Adventure Travel Sample Marketing Plan 4y2be
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Adventure Travel International (ATI) — 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 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 Macroenvironment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 2 3 3 4 4 5 5 6 6 6 7 8 8 8 9
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 Marketing Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9 9 9 10 10 10 11 11 12 12 12 13
4.0
Financials, Budgets, and Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.1 Sales by Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.1 Expenses by Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Linking Sales and Expenses to Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 Contribution Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Implementation Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Marketing Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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5.0
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Adventure Travel Int'l. -- Sample Plan 1.0 Executive Summary
Adventure Travel International (ATI) will begin operations in September, 1999 and provide adventure, sport/travel packages to people in the Pacific Northwest, specifically the greater Woodville area. The founders and employees of ATI are experienced travel-industry professionals and ionate about the activities ATI will promote and offer.
2.0 Situation Analysis
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An opportunity for ATI's success exists because the national tourism and travel industry is growing 4% and adventure travel 10% annually. Further, the Woodville adventure travel market is growing at least 12% annually and has no providers who specialize solely in adventure travel. ATI is poised to take advantage of this growth and lack of competition with an experienced staff, excellent location, and effective management and marketing. The Woodville area, like much of the Pacific Northwest, has a large concentration of outdoor recreation enthusiasts. These health-conscious individuals, couples, and groups interested in popular adventure sports, such as skiing, kayaking, trekking, etc., are ATI's primary customers. ATI's target market is an exploitable niche and ATI will provide a specialized and thus differentiated service. Prices will be competitive with the remainder of the market. The company's estimated sales for the first year of operations is $534,607, increasing 10% annually for the next two years.
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According to the Department of Commerce, the U.S. travel and tourism industry is the nation's third largest retail industry and will be number one by the year 2000. Revenues from travel have increased approximately 100% in the last decade with U.S. travel agencies producing over $100 billion in revenues each year. Adventure travel, a segment of the travel and tourism industry, is growing at least 10% per year. More than 50% of the U.S. adult traveling population, or 147 million people, have taken an adventure trip in their lifetime, 98 million in the past five years. Thirty-one million adults have engaged in hard adventure activities like whitewater rafting, scuba diving, and mountain biking. An additional 25 million engaged in both a hard- and soft-adventure activity. Activities most commonly participated in during adventure vacations: camping (85%), hiking (74%), skiing (51%), snorkeling or scuba diving (30%), sailing (26%), kayaking or whitewater rafting (24%), and biking trips (24%). Customers tend to be young and affluent, ages 18-34, and one fourth are from households with annual incomes of $75,000 or more. In addition, statistics show that 8,000 U.S. companies offered adventure packages that generated $7 billion in 1997. There was a 66% increase in executive participation in adventure travel between 1992 and 1996. California holds the largest population of adventure travelers, who tend to live in urban areas. ATI will be located in an urban area within the state of California. In addition, it will be the only adventure travel agency in an area with 300,000 people and a large concentration of outdoor recreation enthusiasts and customers who match ATI's target profile.
Planning an adventure trip requires knowledge of the travel industry and popular adventure sport destinations, as well as adventure travel activities. Adventure travel customers are a specialty group. These are primarily young professionals who often lack the time and experience necessary to effectively plan an adventure trip on their own. ATI will communicate its ability to meet the demands of this market and fill this need.
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Adventure Travel Int'l. -- Sample Plan 2.1 Market Summary
The travel and tourism market is separated into two main categories, business and leisure travel. Each contribute about 45% to total revenues. The remainder of revenues are generated from combined business/leisure trips. The market is further separated into domestic and international travel. Domestic travel s for approximately 70% of industry revenues. Business travel can be divided into two categories, the medium to large corporate , and the small independent businessman. Leisure travelers are classified according to the types of trips they take, income, or age. The four primary leisure travel groups are: Adventure, Special-Interest, R&R, Honeymoons & Sightseeing Trips. High-Income Travelers. Budget-Conscious Travelers. Families, Students & Seniors.
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Adventure travel generates approximately $15 billion of the approximately $100 billion-dollar annual industry revenues. Approximately $2-4 billion of these revenues come from California adventure travelers. Based on these and other figures, ATI estimates the Woodville adventure travel market to be approximately $6 million annually. ATI estimates that it will capture about 8% of this market.
Target Markets
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National Adventure Travelers Woodville Adventure Travelers Internet
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Table: Market Analysis Market Analysis Potential Customers National Adventure Travelers Woodville Adventure Travelers Internet Total
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Adventure Travel Int'l. -- Sample Plan
Growth
2004
2005
2006
2007
2008
CAGR
10%
9,000,000
9,900,000
10,890,000
11,979,000
13,176,900
10.00%
15%
100,000
115,000
132,250
152,088
174,901
15.00%
20% 12.78%
3,000,000 12,100,000
3,600,000 13,615,000
4,320,000 15,342,250
5,184,000 17,315,088
6,220,800 19,572,601
20.00% 12.78%
2.1.1 Market Demographics
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Adventure travel falls primarily under the leisure travel category. Revenues from leisure travel earned by U.S. travel agencies exceed $50 billion annually. Adventure travel is a subcategory of leisure travel and can be further broken down into hard and soft adventure travel. Both hard and soft adventures involve physical, athletic activities. Hard adventure activities, as the name suggests, generally involve risk and require substantial athletic competence. Soft adventure activities are less physically demanding and more ive than their hard adventure counterparts.
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Adventure travelers are slightly more likely to be men age 18-34. However an increasing number of adventure travelers are women (some statistics suggest that women comprise 49% of the adventure market). Men on average spend more than women on their adventure travels. ATI's primary customers are married couples, ages 25-35, with children and household incomes over $50,000. ATI will be located in the heart of the Pacific Northwest. The natural beauty and abundance of outdoor activities attract many fitness oriented individuals. Per capita, the area has more people than any other in the nation who actively participate in mountain and water sports, such as skiing, climbing, kayaking, whitewater rafting, mountain biking, etc. These are the people in ATI's target market. ATI will focus on the sale and promotion of adventure travel primarily to individuals, but also to corporate clients in the Woodville area.
2.1.2 Market Needs
Adventure travel activities are a specialized product, and first-hand knowledge of these activities is necessary in order to effectively promote and sell them. Many potential customers are unsure of the location they wish to reach. Part of the value associated with travel agencies is the knowledge they possess about destinations. Customers look to the agency to provide them with sound advice for a competitive price. ATI is confident in its ability to do so. ATI can save the customer time and money, and help to ensure that they are satisfied with their vacation.
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Adventure Travel Int'l. -- Sample Plan 2.1.3 Market Trends
One notable trend in the travel industry is increased deregulation. Deregulation has increased competition and the need for differentiation. In many cases, the prices of airfare and other travel-related services has dropped. Additional trends include caps on agency commissions by many of the larger airlines, increases in adventure travel, and reduction of profit margins. More than 50% of the U.S. adult traveling population, or 147 million people, have taken an adventure trip in their lifetime, 98 million in the past five years. Approximately 31 million adults have engaged in hard adventure activities like whitewater rafting, scuba diving and mountain biking. An additional 25 million engaged in both a hard and soft adventure activity. The growth trend in adventure travel is predicted to continue.
14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0
2005
2006
2007
National Adventure Travelers Woodville Adventure Travelers Internet
2008
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Market Forecast
2.1.4 Market Growth
The travel industry is growing. Reasons for this growth include a healthy domestic economy and devaluation of currency in other regions which has made travel less expensive for U.S. residents. Leisure travel increased by 3.2% in 1997 and 2.0% in 1998. The healthy economy has increased business which in turn boosted domestic business travel 4.8% in 1997 and 3.6% in 1998. Adventure travel, growing 10% annually, is one of the fastest growing segments of the travel industry. Statistics show that 8,000 U.S. companies offered adventure packages that generated $7 billion in 1997. There also has been a 66% increase in executive participation in adventure travel between 1992 and 1996.
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Adventure Travel Int'l. -- Sample Plan
Target Market Growth 20.00% 15.00% 10.00% 5.00%
2.2 SWOT Analysis
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0.00%
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In the following four sections are the most relevant issues to ATI's successful operation. ATI's strengths include its management, experienced staff, marketing savvy, and targeted focus. ATI will capitalize on these, and other strengths, to take advantage of opportunities and manage threats. Firm weaknesses are primarily those inherent in a start-up venture and are discussed in one of the following sections.
2.2.1 Strengths
• MANAGEMENT: ATI's manager has a successful record in this industry. His experience and the network of valuable connections he has developed will contribute greatly to ATI's success. • LOCATION: ATI will be ideally located. The Pacific Northwest is a mecca for people who meet ATI's target audience profile. In addition, Woodville is located 45 miles from the coast and less than two hours from the mountains. Five rivers are within a twohour drive. These geographic features will continue to attract potential customers. • EXPERIENCED STAFF: The ATI team is experienced in the travel business and in adventure sports. All have over five years experience. Moreover, they are willing to sacrifice extra time and effort to build a successful business. Along with the intangible benefits derived from succeeding in an independent endeavor, ATI will offer profit sharing and potential partnership opportunities to its ground-floor . • POPULARITY OF ADVENTURE TRAVEL: Adventure activities are very popular, and ATI is betting that the popularity will continue to grow. Many of the adventure sports, such as kayaking, mountainbiking, alpine and rock climbing, have had a kind of cult following for many years. However, in the last five years, these sports have started to go mainstream.
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Adventure Travel Int'l. -- Sample Plan 2.2.2 Weaknesses
• START-UP STATUS: ATI is a start-up and the odds are stacked against small start-up companies. • LIMITED PERSONNEL: Though ATI's staff is exceptional, they will be faced with long hours for little pay during the first two years of operation. • FINANCING: Preliminary estimates of sales and expenditures suggest that ATI will remain financially stable. However, unforeseen expenditures or poor sales will threaten ATI's cash position, which will be particularly vulnerable in year one.
