JavaNet Internet Cafe - Sample Plan
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Table of Contents
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
2.0
Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.1
Market Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.1.1
Market Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.1.2
Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.1.3
Market Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.1.4
Market Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2
SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2.1
Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2.2
Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2.3
Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2.4
Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.3
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.4
Service Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.5
Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.6
Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.7
Macroenvironment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
1
2
3
3
4
5
5
6
6
6
7
7
7
8
8
3.0
Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.1
Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.2
Marketing Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.3
Financial Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.4
Target Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.5
Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.6
Strategy Pyramids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.7
Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.7.1
Services and Service Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.7.2
Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.7.3
Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.7.4
Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.8
Marketing Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
9
9
9
9
10
10
11
11
11
11
12
12
4.0
Financials, Budgets, and Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.1
Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.2
Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3
Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.4
Linking Sales and Expenses to Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.5
Contribution Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
13
14
15
17
17
5.0
Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.1
Implementation Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.2
Marketing Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.3
Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18
19
19
20
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21
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Pro
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1.0
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
JavaNet Internet Cafe
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1.0 Executive Summary
mp
The goal of this marketing plan is to outline the strategies, tactics, and programs that will
make the sales goals outlined in the JavaNet business plan a reality in the year 1999.
Sa
JavaNet, unlike a typical cafe, provides a unique forum for communication and entertainment
through the medium of the Internet. JavaNet is the answer to an increasing demand. The
public wants: (1) access to the methods of communication and volumes of information now
available on the Internet, and (2) a place to socialize and share these experiences with friends
and colleagues.
Our target markets include:
Pro
Marketing will play a vital role in the success of JavaNet. JavaNet must build a brand around
the services it offers by heavily promoting itself through local television, radio, and print
advertising. Marketing efforts are just beginning by the time a potential customer enters
JavaNet for the first time. A strong emphasis will be put on keeping customers and building
brand loyalty through programs focused on staffing, experience, and customer satisfaction.
lan
• Students from nearby housing centers.
• Business people from the downtown business centers and professional buildings.
• Seniors from nearby retirement facilities.
2.0 Situation Analysis
gP
JavaNet just opened its doors for business a little over a month ago. Business is good, and
customers have been impressed with our offerings, but we need to focus our efforts on
implementing the strategies, programs, and tactics outlined in the original business plan.
Differentiating ourselves from other more traditional cafes has given us the ability to
effectively compete on the beverage and pastry side of the business with the already
entrenched competition. Sales are brisk and in-line with projections.
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The Internet services side of the business is rapidly being accepted by the local community.
Memberships are meeting the projections outlined in the business plan, and sales of Internet
services are meeting the goals forecast. Students love to gather for late-night sessions, nearby
seniors are getting a glimpse of what the Internet offers, and local business people love to
stop by for a quick bite and an email check.
2.1 Market Summary
Ma
JavaNet is faced with the exciting opportunity of being the first-mover in the local cyber-cafe
market. The consistent popularity of coffee, combined with the growing interest in the
Internet, has been proven to be a winning concept in other markets and will produce the same
results here.
All three target markets for the JavaNet service are growing at a relatively fast pace. We're
faced with a large number of potential customers, and we're offering a needed service.
Target Market Growth:
• University students continue to grow at a steady pace, at nearly 4%
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
Page 1
JavaNet Internet Cafe
Office Workers
Seniors
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2.1.1 Market Demographics
University Students
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Pro
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Target Markets
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• Office workers in the downtown area and nearby professional buildings continue to add
value, growing at 3%
• Seniors are becoming an important part of downtown business, growing at almost 6%
• Teens continue to play a major role in downtown foot-traffic, growing at 2%
tin
JavaNet's customers can be divided into two groups. The first group is familiar with the
Internet and desires a progressive and inviting atmosphere where they can get out of their
offices or homes to enjoy a great cup of coffee and Internet access. This group is made up of
students from the University of Oregon and business people from nearby downtown offices and
professional centers.
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The second group is not as familiar with the Internet. This group is made up of seniors from
the downtown retirement centers. There are three large retirement centers in the downtown
area, and currently none of them offer Internet access to their residents. Seniors represent a
growing segment of Internet users. They use the Internet to communicate with friends and
family and they will be regular users of the JavaNet service.
Table: Market Analysis
Market Analysis
Ma
Potential Customers
University Students
Office Workers
Seniors
Total
Growth
4%
3%
6%
3.59%
2001
2002
2003
2004
2005
10,000
20,000
3,000
33,000
10,400
20,600
3,180
34,180
10,816
21,218
3,371
35,405
11,249
21,855
3,573
36,677
11,699
22,511
3,787
37,997
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
CAGR
4.00%
3.00%
6.00%
3.59%
Page 2
JavaNet Internet Cafe
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2.1.2 Market Needs
mp
Factors, such as addiction, and historical sales data ensure that the high demand for coffee will
remain constant over the next five years.
Pro
Sa
The rapid growth of the Internet and online services that has been witnessed worldwide is only
the beginning of a long-lived trend towards an economy built on the infrastructure of the
Internet. The potential growth of the Internet is enormous, to the point where one day, a
computer terminal with an online connection will be as common and necessary as a telephone
or toilet. This may be 5 or 10 years down the road, but for the next five years, the online
service provider market is sure to experience tremendous growth. Establishing itself as the
first cyber-cafe in the area, JavaNet will enjoy the first-mover advantages of name recognition
and customer loyalty. Initially, JavaNet will hold a 100 percent share of the cyber-cafe market
locally. In the next five years, competitors will enter the market. JavaNet has set a goal to
consistently maintain a market share of greater than fifty percent.
2.1.3 Market Trends
JavaNet will provide:
A meeting place for business people interested in sharing their Internet-based
business ideas.
• A social hub for students and young people interested in sharing a beverage and their
Internet experiences with friends.
• A place for nearby seniors to gather and learn about the powers of the Internet and
better communication methods.
