MKT 5000

MARKETING MANAGEMENET

Assignment 2 Semester 2 2011 Prepared for: MARGEE HUMES

Prepared by: RAMLA ARIF MUNAWWAR Student number: U0061022934 Date submitted: 17TH OCTOBER 2011

EXECUTIVE SUMMARY

Biosystems Engineering is an Australian engineering consultancy, specializes in technological research and development for different sectors including agriculture, food forestry, water and energy.

The firm has developed a pioneer product; Bionic Beaver that will provide the source of biomass for generation of energy, as the market trend is towards generation of renewable source of energy from Biomass but it will soon develop a future competition.

The marketing plan will assist the firm to meet the objective of sales, profit and brand awareness. The product is an innovation in short crop rotation with distinguishing feature. The main market will be considered in Brazil, Latin America, British Columbia and Scandinavia. To promote the product an aggressive advertising is required. Financial analysis shows that the firm will have profit in the first year. The expected return on equity in the first year is 10.88%. Furthermore constant performance and financial monitoring is required to eliminate any threat arising in the long run.

The only foulest situation that will arise is lack of sales capital but it could be tackled by forming coalition with other companies.

Table of Contents
Executive Summary 1 2 INTRODUCTION SITUATIONAL ANALYSIS 2.1 Company Overview 2.2 Market Summary 2.3 Market Needs 2.4 Target Market 3 GE MATRIX 3.1 Strategic Marketing Objective 4 MARKETING STRATEGIES 4.1 Quality function Deployment Strategy 4.2 Geographical coverage 4.3 Zone Pricing 4.4 Supply & Demand 4.5 Promotion 5 6 7 8 FINANCIAL PROJECTIONS MARKETING TIMELINE CONTINGENCY PLAN CONCLUSION References List of Figures Figure 1 GE Matrix 4 i 1 2 2 2 3 3 4 4 5 5 6 7 7 8 11 20 22 24 25

Figure 2 Quality Function Deployment strategy Figure 3 Gantt chart

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List of Table: Table 1 Planning 20

1.0

INTRODUCTION

Biosystems Engineering is an Australian engineering consultancy, specializes in technological research and development for different sectors including agriculture, food forestry, water and energy. This marketing plan will help to identify the external and the internal environment of the firm and how its competence over other firms in the market will enable its growth in the future. The report contains an analysis of the different marketing strategies which will enhance the firms smooth operations resulting in higher customer awareness. The financial limitations are also taken in consideration while constructing this plan to have accurate measurements in terms of profit and losses. The contingency planning will help in resolving the predicted issues and difficulties that may arise in the process of implementing the plan.

Lastly, the plan is set in a way that it will have its effects on the firms internal operations as well as the international marketing techniques that are currently operational in doing business with. The foreign markets are also targeted in order to achieve maximum expansion.

2.0

SITUATIONAL ANALYSIS

Biosystems engineering technology design, research equipment, analysis and evaluation has been engaged in these past projects. Currently working on the prototype of Short rotation woody crop harvester also known as the Bionic Beaver. The Biosystems engineering products have been well received, and marketing will serve as a key to the development of brand and product awareness as well as the growth of the customer base. The firm offers several different services including rapid prototyping, project management, modelling, forensic engineering and novel design concepts. Australian market has an environmental opportunity of growing a local, waste-fed biofuels market, which would help them overcome the shock of fluctuations of oil prices and fossil fuel availability.

2.1 COMPANY OVERVIEW

Biosystems engineering firm aims to create technology to provide safe and plentiful food to eat, pure water to drink, clean fuel and energy, and a healthy and safe environment in which to live.

Their mission is to develop and disseminate engineering knowledge to solve systems problems in agriculture, food, forestry, natural resources and the environment.

2.2 MARKET SUMMARY

Biosystems Engineering possesses good information about the market and knows a great deal about the common attributes of potential and loyal customers. 2

The firm will leverage this information to better understand who is served, their specific needs, and how Biosystem Engineering can better communicate with them. Biosystems engineering is part of a new, rapidly developing discipline.

2.3

MARKET NEEDS

Currently the market that the biosystems has been catering with reference to its harvester is the foreign markets of Brazil, Latin America, British Columbia and Scandinavia. As these countries show great potential of growth in the in the biomass-based industry.