2.2.3 Opportunities
2.2.4 Threats
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• GROWTH MARKET: The national adventure travel market is growing 10% annually, and preliminary estimates suggest that the Woodville market exceeds that growth rate. • POTENTIAL TO ACHIEVE SALES FROM THE NATIONAL MARKET: As ATI establishes itself and gains financial stability, it can begin to market its services nationally. ATI plans to begin this effort via a World Wide Web campaign in the first year of operation and diversify its communications efforts in years two and three. • POTENTIAL TO BECOME A PREMIER PROVIDER: ATI has the management and staff to produce a top-quality service. • VERTICAL INTEGRATION: The potential to integrate services and add branches exists.
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• INTERNET AND PRICE COMPETITION: When the airlines were deregulated, price competition increased. Further, the Internet has provided a sales medium for consolidators who compete on price and has also given consumers the ability to plan and arrange trips for themselves. Thus, the traditional agency faces greater competition. • LOCAL COMPETITION (EXISTING AND POTENTIAL): There are no agencies in the Woodville area that specialize solely in adventure travel. However, any one of the approximately 30 can book an adventure trip. Moreover, additional adventure travel specialists may follow ATI's lead. • ECONOMIC DOWNTURN: The strong domestic economy has been good for the travel and tourism industry. Continued growth is anticipated. However, unforeseen or unanticipated economic recession would reduce disposable income and threaten ATI's sales.
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Adventure Travel Int'l. -- Sample Plan 2.3 Competition
In the travel industry, as in other industries, there are large national chains, small homebased businesses, consolidators on the Internet, etc. hip numbers of travel-related associations give some indication of the number of participants in this market. The American Society of Travel Agents (ASTA) reports 25,000 in 135 countries, most of whom are small businesses. The Association of Retail Travel Agencies (ARTA) has another 3,000 . In addition, there are many agencies not d with these associations but with one or more of the approximately 35 travel-industry organizations in the country. ATI has approximately 30 immediate competitors in the greater Woodville area, including two agencies that are branches of national travel agency chains. Direct national competitors include:
2.
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Rollins & Hayes: Based on the east coast, Rollins & Hayes is the most well known and respected adventure travel agency in the world. They have provided adventure travel packages for over 20 years and have successfully integrated travel agency services and adventure travel activities. This offers them complete control over the entire vacation. They have the advantage of an established reputation, high-quality trips, economies of scale, and strategic alliances. However, their packages are expensive and appeal primarily to a high-income clientele. Sundance Travel: Based in Colorado, Sundance is a traditional agency and has been in business for 10 years. They have gradually made the move towards becoming adventure travel specialists and are now recognized as such. Their strengths are experience, reputation, and financial solvency. Weaknesses may include high personnel and management turnover and the lack of a clear plan for future growth. Global Adventure Travel: Global was established in 1995 and has successfully established themselves as adventure travel specialists. They are based in the Los Angeles area. Global has done a good job positioning itself through successful marketing communications and management. The Los Angeles area contains a large adventure travel market. It is, however, a very competitive area.
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Competitor by Growth and Share
Rollins & Hayes Sundance Global Travel Northwest Woodville Travel Other
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Table: Growth and Share Analysis Growth and Share Competitor Rollins & Hayes Sundance Global Travel Northwest Woodville Travel Other Average Total
Price $1,100 $975 $950 $1,000 $965 $0
Growth Rate 3% 5% 10% 4% 0% 0%
$831.67 $4,990.00
3.67% 22.00%
2.4 Services
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Adventure Travel Int'l. -- Sample Plan
Market Share 23% 8% 7% 1% 1% 0% 6.63% 39.80%
2.5 Keys to Success
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ATI is a full service agency and sells standard travel agency goods and services, including airfare and travel packages. Additional services include assistance with ports, providing access to top-of-the-line equipment and supplies, and a superior offering that includes access to better than average terrain and activities, accommodations, and entertainment. The value added of ATI's offering is its knowledge and expertise, competitive rates, and specialty focus on adventure travel, which translate into increased satisfaction for the customer.
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• Effectively segment the travel market and target adventure travelers. • Successfully position ourselves as adventure travel specialists. • Communicate the differentiation and quality of our offering through personal interaction and media. • Develop a repeat-business base of loyal customers.
2.6 Critical Issues
• Market growth projections for the travel industry and for adventure travel are accurate. • National economic conditions, which are favorable to the travel industry, will not experience significant decline in the next five years. • International conditions will remain favorable for service providers. • Capability to produce effective, targeted communications that promote the benefits of adventure travel and ATI's specialty focus and services.
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Adventure Travel Int'l. -- Sample Plan 2.7 Macroenvironment
3.0 Marketing Strategy
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• Disposable income is high but leisure time is limited and contested by other responsibilities and recreation options. • Due to a good economy, travel and tourism is growing. • Population segments have different needs and wants. This requires effective target marketing. • Internet sales threaten the traditional firm, and technological advances require greater knowledge and sophistication in most industries. • International conditions, which are favorable, greatly effect the industry. Political unrest, military action, and other issues determine availability to many foreign destinations.
ATI believes that the goal of business is to create and keep customers. Its marketing strategy will reflect this goal as it builds its reputation in the Woodville area. Though ATI operates in the travel industry, it provides much more than travel. ATI provides adventure and freedom. Many of ATI's customers spend 50 weeks of the year in an office. ATI offers people the ability to get away and how much they love the challenge and excitement of an athletic endeavor. ATI will promote the benefits of adventure travel. These benefits include better health, excitement, personal growth, ear-to-ear grins, and a whole lot of fun. ATI will also promote the benefits of its services. These benefits include saving time and money, and confidence in the vacation's success.
3.1 Mission
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Adventure Travel International (ATI) is a travel agency that specializes in adventure travel. We provide consulting and custom travel arrangements and packages. ATI's mission is to become the foremost provider of adventure travel to the people of the Pacific Northwest. ATI's employees and owner are outdoor adventure and travel enthusiasts, as well as seasoned travel-industry professionals. ATI seeks to connect adventure travel newcomers and veterans with service providers, adventure activities, and accommodations that fit the client's desires, budget, and skill level.
3.2 Marketing Objectives
• Achieve an annual growth rate of at least 10%. • Promote adventure activities through strategic alliances with health clubs, local athletic organizations, and retailers. • By the end of year three, achieve 15% of sales through the Internet. • Become the market leader of adventure travel in the Woodville area.
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3.3 Financial Objectives
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Adventure Travel Int'l. -- Sample Plan
• Generate sales of approximately $550,000 in year one and increase sales 10% annually. • Capture and maintain a gross margin of 18-20%. • Achieve positive net worth by year two.
3.4 Target Marketing ATI will target the following groups:
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• Couples and individual adventure travelers: This is the customer group that meets the demographic profile for adventure travelers -- ages 25-35, married, with household income greater than $50,000. • Group adventure travelers: These are groups that belong to local athletic organizations, such as cycling or kayaking clubs. • Corporate adventure travelers: ATI will target local businesses in an attempt to secure corporate s. ATI plans to focus its initial efforts on the adventure travel market in the greater Woodville area. As ATI grows, marketing efforts will expand. The major purchasers that fit ATI's target market are located in urban areas within these states: California Florida New York Texas Illinois Nevada Hawaii New Jersey Pennsylvania Georgia
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1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
3.5 Positioning
For individual and corporate clients who wish to participate in adventure travel, ATI is the premier adventure travel agency in the Woodville area. ATI's experience with and enthusiasm for adventure travel is displayed in the exceptional service, value, and advice it provides for the customer.
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Adventure Travel Int'l. -- Sample Plan 3.6 Strategy Pyramids
STRATEGY 1: Develop brand recognition through the use of effective advertising, marketing communications and promotion. Tactic: Develop a marketing mix designed to target the Woodville market. •
Program: Print and electronic advertising campaign, using specialty publications and local radio as primary media. • Program: Use strategic alliances to conduct promotions and giveaways.
Tactic: Expand brand recognition to the national market through increased industry participation and WWW presence.
Program: Utilize the networking benefits of industry associations, trade shows, and publications. • Program: Develop and promote ATI's website. The availability of information and the ability to schedule and purchase online will be beneficial to the customer and ATI.
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•
STRATEGY 2: Increase revenues and reduce costs by establishing repeat and corporate customers. Tactic: Customer satisfaction program. •
Program: Focus ATI's efforts on customization of adventure travel and utilization of its core competencies. ATI would rather recommend that a potential customer purchase elsewhere than provide a trip outside of its expertise. • Program: Post purchase and post trip follow-up. Research indicates that the communication between the firm and the customer after the sale positively influences repeat purchase. Tactic: Corporate acquisition.
Program: The corporate sales program will depend upon specialized literature and personal promotion. Corporate s generate recurring revenue and will help diversify ATI's sources of income. • Program: Corporate giveaway promotion. Trips will be awarded as prizes and will be promoted via local radio.
M ar ke tin g
•
3.7 Marketing Mix
ATI will employ a wide range of advertising communications and promotion to achieve its marketing goals. Research on the demographics of ATI's target market suggest that the most effective communications will come through advertising in several specialty publications and via local radio. In addition, direct interaction or promotion at health clubs, shopping malls, sporting events, etc. will be part of ATI's marketing mix.
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3.7.1 Services and Service Marketing
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Adventure Travel Int'l. -- Sample Plan
3.7.2 Pricing
Pla nP ro
ATI will sell standard travel agency goods and services including airfare and travel packages. Additional services will include assistance with ports, providing access to top-of-the-line equipment and supplies, and a superior offering that includes access to better than average terrain and activities, accommodations, and entertainment. The value added of ATI's offering is its knowledge and expertise, competitive rates, and specialty focus on adventure travel, which will translate into increased assurance and satisfaction for the customer. ATI's decision to focus on adventure travel was made because economic indicators suggest that an increased demand for adventure travel services exists, the Woodville area does not have a true adventure travel specialist, and of the ATI team are experienced and enthusiastic about adventure travel activities. It is hoped that this enthusiasm will be communicated to the customer, and ATI's experience will translate into satisfaction and repeat business.