• A stopping point for travelers in need of an Internet connection.
tin
gP
•
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The Internet has become a point of conversation in almost all social groups. People are talking
about sites they visited, business people are talking about Internet-based businesses, and kids
are talking about the latest Internet clubs and chat rooms. People like to communicate their
Internet experiences with their friends, colleagues, and family. However, it can be difficult to
do it in front of a computer terminal at the office or in the family study. A comfortable place to
gather and share these experiences is becoming a real need.
A market survey was conducted in the Fall of 1998. Key questions were asked of fifty potential
customers. Some key findings include:
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• 35 subjects said they would be willing to pay for access to the Internet.
• $2.50 an hour was the most popular hourly Internet fee.
• 24 subjects use the Internet to communicate with others on a regular basis.
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
Page 3
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JavaNet Internet Cafe
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Market Forecast
25,000
20,000
Sa
15,000
5,000
0
2002
2003
Seniors
2004
2005
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2001
Office Workers
Pro
10,000
University Students
2.1.4 Market Growth
gP
The market for the services JavaNet will offer is growing rapidly. The cyber-cafe hasn't come
to this area yet, but similar services are growing rapidly on a global scale. Large cities that
cater to large numbers of travelling business people and tourists have been saturated with
businesses offering the services JavaNet will offer. Business people use the Internet services to
catch up on email and communications with their family, and tourists do the same. Our area
supports a population that has many of the same needs and interests of this larger group.
Ma
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The student population continues to grow as the University grows in popularity with highschool graduates from out of state. These students tend to have money and an interest in upscale social centers. Business in the downtown area is on the rise with the coming completion
of the renovated Fifth Street Market and the new Compu-tech facility. JavaNet will target these
groups with radio and TV spots on local stations.
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
Page 4
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JavaNet Internet Cafe
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Target Market Growth
6.00%
5.00%
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4.00%
3.00%
1.00%
0.00%
Office Workers
Seniors
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University Students
Pro
2.00%
2.2 SWOT Analysis
gP
The SWOT analysis provides us with an opportunity to examine the internal strengths and
weaknesses JavaNet must address. It also allows us to examine the opportunities presented to
JavaNet as well as potential threats.
tin
JavaNet has a valuable inventory of strengths that will help it succeed. These strengths
include: a knowledgeable and friendly staff, state-of-the-art computer hardware, and a clear
vision of the market need. Strengths are valuable, but it is also important to realize the
weaknesses JavaNet must address. These weaknesses include: a dependence on quickly
changing technology, and the cost factor associated with keeping state-of-the art computer
hardware.
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JavaNet's strengths will help it capitalize on emerging opportunities. These opportunities
include, but are not limited to, a growing population of daily Internet users, and the growing
social bonds fostered by the new Internet communities. Threats that JavaNet should be
aware of include, the rapidly falling cost of Internet access, and emerging local competitors.
2.2.1 Strengths
Knowledgeable and friendly staff. We've gone to great lengths at JavaNet to find
people with a passion for teaching and sharing their Internet experiences. Our staff is
both knowledgeable and eager to please.
State-of-the art equipment. Part of the JavaNet experience includes access to stateof-the-art computer equipment. Our customers enjoy beautiful flat-screen displays,
fast machines, and high-quality printers.
Up-scale ambiance. When you walk into JavaNet, you'll feel the technology. High
backed mahogany booths with flat-screen monitors inset into the walls provide a cozy
hideaway for meetings and small friendly gatherings. Large round tables with displays
Ma
1.
2.
3.
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
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JavaNet Internet Cafe
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4.
viewable from above provide a forum for larger gatherings and friendly "how-to"
classes on the Internet. Aluminum track lighting and art from local artists sets the
mood. Last, but not least, quality cappuccino machines and a glass pastry display case
provide enticing refreshments.
Clear vision of the market need. JavaNet knows what it takes to build an upscale
cyber cafe. We know the customers, we know the technology, and we know how to
build the service that will bring the two together.
2.
A dependence on quickly changing technology. JavaNet is a place for people to
experience the technology of the Internet. The technology that is the Internet changes
rapidly. Product lifecycles are measured in weeks, not months. JavaNet needs to keep
up with the technology because a lot of the JavaNet experience is technology.
Cost factor associated with keeping state-of-the-art hardware. Keeping up with
the technology of the Internet is an expensive undertaking. JavaNet needs to balance
technology needs with the other needs of the business. One aspect of the business
can't be sacrificed for the other.
Pro
1.
Sa
2.2.2 Weaknesses
1.
Growing population of daily Internet users. The importance of the Internet almost
equals that of the telephone. As the population of daily Internet users increases, so will
the need for the services JavaNet offers.
Social bonds fostered by the new Internet communities. The Internet is bringing
people from across the world together unlike any other communication medium.
JavaNet will capitalize on this social trend by providing a place for smaller and local
Internet communities to meet in person. JavaNet will grow some of these communities
on its own by establishing chat areas and community programs. These programs will
be designed to build customer loyalty.
2.2.4 Threats
Rapidly falling cost of Internet access. The cost of access to the Internet for home
users is dropping rapidly. Internet access may become so cheap and affordable that
nobody will be willing to pay for access to it. JavaNet is aware of this threat and will
closely monitor pricing.
Emerging local competitors. Currently, JavaNet is enjoying a first-mover advantage
in the local cyber-cafe market. However, additional competitors are on the horizon, and
we need to be prepared for their entry into the market. Many of our programs will be
designed to build customer loyalty, and it is our hope that our quality service and upscale ambiance won't be easily duplicated.
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2.
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2.2.3 Opportunities
Ma
2.
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Page 6
JavaNet Internet Cafe
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2.3 Competition
mp
The dual product/service nature of JavaNet's business faces competition on two levels.
JavaNet competes not only with coffee retailers, but also with Internet service providers. The
good news is that JavaNet does not currently face any direct competition from other cyber
cafes in the local market. There are a total of three cyber cafes in the state: one located in
Portland and two in Ashland.