2.4 TARGET MARKETS

Petrochemical producers Renewable energy clients Agricultural producers Waste reduction agencies Green houses Biosystem engineers Forestry

3.0 GE-MATRIX

GROWTH

TECH-

MARKET
SHARE

NOLOGY

MARKET PROFITS RIVALRY COST BASE

3.1

SIZE DIVEST

INVEST
TO BUILD

STRATEGIC MARKETING OBJECTIVES

The main focus of the marketing plan will be to achieve higher rates of growth as

compare to the present situation with the help of the licensing of the IP woody crop harvester. It will enhance the amount of cash generated as the foreign investors will take more

interest due to its competitive advantages which suites their climate as well as the geographical disbursement of crop area. The value of the design grows along with time as new and innovative amendments

are done to the design for continuous improvement in its functions to ensure increase in the profit levels. 4

4.0 MARKETING STRATEGIES

These will enable the woody crop harvester (bionic beaver) to enter the market with maximum benefits and market study. The main focus will be based on four main components for which the most beneficial strategies will be applied to acquire higher returns, and they are as follows:

PRODUCT PLACE PRICE PROMOTION

4.1 QUALITY FUNCTION DEPLOYMENT STRATEGY (QFD)

This will be useful in entering the foreign markets more successfully as it involves a complete research and places its major focus on the quality of the product. The most essential and key factor in success of any product is its quality which helps in deciding its value and purpose

Customer requirements are the first thing which is ensured while designing the woody crop so that it fulfills its purpose in the manner most efficient and effective. Planning matrix ensures that all competitors are studied well in terms of their size and market share to cater the competition more precisely. The top consists of the technical requirements in which the latest technology has been used to achieve maximum output out of minimum input thus resulting in higher returns on investment. Referring to woody crop harvester the interrelationships of its design with its features have the correct collaboration which enables it to produce pellets like no other machinery around the world. .

The Roof addresses the bionic beaver flaws in its design due to which it cannot be operative for long operational hours will be kept under consideration and rectified in the future models. Targets are clear and in position which is mainly to enhance performance on continuous basis.

4.2 GEOGRAPHICAL COVERAGE

The location that best serves the purpose of the bionic beaver and is in high demand for such equipment which can support functions of producing pellets or crude oil at the moment is the Brazilian peninsula as it is a tropical / temperate climate with arable land and more than 2.1 billion acres of forests and agriculture. The economy is boosting with respect to green business and is more than likely to absorb equipment as woody crop which will be of great use for upcoming projects that will be based on biomass fuels.

4.3 ZONE PRICING

COUNTRY CURRENCY 1 BRAZIL REAL EXCHANGE RATE CONVERTED TO U.S DOLLARS U.S DOLLARS

0.573066

0.18 1 NORWEGIAN KRONE

It is evident in the recent market research report that the biomass industry of Brazil is most attractive as it has all the components to make it an investment hub of biosystem products. The report provided an outlook of the industry till 2020 covering major power plants, regulations, capacity, and coverage on generation and major companies.

The biomass market in Brazil is at the boost which is why a number of foreign investments is visible in the region involved in green business and its products.

4.4 SUPPLY & DEMAND The current price of Eucalyptus is R$80 to R$100 per m3. Wood chips sell for approximately 130 per ton in Europe. WOOD PULP

Represents the most widespread industrial application of Eucalyptus wood. The trees white fiber makes it less expensive to process and ideal for the wood pulp industry. A new pulp mill is planned within the region that we target. 7

CHARCOAL

The market for charcoal from Eucalyptus is primarily for the steel industry. 40% of the Brazilian Eucalyptus planted is designated for this market. BIOMASS

Biomass is the new growth market for fast-growing trees. A typical electric generation plant will consume 3 million tons of bio-mass annually.

4.5 PROMOTION

Before determine the promotion strategies, we need to very clear about what are the objectives we need to achieve. We know as above, the missions are to promote Biomass harvester in Australia & in Brazil and increase the sales quarterly. It is very new for biomass; they feel fresh with this new brand and concept of this harvester. So first of the objective for promotion strategies are aims to create brand awareness and concept/knowledge of this new product. This is the pioneer product in the world and burst into the worldwide market in the short time. But still is the new brand for the world, so we do the advertisement and organize the event or campaign in sufficient detail to establish the good brand attitudes. Brand awareness is important to provide a foundation for brand equity.