Much of ATI's pricing is determined by market standards. ATI will attempt to maintain margins of 10% on all airline travel. Margins on all other products and services vary depending upon the provider but are expected to average 20%. ATI will make every effort to maintain a competitive pricing policy. However, as ATI builds its reputation as the premier provider of adventure travel, it expects to earn the ability to charge a for its services.
3.7.3 Promotion
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During ATI's first year of operation, it will hold a grand opening and will organize and sponsor several athletic events. Events will include, among others, an off-road triathlon, 10k race and 5k fun run, and a mountain-bike race. ATI will provide various travel packages and other items as prizes. All ATI employees belong to local athletic clubs and will, through interaction with other , promote ATI's services. During the grand opening and other events, ATI will provide literature with information about trips and activities. Negotiations with area health clubs have begun and additional promotion will likely occur through these strategic alliances. Specialty rather than large national publications will serve as media vehicles for ATI advertising. Local radio stations will also be used. Personal selling will also occur, though phone solicitation will be limited. ATI plans to occasionally station sales personnel in locations around Woodville, such as shopping malls. ATI's goal is to develop personal familiarity between its employees and the community.
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3.8 Marketing Research
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Adventure Travel Int'l. -- Sample Plan
Ongoing industry analysis is conducted by several organizations, including the U.S. Department of Commerce, and is available for sale. Research on the travel and tourism industry will be purchased as necessary. Demographics and spending patterns of adventure travelers have been secured and used to formulate communications strategy. ATI will conduct customer surveys when a specific research problem is identified. ATI subscribes to several industry publications and will attend trade shows to stay abreast of relevant issues.
4.0 Financials, Budgets, and Forecasts
Pla nP ro
ATI's marketing budget for year one of operations is taken from the start-up investment and is equivalent to approximately 6% of anticipated first-year revenues. The marketing budget will be evaluated quarterly, and at the end of year one, adjustments will be made to advertising schedules, media vehicles, effective frequency, etc. as necessary. The following issues are relevant to ATI's marketing efforts: •
As a start-up, ATI has no baseline by which it can determine the effects of its marketing efforts on sales. Year two marketing activities will benefit from the financial results of year one operations. • The marketing budget has been established based on anticipated revenues. ATI plans to employ the use of more sophisticated budgeting methods as a baseline is established. • Much of ATI's marketing efforts will involve personal interaction with customers in the Woodville area. ATI must attempt to conserve resources when possible, especially in the early stages of operation. Sweat equity in marketing and other activities will be critical to ATI's success.
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4.1 Break-even Analysis
ATI's break-even analysis, including monthly sales break-even points, are located in the following table. Break-even calculations assume a 20% gross margin. ATI plans to improve its margin by year three or four. The improved margin will come as the result of economies of scale, strategic alliances, and ATI's position as a premier service provider. ATI will be able to raise prices without affecting demand. Fixed costs may increase slightly over the next two years.
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Adventure Travel Int'l. -- Sample Plan
Break-even Analysis $2,500 $2,000 $1,500 $1,000 $500 $0 ($500) ($1,000) ($1,500) $1,900
$3,800
$5,700
$7,600
$9,500
Pla nP ro
$0
Monthly break-even point
Break-even point = where line intersects with 0
Table: Break-even Analysis
Break-even Analysis: Monthly Units Break-even Monthly Revenue Break-even
Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost
5 $4,286
$950.00 $617.50 $1,500
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4.2 Sales Forecast
Detailed projections are located in the sales forecast table. ATI expects sales to be slow in the first, and possibly second quarter of operation. Sales growth is estimated at 10% annually through year three.
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Adventure Travel Int'l. -- Sample Plan
Monthly Sales Forecast
$80,000 $70,000 $60,000 $50,000
Woodville Market (Individual) National Market
$40,000
Internet
$30,000
Corporate Market
$10,000 $0
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$20,000
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Table: Sales Forecast
2005 $427,685 $42,768 $10,693 $53,461 $534,607
2006 $382,245 $70,568 $47,046 $88,210 $588,069
2007 $258,751 $97,032 $97,032 $194,063 $646,878
2008 $284,626 $106,735 $106,735 $213,469 $711,566
2009 $313,089 $117,409 $117,409 $234,816 $782,722
Direct Cost of Sales Woodville Market (Individual) National Market Internet Corporate Market Subtotal Direct Cost of Sales
2005 $342,148 $34,214 $8,554 $42,769 $427,686
2006 $301,974 $55,749 $37,166 $69,686 $464,575
2007 $199,238 $74,715 $74,715 $149,429 $498,096
2008 $219,162 $82,186 $82,186 $164,371 $547,906
2009 $241,078 $90,405 $90,405 $180,808 $602,696
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Sales Forecast Sales Woodville Market (Individual) National Market Internet Corporate Market Total Sales
4.2.1 Sales by Manager
ATI anticipates that the majority of revenues, 75-80% will come from individual customers in the Woodville area. This is especially true in the first two years of operation. The remainder of revenues will come from corporate clients and national customers who purchase via the Internet. By year three, ATI hopes to capture more sales from corporate and national customers, thus reducing its reliance on the Woodville area. Preliminary goals for year three are: • • • •
Woodville customers: 40%. Corporate customers: 30%. National Customers: 15%. Internet: 15%.
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Adventure Travel Int'l. -- Sample Plan 4.3 Expense Forecast
The marketing budget is between 5% to 6% of revenues. ATI's marketing director will assume responsibility for everything except the website development budget. All ATI staff are salaried, so labor hours, other than those included in the directors salary, are not included in the budget. They will, however, play a key role in many of the planned promotional activities. All are expected to take part in the promotion of ATI. There are no 9-5 positions.
Monthly Expense Budget
$2,000 $1,500 $1,000 $500 $0
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$2,500
Print and Radio Advertising Personal Selling and Promotion Other
Table: Marketing Expense Budget
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Marketing Expense Budget Print and Radio Advertising Personal Selling and Promotion Other
Total Sales and Marketing Expenses Percent of Sales Contribution Margin Contribution Margin / Sales
2005 $15,000 $8,500 $5,000 -----------$28,500 5.33% $78,421 14.67%
2006 $18,750 $10,625 $2,500 -----------$31,875 5.42% $91,619 15.58%
2007 $20,625 $11,688 $3,000 -----------$35,313 5.46% $113,469 17.54%
2008 $22,688 $12,856 $3,000 -----------$38,544 5.42% $125,116 17.58%
2009 $27,225 $15,428 $3,000 -----------$45,653 5.83% $134,374 17.17%
4.3.1 Expenses by Manager
The following chart details ATI's primary marketing. Jordan Barnes is responsible for the success of the programs and the proper management of the budget. Year two expenditures could easily double if ATI generates sufficient revenues. As efforts to communicate with the national and global markets increase, ATI expects to use several national publications for advertising. Doing so will be costly.
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4.4 Linking Sales and Expenses to Strategy
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Adventure Travel Int'l. -- Sample Plan
ATI's marketing efforts have been designed to improve sales. ATI's director of marketing will be responsible for tracking the various programs. If measurable results are not realized, changes will be made to the marketing mix. Other factors, such as economic recession, sales below estimates, high costs associated with the use of certain media, and others may influence ATI's marketing budget and mix.
Sales vs. Expenses Monthly $80,000
$60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0
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$70,000
Apr May Jun
Jul
Sales Expenses
Aug Sep Oct Nov Dec Jan Feb Mar
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4.5 Contribution Margin
ATI anticipates that contribution margin will improve beginning in year three. By then, ATI will have developed a better mixture of revenue sources, strategic alliances, and brand equity. Corporate s will bring higher contribution margins, as will other group trips. Suppliers tend to give price breaks if the agency can book larger groups. In addition, ATI plans to charge as much as 5% over the industry standard by the end of year three, as it will be recognized as an industry leader.
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Adventure Travel Int'l. -- Sample Plan
Contribution Margin Monthly $12,000 $10,000 $8,000 $6,000
$2,000 $0
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$4,000
Apr May Jun
Table: Contribution Margin Contribution Margin
Sales Direct Cost of Sales Other Variable Costs of Sales Total Cost of Sales Gross Margin Gross Margin %
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Marketing Expense Budget Print and Radio Advertising Personal Selling and Promotion Other
Total Sales and Marketing Expenses Percent of Sales Contribution Margin Contribution Margin / Sales
Jul
Aug Sep Oct Nov Dec Jan Feb Mar
2005 $534,607 $427,686 $0 -----------$427,686 $106,921 20.00%
2006 $588,069 $464,575 $0 -----------$464,575 $123,494 21.00%
2007 $646,878 $498,096 $0 -----------$498,096 $148,782 23.00%
2008 $711,566 $547,906 $0 -----------$547,906 $163,660 23.00%
2009 $782,722 $602,696 $0 -----------$602,696 $180,026 23.00%
2005 $15,000 $8,500 $5,000 -----------$28,500 5.33% $78,421 14.67%
2006 $18,750 $10,625 $2,500 -----------$31,875 5.42% $91,619 15.58%
2007 $20,625 $11,688 $3,000 -----------$35,313 5.46% $113,469 17.54%
2008 $22,688 $12,856 $3,000 -----------$38,544 5.42% $125,116 17.58%
2009 $27,225 $15,428 $3,000 -----------$45,653 5.83% $134,374 17.17%
5.0 Controls
ATI's marketing efforts will be reviewed quarterly. Variance between sales goals for the first year of operations and revenues will be ATI's only real source of comparison. ATI will seek customer on marketing efforts and may conduct surveys or focus groups to test ad effectiveness.
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Sa m ple
Adventure Travel Int'l. -- Sample Plan 5.1 Implementation Milestones
• ATI's grand opening event will take place in the first quarter. This will be a combined effort with a local rock gym, one of ATI's strategic alliances. The event will be hosted by a local radio station and will include a prize giveaway of an adventure travel package. • ATI will begin its corporate marketing in the first quarter and hopes to secure at least one corporate during that time. • ATI's website should be operational by the middle of the second quarter of operation. The website will be capable of online transactions with secure site protections. ATI banners will be placed at several World Wide Web locations. • Tracking of ad exposure will begin in the first month of operation. ATI has a designated 800 number that is only used in advertising.