Pro
Sa
Heavy competition between coffee retailers creates an industry where all firms face the same
costs. There is a positive relationship between price and quality of coffee. Some coffees retail
at $8/pound, while other more exotic beans may sell for as high as $16/pound. Wholesalers
sell beans to retailers at an average of a 50% discount. For example, a pound of Sumatran
beans wholesales for $6.95 and retails for $13.95. And as in most industries, price decreases
as volume increases.
2.4 Service Offering
JavaNet will provide its customers with full access to the Internet and common computer
programs and equipment. Some of the Internet and computing services available to JavaNet
customers are listed below:
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• Access to external POP3 email accounts.
• Customers can sign up for a JavaNet email account. This account will be managed by
JavaNet servers and accessible from computer systems outside the JavaNet network.
• FTP, Telnet, Gopher, and other popular Internet utilities will be available.
• Access to Netscape or Internet Explorer browsers.
• Access to laser and color printing.
• Access to popular software applications, like Adobe Photoshop and Microsoft Word.
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JavaNet will also provide its customers with access to introductory Internet and email classes.
These classes will be held in the afternoon and late in the evening. By providing these classes,
JavaNet will build a client base familiar with its services. The computers, Internet access, and
classes wouldn't mean half as much if taken out of the environment JavaNet will provide. Good
coffee, specialty drinks, bakery goods, and a comfortable environment will provide JavaNet
customers with a home away from home; a place to enjoy the benefits of computing in a
comfortable and well kept environment.
2.5 Keys to Success
The keys to the success for JavaNet are:
Ma
• The creation of a unique, innovative, upscale atmosphere that will differentiate JavaNet
from other local coffee shops and future Internet cafes.
• The establishment of JavaNet as a community hub for socialization and entertainment.
• The creation of an environment that won't intimidate the novice user. JavaNet will
position itself as an educational resource for individuals wishing to learn about the
benefits the Internet has to offer.
• Great coffee and bakery items.
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
Page 7
JavaNet Internet Cafe
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2.6 Critical Issues
The risks involved for JavaNet are:
mp
Will there be a continuing demand for the services offered by JavaNet?
Will the popularity of the Internet continue to grow, or is the Internet a fad?
Will individuals be willing to pay for the services JavaNet offers?
Will the cost of accessing the Internet from home drop so significantly that there will
not be a market for Internet Cafes such as JavaNet?
Sa
•
•
•
•
2.7 Macroenvironment
Pro
The retail coffee industry in this area experienced rapid growth at the beginning of the decade
and is now moving into the mature stage of its life cycle. Many factors contribute to the large
demand for good coffee: The student population at the University is a main source of demand
for coffee retailers, the cold and damp climate is extremely conducive to coffee consumption,
and current trends in the Northwest reflect the popularity of quality coffee and specialty drinks.
gP
3.0 Marketing Strategy
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The popularity of the Internet is growing exponentially. Those who are familiar with the
information superhighway are well aware of how fun and addicting surfing the Internet can be.
Those who have not yet experienced the Internet need a convenient, relaxed atmosphere
where they can feel comfortable learning about and utilizing the current technologies. JavaNet
seeks to provide its customers with affordable Internet access in an innovative and supportive
environment.
JavaNet has three main strategies. The first strategy focuses on attracting novice Internet
users. By providing a novice-friendly environment, JavaNet hopes to educate and train a loyal
customer base.
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The second and most important strategy focuses on pulling in power Internet users. Power
Internet users are extremely familiar with the Internet and its offerings. This group of
customers serves an important function at JavaNet. Power users have knowledge and webbrowsing experience that novice Internet users find attractive and exciting.
Ma
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The third strategy focuses on building a social environment for JavaNet customers. A social
environment that provides entertainment will serve to attract customers that wouldn't
normally think about using the Internet. Once on location at JavaNet, these customers that
came for the more standard entertainment offerings, will realize the potential entertainment
value the Internet can provide.
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
Page 8
JavaNet Internet Cafe
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3.1 Mission
JavaNet has one purpose.
mp
JavaNet provides communities with the ability to access the Internet, enjoy a cup of coffee,
and share Internet experiences in a comfortable environment.
Sa
JavaNet's marketing will consistently build on this mission. Everything we do, from the pricing
structure for our services to the ambiance we create, must be done with this mission in mind.
We cater to: downtown business people, traveling business people, university students, and
seniors. Our ambiance and our services are designed for this clientele and our marketing
efforts are focused on capturing this market.
Pro
3.2 Marketing Objectives
JavaNet's marketing objectives for the first three years of operation include:
gP
3.3 Financial Objectives
lan
• Grow total sales by 10% annually.
• Diversify the service offering to insulate the business against fluctuations in any one
component of the revenue stream.
• Build customer loyalty through educational programs.
• Maintain a staff of enthusiastic employees excited to share their Internet knowledge
with JavaNet customers.
• Build the JavaNet brand to the point where it becomes a household word in the area.
tin
The goal of this marketing plan is to outline the marketing strategies, tactics, and programs
that will make the vision outlined in the JavaNet business plan a reality in the year 2000. The
vision outlined in the business plan includes sales of roughly $275,000 in the first year with
that figure increasing 10% annually.
3.4 Target Marketing
Ma
rke
JavaNet intends to cater both to people who want a guided tour of the Internet and to
experienced users eager to indulge their passion for computers in a social setting.
Furthermore, JavaNet will be a magnet for local and traveling professionals who desire to work
or check their email messages in a friendly atmosphere. These professionals will either use
JavaNet's PCs, or plug their own notebook computers into Internet connections. JavaNet's
target market covers a wide range of ages: from members of "Generation X," who grew up
surrounded by computers, to seniors from local retirement centers.
Our primary target markets include:
• Students. The large student population will become an important part of the JavaNet
customer base. The student population continues to grow with the success of the
University. Evening entertainment, access to the Internet, and the up-scale ambiance
will attract this demographic.
• Business people. The downtown business community is growing rapidly with the
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
Page 9
JavaNet Internet Cafe
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mp
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addition of a new Compu-tech building and a flurry of new professional centers.
