SPREE - THE MARKET PLAN (Muhammad Shoaib Assignment)
SPREE - THE MARKET PLAN (Muhammad Shoaib Assignment)
SPREE - THE MARKET PLAN (Muhammad Shoaib Assignment)
Email: ms9189045@gmail.com
SPREE WATCH MARKETING PLAN SUMMARY
Based on an evaluation of the watch market and our strengths, General will introduce the Spree watch.
SITUATION ANALYSIS
Half the buyers of branded fashion watches are between 18 and 34 years of age. This group, which
purchases more watches per capita than those older, is our primary market segment. Watch purchases are
more likely by consumers in the northeast and Midwest. Many purchases are expected to be impulse,
requiring strong point-of-purchase support. Seventy percent of the market is concentrated with strong
competition from Swatch, Fossil, Guess, and Anne Kline. We have extensive experience in the
manufacture of innovative, high quality, precision plastics and timing devices permitting us to offer the
consumer value in a branded fashion watch. Additionally, we have experience distributing products into
75 percent of the outlets for branded fashion watches.
OBJECTIVES
The combination of a unique, cost-effective design allows us to establish a three percent market share in
the first year. The Spree watch project will break-even in 1998.
MARKETING STRATEGIES
General will introduce a new product, the innovative Spree watch, using penetration pricing, extensive
advertising, and expanded distribution in order to increase our revenues and growth rate.
ACTION PLAN
The Spree watch has strong product benefits compared to current market offerings. To achieve our
objectives we will offer our unique watch in a variety of designs at a suggested retail price of $45. Our
current distribution covers 75 percent of the market. At this time we will not expand our distribution to
access the jewelry store retail channel. We will increase our sales force by 5 persons and add a sales
trainer to support for our market plan. Advertising of one million dollars will emphasis the unique design
of the watch and is weighted toward print and point-of-purchase displays. This and television advertising
will be scheduled two-thirds in the first six months of the campaign. To achieve consumer awareness in
the first year, our advertising voice share will be considerably higher than that of the four market leaders.
We expect first year sales of 8.5 million dollars and project break-even for the project in the first year.
CONTINGENCY PLANS
If the competition increases advertising or our sales are less than expected, we are prepared to add as
much $500,000 to our advertising budget.
SPREE - THE MARKET PLAN
SITUATION ANALYSIS
General's core business is industrial timing devices and consumer clocks, based on
skills in manufacturing high quality timing movements and plastic casings. This
market plan is based on providing consumers with a high quality, innovative watch. It
will be offered in a variety of styles for both men and women. The casing and
movement has other potential applications not discussed in this plan.
Our 1995 profits of 30 million dollars represent 7.5 percent of total sales. Sales
growth has slowed to a current level of 5 percent annually. Growth in current markets
is expected to be limited. The Spree watch is one of several projects with the potential
to improve General's growth rate.
Market Analysis
The Spree watch will compete directly with several other branded fashion watches.
The market size for branded fashion watches is forecast to be $524 million retail
dollars in 1998, growing to $721 million by 2002. Annual market growth is expected
to exceed six percent through 2002, exceeding our current annual sales growth.
Market Segments
Table 1: Market Segments by Age
25-34 33 19 1.74
The highest purchase prevalence is those
from 25 to 34 who purchase 74 percent
35-54 35 40 0.88
more watches per capita than those the
55+ 13 29 0.45 average consumer. Purchase behavior is
Consumers are reached through five types of outlets... We currently have access to
four of these channels, representing 75 percent of watch sales. Channel development
is necessary to reach the total watch market. A majority of branded fashion watches
are currently purchased at department stores. We will take advantage of our strong
distribution through department, discount, and drug stores to assure widespread
availability of Spree watches. Jewelry store channel development will be deferred
until we are established in our traditional retail channels.
Competitive Analysis
Company Analysis
General currently distributes products through channels accounting for 75 percent of
watch sales. Branded fashion watch sales are growing faster than our current product
lines. Our innovative product, product design skills, strong manufacturing skills, and
experience in distributing consumer clocks provide an opportunity for entry and
growth in this market.
SWOT Analysis
Strengths
Weaknesses
Opportunities
Large market
Threats
OBJECTIVES
Market share of three percent of the branded fashion watch market in the first year [sales
of over 8 million dollars].
Project break-even in 1998.
MARKETING STRATEGIES
General will introduce a new product, the innovative Spree watch, using penetration
pricing, extensive advertising, and expanded distribution in order to increase our
revenues and growth rate.
ACTION PLAN
Product
We will introduce between 30 to 40 different designs in the first year. One quarter of
these will have a "metal" case, copying many of the traditional and modern metal
designs. These are targeted at consumers 25 and over. We will design a series
including licensed characters and unusual shapes for the market segment under 24
years of age. Swatch does not have exclusive licensing for Disney and Warner
Brothers characters or Coke. By using these and others we will have a variety of
product and character designs in our line. The most unusual aspect of our line will be
some very unusual shapes. Several of these will be geometric; hexagon, trapezoid,
oval, and diamond. For younger ages our technology allows the design of watches in
the shapes of cartoon character faces.
Price
The Spree watch will be sold for a suggested retail price of $45. We believe that we
have product quality and feature advantages, encouraging the use of a price slightly
exceeding Swatch. This pricing strategy, coupled with our efficient production
methods, aids in achieving our relatively high market share for a new product entry.
Distribution
We will introduce Spree in the northeast but within the first year sell to the national
market. With our current strong distribution channels nationwide covering 75 percent
of watch sales, we will limit our potential if we restrict our distribution to specific
regional markets. Although we do not currently have jewelry stores, our distribution
will place watches in at least 75 percent of locations in the United States. We will use
current normal distributor markups.
Promotion
Five new sales representatives will be added to assist in the development of new
distribution outlets. A sales trainer will be hired to train the sales force in the new
product. This will be within our $500,000 sales support budget based on an average
salary and benefits cost of $100,000 for each position.
The advertising level for the four leading firms can be compared by determining the
ratio of voice share (% of total advertising dollars of $20 million) divided by the
market share as shown in Table 3. Consumers will not know our brand; therefore, we
will have to advertise more aggressively to achieve brand awareness. Although our
market share goal in 1998 is three percent, we will set advertising at one million
dollars. This will achieve an advertising voice/market index considerably higher than
our competition.
Table 3: Fashion Watch Advertising and Voice
Media will be targeted to our major market segments; women between 18 and 24 and
between 25 and 34. Smaller amounts will be directed to other segments.
In conclusion, we will invest one million dollars in the Spree watch project. We can
achieve sufficient market share to achieve our financial and marketing objectives.
During the next five years the market is expected to grow and our costs are expected
to decline with experience increasing unit contribution. Our greatest challenge will be
tracking the market's tastes in watch design and meeting and leading these with
creative and innovative designs.
CONTINGENCY PLANS
Table 4: Impact of Advertising Levels on Financial Results
TOTAL AD BUDGET BREAK EVEN YEAR NET PRESENT
It is not expected that there will be increased
VALUE IN MIL. $
$2,500,000 1998 $35.8
3,000,000 1999 34.0
price competition due to the entry of the
3,500,000 1999 30.4 Spree watch. Increased advertising, however,
4,000,000 1999 28.6 might lead to an increase in industry
FINANCIAL APPENDIX
TABLE 1: PRO-FORMA INCOME STATEMENT AT $50 PRICE