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Entrepreneurship 110 The Business Plan
Sections in a Business Plan
Cover Page
Table of Contents
Business Overview/Executive Summary
Management
Market Research
Marketing (the 4 Ps)
Suppliers
Employees
Operations
Financial
Appendix (Your resume, a flyer, survey)
Marketing – The 4 Ps
The 4 Ps are:
◦ Price
◦ Promotion
◦ Place
◦ Product
An Entrepreneur must
have an intense
understanding of each as it
applies to his or her
business.
An entrepreneur must also
have an intense
understanding of how each
of these pieces work
together.
Activity – The Dragon’s Den
As you watch the following clips, take notes as to
how well each entrepreneur knows or
understands the 4P’s of their venture idea
Dragon’s Den
Atomic tea
Hillberg and Berk
Gourmet Dog Food
http://www.youtube.com/watch?v=63usX
n-4oQo&feature=related
Price is the process of determining what to charge for your product or service.
It should reflect what the customers are willing and able to pay.
It is assumed a profit is to be made.
It includes determining the:
◦ cost of production (time, labor, ingredients, packaging, advertising, etc),
◦ the state of supply and demand, and
◦ the amount of profit to be made.
Price
Assignment:
Complete the assignment using the
textbook.
This assignment will not be passed in, but
marked together.
Area Wal-Mart cut costs by…
Wages
Health Benefits
Overtime
Rubbermaid and similar suppliers
Outsourcing
Charity Donations
Security
It has been determined that Wal-Mart is able to make so much PROFIT because they
are able to cut costs so much.
Remember: Profit = Sales – Costs
Complete the chart below, explaining how Wal-Mart cut
costs in each areas:
Wal-Mart Case Study Assignment
Price and the Law
The Competition Act protects customers in Canada from:
1. Price Fixing -
Businesses are not allowed to decide as a group what to charge
consumers for a specific product.
It is illegal because if prices get driven as high as possible so that every
producer is guaranteed to make a profit consumers might be gouged.
It also goes against the competiveness and free will of our economy.
2. Retail Price Management –
No company (supplier) can force another, independent company
(retailer) to charge a particular price for a product it has provided.
A company can suggest a price (MSRP)
This is an attempt by producers of products to protect their own
reputation as well as the dignity of the consumer.
Prior to laws that enacted MSRPs, retailers were free to charge wildly
different prices for the same product —- not just among different
outlets, but to different customers at the same outlet.
3. Deceptive Pricing Strategies:
A. Double Ticketing - prohibits the supply of a product at a price that exceeds the lowest of two or more prices. In other words, where two or more prices are clearly shown on a product, it must be supplied at the
lower price .
B. Bait and Switch - occurs when a product is advertised at allow price
to attract (bait) customers to the store, then staff try to push the
customer into to buying a more expensive item. Occurs when a product
is advertised at a bargain price, but is not available for sale in reasonable
quantities
C. False Sale Price - refers to the practice by some stores of advertising
a regular price as a sale price.
Promotion
Letting people know about products and services in a positive way so they will want to make a purchase.
Promotion is used to tell potential customers about:
1. How to use a product or service and what it is used for
2. The quality of a product or service
3. Where the product or service is available
4. New products that are on the market
5. Etc.
YouTube - Commercial - The Wait
Which of the above 5 is this commercial being used for?
There are THREE MAJOR REASONS to use promotion. They
are to INFORM customers about products, to REMIND
customers of the product, and to PERSUADE customers to buy.
For example:
1. To Inform: A TV commercial airs 10 times a day before product
is released.
2. To Remind: A pizza restaurant gives away free refrigerator
magnets with delivery information.
3. To Persuade: A company uses labels to emphasize that
products are “new and improved,” “concentrated,” “extra
strength,” etc.
Which is the following an example of?
YouTube - TV Commercial
There are Six TYPES OF PROMOTION used to help sellers get their message to customers.
1. ADVERTISING – paying to use the media to promote product (newspapers, TV, radio, magazines, billboards, etc.).
2. PUBLICITY - Free promotion (press releases or news reports describing how the company sponsored events or donated to a cause.)
3. SALES PROMOTION - Special things done to get customers interested in trying products or to come into a store (coupons, contests, rebates, free samples, displays, etc.)