JavaNet will provide a perfect setting for business meetings. It will also give traveling
business people an opportunity to plug their laptops into the JavaNet network to check
email communications.
• Seniors. Represent a growing population of Internet users. JavaNet will target the
seniors in the nearby downtown retirement centers by offering "Introduction to the
Internet" classes. The JavaNet staff will hold brief classes in the off hours to educate
seniors on how to use the Internet to communicate with friends and family. This will
build a regular base of customers that wouldn't typically use the services offered by
JavaNet.
3.5 Positioning
3.6 Strategy Pyramids
lan
Pro
JavaNet will position itself as an upscale coffee house and Internet service provider. Business
people of all types will use JavaNet as a place to hold meetings and catch-up on email
communications. Students from nearby downtown housing centers will use JavaNet as a place
to socialize and discuss the latest Internet sites. Seniors from downtown retirement centers
will experience the Internet for the first time at JavaNet. Programs designed to teach
newcomers about the power of the Internet will help build customer loyalty and spread the
word about the services JavaNet offers.
The following are the three key strategies JavaNet will focus on:
gP
JavaNet's first strategy focuses on attracting novice Internet users. JavaNet plans on
attracting these customers by:
tin
• Providing a novice-friendly environment. JavaNet will be staffed by knowledgeable
employees focused on serving the customer's needs.
• A Customer Service desk will always be staffed. If a customer has any type of question
or concern, a JavaNet employee will always be available to assist.
• JavaNet will offer introductory classes on the Internet and email. These classes will be
designed to help novice users familiarize themselves with these key tools and the
JavaNet computer systems.
rke
JavaNet's second strategy will be focused on attracting power Internet users who will provide
an important function at JavaNet. JavaNet plans on attracting this type of customer by:
• Providing the latest in computing technology.
• Providing scanning and printing services.
• Providing access to powerful software applications.
Ma
The third strategy focuses on building a social environment for JavaNet customers. A social
environment that provides entertainment will serve to attract customers that wouldn't
normally think about using the Internet. Once on location at JavaNet, these customers that
came for the more standard entertainment offerings will realize the potential entertainment
value the Internet can provide.
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Page 10
JavaNet Internet Cafe
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3.7 Marketing Mix
mp
JavaNet's marketing efforts will focus on building a loyal base of customers that will use the
services provided on an almost daily basis.
3.7.1 Services and Service Marketing
Pro
Sa
As the popularity of the Internet continues to grow at an exponential rate, easy and affordable
access to the information superhighway is quickly becoming a necessity of life. JavaNet
provides the local community with the ability to access the Internet, enjoy a cup of coffee, and
share Internet experiences in a comfortable environment. People of all ages and backgrounds
will come to enjoy the unique, upscale, educational, and innovative environment that JavaNet
provides.
3.7.2 Pricing
lan
JavaNet bases its prices for coffee and specialty drinks on the "Retail Profit Analysis" provided
by our supplier, Allann Brothers Coffee Co., Inc. Allann Brothers has been in the coffee
business for 22 years and has developed a solid pricing strategy.
tin
gP
Determining a fair market, hourly price for online use is more difficult because there is no
direct competition from another cyber-cafe in our area. Therefore, JavaNet considered three
sources to determine the hourly charge rate. First, we considered the cost to use other
Internet servers, whether it is a local networking firm or a provider such as America Online.
Internet access providers use different pricing schemes. Some charge a monthly fee, while
others charge an hourly fee. In addition, some providers use a strategy with a combination of
both pricing schemes. Thus, it can quickly become a high monthly cost for the individual.
Second, JavaNet looked at how cyber-cafes in other markets such as Portland and Ashland
went about pricing Internet access. Third, JavaNet used the market survey conducted in the
Fall of 1998. Evaluating these three factors resulted in JavaNet's hourly price of $2.50.
3.7.3 Promotion
rke
JavaNet will spend almost fifty thousand dollars in its first year of operations to build a brand
and a loyal customer base. Marketing efforts will be focused on the local market, and the
campaign will run the entirety of 1999, increasing roughly 10% per year to match increased
sales revenue. The marketing budget will consistently equal almost 20% of sales.
A Few Specific Marketing Efforts:
Local TV spots
Print Materials
Local Newspapers
Local Radio Spots
JavaNet Events
Ma
•
•
•
•
•
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JavaNet Internet Cafe
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3.7.4 Service
Dedicated to Quality Service Programs:
mp
This topic is a critical reminder of the fact that JavaNet is a service business. The success of
our business depends upon the quality of the service we offer and delivering that service
consistently. JavaNet is dedicated to delivering this quality service.
Pro
Sa
• We've gone to great lengths at JavaNet to find people with a passion for teaching and
sharing their Internet experiences. Our staff is both knowledgeable and eager to
please. An excess of staff members will consistently be on hand to provide service to
JavaNet customers. Performance will be frequently evaluated both internally and
through customer surveys.
• A highly valued member of the JavaNet staff will be the "Customer Happiness
Representative." This individual will be available forty hours a week to monitor the level
of happiness amongst JavaNet customers. This individual will be responsible for:
developing customer satisfaction programs, monitoring happiness levels, responding to
customer concerns, and the general well being of every JavaNet customer.
3.8 Marketing Research
gP
lan
In 1998, a market survey was conducted to help evaluate the business viability prior to its
inception. The survey was a valuable resource for establishing pricing and market needs. We
will continue to conduct a survey of our customers and potential customers on an annual
basis. Survey results will be used to create new marketing programs and monitor the
performance of current marketing programs.
4.0 Financials, Budgets, and Forecasts
The marketing plan is built on these truths:
rke
2.
3.
4.
The marketing budget is based on a percentage of sales value. Currently, that value is
set at 20%.
Building a strong brand and brand loyalty is critical to the success of JavaNet.
Marketing is a critical component of the JavaNet business plan.
The relationship between marketing dollars spent and revenues generated is positive
only to a certain point. We don't feel that a marketing budget based on 20% of sales is
close to that point where additional marketing dollars spent won't create additional
revenue. If we can manage, we plan to spend more than 20% of sales on marketing in
future years. However, we want to keep this relationship in mind as we consider
spending more on marketing efforts.