After that, our second objective is knowledge and persuasive. We aim to create liking, preference, conviction, and purchase of a product. Beside that we will convince current purchasers that we will give the potential customer to enjoying the good experience with Bio System Engineering by giving them free maintenance service for 1 year.

Advertising Program

The firm aim to inform the world this is the innovation in woody crop harvesting in the world and persuade to buy product due to this harvester is cheaper, useful, all in good quality and also environment friendly by developing an advertising program.

Online Advertisement

First step we start before lunching bionic Beaver, the firm should do the online advertisement by creating a Web site to better communicate with the customers. In the Web site, the firm should post the photo categories and videos to provide customers the information and special features of product and bring them inside the company. In addition to photos and videos, the web site links to recent news about Bionic Beaver and space for public feedback. This is a cheapest and good way to build up brand awareness.

Television Advertisement

Television advertisement is very expensive but this is the most powerful to perform the product to the public by demonstrating Bionic Beavers attributes and persuasively explaining their corresponding consumer benefits. By lower advertising budget, the firm cannot do the TV advertisement in whole day, so it must just choose the prime time to place the advertisement. By properly designed and executed TV advertisement can improve brand equity and affect sales and profits.

Marketing Campaign

This Marketing campaign is shall be based on every four month on the occasion of, festivals, national events or world environment day, before harvesting period etc. that will based on the workshops , training and seminars which will be conducted and will help promotion.

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5. Financial Projections
The following include multiyear projections for income, cash flow, balance statement, as well as estimated financial ratios.

Biosystems Engineering Pty Ltd.

Pro Forma Income Statement Year 1

Net Sales Less: Cost of Goods Sold Gross Income

$24,045,000.00 $18,200,000.00 $5,845,000.00

Operating Expenses Labour Utilities Insurance Sales Promotion Delivery and Transportation Miscellaneous Total Expenses $1,200,000.00 $300,000.00 $240,00.00 $1,200,000.00 $600,000.00 $150,000.00 $3,690,000.00

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Net Income Before Taxes Less: Income Taxes Net Income After Taxes

$2,155,000.00 $646,500.00 $1,508,500.00

Assumptions: 1 Net sales based on price of $750,000 per unit, 32 units sold

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Biosystems Engineering Pty Ltd.

Pro Forma Income Statement Year 2

Net Sales Less: Cost of Goods Sold Gross Income

$42,594,000.00 $31,806,000.00 $10,788,000.00

Operating Expenses Labour Utilities Insurance Sales Promotion Delivery and Transportation Miscellaneous Total Expenses $1,800,000.00 $500,000.00 $240,000.00 $1,800,000.00 $1,200,000.00 $150,000.00 $5,690,000.00

Net Income Before Taxes Less: Income Taxes Net Income After Taxes

$5,098,000.00 $1,529,400.00 $3,568,600.0 0 13

Assumption : The net selling price is $ 730,000 and 58 Units are sold

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Biosystems Engineering Pty Ltd.

Pro Forma Income Statement Year 3

Net Sales Less: Cost of Goods Sold Gross Income

$59,219,400.00 $44,220,600.00 $14,998,800.00

Operating Expenses Salary Labor Utilities Insurance Sales Promotion Delivery and Transportation Miscellaneous Total Expenses $2,000,000.00 $3,000,000.00 $650,000.00 $360,000.00 $2,500,000.00 $1,650,000.00 $150,000.00 $8,310,000.00

Net Income Before Taxes Less: Income Taxes Net Income After Taxes

$6,688,800.00 $2,006,600.40 $4,682,100.60

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Pro Forma Cash Flow Statement Year 1

