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Mobillite Satellite phones Aron Butler Caitlin Allard Kristina Cole Jill Buote John Gordon
Why Choose Mobillite? l These phones provide communication in even the most secluded areas of the planet, including oceans (1) l They are small, light, and durable. perfect for any type of business or leisurely travel l Made with nalgene plastic (high-density polyethylene) which is stronger than other plastics and is environmentally friendly (2) l Uses LEO (low earth orbit) satellite technology l l l Provides worldwide wireless coverage with no gaps Orbit the earth at high speed, low altitude orbits Must fly complete orbits, further guaranteeing complete coverage over every area by at least one satellite at all times (3)
The Target Market l People whose jobs require travel and unrestricted communication with the rest of the world including: l Professional/ scientific (researchers) (A) l l l Financers/insurance companies (B) l l l Size of segment (1, 729, 992) Total average income (31, 781) Foresters (D) l l l Size of segment (5, 575, 813) Total average income (46, 297) Agricultural management (C) l l l Size of segment (6, 125, 13) Total average income (60, 327) Size of segment (1, 249, 000) Total average income (26, 146) Miners (E) l l Size of segment (480, 992) Total average income (51, 207) (4)
Product Demand l In areas where there is a high risk for natural disasters (specifically hurricanes such as Katrina) there is a strong demand for satellite phones l In 2005 alone, one company alone sold over 1000 phones during the month of September l l This remained the same during the first half of the 2006 hurricane season 2007 is expected to be the same with purchases and activations of the satellite phones (5)
NAICS Code l 334220 (6)
Market Size and Growth l In the last five years there has been a tremendous growth in the satellite phone market l l 30% average sales growth each year for the past five years Demand for rental units have almost doubled every year for the same period Public awareness for satellite phones has increased due to terrorist attacks and natural disasters There has been an increased interest by business and government agencies (7) l However, many leading satellite phone companies have suffered great dept and bankruptcy due to lack of subscribers, even though there has been increased awareness people still are not purchasing satellite phones l Globalstar’s stock is down more than 90% from a year ago (8) l The estimated market size for 2002 was 42 million users, but the market never reached that size, there is not much of a demand (9)
Product Life Cycle l Satellite phones have very low growth and profits due to the lack of interest in satellite phones l When satellite phones first came out, the company lost money rather than earn money due to lack of public knowledge and need l Sales increase during hurricane seasons and times of other natural disasters (10)
Competitors l The main competitors for Mobillite are: l l Inmarsat Globalstar Iridium (11) Mobillite is a better product! l Cheaper to rent or buy l l Made of a stronger plastic (more durable) The smallest of all satellite phones l l Dollar per minute calling fees Receiver of the call pays nothing attachable antenna Uses LEO satellite technology which is far more dependable than the commonly used geostationary services
Start Up Costs l Mobillite could take out a $500, 000 loan to start off with from a federal bank which would cover the costs of: l l l Office equipment and supplies- $25, 000 satellite equipment-$125, 000 rent for the building- $100, 000 utilities and salary for workers-$ 200, 000 advertisements- $50, 000 We could also raise capital by offering stocks and shares to the general public
Test Marketing Plan l In order to make Mobillite known to the public we intend to advertise on radio stations and billboards in major cities l We will test Mobillite in Monterey, California. l Not a major city l May be subdued to earthquakes and forest fires. l Fairly wealthy city with people that could afford to use our phone
Reduce, Reuse, Recycle l With toxic elements like lead and mercury found in each mobile unit, it is important to keep satellite phones out of landfills and incinerators. (12) l There a number of Charities that accept the donation of old mobile phones (including cell phones and satellite phones) l Wireless Foundation’s cell phone recycling programs l l l Donate A Phone recycles phones to raise funds for a number of charities Call to protect collects retired phones to give to victims of domestic violence for use as a lifeline (13) If the user of a Mobillite satellite phone returns they old, used phone to us at the end of use, the user will receive a check reward of $25