Our understanding of the need for strong branding and emphasis on marketing gives
us a competitive edge over other cafes in our area and potential competitors.
tin
1.
Ma
5.
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JavaNet Internet Cafe
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4.1 Break-even Analysis
mp
JavaNet is operating in an industry capable of supporting high gross margins. Variable costs in
relationship to per-unit revenues are low. Variable costs are equal to roughly 25% of per-units
revenues. It is our hope that as we move into the future and continue to build relationships
with our suppliers, this value will decrease further, approaching a value of 20%.
Sa
Fixed costs for JavaNet equal almost $7,500. Fixed costs include: payment of debt, facility
lease costs, hardware costs, and other costs JavaNet must maintain on a monthly basis. These
costs are fixed and aren't impacted by an increase or a decrease in sales.
Currently, JavaNet will break even at a monthly sales point of $10,000.
Pro
Break-even Analysis
$8,000
$6,000
$4,000
$2,000
($4,000)
($6,000)
($8,000)
0
lan
$0
($2,000)
1000
2000
3000
4000
5000
gP
Monthly break-even point
tin
Break-even point = where line intersects with 0
Table: Break-even Analysis
Break-even Analysis
rke
Monthly Units Break-even
Monthly Revenue Break-even
$3.35
$0.84
$7,500
Ma
Assumptions:
Average Per-Unit Revenue
Average Per-Unit Variable Cost
Estimated Monthly Fixed Cost
2,986
$10,002
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
Page 13
JavaNet Internet Cafe
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4.2 Sales Forecast
Sa
mp
Revenues for the first year of operation are based on an almost 10% growth rate from month
to month. This is an aggressive estimate, but we feel that our strong emphasis on marketing
will have positive results. Annually, beyond the first year of operations, we're predicting a
growth rate of roughly 10%. We'll have a better idea of potential growth rate beyond year one
as we make our way through our first year. The plan will be updated as we receive more
information.
Sales Monthly
Pro
$50,000
$40,000
Coffee (based on average)
Specialty Drinks (based on average)
$30,000
E-mail Memberships
$20,000
Hourly Internet Fees
Baked Goods (based on average)
lan
$10,000
Ma
rke
tin
gP
$0
Other
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
Page 14
JavaNet Internet Cafe
Sales Forecast
2002
2003
16,230
9,129
12,173
60,255
54,777
0
152,564
17,853
10,042
13,390
66,280
60,255
0
167,820
19,639
11,047
14,729
72,908
66,280
0
184,602
Unit Prices
Coffee (based on average)
Specialty Drinks (based on average)
E-mail Memberships
Hourly Internet Fees
Baked Goods (based on average)
Other
2001
$1.00
$2.00
$10.00
$2.50
$1.25
$0.00
2002
$1.00
$2.00
$10.00
$2.50
$1.25
$0.00
Sales
Coffee (based on average)
Specialty Drinks (based on average)
E-mail Memberships
Hourly Internet Fees
Baked Goods (based on average)
Other
Total Sales
$16,230
$18,259
$121,726
$150,636
$68,471
$0
$375,323
tin
Direct Cost of Sales
Coffee (based on average)
Specialty Drinks (based on average)
E-mail Memberships
Hourly Internet Fees
Baked Goods (based on average)
Other
Subtotal Direct Cost of Sales
21,602
12,151
16,202
80,199
72,908
0
203,062
23,763
13,366
17,822
88,219
80,199
0
223,368
Sa
2003
$1.00
$2.00
$10.00
$2.50
$1.25
$0.00
2005
$1.00
$2.00
$10.00
$2.50
$1.25
$0.00
$19,639
$22,093
$147,289
$182,270
$82,850
$0
$454,141
$21,602
$24,303
$162,018
$200,497
$91,135
$0
$499,555
$23,763
$26,733
$178,219
$220,547
$100,248
$0
$549,510
2002
$0.50
$2.50
$0.63
$0.31
$0.00
$0.25
2003
$0.50
$2.50
$0.63
$0.31
$0.00
$0.25
2004
$0.50
$2.50
$0.63
$0.31
$0.00
$0.25
2005
$0.50
$2.50
$0.63
$0.31
$0.00
$0.25
$8,927
$25,106
$8,436
$20,547
$0
$0
$63,015
$9,819
$27,617
$9,279
$22,601
$0
$0
$69,317
$10,801
$30,378
$10,207
$24,862
$0
$0
$76,248
$11,881
$33,416
$11,228
$27,348
$0
$0
$83,873
Pro
$8,115
$22,824
$7,669
$18,679
$0
$0
$57,286
2005
2004
$1.00
$2.00
$10.00
$2.50
$1.25
$0.00
$17,853
$20,085
$133,899
$165,700
$75,318
$0
$412,855
lan
2001
$0.50
$2.50
$0.63
$0.31
$0.00
$0.00
gP
Direct Unit Costs
Coffee (based on average)
Specialty Drinks (based on average)
E-mail Memberships
Hourly Internet Fees
Baked Goods (based on average)
Other
2004
mp
2001
Unit Sales
Coffee (based on average)
Specialty Drinks (based on average)
E-mail Memberships
Hourly Internet Fees
Baked Goods (based on average)
Other
Total Unit Sales
le
Table: Sales Forecast
4.3 Expense Forecast
rke
The marketing budget will consistently equal approximately 20% of sales. One of our strongest
strengths is our marketing and brand building capabilities, and the aggressive marketing
budget is a reflection of the importance we attribute to our marketing activities.
Ma
Currently, the marketing budget beyond year one remains set at 20% of sales. It is our hope
to increase this budget should sales and efficiencies of scale allow us to do so.
Explanation of Major Marketing Expenses:
• Local TV spots... In our first year of operations, we will spend $23,000 on TV spots.
TV spots allow us to reach a large audience and effectively target our market.