Pla nP ro
Milestones
Media Campaign Strategic Alliance Development Grand Opening Promotion
First Trade Show
Web Site Completion Corporate Program
M ar ke tin g
Customer Satisfaction Program
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Table: Milestones
Milestones Milestone Media Campaign Strategic Alliance Development Grand Opening Promotion First Trade Show
Web Site Completion Corporate Program Customer Satisfaction Program Totals
Start Date 9/1/99 9/1/99 10/1/99
End Date 1/1/00 3/1/00 4/1/00
Budget $15,000 $2,000 $800
4/12/00
4/15/00
$1,000
9/1/99 9/1/99
12/1/99 7/1/00
$5,000 $1,000
Manager J. Barnes S. Delaney Staff S. Delaney & S. Taylor S. Delaney P. Mclellan
9/1/99
1/1/00
$1,000
S. Taylor
Department Marketing Marketing Marketing Marketing Management ing Customer Service
$25,800
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Adventure Travel Int'l. -- Sample Plan 5.2 Marketing Organization
Marketing Director Jordan Barnes will be responsible for the planning and implementation of ATI's Advertising, Communications, and Promotion activities. Mr. Barnes will work under the supervision of Shea Delaney and will instruct all ATI in their roles in the marketing activities. ATI may use marketing consultants from a local firm to help with strategy.
5.3 Contingency Planning
These are the issues that will most likely call for changes in ATI's operations. The threats and the manner with which they will be dealt are discussed:
Pla nP ro
INTERNET AND PRICE COMPETITION: When the airlines were deregulated, price competition increased. Further, the Internet has provided a sales medium for consolidators who compete on price, and has also given consumers the ability to plan and arrange trips for themselves. Thus the traditional agency faces greater competition. ATI plans to compete with other firms on the Internet by having its own website on which to conduct communications and sales. Price competition is a problem in any industry. ATI will not compete on price, mainly because it cannot win doing so. ATI will continue to communicate the benefits of its offering. It will attempt to remain competitively priced but will not defend its price structure.
M ar ke tin g
LOCAL COMPETITION (EXISTING AND POTENTIAL): There are no agencies in the Woodville area that specialize solely in adventure travel. However, any one of the approximately 30 agencies can book an adventure trip. Moreover, additional adventure travel specialists may follow ATI's lead. Competition is already present. It is likely that additional agencies may begin to present themselves as adventure travel specialists. It is also possible that new agencies will enter the Woodville market with a similar offering. ATI will attempt to establish itself as a market leader and maintain that position if new competitors emerge. Additional safeguards include ongoing analysis of additional segments of the travel market in which ATI might successfully participate. In addition, opportunities for vertical and horizontal integration will be examined. ECONOMIC DOWNTURN: The strong domestic economy has been good for the travel and tourism industry. Continued growth is anticipated. However, unforeseen or unanticipated economic recession would reduce disposable income and threaten ATI's sales. In the event of an economic downturn, ATI will continue to promote and likely expand its offering. ATI already operates on a skeleton staff, and aside from small budget cuts, there is little that can be done financially.
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Adventure Travel Int'l. -- Sample Plan Appendix Appendix Table: Sales Forecast Apr $20,000 $2,000 $500 $2,500 $25,000
May $22,000 $2,200 $550 $2,750 $27,500
Jun $24,200 $2,420 $605 $3,025 $30,250
Jul $26,620 $2,662 $666 $3,328 $33,276
Aug $29,282 $2,928 $732 $3,660 $36,602
Direct Cost of Sales Woodville Market (Individual) National Market Internet Corporate Market Subtotal Direct Cost of Sales
Apr $16,000 $1,600 $400 $2,000 $20,000
May $17,600 $1,760 $440 $2,200 $22,000
Jun $19,360 $1,936 $484 $2,420 $24,200
Jul $21,296 $2,130 $533 $2,662 $26,621
Aug $23,426 $2,342 $586 $2,928 $29,282
Sep $32,210 $3,221 $805 $4,026 $40,262
Oct $35,431 $3,543 $886 $4,429 $44,289
Nov $38,974 $3,897 $974 $4,872 $48,717
Dec $42,872 $4,287 $1,072 $5,359 $53,590
Jan $47,159 $4,716 $1,179 $5,895 $58,949
Feb $51,875 $5,188 $1,297 $6,484 $64,844
Mar $57,062 $5,706 $1,427 $7,133 $71,328
Sep $25,768 $2,577 $644 $3,221 $32,210
Oct $28,345 $2,834 $709 $3,543 $35,431
Nov $31,179 $3,118 $779 $3,898 $38,974
Dec $34,298 $3,430 $858 $4,287 $42,872
Jan $37,727 $3,773 $943 $4,716 $47,159
Feb $41,500 $4,150 $1,038 $5,187 $51,875
Mar $45,650 $4,565 $1,142 $5,706 $57,062
ar ke tin g
Pla nP ro
Sales Forecast Sales Woodville Market (Individual) National Market Internet Corporate Market Total Sales
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Adventure Travel Int'l. -- Sample Plan Appendix Appendix Table: Marketing Expense Budget Marketing Expense Budget Print and Radio Advertising Personal Selling and Promotion Other
May $1,250 $708 $417 -----------$2,375 8.64% $3,125 11.36%
Jun $1,250 $708 $417 -----------$2,375 7.85% $3,675 12.15%
Jul $1,250 $708 $417 -----------$2,375 7.14% $4,280 12.86%
Aug $1,250 $708 $417 -----------$2,375 6.49% $4,945 13.51%
Sep $1,250 $708 $417 -----------$2,375 5.90% $5,677 14.10%
Oct $1,250 $708 $417 -----------$2,375 5.36% $6,483 14.64%
Nov $1,250 $708 $417 -----------$2,375 4.88% $7,368 15.12%
Dec $1,250 $708 $417 -----------$2,375 4.43% $8,343 15.57%
Jan $1,250 $708 $417 -----------$2,375 4.03% $9,415 15.97%
Feb $1,250 $708 $417 -----------$2,375 3.66% $10,594 16.34%
Mar $1,250 $708 $417 -----------$2,375 3.33% $11,891 16.67%
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Pla nP ro
Total Sales and Marketing Expenses Percent of Sales Contribution Margin Contribution Margin / Sales
Apr $1,250 $708 $417 -----------$2,375 9.50% $2,625 10.50%
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Sa m pl
Adventure Travel Int'l. -- Sample Plan Appendix Appendix Table: Contribution Margin Contribution Margin
Marketing Expense Budget Print and Radio Advertising Personal Selling and Promotion Other Total Sales and Marketing Expenses Percent of Sales Contribution Margin Contribution Margin / Sales
May $27,500 $22,000 $0 -----------$22,000 $5,500 20.00%
Jun $30,250 $24,200 $0 -----------$24,200 $6,050 20.00%
Jul $33,276 $26,621 $0 -----------$26,621 $6,655 20.00%
Aug $36,602 $29,282 $0 -----------$29,282 $7,320 20.00%
Apr $1,250 $708 $417 -----------$2,375 9.50% $2,625 10.50%
May $1,250 $708 $417 -----------$2,375 8.64% $3,125 11.36%
Jun $1,250 $708 $417 -----------$2,375 7.85% $3,675 12.15%
Jul $1,250 $708 $417 -----------$2,375 7.14% $4,280 12.86%
Aug $1,250 $708 $417 -----------$2,375 6.49% $4,945 13.51%
Sep $40,262 $32,210 $0 -----------$32,210 $8,052 20.00%
Oct $44,289 $35,431 $0 -----------$35,431 $8,858 20.00%
Nov $48,717 $38,974 $0 -----------$38,974 $9,743 20.00%
Dec $53,590 $42,872 $0 -----------$42,872 $10,718 20.00%
Jan $58,949 $47,159 $0 -----------$47,159 $11,790 20.00%
Feb $64,844 $51,875 $0 -----------$51,875 $12,969 20.00%
Mar $71,328 $57,062 $0 -----------$57,062 $14,266 20.00%
Sep $1,250 $708 $417 -----------$2,375 5.90% $5,677 14.10%
Oct $1,250 $708 $417 -----------$2,375 5.36% $6,483 14.64%
Nov $1,250 $708 $417 -----------$2,375 4.88% $7,368 15.12%
Dec $1,250 $708 $417 -----------$2,375 4.43% $8,343 15.57%
Jan $1,250 $708 $417 -----------$2,375 4.03% $9,415 15.97%
Feb $1,250 $708 $417 -----------$2,375 3.66% $10,594 16.34%
Mar $1,250 $708 $417 -----------$2,375 3.33% $11,891 16.67%
Pla nP ro
Total Cost of Sales Gross Margin Gross Margin %
Apr $25,000 $20,000 $0 -----------$20,000 $5,000 20.00%
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Sales Direct Cost of Sales Other Variable Costs of Sales
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Adventure Travel International (ATI) — Sample Plan
This sample business plan was created using Marketing Plan Pro® —marketing planning software published by Palo Alto Software.
Pla nP ro
This plan may be edited using Marketing Plan Pro and is one of 70+ sample plans available from within the software. To learn more about Marketing Plan Pro and other planning products for small and medium sized businesses, visit us at www.paloalto.com.
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This is a sample marketing plan and the names, locations and numbers may have been changed, and substantial portions of the original plan text may have been omitted to preserve confidentiality and proprietary information.
M ar ke tin g
You are welcome to use this plan as a starting point to create your own, but you do not have permission to reproduce, publish, distribute or even copy this plan as it exists here. Requests for reprints, academic use, and other dissemination of this sample plan should be emailed to the marketing department of Palo Alto Software at [email protected]. For product information visit our Website: www.paloalto.com or call: 1-800-229-7526.
Copyright © Palo Alto Software, Inc., 1995-2006. All rights reserved.
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Confidentiality Agreement
The undersigned reader acknowledges that the information provided by ________________ in this marketing plan is confidential; therefore, reader agrees not disclose it without the express written permission of ________________. It is acknowledged by reader that information to be furnished in this marketing plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to ________________.