Channel Type l Mobillite will use C 1 (direct marketing) and C 3 (producer to wholesaler to retailer to customer) l l We will be using a merchant wholesaler who will store our satellite phones for us Mobillite will be sold both online and in stores, so to avoid any pricing conflicts, Mobillite will be sold to the merchants at a discount price, who will sell to the retailers at a discount price. The online price will match the prices of the phones in the stores l Mobillite will use selective market coverage, focusing on areas where there are high risks for natural disasters l Mobillite will not be franchising
Location l Mobillite will be located in Monterey, California l California has a population of 36, 457, 549 (14) l Eighth wealthiest state, so most of the people should be able to afford our phone l High risk for natural disasters
Inventory Management l The merchants will be warehousing Mobillite phones for us l Mobillite will increase production during the summer and winter to prepare for hurricane seasons which generally happen in the fall and spring l Mobillite will use air as its method of transportation because it is quick and we want our product to be readily available to our customers in case of sudden natural disasters. l Air is the best method of transportation for small objects
Projected Income Statement Process l Step A: # of units for the 1 st year = 95, 000 units l Step B: Labor = 45 Materials = 90 Benefits = 20 Total = 155 units • Step C: L = 45 x 95, 000 = 4, 275, 000 M = 90 x 95, 000 = 8, 550, 000 B = 20 x 95, 000 = 1, 900, 000 Total = 14, 725, 000
Process Continued l Step D: OPERATING EXPENCES Administration = 95, 000 x 5 = 475, 000 Lease/rent costs = 65, 000 Insurance = 35, 000 Total operating expenses = 575, 000 • Step E: ATC = average total cost ATC = (total cost of goods sold + total operating expenses) expected # of units sold (14, 725, 000 + 575, 000) = 15, 300, 000 = 161 95, 000 ATC = $161
Continued………. l Step F: Markup based on selling price Selling price= ATC per unit 1 - markup desired $ 161 = $ 460 per unit 1 -. 65 • Step G: Gross Profit = sales – cost of goods sold 44, 175, 000 – 15, 175, 000 = 29, 000 Net income before taxes = gross profit – total operating expenses 29, 000 – 575, 000 = 28, 425, 000 Tax Amount = net income before taxes x taxes(40%) 28, 425, 000 x. 40 = 11, 370, 000 Net income after taxes = before taxes – tax amount 28, 425, 000 – 11, 370, 000 = 17, 055, 000
Breakeven Points l Breakeven point in units = total fixed costs/unit contribution margin = unit sales price – unit variable cost CM = 460 – 155 = 305 BP = 575, 000 = 1, 885 IN UNITS 305 • Breakeven point in dollars = breakeven x unit sales price BP = 1, 885 x 460 = $867, 100 IN DOLLARS
Mobollite Satellite Phones Projected Income Statement Years 2008 - 2012 10% Growth each year Year 2008 2009 2010 2011 2012 $44, 175, 000 48, 592, 500 53, 451, 750 58, 796, 925 64, 676, 618 4, 725, 000 5, 197, 500 5, 717, 250 6, 288, 975 6, 917, 873 Materials 8, 550, 000 9, 405, 000 10, 345, 500 11, 380, 050 12, 518, 055 Benefits 1, 900, 000 2, 090, 000 2, 299, 000 2, 528, 900 2, 781, 790 15, 175, 000 16, 692, 500 18, 361, 750 20, 197, 925 22, 217, 718 29, 000 31, 900, 000 35, 090, 000 38, 599, 000 42, 458, 900 475, 000 475, 000 lease/Rent costs 65, 000 65, 000 Insurance 35, 000 35, 000 575, 000 575, 000 $28, 425, 000 31, 325, 000 34, 515, 000 38, 024, 000 41, 883, 900 40% 40% 40% Tax amount 11, 370, 000 12, 530, 000 13, 806, 000 15, 209, 600 Net income after taxes 17, 055, 000 18, 795, 000 20, 709, 000 22, 814, 400 26, 674, 300 Sales Costs of goods sold: Labor Total cost of goods sold Gross profit Operating expenses: administration Total operating expenses Net income before taxes Taxes
Pricing Strategy l We will first use Reference pricing by looking at our competitors prices in order to mark our cost down in hopes of attracting more costumers l Penetration will then be our main strategy by setting a lower price to attract buyers to our satellite phone company instead of our competitors l By setting a lower price we hope that our satellite phone will become further globalized and create a higher demand, which we intend to meet! l Our price has been determined by mark up based on selling price, which will leave our company with a good profit Selling price = ATC Per unit 1 – Mark – up desired • Selling Price = $460 $161 = $460 1 -. 65
