Bottlieb Innovations, Inc., an innovative start-up, produces a product that will transform the land assessment industry. Bottlieb’s Digital Geographer, a simple device, uses patented technology that calculates the area around a walked perimeter.
The marketing and financial strategies presented in this plan serve as a set of guidelines for management as the start-up company enters its first year of production. The plan employs the most conservative numbers and projections.
Bottlieb Innovations, Inc., can be found in Escondido, CA. This 1,500-square-foot facility is close to the freeway and includes an office, workshop, assembly space, and ample parking.
George S. Bottlieb, the president and CEO is responsible to product design, development and sales. He also manages overall business management. Jay Rosenburg Jr., vice president, is responsible for the business management. This includes a focus on operations and marketing. Since the company is very small, both the president and VP will initially have to focus on tasks such as product assembly, packaging, order processing, and shipping. As the company grows, additional management personnel will be hired. Production personnel will initially be contracted from temporary employment agencies to eliminate the overhead associated with benefits.
The company will implement a bonus program that is linked to outstanding company performance. This bonus plan and the chance to work in a company with such great growth potential should help attract and keep key employees.
The company has already developed and is in the process of manufacturing the Digital Geographer. This device will quickly calculate the area of a walk perimeter. It is expected that the manufacturing process of the Digital Geographer will be very simple due to its few components.
There are no comparisons between Bottlieb’s Digital Geographer’s functionality and distance wheels from other manufacturers. The Digital Geographer makes complex area measurements simple. What once required multiple measurements, a large amount of estimation, and lots of geometric calculations now only requires the ability of walking and pressing a button. Contractors are well aware of the importance of precise area measurement. Contractors will be able to avoid the costly mistakes of underestimating jobs in a highly competitive market.
Bottlieb Innovations, Inc. assembles its own products, using local vendors for materials and services. Molds are available for the production of plastic components, such as the wheel or encoder boxes.
Plans for a DG-3000 product follow-up are already in progress. The DG-3000 will have two wheels and a differential based system for determining directional shifts. It will not use an electronic compass. Bottlieb Innovations is currently developing future products. These will include software interfaces as well as future versions of the DG-3000, which could use a Global Positioning Satellite System (GPS).
Analysis has shown that the annual global revenue from the sales of measuring wheels is roughly $100M, with the average price about $50 (U.S. dollars). The worldwide sales of distance wheels total approximately two million annually. Bottlieb Innovations conservatively estimates that within this market, one-third of the demand is generated due to customer need to calculate area and distance versus distance measurement only. If this estimate is correct, there may be demand for 600,000.+ units per annum in the area measurement segment.
Bottlieb Innovations would be able capture 1% and will sell 6,000 units a year. As long the market values the Digital Geographer as a superior product and customer buying habits are changed, then the market potential is high.
The current distance-wheel market has three main segments:
- Construction, including appraising, engineering, and small-scale surveying.
- Agricultural, with large-scale surveys.
Bottlieb Innovations is targeting current buyers aged 10 to 18𔈁.
Distance wheels are used in construction, surveying, and small-scale appraising industries. More specifically, the Digital Geographer is targeted specifically at buyers who use their distance wheels to measure area. Bottlieb’s initial sales will go to California’s fast-growing construction sector. However, Bottlieb plans on rapidly expanding its domestic and global sales.
Since Bottlieb’s product represents a leap in technology, there are no direct competitors for the Digital Geographer product. Bottlieb hopes to sell the Digital Geographer in a large portion of current distance wheel markets. Bottlieb can be seen as a competitor in the current distance wheel market.
Tool distributors are the preferred channel for distance wheel vendors. Some of the larger wheel sizes are sold through distributors of agricultural supply. Distributors are responsible for product placement as well as customer issues. Also, distance wheels can be purchased at large retailers of home improvement products (e.g. Home Depot
Current measuring wheel industry growth is difficult to forecast because of the large number of privately-owned companies that operate in the industry. Bottlieb Innovations believes that global growth in construction will be a strong indicator that the market continues to grow. However, Bottlieb Innovations does NOT anticipate an increase in unit sales for the measuring wheel market in the coming years. Instead, Bottlieb Innovations plans to expand its market share by acquiring market share from existing markets. Bottlieb Innovations’ growth is not dependent upon the overall market growing, but rather on creating interest, awareness, excitement, and sales for the Digital Geographer product.
Bottlieb believes that direct marketing and product image will help Bottlieb Innovations increase the demand for their products in the region, state and nation. This should happen within five years. Bottlieb Innovations is likely to be successful in domestic sales and have favorable Web-based sales.
Financial ProjectionsBottlieb Innovations’â€™s Sales Forecast assumes steady, non-seasonal revenue growth of $425/unit. Because of volume requirements, production will be driven and our suppliers offer significant discounts on larger volumes, it’s possible that the Digital Geographer will be priced lower if sales volume rises significantly. We will not let the price drop to reduce our profit margin.
We don’t know how many people will pay around $600 to get a Digital Geographer. However, we anticipate doubling our production to 100 units per year within the first one-year. If demand for the product turns out to be greater than expected, the facility in Escondido is capable of producing up to 500 units per month. The company plans to realize a very high level of profits on its sales by Year 2.
Bottlieb’, the management of the company, aims to make it profitable within a year of production starting. This will be in the early third quarter of Year 1. The production capacity can be rapidly increased if necessary. It may be increased to as many as 500 units per month in the current facility if demand is sufficient.
Management’s challenge is to generate enough demand for the product on local and regional distance-wheel market to achieve sales of 100 units per monthly by the end of Year1. This will ensure profitability and enable further expansion into national or global markets.
Bottlieb Innovations seeks to “through relentless innovating and creativity, extend the overwhelming power and technology to practical time-saving, accurate, and time-saving tools that enable increases customer productivity.” Bottlieb’s mission statement reflects this blend of creativity that Bottlieb’s management believes is necessary for creating, marketing, producing, and selling breakthrough products.
Although the Digital Geographer is Bottlieb Innovations’ first and only product, the founder and management are constantly evaluating the market feasibility of a wide range of breakthrough product ideas.
The anticipated revenues generated by the Digital Geographer product will be used to improve future iterations of the product, as well as to fund research and development of future innovative products, possibly in unrelated fields.
1.3 Keys for Success
- Bottlieb’’s Digital Geographer is so innovative, it creates an entirely new market. Bottlieb’’s management has already targeted distance-wheel buyers. They need to convince these customers about the Digital Geographer’â€™s added value.
- Product quality must be exceptional, since the company’s reputation will initially be driven by the experiences of users as well as word of mouth advertising.
- Financial health is dependent on accurate production planning, cost control, budgeting, and financial forecasting.
- Avoid the temptation to focus on growth and neglect profitability.