Pla nP ro
Upon request, this document is to be immediately returned to ________________.
____________________Signature
_____________________Name (typed or printed) _______________Date
M ar ke tin g
This is a marketing plan. It does not imply an offering of securities.
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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 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7 Macroenvironment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 2 3 3 4 4 5 5 6 6 6 7 8 8 8 9
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 Marketing Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9 9 9 10 10 10 11 11 12 12 12 13
4.0
Financials, Budgets, and Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.1 Sales by Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.1 Expenses by Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Linking Sales and Expenses to Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 Contribution Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13 13 14 15 16 16 17 17
Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Implementation Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Marketing Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18 19 20 20
M ar ke tin g
Pla nP ro
1.0
5.0
Sa m ple
Adventure Travel Int'l. -- Sample Plan 1.0 Executive Summary
Adventure Travel International (ATI) will begin operations in September, 1999 and provide adventure, sport/travel packages to people in the Pacific Northwest, specifically the greater Woodville area. The founders and employees of ATI are experienced travel-industry professionals and ionate about the activities ATI will promote and offer.
2.0 Situation Analysis
Pla nP ro
An opportunity for ATI's success exists because the national tourism and travel industry is growing 4% and adventure travel 10% annually. Further, the Woodville adventure travel market is growing at least 12% annually and has no providers who specialize solely in adventure travel. ATI is poised to take advantage of this growth and lack of competition with an experienced staff, excellent location, and effective management and marketing. The Woodville area, like much of the Pacific Northwest, has a large concentration of outdoor recreation enthusiasts. These health-conscious individuals, couples, and groups interested in popular adventure sports, such as skiing, kayaking, trekking, etc., are ATI's primary customers. ATI's target market is an exploitable niche and ATI will provide a specialized and thus differentiated service. Prices will be competitive with the remainder of the market. The company's estimated sales for the first year of operations is $534,607, increasing 10% annually for the next two years.
M ar ke tin g
According to the Department of Commerce, the U.S. travel and tourism industry is the nation's third largest retail industry and will be number one by the year 2000. Revenues from travel have increased approximately 100% in the last decade with U.S. travel agencies producing over $100 billion in revenues each year. Adventure travel, a segment of the travel and tourism industry, is growing at least 10% per year. More than 50% of the U.S. adult traveling population, or 147 million people, have taken an adventure trip in their lifetime, 98 million in the past five years. Thirty-one million adults have engaged in hard adventure activities like whitewater rafting, scuba diving, and mountain biking. An additional 25 million engaged in both a hard- and soft-adventure activity. Activities most commonly participated in during adventure vacations: camping (85%), hiking (74%), skiing (51%), snorkeling or scuba diving (30%), sailing (26%), kayaking or whitewater rafting (24%), and biking trips (24%). Customers tend to be young and affluent, ages 18-34, and one fourth are from households with annual incomes of $75,000 or more. In addition, statistics show that 8,000 U.S. companies offered adventure packages that generated $7 billion in 1997. There was a 66% increase in executive participation in adventure travel between 1992 and 1996. California holds the largest population of adventure travelers, who tend to live in urban areas. ATI will be located in an urban area within the state of California. In addition, it will be the only adventure travel agency in an area with 300,000 people and a large concentration of outdoor recreation enthusiasts and customers who match ATI's target profile.
Planning an adventure trip requires knowledge of the travel industry and popular adventure sport destinations, as well as adventure travel activities. Adventure travel customers are a specialty group. These are primarily young professionals who often lack the time and experience necessary to effectively plan an adventure trip on their own. ATI will communicate its ability to meet the demands of this market and fill this need.
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Adventure Travel Int'l. -- Sample Plan 2.1 Market Summary
The travel and tourism market is separated into two main categories, business and leisure travel. Each contribute about 45% to total revenues. The remainder of revenues are generated from combined business/leisure trips. The market is further separated into domestic and international travel. Domestic travel s for approximately 70% of industry revenues. Business travel can be divided into two categories, the medium to large corporate , and the small independent businessman. Leisure travelers are classified according to the types of trips they take, income, or age. The four primary leisure travel groups are: Adventure, Special-Interest, R&R, Honeymoons & Sightseeing Trips. High-Income Travelers. Budget-Conscious Travelers. Families, Students & Seniors.
Pla nP ro
1. 2. 3. 4.
Adventure travel generates approximately $15 billion of the approximately $100 billion-dollar annual industry revenues. Approximately $2-4 billion of these revenues come from California adventure travelers. Based on these and other figures, ATI estimates the Woodville adventure travel market to be approximately $6 million annually. ATI estimates that it will capture about 8% of this market.
Target Markets
M ar ke tin g
National Adventure Travelers Woodville Adventure Travelers Internet
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Table: Market Analysis Market Analysis Potential Customers National Adventure Travelers Woodville Adventure Travelers Internet Total
Sa m ple
Adventure Travel Int'l. -- Sample Plan
Growth
2004
2005
2006
2007
2008
CAGR
10%
9,000,000
9,900,000
10,890,000
11,979,000
13,176,900
10.00%
15%
100,000
115,000
132,250
152,088
174,901
15.00%
20% 12.78%
3,000,000 12,100,000
3,600,000 13,615,000
4,320,000 15,342,250
5,184,000 17,315,088
6,220,800 19,572,601
20.00% 12.78%
2.1.1 Market Demographics
Pla nP ro
Adventure travel falls primarily under the leisure travel category. Revenues from leisure travel earned by U.S. travel agencies exceed $50 billion annually. Adventure travel is a subcategory of leisure travel and can be further broken down into hard and soft adventure travel. Both hard and soft adventures involve physical, athletic activities. Hard adventure activities, as the name suggests, generally involve risk and require substantial athletic competence. Soft adventure activities are less physically demanding and more ive than their hard adventure counterparts.
M ar ke tin g
Adventure travelers are slightly more likely to be men age 18-34. However an increasing number of adventure travelers are women (some statistics suggest that women comprise 49% of the adventure market). Men on average spend more than women on their adventure travels. ATI's primary customers are married couples, ages 25-35, with children and household incomes over $50,000. ATI will be located in the heart of the Pacific Northwest. The natural beauty and abundance of outdoor activities attract many fitness oriented individuals. Per capita, the area has more people than any other in the nation who actively participate in mountain and water sports, such as skiing, climbing, kayaking, whitewater rafting, mountain biking, etc. These are the people in ATI's target market. ATI will focus on the sale and promotion of adventure travel primarily to individuals, but also to corporate clients in the Woodville area.
2.1.2 Market Needs
Adventure travel activities are a specialized product, and first-hand knowledge of these activities is necessary in order to effectively promote and sell them. Many potential customers are unsure of the location they wish to reach. Part of the value associated with travel agencies is the knowledge they possess about destinations. Customers look to the agency to provide them with sound advice for a competitive price. ATI is confident in its ability to do so. ATI can save the customer time and money, and help to ensure that they are satisfied with their vacation.
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Adventure Travel Int'l. -- Sample Plan 2.1.3 Market Trends
One notable trend in the travel industry is increased deregulation. Deregulation has increased competition and the need for differentiation. In many cases, the prices of airfare and other travel-related services has dropped. Additional trends include caps on agency commissions by many of the larger airlines, increases in adventure travel, and reduction of profit margins. More than 50% of the U.S. adult traveling population, or 147 million people, have taken an adventure trip in their lifetime, 98 million in the past five years. Approximately 31 million adults have engaged in hard adventure activities like whitewater rafting, scuba diving and mountain biking. An additional 25 million engaged in both a hard and soft adventure activity. The growth trend in adventure travel is predicted to continue.
14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0
2005
2006
2007
National Adventure Travelers Woodville Adventure Travelers Internet
2008
M ar ke tin g
2004
Pla nP ro
Market Forecast
2.1.4 Market Growth
The travel industry is growing. Reasons for this growth include a healthy domestic economy and devaluation of currency in other regions which has made travel less expensive for U.S. residents. Leisure travel increased by 3.2% in 1997 and 2.0% in 1998. The healthy economy has increased business which in turn boosted domestic business travel 4.8% in 1997 and 3.6% in 1998. Adventure travel, growing 10% annually, is one of the fastest growing segments of the travel industry. Statistics show that 8,000 U.S. companies offered adventure packages that generated $7 billion in 1997. There also has been a 66% increase in executive participation in adventure travel between 1992 and 1996.
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Adventure Travel Int'l. -- Sample Plan
Target Market Growth 20.00% 15.00% 10.00% 5.00%
2.2 SWOT Analysis
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0.00%
M ar ke tin g
In the following four sections are the most relevant issues to ATI's successful operation. ATI's strengths include its management, experienced staff, marketing savvy, and targeted focus. ATI will capitalize on these, and other strengths, to take advantage of opportunities and manage threats. Firm weaknesses are primarily those inherent in a start-up venture and are discussed in one of the following sections.
2.2.1 Strengths
• MANAGEMENT: ATI's manager has a successful record in this industry. His experience and the network of valuable connections he has developed will contribute greatly to ATI's success. • LOCATION: ATI will be ideally located. The Pacific Northwest is a mecca for people who meet ATI's target audience profile. In addition, Woodville is located 45 miles from the coast and less than two hours from the mountains. Five rivers are within a twohour drive. These geographic features will continue to attract potential customers. • EXPERIENCED STAFF: The ATI team is experienced in the travel business and in adventure sports. All have over five years experience. Moreover, they are willing to sacrifice extra time and effort to build a successful business. Along with the intangible benefits derived from succeeding in an independent endeavor, ATI will offer profit sharing and potential partnership opportunities to its ground-floor . • POPULARITY OF ADVENTURE TRAVEL: Adventure activities are very popular, and ATI is betting that the popularity will continue to grow. Many of the adventure sports, such as kayaking, mountainbiking, alpine and rock climbing, have had a kind of cult following for many years. However, in the last five years, these sports have started to go mainstream.