Concerns l Our pricing strategies are not to raise any concerns other than that of the reactions of our competitors, which may result with them trying to lower their price as well. l However, other satellite phones cost about $200 more than ours and will only create competition if other companies rethink and execute new strategies. l When and if this does occur our company will have plenty of warning and time to rethink our strategy as well. Considering the fact that they would have more steps to take than us because our satellite phone is already unique and costs a lot less
Discounts & Shipping l Cash discounts and quantity discounts will not be an issue because our product is expected to be needed almost as soon as it is ordered, and in small quantities. l If we were to give a cash discount almost all buyers would meet the standards, plus we are also selling our product online, which must be paid the minute its ordered l Our shipping prices will only have an effect on the buyer depending on their location in comparison to our shipping stations. l We would like standard shipping to cost about $4. 95, but if more than 3 satellite phone are purchased for the same shipping location then shipping will be free. However, we do not expect this to occur often.
Public Relations Campaign • • Objective: Through our campaign we aim to build strong relations among our costumers, the media, and communities creating awareness about our product and exactly what our product can and will provide, that being assistance to attain or feel relief. Channel: We will be using sponsorship to support NPR (National Public Radio), which is a non-profit internationally acclaimed producer and distributor of noncommercial news, talk, and entertainment programming. We will also sponsor KPBS and WJCT. By sponsoring them we will receive a 10 second on air acknowledgement for our financial support during these programs. Sooooo, with this we are getting our message across while generating community goodwill.
Public Relations Campaign l Target: We would like our campaign to target those who can benefit and receive the most assistance from our product when and if needed. Meaning to say, that by distributing our product we would like the consumers to be fully aware that we are providing a “reliable” form of assistance for various situations as well as location. l Our target audience will therefore include customers as well as the communities which are more apt to being surrounded by natural disasters, such as hurricanes, earthquakes, brush fires, etc. Customers will therefore be those who are part of these communities, or those who travel, taking on the environment by means of hiking, white water rafting, or anything else that may call for immediate assistance.
Public Relations Campaign l Our Message: As a satellite phone provider we are trying to convey the message that our phone is a 100% reliable source for attaining assistance or relief at any time and place, while still being light, compact, and convenient. l Our message will be released before and after the times of occurrence for natural disasters based on location. For example, the months in which hurricane season occurs. Yet, our phone will still be available at anytime for those who need it for reasons of comfort on trips or adventures. l Evaluating PR: In order to evaluate we would compare our sales in year 1 to what we predicted for year 1, then from there make the proper adjustments needed. We would also monitor the internet to see how many users checked out the product and web site. This can help us discover why possible consumers may have turned away. We could also check out other satellite phone companies to see if their sales jumped at any point in time when our product may not have been doing well. Yet, we only predict success!
Advertising l • Advertising budget = (unit sales price x # of units for yr. 1) x 5% ($480 x 95, 000) x. 05 = $2, 280, 000 mil Media forms: Radio- We will be using a few different radio stations, those being ( NPR, WERZ, KPBS, and, WJCT ). We feel that these stations will target a variety of generations and not just the youth of today. This radio advertisement will consist of our general message and where you can find further info. Billboard- Our billboard will be eye catching and straight to the point, so it catches the eye when travelers are driving by. Anything to wordy wouldn’t make an impact.