• Print Materials... Print materials always require a significant budget. They include:
flyers, literature distributed internally, novelties for customers, coupons, and anything
else we can squeeze into this budget.
• Local Newspapers... An important part of our marketing efforts. Newspapers ads will
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
Page 15
JavaNet Internet Cafe
Sa
mp
le
give us a vehicle for consistently getting our message/brand in front of a large number
of potential customers. We believe this vehicle will get our message to seniors, which
make up a large portion of our target market. In addition, the business section will
provide us with a means for communicating with our business customers.
• Local Radio Spots... These are an inexpensive way to secure a large number of daily
impressions.
• JavaNet Events... This will include local radio and TV events where radio and TV
stations broadcast from the JavaNet site offering freebies to first-time customers for
stopping by. JavaNet will also run educational programs and community events
throughout the year.
• Customer Happiness Representative... This employee will monitor the level of
happiness amongst JavaNet customers. They will be responsible for: developing
customer satisfaction programs, monitoring happiness levels, responding to customer
concerns, and the general well being of every JavaNet customer.
Pro
Monthly Expense Budget
$5,000
$4,500
$4,000
lan
$3,500
$3,000
$2,500
$2,000
$1,000
$500
$0
gP
$1,500
tin
Jan Feb Mar Apr May Jun
Local TV Spots
Print Materials
Other
Jul Aug Sep Oct Nov Dec
Table: Marketing Expense Budget
rke
Marketing Expense Budget
Local TV Spots
Print Materials
Other
2002
$25,300
$7,425
$3,630
-----------$36,355
8.81%
2003
$27,830
$8,168
$3,993
-----------$39,991
8.81%
2004
$30,613
$8,984
$4,392
-----------$43,990
8.81%
2005
$33,674
$9,883
$4,832
-----------$48,389
8.81%
Ma
Total Sales and Marketing Expenses
Percent of Sales
2001
$23,000
$6,750
$3,300
-----------$33,050
8.81%
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Page 16
JavaNet Internet Cafe
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4.4 Linking Sales and Expenses to Strategy
Sa
mp
Our marketing expenses are tied directly to our sales revenue. As sales increase, the
marketing expenses will increase. Currently our marketing expenses equal roughly 20% of
sales, and we hope to increase that value in the future. Our programs will be monitored for
efficiency and return on investment. Most notably, we want to pay close attention to the value
of the "Customer Happiness Representative." This component of our marketing budget is
expensive, and we want to track the value of the program to make sure we're optimizing our
budget. Periodically, we will survey our customers to determine the effectiveness of our
programs, and we'll adjust the marketing mix appropriately based on our findings.
Sales vs. Expenses Monthly
Pro
$50,000
$45,000
$40,000
$35,000
$30,000
lan
$25,000
$20,000
$15,000
$10,000
$0
gP
$5,000
Jan Feb Mar Apr May Jun
Sales
Expenses
Jul Aug Sep Oct Nov Dec
tin
4.5 Contribution Margin
The Contribution Margin chart and table presents a strong outlook for JavaNet's first year of
operations.
Sales increase an average of 10% per month in the first year.
Contribution margin runs at roughly 50%.
The marketing budget is consistently based on 20% of total revenue.
A strong focus on local TV and radio is apparent in the expense breakdown.
The marketing budget is spread evenly throughout the year.
Ma
rke
1.
2.
3.
4.
5.
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Page 17
mp
Contribution Margin Monthly
$40,000
$35,000
$30,000
Sa
$25,000
$20,000
$15,000
Pro
$10,000
$5,000
$0
Contribution Margin
Jul Aug Sep Oct Nov Dec
lan
Jan Feb Mar Apr May Jun
Table: Contribution Margin
le
JavaNet Internet Cafe
2001
$375,323
$57,286
$3,000
-----------$60,286
2002
$412,855
$63,015
$3,000
-----------$66,015
2003
$454,141
$69,317
$3,000
-----------$72,317
2004
$499,555
$76,248
$3,000
-----------$79,248
2005
$549,510
$83,873
$3,000
-----------$86,873
$315,036
83.94%
$346,840
84.01%
$381,824
84.08%
$420,306
84.14%
$462,637
84.19%
Total Sales and Marketing Expenses
Percent of Sales
2001
$23,000
$6,750
$3,300
-----------$33,050
8.81%
2002
$25,300
$7,425
$3,630
-----------$36,355
8.81%
2003
$27,830
$8,168
$3,993
-----------$39,991
8.81%
2004
$30,613
$8,984
$4,392
-----------$43,990
8.81%
2005
$33,674
$9,883
$4,832
-----------$48,389
8.81%
Contribution Margin
Contribution Margin / Sales
$281,986
75.13%
$310,485
75.20%
$341,833
75.27%
$376,317
75.33%
$414,249
75.39%
Total Cost of Sales
Gross Margin
Gross Margin %
gP
Sales
Direct Cost of Sales
Other Variable Costs of Sales
rke
tin
Marketing Expense Budget
Local TV Spots
Print Materials
Other
5.0 Controls
Ma
The goal of this marketing plan is to outline the strategies, tactics, and programs that will
make the sales goals outlined in the JavaNet business plan a reality in the year 2000. We have
these marketing obstacles to face:
• The creation of a unique, innovative, upscale atmosphere that will differentiate JavaNet
from other local coffee shops and future Internet cafes.
• The establishment of JavaNet as a community hub for socialization and entertainment.
• The creation of an environment that won't intimidate the novice user. JavaNet will
position itself as an educational resource for individuals wishing to learn about the
benefits the Internet has to offer.
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Page 18
JavaNet Internet Cafe
mp
le
Our marketing efforts will be focused on building the image outlined above. We have
milestones and sales goals to meet and a business plan outlining our first and second year of
business in detail. It will be critical to use this marketing plan and the JavaNet business plan as
living/working documents. We can't allow them to sit in a file. They must be used as a map for
the future success of JavaNet.