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Adventure Travel Int'l. -- Sample Plan 2.2.2 Weaknesses
• START-UP STATUS: ATI is a start-up and the odds are stacked against small start-up companies. • LIMITED PERSONNEL: Though ATI's staff is exceptional, they will be faced with long hours for little pay during the first two years of operation. • FINANCING: Preliminary estimates of sales and expenditures suggest that ATI will remain financially stable. However, unforeseen expenditures or poor sales will threaten ATI's cash position, which will be particularly vulnerable in year one.
2.2.3 Opportunities
2.2.4 Threats
Pla nP ro
• GROWTH MARKET: The national adventure travel market is growing 10% annually, and preliminary estimates suggest that the Woodville market exceeds that growth rate. • POTENTIAL TO ACHIEVE SALES FROM THE NATIONAL MARKET: As ATI establishes itself and gains financial stability, it can begin to market its services nationally. ATI plans to begin this effort via a World Wide Web campaign in the first year of operation and diversify its communications efforts in years two and three. • POTENTIAL TO BECOME A PREMIER PROVIDER: ATI has the management and staff to produce a top-quality service. • VERTICAL INTEGRATION: The potential to integrate services and add branches exists.
M ar ke tin g
• INTERNET AND PRICE COMPETITION: When the airlines were deregulated, price competition increased. Further, the Internet has provided a sales medium for consolidators who compete on price and has also given consumers the ability to plan and arrange trips for themselves. Thus, the traditional agency faces greater competition. • LOCAL COMPETITION (EXISTING AND POTENTIAL): There are no agencies in the Woodville area that specialize solely in adventure travel. However, any one of the approximately 30 can book an adventure trip. Moreover, additional adventure travel specialists may follow ATI's lead. • ECONOMIC DOWNTURN: The strong domestic economy has been good for the travel and tourism industry. Continued growth is anticipated. However, unforeseen or unanticipated economic recession would reduce disposable income and threaten ATI's sales.
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Adventure Travel Int'l. -- Sample Plan 2.3 Competition
In the travel industry, as in other industries, there are large national chains, small homebased businesses, consolidators on the Internet, etc. hip numbers of travel-related associations give some indication of the number of participants in this market. The American Society of Travel Agents (ASTA) reports 25,000 in 135 countries, most of whom are small businesses. The Association of Retail Travel Agencies (ARTA) has another 3,000 . In addition, there are many agencies not d with these associations but with one or more of the approximately 35 travel-industry organizations in the country. ATI has approximately 30 immediate competitors in the greater Woodville area, including two agencies that are branches of national travel agency chains. Direct national competitors include:
2.
M ar ke tin g
3.
Rollins & Hayes: Based on the east coast, Rollins & Hayes is the most well known and respected adventure travel agency in the world. They have provided adventure travel packages for over 20 years and have successfully integrated travel agency services and adventure travel activities. This offers them complete control over the entire vacation. They have the advantage of an established reputation, high-quality trips, economies of scale, and strategic alliances. However, their packages are expensive and appeal primarily to a high-income clientele. Sundance Travel: Based in Colorado, Sundance is a traditional agency and has been in business for 10 years. They have gradually made the move towards becoming adventure travel specialists and are now recognized as such. Their strengths are experience, reputation, and financial solvency. Weaknesses may include high personnel and management turnover and the lack of a clear plan for future growth. Global Adventure Travel: Global was established in 1995 and has successfully established themselves as adventure travel specialists. They are based in the Los Angeles area. Global has done a good job positioning itself through successful marketing communications and management. The Los Angeles area contains a large adventure travel market. It is, however, a very competitive area.
Pla nP ro
1.
Competitor by Growth and Share
Rollins & Hayes Sundance Global Travel Northwest Woodville Travel Other
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Table: Growth and Share Analysis Growth and Share Competitor Rollins & Hayes Sundance Global Travel Northwest Woodville Travel Other Average Total
Price $1,100 $975 $950 $1,000 $965 $0
Growth Rate 3% 5% 10% 4% 0% 0%
$831.67 $4,990.00
3.67% 22.00%
2.4 Services
Sa m ple
Adventure Travel Int'l. -- Sample Plan
Market Share 23% 8% 7% 1% 1% 0% 6.63% 39.80%
2.5 Keys to Success
Pla nP ro
ATI is a full service agency and sells standard travel agency goods and services, including airfare and travel packages. Additional services include assistance with ports, providing access to top-of-the-line equipment and supplies, and a superior offering that includes access to better than average terrain and activities, accommodations, and entertainment. The value added of ATI's offering is its knowledge and expertise, competitive rates, and specialty focus on adventure travel, which translate into increased satisfaction for the customer.
M ar ke tin g
• Effectively segment the travel market and target adventure travelers. • Successfully position ourselves as adventure travel specialists. • Communicate the differentiation and quality of our offering through personal interaction and media. • Develop a repeat-business base of loyal customers.
2.6 Critical Issues
• Market growth projections for the travel industry and for adventure travel are accurate. • National economic conditions, which are favorable to the travel industry, will not experience significant decline in the next five years. • International conditions will remain favorable for service providers. • Capability to produce effective, targeted communications that promote the benefits of adventure travel and ATI's specialty focus and services.
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Adventure Travel Int'l. -- Sample Plan 2.7 Macroenvironment
3.0 Marketing Strategy
Pla nP ro
• Disposable income is high but leisure time is limited and contested by other responsibilities and recreation options. • Due to a good economy, travel and tourism is growing. • Population segments have different needs and wants. This requires effective target marketing. • Internet sales threaten the traditional firm, and technological advances require greater knowledge and sophistication in most industries. • International conditions, which are favorable, greatly effect the industry. Political unrest, military action, and other issues determine availability to many foreign destinations.
ATI believes that the goal of business is to create and keep customers. Its marketing strategy will reflect this goal as it builds its reputation in the Woodville area. Though ATI operates in the travel industry, it provides much more than travel. ATI provides adventure and freedom. Many of ATI's customers spend 50 weeks of the year in an office. ATI offers people the ability to get away and how much they love the challenge and excitement of an athletic endeavor. ATI will promote the benefits of adventure travel. These benefits include better health, excitement, personal growth, ear-to-ear grins, and a whole lot of fun. ATI will also promote the benefits of its services. These benefits include saving time and money, and confidence in the vacation's success.
3.1 Mission
M ar ke tin g
Adventure Travel International (ATI) is a travel agency that specializes in adventure travel. We provide consulting and custom travel arrangements and packages. ATI's mission is to become the foremost provider of adventure travel to the people of the Pacific Northwest. ATI's employees and owner are outdoor adventure and travel enthusiasts, as well as seasoned travel-industry professionals. ATI seeks to connect adventure travel newcomers and veterans with service providers, adventure activities, and accommodations that fit the client's desires, budget, and skill level.
3.2 Marketing Objectives
• Achieve an annual growth rate of at least 10%. • Promote adventure activities through strategic alliances with health clubs, local athletic organizations, and retailers. • By the end of year three, achieve 15% of sales through the Internet. • Become the market leader of adventure travel in the Woodville area.
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3.3 Financial Objectives
Sa m ple
Adventure Travel Int'l. -- Sample Plan
• Generate sales of approximately $550,000 in year one and increase sales 10% annually. • Capture and maintain a gross margin of 18-20%. • Achieve positive net worth by year two.
3.4 Target Marketing ATI will target the following groups:
Pla nP ro
• Couples and individual adventure travelers: This is the customer group that meets the demographic profile for adventure travelers -- ages 25-35, married, with household income greater than $50,000. • Group adventure travelers: These are groups that belong to local athletic organizations, such as cycling or kayaking clubs. • Corporate adventure travelers: ATI will target local businesses in an attempt to secure corporate s. ATI plans to focus its initial efforts on the adventure travel market in the greater Woodville area. As ATI grows, marketing efforts will expand. The major purchasers that fit ATI's target market are located in urban areas within these states: California Florida New York Texas Illinois Nevada Hawaii New Jersey Pennsylvania Georgia
M ar ke tin g
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
3.5 Positioning
For individual and corporate clients who wish to participate in adventure travel, ATI is the premier adventure travel agency in the Woodville area. ATI's experience with and enthusiasm for adventure travel is displayed in the exceptional service, value, and advice it provides for the customer.
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Sa m ple
Adventure Travel Int'l. -- Sample Plan 3.6 Strategy Pyramids
STRATEGY 1: Develop brand recognition through the use of effective advertising, marketing communications and promotion. Tactic: Develop a marketing mix designed to target the Woodville market. •
Program: Print and electronic advertising campaign, using specialty publications and local radio as primary media. • Program: Use strategic alliances to conduct promotions and giveaways.
Tactic: Expand brand recognition to the national market through increased industry participation and WWW presence.
Program: Utilize the networking benefits of industry associations, trade shows, and publications. • Program: Develop and promote ATI's website. The availability of information and the ability to schedule and purchase online will be beneficial to the customer and ATI.
Pla nP ro
•
STRATEGY 2: Increase revenues and reduce costs by establishing repeat and corporate customers. Tactic: Customer satisfaction program. •
Program: Focus ATI's efforts on customization of adventure travel and utilization of its core competencies. ATI would rather recommend that a potential customer purchase elsewhere than provide a trip outside of its expertise. • Program: Post purchase and post trip follow-up. Research indicates that the communication between the firm and the customer after the sale positively influences repeat purchase. Tactic: Corporate acquisition.
Program: The corporate sales program will depend upon specialized literature and personal promotion. Corporate s generate recurring revenue and will help diversify ATI's sources of income. • Program: Corporate giveaway promotion. Trips will be awarded as prizes and will be promoted via local radio.
M ar ke tin g
•
3.7 Marketing Mix
ATI will employ a wide range of advertising communications and promotion to achieve its marketing goals. Research on the demographics of ATI's target market suggest that the most effective communications will come through advertising in several specialty publications and via local radio. In addition, direct interaction or promotion at health clubs, shopping malls, sporting events, etc. will be part of ATI's marketing mix.