(Amount January Revenues Expenses Cost of Goods Sold Labor Utilities Insurance Sales Promotion Delivery and Transportation Miscellaneous $8,550 $0 $100 $200 $500 $200 $50 $8,550 $0 $100 $200 $500 $200 $50 $8,550 $0 $100 $200 $500 $200 $50 $8,550 $0 $100 $200 $500 $200 $50 $8,550 $0 $100 $200 $500 $200 $50 $8,550 $0 $100 $200 $500 $200 $50 $8,550 $0 $100 $200 $500 $200 $50 $23,940 $2,400 $460 $200 $1,700 $920 $225 $23,940 $2,400 $460 $200 $1,700 $920 $225 $23,940 $2,400 $460 $200 $1,700 $920 $225 $23,940 $2,400 $460 $200 $1,700 $920 $225 $23,940 $2,400 $460 $200 $1,700 $920 $225 $182,000 $12,000 $3,000 $2,400 $12,000 $6,000 $1,500 $11,450 February $11,450 March $11,450 In 100 April $11,450 Dollars) May $11,450 June $11,450 July $11,450 August $32,060 September $32,060 October $32,060 November December $32,060 $32,060 TOTAL $240,450

Total Cash Flow

$1,850

$1,850

$1,850

$1,850

$1,850

$1,850

$1,850

$2,215

$2,215

$2,215

$2,215

$2,215

$21,550

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Pro Forma Balance Sheet Year 1

Current Assets Cash Accounts Receivable
Inventory

$700,540.00 $6,048,400.00 $8,004,200.00 $104,600.00 $14,862,600.00

Pre-Paid Expenses Total Current Assets

Fixed Assets Building Equipment Gross Fixed Assets Less Accumulated Depreciation Net Fixed Assets $10,050,000. 0 $4,095,000.00 $14,145,000.0 $1,690,000.00 $12,455,000.00

Total Assets

$27,317,600.00

LIABILITIES AND OWNERS EQUITY Liabilities Current Liabiliities Accounts Payable $5,134,300.00

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Accrued Payables Total Current Liabilities

$300,600.00 $5,440,800.00

Long Term Liabilities Mortgage Payable Total Liabilities $2,070,800.00 $7,511,600.00

Owner's Equity

$19,806,000.00

Total Liabilities and Owner's Equity

$27,317,600.00

[Note: A typical business plan would have 3-5 years of pro forma balance sheets, not just one year as shown here. The pro forma balance sheets for following years will be impacted by how profits are handled (retained in the business or paid out to the owner(s)), how assets are depreciated over time, the reinvestment of cash, the pay-down of debts, etc. The first year pro forma balance sheet shown here is used to calculate financial ratios.]

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Biosystem Engineering Pty Ltd

Financial Ratios Year1

Return on Equity

Net Profit before Taxes Net Equity

$2,155,000.00 $19,806,000. 0

10.88%

Current Ratio

Current Assets Current Liabilities

$14,862,600. 0 $5,440,800.00

2.73

Quick Ratio

Curr. Assets - Inventory Current Liabilities

$6,858,400.00 $5,440,800.00

1.26

Debt to Equity

Total Liabilities Net Equity

$7,511,600.00 $19,806,000. 0

0.38

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6. Marketing Timeline:
The marketing plan has to be implemented as per the schedule provided below to achieve the milestones

Table 1: Planning

Sr No. Activity

Duration From(Months) To (Months) Responsibility (Weeks)

Develop Supplier Relationship

Sales Manager

2 3

Lease Facilities Purchase Materials equipment &

4 4

1 2

2 3

Contracts Manager Procurement Manager

4 5 6 7

Hire Staff Initial Manufacturing Pilot Sales Phase Secondary Run Manufacturing

4 8 7 8

2 3 3 4

3 5 5 6

HR Manager Production Manager Marketing Manager Production Manager

8 9

Ramp Up phase sales Rollout Maintenance &

6 10

5 4

6 6

Marketing Manager QA& QC Manager

ed. Program 10 Continuous Manufacturing & Onwards Sales 6 onwards Production Manger

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Fig: Gantt chart

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7. Contingency Plans

While careful planning was involved in setting the strategic goals for firm, it may be that these goals are not met. The firm has decided to set a zone of acceptability for meeting sales and financial objectives. For both sales and financial objectives, a 10% negative deviation from expected sales and projected returns on assets will be accepted. However, if sales objectives and returns on investment are less than 90% of projections, certain actions will be taken. These actions include:

1.

