AN EXAMPLE OF A MARKETING PLAN

SPREE WATCH MARKETING PLAN SUMMARY

Based on an evaluation of the watch market and our strengths, General will
introduce the Spree watch.

SITUATION ANALYSIS
Half the buyers of branded fashion watches are between 18 and 34 years of age.
This group, which purchases more watches per capita than those older, is our
primary market segment. Watch purchases are more likely by consumers in the
northeast and Midwest. Many purchases are expected to be impulse, requiring
strong point-of-purchase support. Seventy percent of the market is
concentrated with strong competition from Swatch, Fossil, Guess?, and Anne
Kline. We have extensive experience in the manufacture of innovative, high
quality, precision plastics and timing devices permitting us to offer the
consumer value in a branded fashion watch. Additionally, we have experience
distributing products into 75 percent of the outlets for branded fashion
watches.

OBJECTIVES
The combination of a unique, cost-effective design allows us to establish a
three percent market share in the first year. The Spree watch project will
break-even in 1998.

MARKETING STRATEGIES
General will introduce a new product, the innovative Spree watch, using
penetration pricing, extensive advertising, and expanded distribution in order
to increase our revenues and growth rate.

ACTION PLAN
The Spree watch has strong product benefits compared to current market
offerings. To achieve our objectives we will offer our unique watch in a
variety of designs at a suggested retail price of $45. Our current
distribution covers 75 percent of the market. At this time we will not expand
our distribution to access the jewelry store retail channel. We will increase
our sales force by 5 persons and add a sales trainer to support for our market
plan. Advertising of one million dollars will emphasis the unique design of
the watch and is weighted toward print and point-of-purchase displays. This
and television advertising will be scheduled two-thirds in the first six
months of the campaign. To achieve consumer awareness in the first year, our
advertising voice share will be considerably higher than that of the four
market leaders.

FINANCIAL ANALYSIS AND EXPECTED RESULTS

We expect first year sales of 8.5 million dollars and project break-even for
the project in the first year.

CONTINGENCY PLANS
If the competition increases advertising or our sales are less than expected,
we are prepared to add as much $500,000 to our advertising budget.

SPREE - THE MARKET PLAN

SITUATION ANALYSIS
General's core business is industrial timing devices and consumer
clocks, based on skills in manufacturing high quality timing movements
and plastic casings. This market plan is based on providing consumers
with a high quality, innovative watch. It will be offered in a variety
of styles for both men and women. The casing and movement has other
potential applications not discussed in this plan.
Our 1995 profits of 30 million dollars represent 7.5 percent of total
sales. Sales growth has slowed to a current level of 5 percent annually.
Growth in current markets is expected to be limited. The Spree watch is
one of several projects with the potential to improve General's growth
rate.
Market Analysis
The Spree watch will compete directly with several other branded fashion
watches. The market size for branded fashion watches is forecast to be
$524 million retail dollars in 1998, growing to $721 million by 2002.
Annual market growth is expected to exceed six percent through 2002,
exceeding our current annual sales growth.
Market Segments
Table 1: Market Segments by Age
AGE

PERCENT OF
WATCH
BUYERS

PERCENT OF
POPULATION
OVER 17

RELATIVE
PURCHASE
INDEX

18-24

19%

13%

1.46

25-34

33

19

1.74

35-54

35

40

0.88

55+

13

29

0.45

Those under 35 years of age purchase slightly over 50 percent of all

branded fashion watches as shown in the Table 1. The highest purchase
prevalence is those from 25 to 34 who purchase 74 percent more watches
per capita than those the average consumer. Purchase behavior is
expected to differ among age segments and by gender. Young females [1824 years of age] are expected to be intense purchasers. This group is
likely to be very styling conscious. Women in the 25 to 34 age group
will be our second significant segment, expected to buy more watches
than any other age-sex segment.
Consumer purchases of branded fashion watches also vary by region as
shown in Table 2. An index of relative watch sales by regions shows that
sales are above average in the east north central, west north central,
north central, and midatlantic states. Product introduction is likely to
be more successful in the states in these regions.
Table 2: Watch Sales by Region
REGION
ENC