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3.7.1 Services and Service Marketing
Sa m ple
Adventure Travel Int'l. -- Sample Plan
3.7.2 Pricing
Pla nP ro
ATI will sell standard travel agency goods and services including airfare and travel packages. Additional services will include assistance with ports, providing access to top-of-the-line equipment and supplies, and a superior offering that includes access to better than average terrain and activities, accommodations, and entertainment. The value added of ATI's offering is its knowledge and expertise, competitive rates, and specialty focus on adventure travel, which will translate into increased assurance and satisfaction for the customer. ATI's decision to focus on adventure travel was made because economic indicators suggest that an increased demand for adventure travel services exists, the Woodville area does not have a true adventure travel specialist, and of the ATI team are experienced and enthusiastic about adventure travel activities. It is hoped that this enthusiasm will be communicated to the customer, and ATI's experience will translate into satisfaction and repeat business.
Much of ATI's pricing is determined by market standards. ATI will attempt to maintain margins of 10% on all airline travel. Margins on all other products and services vary depending upon the provider but are expected to average 20%. ATI will make every effort to maintain a competitive pricing policy. However, as ATI builds its reputation as the premier provider of adventure travel, it expects to earn the ability to charge a for its services.
3.7.3 Promotion
M ar ke tin g
During ATI's first year of operation, it will hold a grand opening and will organize and sponsor several athletic events. Events will include, among others, an off-road triathlon, 10k race and 5k fun run, and a mountain-bike race. ATI will provide various travel packages and other items as prizes. All ATI employees belong to local athletic clubs and will, through interaction with other , promote ATI's services. During the grand opening and other events, ATI will provide literature with information about trips and activities. Negotiations with area health clubs have begun and additional promotion will likely occur through these strategic alliances. Specialty rather than large national publications will serve as media vehicles for ATI advertising. Local radio stations will also be used. Personal selling will also occur, though phone solicitation will be limited. ATI plans to occasionally station sales personnel in locations around Woodville, such as shopping malls. ATI's goal is to develop personal familiarity between its employees and the community.
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3.8 Marketing Research
Sa m ple
Adventure Travel Int'l. -- Sample Plan
Ongoing industry analysis is conducted by several organizations, including the U.S. Department of Commerce, and is available for sale. Research on the travel and tourism industry will be purchased as necessary. Demographics and spending patterns of adventure travelers have been secured and used to formulate communications strategy. ATI will conduct customer surveys when a specific research problem is identified. ATI subscribes to several industry publications and will attend trade shows to stay abreast of relevant issues.
4.0 Financials, Budgets, and Forecasts
Pla nP ro
ATI's marketing budget for year one of operations is taken from the start-up investment and is equivalent to approximately 6% of anticipated first-year revenues. The marketing budget will be evaluated quarterly, and at the end of year one, adjustments will be made to advertising schedules, media vehicles, effective frequency, etc. as necessary. The following issues are relevant to ATI's marketing efforts: •
As a start-up, ATI has no baseline by which it can determine the effects of its marketing efforts on sales. Year two marketing activities will benefit from the financial results of year one operations. • The marketing budget has been established based on anticipated revenues. ATI plans to employ the use of more sophisticated budgeting methods as a baseline is established. • Much of ATI's marketing efforts will involve personal interaction with customers in the Woodville area. ATI must attempt to conserve resources when possible, especially in the early stages of operation. Sweat equity in marketing and other activities will be critical to ATI's success.
M ar ke tin g
4.1 Break-even Analysis
ATI's break-even analysis, including monthly sales break-even points, are located in the following table. Break-even calculations assume a 20% gross margin. ATI plans to improve its margin by year three or four. The improved margin will come as the result of economies of scale, strategic alliances, and ATI's position as a premier service provider. ATI will be able to raise prices without affecting demand. Fixed costs may increase slightly over the next two years.
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Sa m ple
Adventure Travel Int'l. -- Sample Plan
Break-even Analysis $2,500 $2,000 $1,500 $1,000 $500 $0 ($500) ($1,000) ($1,500) $1,900
$3,800
$5,700
$7,600
$9,500
Pla nP ro
$0
Monthly break-even point
Break-even point = where line intersects with 0
Table: Break-even Analysis
Break-even Analysis: Monthly Units Break-even Monthly Revenue Break-even
Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost
5 $4,286
$950.00 $617.50 $1,500
M ar ke tin g
4.2 Sales Forecast
Detailed projections are located in the sales forecast table. ATI expects sales to be slow in the first, and possibly second quarter of operation. Sales growth is estimated at 10% annually through year three.
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Sa m ple
Adventure Travel Int'l. -- Sample Plan
Monthly Sales Forecast
$80,000 $70,000 $60,000 $50,000
Woodville Market (Individual) National Market
$40,000
Internet
$30,000
Corporate Market
$10,000 $0
Pla nP ro
$20,000
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Table: Sales Forecast
2005 $427,685 $42,768 $10,693 $53,461 $534,607
2006 $382,245 $70,568 $47,046 $88,210 $588,069
2007 $258,751 $97,032 $97,032 $194,063 $646,878
2008 $284,626 $106,735 $106,735 $213,469 $711,566
2009 $313,089 $117,409 $117,409 $234,816 $782,722
Direct Cost of Sales Woodville Market (Individual) National Market Internet Corporate Market Subtotal Direct Cost of Sales
2005 $342,148 $34,214 $8,554 $42,769 $427,686
2006 $301,974 $55,749 $37,166 $69,686 $464,575
2007 $199,238 $74,715 $74,715 $149,429 $498,096
2008 $219,162 $82,186 $82,186 $164,371 $547,906
2009 $241,078 $90,405 $90,405 $180,808 $602,696
M ar ke tin g
Sales Forecast Sales Woodville Market (Individual) National Market Internet Corporate Market Total Sales
4.2.1 Sales by Manager
ATI anticipates that the majority of revenues, 75-80% will come from individual customers in the Woodville area. This is especially true in the first two years of operation. The remainder of revenues will come from corporate clients and national customers who purchase via the Internet. By year three, ATI hopes to capture more sales from corporate and national customers, thus reducing its reliance on the Woodville area. Preliminary goals for year three are: • • • •
Woodville customers: 40%. Corporate customers: 30%. National Customers: 15%. Internet: 15%.
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Sa m ple
Adventure Travel Int'l. -- Sample Plan 4.3 Expense Forecast
The marketing budget is between 5% to 6% of revenues. ATI's marketing director will assume responsibility for everything except the website development budget. All ATI staff are salaried, so labor hours, other than those included in the directors salary, are not included in the budget. They will, however, play a key role in many of the planned promotional activities. All are expected to take part in the promotion of ATI. There are no 9-5 positions.
Monthly Expense Budget
$2,000 $1,500 $1,000 $500 $0
Pla nP ro
$2,500
Print and Radio Advertising Personal Selling and Promotion Other
Table: Marketing Expense Budget
M ar ke tin g
Marketing Expense Budget Print and Radio Advertising Personal Selling and Promotion Other
Total Sales and Marketing Expenses Percent of Sales Contribution Margin Contribution Margin / Sales
2005 $15,000 $8,500 $5,000 -----------$28,500 5.33% $78,421 14.67%
2006 $18,750 $10,625 $2,500 -----------$31,875 5.42% $91,619 15.58%
2007 $20,625 $11,688 $3,000 -----------$35,313 5.46% $113,469 17.54%
2008 $22,688 $12,856 $3,000 -----------$38,544 5.42% $125,116 17.58%
2009 $27,225 $15,428 $3,000 -----------$45,653 5.83% $134,374 17.17%
4.3.1 Expenses by Manager
The following chart details ATI's primary marketing. Jordan Barnes is responsible for the success of the programs and the proper management of the budget. Year two expenditures could easily double if ATI generates sufficient revenues. As efforts to communicate with the national and global markets increase, ATI expects to use several national publications for advertising. Doing so will be costly.
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4.4 Linking Sales and Expenses to Strategy
Sa m ple
Adventure Travel Int'l. -- Sample Plan
ATI's marketing efforts have been designed to improve sales. ATI's director of marketing will be responsible for tracking the various programs. If measurable results are not realized, changes will be made to the marketing mix. Other factors, such as economic recession, sales below estimates, high costs associated with the use of certain media, and others may influence ATI's marketing budget and mix.
Sales vs. Expenses Monthly $80,000
$60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0
Pla nP ro
$70,000
Apr May Jun
Jul
Sales Expenses
Aug Sep Oct Nov Dec Jan Feb Mar
M ar ke tin g
4.5 Contribution Margin
ATI anticipates that contribution margin will improve beginning in year three. By then, ATI will have developed a better mixture of revenue sources, strategic alliances, and brand equity. Corporate s will bring higher contribution margins, as will other group trips. Suppliers tend to give price breaks if the agency can book larger groups. In addition, ATI plans to charge as much as 5% over the industry standard by the end of year three, as it will be recognized as an industry leader.
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Sa m ple
Adventure Travel Int'l. -- Sample Plan
Contribution Margin Monthly $12,000 $10,000 $8,000 $6,000
$2,000 $0
Pla nP ro
$4,000
Apr May Jun
Table: Contribution Margin Contribution Margin
Sales Direct Cost of Sales Other Variable Costs of Sales Total Cost of Sales Gross Margin Gross Margin %
M ar ke tin g
Marketing Expense Budget Print and Radio Advertising Personal Selling and Promotion Other
Total Sales and Marketing Expenses Percent of Sales Contribution Margin Contribution Margin / Sales
Jul
Aug Sep Oct Nov Dec Jan Feb Mar
2005 $534,607 $427,686 $0 -----------$427,686 $106,921 20.00%
2006 $588,069 $464,575 $0 -----------$464,575 $123,494 21.00%
2007 $646,878 $498,096 $0 -----------$498,096 $148,782 23.00%
2008 $711,566 $547,906 $0 -----------$547,906 $163,660 23.00%
2009 $782,722 $602,696 $0 -----------$602,696 $180,026 23.00%
2005 $15,000 $8,500 $5,000 -----------$28,500 5.33% $78,421 14.67%
2006 $18,750 $10,625 $2,500 -----------$31,875 5.42% $91,619 15.58%
2007 $20,625 $11,688 $3,000 -----------$35,313 5.46% $113,469 17.54%
2008 $22,688 $12,856 $3,000 -----------$38,544 5.42% $125,116 17.58%
2009 $27,225 $15,428 $3,000 -----------$45,653 5.83% $134,374 17.17%
5.0 Controls
ATI's marketing efforts will be reviewed quarterly. Variance between sales goals for the first year of operations and revenues will be ATI's only real source of comparison. ATI will seek customer on marketing efforts and may conduct surveys or focus groups to test ad effectiveness.