Sa
5.1 Implementation Milestones
Pro
The milestones chart below outlines key dates that the marketing team must meet. The
milestones table includes both sales goals and deadlines for major projects that impact the
programs outlined in the Marketing Expense Budget. Each milestone is assigned a manager
and that manager has ownership of the task and is responsible for its success. We will track
our successes and failures by reviewing planned-vs-actual results. Successes and failures will
be reviewed and addressed and a quarterly basis.
Table: Milestones
Milestones
Start Date
1/15/1999
1/15/1999
2/1/1999
1/1/1999
End Date
2/1/1999
2/1/1999
2/10/1999
1/5/1999
Budget
$500
$250
$250
$75
Manager
Cale
Cale
Cale
Cale
Department
Start Date
End Date
$1,075
Budget
Manager
Department
1/15/1999
2/1/1999
$500
Cale
Start Date
2/1/1999
4/1/1999
End Date
2/10/1999
4/10/1999
$500
Budget
$250
$300
Manager
Cale
Cale
Department
Start Date
1/15/1999
End Date
1/16/1999
$550
Budget
$250
Manager
Cale
Department
Start Date
3/1/1999
End Date
4/1/1999
$250
Budget
$1,000
Manager
Cale
Department
rke
tin
gP
lan
Advertising
TV Ad Creative
Radio Spot 1 Creative
Radio Spot 2 Creative
Newspaper Ad Creative
Other
Total Advertising Budget
PR
Customer Happiness Representative
Prog. 1
Other
Total PR Budget
Direct Marketing
JavaNet Event 1 Creative
JavaNet Event 2 Creative
Other
Total Direct Marketing Budget
Web Development
Introduction to the Internet Class 1
Other
Total Web Development Budget
Other
Customer Survey
Other
Total Other Budget
Totals
$1,000
$3,375
5.2 Marketing Organization
Ma
The founder of JavaNet, Cale Brockman, has a BS from the University of Oregon in Marketing
and Management and will head the marketing effort. Initially, there will only be one additional
member of the marketing team, the "Customer Happiness Representative." This position has
not yet been filled, but it is the first milestone that must be completed. The "Customer
Happiness Representative" will play a large role in implementing the different marketing
programs. A marketing manager will be hired during the third or fourth quarter if revenues
meet projections.
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Page 19
JavaNet Internet Cafe
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5.3 Contingency Planning
The following are some possible scenarios:
mp
This marketing plan is just that, a plan. Plans don't always work out and we have to be ready
to deal with the likelihood that JavaNet won't make good on the projections outlined in this
plan. We also have to prepare ourselves for overwhelming success.
Sa
Revenues exceed projections - A serious increase in revenues over projections will give us
an opportunity to increase our marketing budget above the allocated 20%. We'll be able to
hire the marketing manager earlier, and we'll be able to provide more equipment and possibly
add an additional location.
Pro
Revenues miss projections - We have to be prepared for this possibility. If we miss our
projections, we simply have to re-double our marketing efforts. The danger in this scenario is
that the first reaction to missed projections is to decrease spending, particularly marketing
expenses. We can't do that! We have to get our message out to the target market, and we
can't do that if we stop spending on marketing. Additional capital infusions may become
necessary and that possibility is detailed in the business plan.
Ma
rke
tin
gP
lan
Internet side of business plays a lesser role - Our customers might not be willing to pay
for Internet access or JavaNet memberships as Internet access costs and hardware costs
continue to fall. If this scenario materializes, we will need to move our focus to beverages and
pastry items, perhaps even providing deli-style lunches. Internet services in the scenario
would still play an important role in attracting customers; we'd just have to charge less and
move our numbers around to accommodate this trend.
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Page 20
Appendix
Appendix Table: Sales Forecast
Sales Forecast
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
800
450
600
2,970
2,700
0
7,520
840
473
630
3,119
2,835
0
7,896
882
496
662
3,274
2,977
0
8,291
988
556
741
3,667
3,334
0
9,286
1,106
622
830
4,107
3,734
0
10,400
1,250
703
938
4,641
4,219
0
11,752
1,413
795
1,060
5,245
4,768
0
13,280
1,526
858
1,144
5,664
5,149
0
14,342
Unit Prices
Coffee (based on average)
Specialty Drinks (based on average)
E-mail Memberships
Hourly Internet Fees
Baked Goods (based on average)
Other
Jan
$1.00
$2.00
$10.00
$2.50
$1.25
$0.00
Feb
$1.00
$2.00
$10.00
$2.50
$1.25
$0.00
Mar
$1.00
$2.00
$10.00
$2.50
$1.25
$0.00
Apr
$1.00
$2.00
$10.00
$2.50
$1.25
$0.00
May
$1.00
$2.00
$10.00
$2.50
$1.25
$0.00
Jun
$1.00