Billboard Provides the ability to communicate any time, anywhere, with anyone, under any circumstance. For more information visit us at Mobillitephones. com or tune into NPR, 107. 9, 89. 5, OR 89. 9
Scheduling l Radio adds will be launched morning, noon, and night during prime hours morning – 6 -9 am Afternoon – 11 am– 1 pm Night – 4– 7 pm l Our billboards and radio adds will be launched before and after disastrous seasons. These are the seasons: Southwest (brushfires) December– June Atlantic & Central Pacific (hurricanes) June – November
Cost of Advertising Audience Cost per ad/ add slots Cost per Thousand Households (CPM) NPR (Nation Public Radio Sponsor) 40, 000 $650, 000 $16. 25 WERZ- 107. 9 FM (Portsmouth) 15, 000 KPBS- 89. 5 FM (San Diego Sponsor) 21, 000 $300, 000 $14. 29 WJCT- 89. 9 FM (Jacksonville sponsor) 18, 000 $400, 000 $22. 22 Billboards (Fl, CA, NE area) 65, 000 $125, 000 x 6 $11. 54 = 750, 000 $60, 000 X 3 $12 (three time slots) = 180, 000
Advertising l Theme: Our theme will consist of making it know that our product is fully reliable and convenient in any situation or location providing assistance to attain or feel relief. l Types of Advertising: Competitive- We will be competing with our characteristics, being that our satellite phone is smaller and compact. Pioneer- Through pioneer we will be educating our consumers about our product because many are uneducated when it comes to satellite phones. l Evaluation: We will evaluate by sending and taking a pole from our costumers, but also by looking at our sales.
Sales Objective l Mobillite will have a trial period of 30 days to sample our product for FREE! If our phone is not purchased, the consumer must return our phone with a required questioner explaining why they didn’t want the phone. l To ensure reliablity, we will take down all consumers credit information to protect us from theft through this trial. If the phone is not returned or bought after 30 days, we will charge their account, otherwise, this trial period is free of charge!
Sales Promotion l In order to promote our phone, we will set up a demo in the retailers we intend on selling our phone in, directing specifically towards the consumer l l l Circuit City Radio Shack Best Buy Dicks Sporting goods We will also use price reduction. If our phone is purchased during the trial period, the cost will be reduced from $460 to $400
Promotion Scheduling l Since Mobillite production is increased during the seasons before common natural disaster seasons (summer and winter), our promotion will also take place during this time since it is leading up to the most important and crucial time to have our satellite phone
Promotion Survey l To tell how well our demos went, people will be offered a survey rating what they thought of our phone l We will also hand out cards with our website, monitor how many people are accessing our website
Key Points of Mobillte l Strong and dependable l No limit to service l Smaller and significantly cheaper than our competitors phones
Consumer Objections l Since many people don’t know a lot about satellite phones, some concerns or complaints may be: l Consumers might feel that our phone is too large compared to the standard cell phone size l Our phone does not offer extra features such as cameras, music, and internet that cell phones offer
Overcoming these objections l l Our phone offers around the world service that normal cell phones cannot provide without a service fee The point of our phone is not to use as a toy, its purpose is to be a reliable tool in reaching help in case of natural disasters, car accidents in remote areas, and as an aid to workers who are often placed in remote areas l l l Miners Forestry/ agricultural workers scientists
Type of Close l Mobillite will use an urgency close, regarding the end of our trial period. We will use our 30 day trial period and the discounted price during this time as motive to buy our phone, because it wont last forever!