4. PERSONAL SELLING - A salesperson assists each customer (a shoe salesperson helps a customer select the proper shoe size. A college student goes door to door selling children’s books.)
5. ENDORSEMENT – When a famous person is paid to promote a product or service (Tiger Woods and NIKE; Tiger Woods and ONSTAR).
YouTube - Gatorade Moon Shot Commercial
Other Tiger Endorsements
J.T. for Pepsi
J.T. for Sony
6. Product Placement
Using brand-name products as props: the practice of placing brand-name items as props in, e.g. movies, television shows, or music videos as a form of promotion. The assumption is that people will subconsciously want the product and make purchases.
Does it work? Does this make you hungry?
YouTube - Oreo dunking
Worksheet - Jane’s Market
Complete and we will go over together
Place
Place
It is the mechanism through which
goods and/or services are moved from
the manufacturer/ service provider to
the user or consumer.
You must decide what “channel” you will
use to get your product/service to your
customers.
Channel #1 Wholesalers
Break down 'bulk' into smaller packages
for resale by a retailer.
Provide storage facilities
Take on the some of the marketing
responsibilities
Channel #2 Agents
Mainly used in international markets
Agent will typically secure an order for a
producer and will take a commission
Channel #3 Retailers
Retailers will have a much stronger personal relationship with the consumer.
The retailer will hold several other brands and products. A consumer will expect to be exposed to many products
The retailer will give the final selling price to the product.
Retailers often have a strong 'brand' themselves
Channel #4 Internet
The main benefit of the Internet is that
products reach a wider audience
Start-up costs are low.
Use e-commerce technology (for
payment, shopping software, etc)
Assignment - Newtown
Please read the handout and complete.
Product
Life Cycle of a Product Introduction
◦ Need for some level of immediate profit
◦ Product is promoted
◦ Limited number of products available
◦ Most products that fail, do so during this stage
Growth
◦ Competitors arrive with very similar products
◦ Products make more profit
Maturity
◦ The products that were the most successful during the earlier stages spend the longest time here.
◦ Sales “stabilize”
◦ Price wars might occur
◦ Competition is fierce
Decline
◦ There is likely a “downturn” in the market
◦ Often, more innovative products are introduced, OR consumer tastes have changed
◦ There may be intense price cuts
The Life Cycle of a Business
All ventures go through a life cycle, or a
series of stages that begin when the
business idea is initially conceived.
An entrepreneur must recognize these
stages in order to anticipate and address
the problems that can occur within each
one.
1. Pre-Startup Stage
Preparations for launching the business are
made.
Generating ideas, doing research and
identifying/solving problems.
At this stage you need to review
resources, consider how best to allocate
them, and write a business plan.
2. Development Stage
Research is complete.
Finalize your business plan, complete your market testing, review the results, and made arrangements to get the funds you need.
Business opens/starts
Goal is to reach the break-even-point. Breaking even is not as easy as it may sound; you must manage your resources well in order to do so.
Break Even Point:
Total monthly revenue = Total monthly costs
◦ Revenue = money that comes into the business from sales
◦ Costs = all the money paid out by the business (i.e. wages, loan payments, etc.)
3. Growth Stage
Passed the break-even point and now
making a profit:
◦ Total revenue > Total Costs
May wish to expand your business:
◦ new products/services
◦ another location, etc.If this is the case, you
should really write a new business plan.
4. Comfort Stage
Venture is secure growing (although at slower rate of
approx. 10% per year.)
Enjoying the benefits of success – a comfortable income
and enjoyable lifestyle.
Assets (anything that a business or entrepreneur owns
that has a cash value) of the business are worth more
than the liabilities (a debt; a sum of money the
entrepreneur owes).
This can be a dangerous stage for the entrepreneur
who forgets that growth and change are essential to
future success.
5. Turnaround Stage
If you reach this stage, your venture is in financial trouble.
The financial records reflect losses for more than two years.
Your competition is attracting customers away from your business.
If you want to save the business, you must act now (eliminating nonproductive people, products and services – no matter how difficult this seems).
Liquidation (the sale of assets in order to raise funds) may be another option to generate cash.