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Sa m ple
Adventure Travel Int'l. -- Sample Plan 5.1 Implementation Milestones
• ATI's grand opening event will take place in the first quarter. This will be a combined effort with a local rock gym, one of ATI's strategic alliances. The event will be hosted by a local radio station and will include a prize giveaway of an adventure travel package. • ATI will begin its corporate marketing in the first quarter and hopes to secure at least one corporate during that time. • ATI's website should be operational by the middle of the second quarter of operation. The website will be capable of online transactions with secure site protections. ATI banners will be placed at several World Wide Web locations. • Tracking of ad exposure will begin in the first month of operation. ATI has a designated 800 number that is only used in advertising.
Pla nP ro
Milestones
Media Campaign Strategic Alliance Development Grand Opening Promotion
First Trade Show
Web Site Completion Corporate Program
M ar ke tin g
Customer Satisfaction Program
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Table: Milestones
Milestones Milestone Media Campaign Strategic Alliance Development Grand Opening Promotion First Trade Show
Web Site Completion Corporate Program Customer Satisfaction Program Totals
Start Date 9/1/99 9/1/99 10/1/99
End Date 1/1/00 3/1/00 4/1/00
Budget $15,000 $2,000 $800
4/12/00
4/15/00
$1,000
9/1/99 9/1/99
12/1/99 7/1/00
$5,000 $1,000
Manager J. Barnes S. Delaney Staff S. Delaney & S. Taylor S. Delaney P. Mclellan
9/1/99
1/1/00
$1,000
S. Taylor
Department Marketing Marketing Marketing Marketing Management ing Customer Service
$25,800
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Sa m ple
Adventure Travel Int'l. -- Sample Plan 5.2 Marketing Organization
Marketing Director Jordan Barnes will be responsible for the planning and implementation of ATI's Advertising, Communications, and Promotion activities. Mr. Barnes will work under the supervision of Shea Delaney and will instruct all ATI in their roles in the marketing activities. ATI may use marketing consultants from a local firm to help with strategy.
5.3 Contingency Planning
These are the issues that will most likely call for changes in ATI's operations. The threats and the manner with which they will be dealt are discussed:
Pla nP ro
INTERNET AND PRICE COMPETITION: When the airlines were deregulated, price competition increased. Further, the Internet has provided a sales medium for consolidators who compete on price, and has also given consumers the ability to plan and arrange trips for themselves. Thus the traditional agency faces greater competition. ATI plans to compete with other firms on the Internet by having its own website on which to conduct communications and sales. Price competition is a problem in any industry. ATI will not compete on price, mainly because it cannot win doing so. ATI will continue to communicate the benefits of its offering. It will attempt to remain competitively priced but will not defend its price structure.
M ar ke tin g
LOCAL COMPETITION (EXISTING AND POTENTIAL): There are no agencies in the Woodville area that specialize solely in adventure travel. However, any one of the approximately 30 agencies can book an adventure trip. Moreover, additional adventure travel specialists may follow ATI's lead. Competition is already present. It is likely that additional agencies may begin to present themselves as adventure travel specialists. It is also possible that new agencies will enter the Woodville market with a similar offering. ATI will attempt to establish itself as a market leader and maintain that position if new competitors emerge. Additional safeguards include ongoing analysis of additional segments of the travel market in which ATI might successfully participate. In addition, opportunities for vertical and horizontal integration will be examined. ECONOMIC DOWNTURN: The strong domestic economy has been good for the travel and tourism industry. Continued growth is anticipated. However, unforeseen or unanticipated economic recession would reduce disposable income and threaten ATI's sales. In the event of an economic downturn, ATI will continue to promote and likely expand its offering. ATI already operates on a skeleton staff, and aside from small budget cuts, there is little that can be done financially.
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Adventure Travel Int'l. -- Sample Plan Appendix Appendix Table: Sales Forecast Apr $20,000 $2,000 $500 $2,500 $25,000
May $22,000 $2,200 $550 $2,750 $27,500
Jun $24,200 $2,420 $605 $3,025 $30,250
Jul $26,620 $2,662 $666 $3,328 $33,276
Aug $29,282 $2,928 $732 $3,660 $36,602
Direct Cost of Sales Woodville Market (Individual) National Market Internet Corporate Market Subtotal Direct Cost of Sales
Apr $16,000 $1,600 $400 $2,000 $20,000
May $17,600 $1,760 $440 $2,200 $22,000
Jun $19,360 $1,936 $484 $2,420 $24,200
Jul $21,296 $2,130 $533 $2,662 $26,621
Aug $23,426 $2,342 $586 $2,928 $29,282
Sep $32,210 $3,221 $805 $4,026 $40,262
Oct $35,431 $3,543 $886 $4,429 $44,289
Nov $38,974 $3,897 $974 $4,872 $48,717
Dec $42,872 $4,287 $1,072 $5,359 $53,590
Jan $47,159 $4,716 $1,179 $5,895 $58,949
Feb $51,875 $5,188 $1,297 $6,484 $64,844
Mar $57,062 $5,706 $1,427 $7,133 $71,328
Sep $25,768 $2,577 $644 $3,221 $32,210
Oct $28,345 $2,834 $709 $3,543 $35,431
Nov $31,179 $3,118 $779 $3,898 $38,974
Dec $34,298 $3,430 $858 $4,287 $42,872
Jan $37,727 $3,773 $943 $4,716 $47,159
Feb $41,500 $4,150 $1,038 $5,187 $51,875
Mar $45,650 $4,565 $1,142 $5,706 $57,062
ar ke tin g
Pla nP ro
Sales Forecast Sales Woodville Market (Individual) National Market Internet Corporate Market Total Sales
Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution.
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Adventure Travel Int'l. -- Sample Plan Appendix Appendix Table: Marketing Expense Budget Marketing Expense Budget Print and Radio Advertising Personal Selling and Promotion Other
May $1,250 $708 $417 -----------$2,375 8.64% $3,125 11.36%
Jun $1,250 $708 $417 -----------$2,375 7.85% $3,675 12.15%
Jul $1,250 $708 $417 -----------$2,375 7.14% $4,280 12.86%
Aug $1,250 $708 $417 -----------$2,375 6.49% $4,945 13.51%
Sep $1,250 $708 $417 -----------$2,375 5.90% $5,677 14.10%
Oct $1,250 $708 $417 -----------$2,375 5.36% $6,483 14.64%
Nov $1,250 $708 $417 -----------$2,375 4.88% $7,368 15.12%
Dec $1,250 $708 $417 -----------$2,375 4.43% $8,343 15.57%
Jan $1,250 $708 $417 -----------$2,375 4.03% $9,415 15.97%
Feb $1,250 $708 $417 -----------$2,375 3.66% $10,594 16.34%
Mar $1,250 $708 $417 -----------$2,375 3.33% $11,891 16.67%
ar ke tin g
Pla nP ro
Total Sales and Marketing Expenses Percent of Sales Contribution Margin Contribution Margin / Sales
Apr $1,250 $708 $417 -----------$2,375 9.50% $2,625 10.50%
Copyright © Palo Alto Software, Inc. 2004 All rights reserved. www.paloalto.com Not for reproduction, publication, or distribution.
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Sa m pl
Adventure Travel Int'l. -- Sample Plan Appendix Appendix Table: Contribution Margin Contribution Margin
Marketing Expense Budget Print and Radio Advertising Personal Selling and Promotion Other Total Sales and Marketing Expenses Percent of Sales Contribution Margin Contribution Margin / Sales
May $27,500 $22,000 $0 -----------$22,000 $5,500 20.00%
Jun $30,250 $24,200 $0 -----------$24,200 $6,050 20.00%
Jul $33,276 $26,621 $0 -----------$26,621 $6,655 20.00%
Aug $36,602 $29,282 $0 -----------$29,282 $7,320 20.00%
Apr $1,250 $708 $417 -----------$2,375 9.50% $2,625 10.50%
May $1,250 $708 $417 -----------$2,375 8.64% $3,125 11.36%
Jun $1,250 $708 $417 -----------$2,375 7.85% $3,675 12.15%
Jul $1,250 $708 $417 -----------$2,375 7.14% $4,280 12.86%
Aug $1,250 $708 $417 -----------$2,375 6.49% $4,945 13.51%
Sep $40,262 $32,210 $0 -----------$32,210 $8,052 20.00%
Oct $44,289 $35,431 $0 -----------$35,431 $8,858 20.00%
Nov $48,717 $38,974 $0 -----------$38,974 $9,743 20.00%
Dec $53,590 $42,872 $0 -----------$42,872 $10,718 20.00%
Jan $58,949 $47,159 $0 -----------$47,159 $11,790 20.00%
Feb $64,844 $51,875 $0 -----------$51,875 $12,969 20.00%
Mar $71,328 $57,062 $0 -----------$57,062 $14,266 20.00%
Sep $1,250 $708 $417 -----------$2,375 5.90% $5,677 14.10%
Oct $1,250 $708 $417 -----------$2,375 5.36% $6,483 14.64%
Nov $1,250 $708 $417 -----------$2,375 4.88% $7,368 15.12%
Dec $1,250 $708 $417 -----------$2,375 4.43% $8,343 15.57%
Jan $1,250 $708 $417 -----------$2,375 4.03% $9,415 15.97%
Feb $1,250 $708 $417 -----------$2,375 3.66% $10,594 16.34%
Mar $1,250 $708 $417 -----------$2,375 3.33% $11,891 16.67%
Pla nP ro
Total Cost of Sales Gross Margin Gross Margin %
Apr $25,000 $20,000 $0 -----------$20,000 $5,000 20.00%
ar ke tin g
Sales Direct Cost of Sales Other Variable Costs of Sales
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