For unacceptable sales levels during the first year: It will combat this problem by doubling in-

store promotions of Bionic Beaver. The firm will personally arrange and carry out these promotions on weekends. If sales do not increase within one month of the in-store promotions, the firm will advertise in the weekly agricultural circulars for one month.

2.

For unacceptable sales levels in Brazil: After 6 months of marketing products in Brazil, sales will

be evaluated. If not meeting acceptable sales levels, firm will consider contracting with local marketing specialists to carry out the promotions and push the products to the farms. This contractual relationship will be based upon sales commissions, thereby providing incentive for the specialists to generate sales of Bionic Beaver.

3.

For unacceptable returns on equity: If returns on assets and owners equity fall below acceptable

levels, firm will first examine and compare the per-unit costs of production and marketing with sales prices. If the margins are too thin, a price increase for products sold in Australia & other countries will be
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considered. However, because if other established substitutes if already exist at lower prices, the lost sales resulting from a price increase may make this option unsuitable for product. Firm will therefore assess opportunities for minimizing production costs and examine different marketing/distribution alternatives.

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8. Conclusion
Biosystem Engineering marketing plan has been consistently developed with accuracy. When it has been wrong, sales have exceeded expectations. Based on the market research, Biosystem Engineerings current marketing decisions have been chalked out that is effective and timely. They will be targeting the global market, primarily in the Brazil and Scandinavia. The high increased pricing with little effect on demand. The improved distribution and promotion strategy will protect the firm from a slow biomass market. The product is innovative based on biomass demand. Success can be somewhat deceiving. The firm may have left money on the table by not being more aggressive, more targeted to local segments and not concentrating their efforts toward the global market.

The firms Mission Statement: to develop and disseminate engineering knowledge to solve systems problems in agriculture, food, forestry, natural resources and the environment, and its strategic planning seem to be in line. The objectives for sales and revenue could consistently achieve. The critical issue for the firm is the decline of the biomass policy & market in Australia.

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References: Expert Group on Renewable Energy 2005, Increasing Global Renewable Energy Market Share Recent Trends and Perspectives, viewed on 22 September 2011, http://www.un.org/esa/sustdev/sdissues/energy/op/beijing_re_egm/beijing_re_report.pdf Editor, 2011, Area of Australia - States and Territories ,viewed on 29 September 2011, http://www.ga.gov.au/education/geoscience-basics/dimensions/area-of-australia-states-andterritories.html
Gonzalez, R. Wright, J. and Saloni, D. 2010, The Business of Growing Eucalyptus for Biomass, viewed on 26 September 2011 , http://biomassmagazine.com/articles/3620/the-business-of-growing-eucalyptus-forbiomass

Stuart Whitten, Martin van Bueren and Drew Collins1, An Overview of Market-Based Instruments and Environmental Policy in Australia, viewed on 15 August 2011,
http://www.ecosystemservicesproject.org/html/publications/docs/MBIs_overview.pdf

D. Briassoulis, P. Panagakis, E. Nikopoulosv (ed.) 2008, Education and Research in Biosystems Engineering in Europe, ERABEE, Greece. Swiss Agency for Development and Cooperation SDC - Natural Resources and Environment Division 2007, BIOFUELS, OPPORTUNITY OR THREAT TO THE POOR? viewed on 14 August 2011,
http://www.worldbiofuelsmarkets.com/reports/SwissReport.pdf

Carla Ferraro 2009 (ed.), Retail Therapy- The Green Consumer, viewed on 13 August 2011,
http://www.buseco.monash.edu.au/centres/acrs/research/whitepapers/the-green-consumer.pdf. 25

Marisa Wikramanayake 2010, New Mallee Harvester prototype reaps accolades, viewed on 10 August 2011, http://www.3017-new-mallee-harvester-prototype-reaps-accolades.html Melanie Ziegler 2011, Agricultural Machinery and Farm Technology, viewed on 10 August 2011 http://www.Agricultural Machinery and Farm Technology NDSU.htm Pink, B. 2010, Australias Environment: Issues and Trends2010, ABS, Australia. Editor 2010, Clean Technology Fund, viewed on 13 August 2011 ,http://www.Clean Technology Fund Climate Funds Update.htm

Joely Taylor Colin Stucley 2011, Growing a green fuel industry in Australia, CISRO Publications.

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