$2.00
$10.00
$2.50
$1.25
$0.00
Jul
$1.00
$2.00
$10.00
$2.50
$1.25
$0.00
Aug
$1.00
$2.00
$10.00
$2.50
$1.25
$0.00
Sales
Coffee (based on average)
Specialty Drinks (based on average)
E-mail Memberships
Hourly Internet Fees
Baked Goods (based on average)
Other
Total Sales
$800
$900
$6,000
$7,425
$3,375
$0
$18,500
$840
$945
$6,300
$7,796
$3,544
$0
$19,425
$882
$992
$6,615
$8,186
$3,721
$0
$20,396
$988
$1,111
$7,409
$9,168
$4,167
$0
$22,844
$1,106
$1,245
$8,298
$10,269
$4,668
$0
$25,585
$1,250
$1,406
$9,377
$11,604
$5,274
$0
$28,911
$1,413
$1,589
$10,596
$13,112
$5,960
$0
$32,670
Jan
$0.50
$2.50
$0.63
$0.31
$0.00
$0.25
Feb
$0.50
$2.50
$0.63
$0.31
$0.00
$0.25
Mar
$0.50
$2.50
$0.63
$0.31
$0.00
$0.25
Apr
$0.50
$2.50
$0.63
$0.31
$0.00
$0.25
May
$0.50
$2.50
$0.63
$0.31
$0.00
$0.25
Jun
$0.50
$2.50
$0.63
$0.31
$0.00
$0.25
$400
$1,125
$378
$921
$0
$0
$2,824
$420
$1,181
$397
$967
$0
$0
$2,965
$441
$1,240
$417
$1,015
$0
$0
$3,113
$494
$1,389
$467
$1,137
$0
$0
$3,487
$553
$1,556
$523
$1,273
$0
$0
$3,905
$625
$1,758
$591
$1,439
$0
$0
$4,413
Unit Sales
Coffee (based on average)
Specialty Drinks (based on average)
E-mail Memberships
Hourly Internet Fees
Baked Goods (based on average)
Other
Total Unit Sales
Direct Unit Costs
Coffee (based on average)
Specialty Drinks (based on average)
E-mail Memberships
Hourly Internet Fees
Baked Goods (based on average)
Other
Direct Cost of Sales
Coffee (based on average)
Specialty Drinks (based on average)
E-mail Memberships
Hourly Internet Fees
Baked Goods (based on average)
Other
Subtotal Direct Cost of Sales
M
0%
0%
0%
0%
0%
0%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
k
r
a
n
i
t
e
P
g
n
la
e
l
p
Oct
Nov
Dec
1,648
927
1,236
6,118
5,561
0
15,489
1,780
1,001
1,335
6,607
6,006
0
16,729
1,922
1,081
1,442
7,135
6,487
0
18,067
2,076
1,168
1,557
7,706
7,006
0
19,512
Sep
$1.00
$2.00
$10.00
$2.50
$1.25
$0.00
Oct
$1.00
$2.00
$10.00
$2.50
$1.25
$0.00
Nov
$1.00
$2.00
$10.00
$2.50
$1.25
$0.00
Dec
$1.00
$2.00
$10.00
$2.50
$1.25
$0.00
$1,526
$1,716
$11,443
$14,161
$6,437
$0
$35,283
$1,648
$1,854
$12,359
$15,294
$6,952
$0
$38,106
$1,780
$2,002
$13,347
$16,517
$7,508
$0
$41,154
$1,922
$2,162
$14,415
$17,839
$8,108
$0
$44,447
$2,076
$2,335
$15,568
$19,266
$8,757
$0
$48,002
Jul
$0.50
$2.50
$0.63
$0.31
$0.00
$0.25
Aug
$0.50
$2.50
$0.63
$0.31
$0.00
$0.25
Sep
$0.50
$2.50
$0.63
$0.31
$0.00
$0.25
Oct
$0.50
$2.50
$0.63
$0.31
$0.00
$0.25
Nov
$0.50
$2.50
$0.63
$0.31
$0.00
$0.25
Dec
$0.50
$2.50
$0.63
$0.31
$0.00
$0.25
$706
$1,987
$668
$1,626
$0
$0
$4,986
$763
$2,146
$721
$1,756
$0
$0
$5,385
$824
$2,317
$779
$1,896
$0
$0
$5,816
$890
$2,503
$841
$2,048
$0
$0
$6,281
$961
$2,703
$908
$2,212
$0
$0
$6,784
$1,038
$2,919
$981
$2,389
$0
$0
$7,327
r
P
S
o
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
Sep
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Page 21
Appendix
Appendix Table: Contribution Margin
Contribution Margin
Sales
Direct Cost of Sales
Other Variable Costs of Sales
Total Cost of Sales
Gross Margin
Gross Margin %
Marketing Expense Budget
Local TV Spots
Print Materials
Other
Total Sales and Marketing Expenses
Percent of Sales
Contribution Margin
Contribution Margin / Sales
M
k
r
a
Jan
$18,500
$2,824
$0
-----------$2,824
Feb
$19,425
$2,965
$0
-----------$2,965
Mar
$20,396
$3,113
$0
-----------$3,113
Apr
$22,844
$3,487
$0
-----------$3,487
May
$25,585
$3,905
$0
-----------$3,905
Jun
$28,911
$4,413
$0
-----------$4,413
Jul
$32,670
$4,986
$500
-----------$5,486
Aug
$35,283
$5,385
$500
-----------$5,885
$15,676
84.74%
$16,460
84.74%
$17,283
84.74%
$19,357
84.74%
$21,680
84.74%
$24,498
84.74%
$27,183
83.21%
$29,398
83.32%
Jan
$0
$500
$250
-----------$750
4.05%
Feb
$2,000
$500
$100
-----------$2,600
13.38%
Mar
$0
$500
$250
-----------$750
3.68%
Apr
$2,000
$500
$100
-----------$2,600
11.38%
May
$0
$500
$250
-----------$750
2.93%
Jun
$2,500
$500
$500
-----------$3,500
12.11%
Jul
$2,500
$500
$250
-----------$3,250
9.95%
Aug
$2,500
$500
$500
-----------$3,500
9.92%
$14,926
80.68%
$13,860
71.35%
$16,533
81.06%
$16,757
73.36%
$20,998
72.63%
$23,933
73.26%
$25,898
73.40%
n
i
t
e
P
g
n
la
$20,930
81.81%
r
P
S
o
Copyright © Palo Alto Software, Inc. 1995-2007 All rights reserved. Not for resale, reproduction, publication, or distribution. www.paloalto.com
e
l
p
Sep
$38,106
$5,816
$500
-----------$6,316
Oct
$41,154
$6,281
$500
-----------$6,781
Nov
$44,447
$6,784
$500
-----------$7,284
Dec
$48,002
$7,327
$500
-----------$7,827
$31,790
83.42%
$34,373
83.52%
$37,163
83.61%
$40,176
83.70%
Sep
$2,500
$500
$250
-----------$3,250
8.53%
Oct
$2,500
$750
$500
-----------$3,750
9.11%
Nov
$2,500
$1,000
$250
-----------$3,750
8.44%
Dec
$4,000
$500
$100
-----------$4,600
9.58%
$28,540
74.90%
$30,623
74.41%
$33,413
75.17%
$35,576
74.11%
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