Follow Up Procedures l In order to avoid post cognitive dissonance Mobillite will offer those who purchase this product a charger, an extra battery, a water proof hard case, a portable antenna for use in a car, and a one year warranty, all for free! l We will also provide a Referral rewards program: if a consumer tells a friend about Mobillite and they too purchase our product then both will receive a free Mobillite gift Stock in the Mobillite company is also available l If Mobillite is purchased during expected hurricane seasons, we will provide a free hurricane emergency kit l l useful for any natural disaster
Sales Force l l Product line will be the way we structure our sales force. The salespeople of Mobillite will be fully knowledgeable about our product, in order to provide help and answers to the consumers Our sales force will be compensated and motivated by salary commission. Our employees will have a set salary, however, bonuses will be given based on how many phones the salespeople are selling l l l Mobillite is a very pleasant environment filled with people who care about our product Our hours are flexible depending on the employees personal situation Opportunities to advance in the workplace are available to those with outstanding sales records
Resources 1. Ezine Articles. (2007) http: //ezinearticles. com/? Satellite-Phone-Benefits-and-Information&id=382575 . Last updated 9 Oct. 2007 2. Wikipedia. High density polyethylene http: //en. wikipedia. org/wiki/HDPE 3. Wikipedia. Satellite Phone. Last updated 9 Oct. 2007 http: //en. wikipedia. org/wiki/Satellite_phone 4. U. S. Census Bureau. (2006) American Community Survey. http: //prudence. franklinpierce. edu/exchweb/bin/redir. asp? URL=http: //factfinder. census. gov/ser vlet/STTable? _bm=y%26 -geo_id=01000 US%26 -qr_name=ACS_2006_EST_G 00_S 2404%26 ds_name=ACS_2006_EST_G 00_%26 -_lang=en%26 -redo. Log=false%26 -CONTEXT=st 5. Global Com. Are You prepared for 2007? (2006) http: //www. globalcomsatphone. com/globalcom/2007. html
Resources (cont) 6. U. S. Census Bureau. Retrieved Sept. 17 2007 http: //www. census. gov/cgi-bin/epcd/srchnaics 07 defs 7. Global Com. The Future of satellite Phone Market Looks Bright. Retrieved Oct. 9 2007 http: //www. globalcomsatphone. com/articles/future. html 8. Dow Jones & Company Inc. Retrieved 9 Oct. 2007 http: //proquest. emi. com 9. New York Times. Planet Earth Calling Iridium; Can the Satellite Phone Service Achieve a Soft Landing? Retrieved Oct. 9 2007 http: //query. nytimes. com/gst/fullpage. html? res=9 C 0 DE 1 DD 1 E 3 AF 934 A 3575 AC 0 A 96 F 958260&se c=&spon=&pagewanted=2 10. Product Life Cycle. Retrieved Oct. 9 2007 http: //images. google. com/imgres? imgurl=http: //www. atkinson. yorku. ca/~lripley/zchtplc. jpg&imgrefurl=http: //www atkinson. yorku. ca/~lripley/im. Uproduct. htm&h=325&w=500&sz=14&hl=en&start=7&um=1&tbnid=6 e. RAnmgz. F 1 j EM: &tbnh=85&tbnw=130&prev=/images%3 Fq%3 Dproduct%2 Blife%2 Bcycle%26 svnum%3 D 10%26 um%3 D 1% 6 hl%3 Den%26 sa%3 DN
Resources (cont) 11. Mackay. Retrieved 17 Sept. 2007 http: //www. mackaysatellite. com/ 12. NBC Newschannel. The Environment and You. Retrieved 17 Sept. 2007 http: //www. kpvi. com/global/story. asp? s=6619867 13. Technobabble. Cell Phone Recycling Makes Good Cents. Retrieved 17 Sept. 2007 http: //www. lockergnome. com/nexus/technobabble/2005/01/26/cell-phone-recycling-makes-good-cents/ 14. US Census Bureau. Retrieved 25 Oct. 2007 http: //quickfacts. census. gov/qfd/states/06000. html