WATCH SALES
20%

POPULATION
%
15%

INDEX OF
WATCH SALES
1.33

SA

16

17

0.94

MA

15

13

1.15

WEST

15

21

0.71

WSC

10

10

1.00

WNC

1.14

NE

1.20

ESC

0.83

MOUNT

0.83

Consumer Behavior
Swatch has changed watch buying habits by encouraging ownership of
multiple low-priced, carefully designed branded fashion watches. Brand
switching and experimentation by consumers is easy for low priced
watches, assuming availability. Consumers are very design oriented when
buying branded fashion watches. Watch attributes that we consider most
important include watch and band design, packaging, price, and
durability. Distribution and display are very important in this market
and can encourage impulse purchases for both personal use and as gifts.
Consumers are reached through five types of outlets.. We currently have
access to four of these channels, representing 75 percent of watch
sales. Channel development is necessary to reach the total watch market.
A majority of branded fashion watches are currently purchased at
department stores. We will take advantage of our strong distribution
through department, discount, and drug stores to assure widespread
availability of Spree watches. Jewelry store channel development will be
deferred until we are established in our traditional retail channels.
Competitive Analysis
Although there are fourteen competitors in this market, there is
substantial concentration. Swatch, Fossil, Guess?, and Anne Kline are
strong competitors, holding 70 percent of the market. Swatch and Fossil
have strong manufacturing and distribution skills, while Guess? and Anne
Kline have less extensive distribution networks but strong name
recognition in fashion. Fossil and Swatch are strong at the lower price
lines. Branded fashion watches are a relatively new product category.
Although pioneered by Swatch, there is considerable opportunity for new
entrants as demonstrated by Fossil and Guess?.
Company Analysis
General currently distributes products through channels accounting for
75 percent of watch sales. Branded fashion watch sales are growing
faster than our current product lines. Our innovative product, product
design skills, strong manufacturing skills, and experience in
distributing consumer clocks provide an opportunity for entry and growth
in this market.
SWOT Analysis
Strengths
Innovative production methods provides the potential for new
designs
Experience in distribution channels for timepieces
Weaknesses
No experience in distribution to jewelry stores

 No experience in marketing fashion products

Opportunities
Large market
Market growing faster than our current sales
Consumer demand for fashion goods creates a demand for
innovative products
Threats
Strong competition with concentrated market shares
Possibility of new market entries
OBJECTIVES
Market share of three percent of the branded fashion watch market
in the first year [sales of over 8 million dollars].
Project break-even in 1998.
MARKETING STRATEGIES
General will introduce a new product, the innovative Spree watch, using
penetration pricing, extensive advertising, and expanded distribution in
order to increase our revenues and growth rate.
ACTION PLAN
Product
We will introduce between 30 to 40 different designs in the first year.
One quarter of these will have a "metal" case, copying many of the
traditional and modern metal designs. These are targeted at consumers 25
and over. We will design a series including licensed characters and
unusual shapes for the market segment under 24 years of age. Swatch does
not have exclusive licensing for Disney and Warner Brothers characters
or Coke. By using these and others we will have a variety of product and
character designs in our line. The most unusual aspect of our line will
be some very unusual shapes. Several of these will be geometric;
hexagon, trapezoid, oval, and diamond. For younger ages our technology
allows the design of watches in the shapes of cartoon character faces.
Price
The Spree watch will be sold for a suggested retail price of $45. We
believe that we have product quality and feature advantages, encouraging
the use of a price slightly exceeding Swatch. This pricing strategy,
coupled with our efficient production methods, aids in achieving our
relatively high market share for a new product entry.
Distribution
We will introduce Spree in the northeast but within the first year sell
to the national market. With our current strong distribution channels
nationwide covering 75 percent of watch sales, we will limit our
potential if we restrict our distribution to specific regional markets.
Although we do not currently have jewelry stores, our distribution will
place watches in at least 75 percent of locations in the United States.
We will use current normal distributor markups.
Promotion
Five new sales representatives will be added to assist in the
development of new distribution outlets. A sales trainer will be hired

to train the sales force in the new product. This will be within our
$500,000 sales support budget based on an average salary and benefits
cost of $100,000 for each position.
The advertising level for the four leading firms can be compared by
determining the ratio of voice share (% of total advertising dollars of
$20 million) divided by the market share as shown in Table 3. Consumers
will not know our brand; therefore, we will have to advertise more
aggressively to achieve brand awareness. Although our market share goal
in 1998 is three percent, we will set advertising at one million
dollars. This will achieve an advertising voice/market index
considerably higher than our competition.
Table 3: Fashion Watch Advertising and Voice
COMPANY

MARKET
SHARE

VOICE
SHARE

VOICE/
MARKET

ADVERTISING
MILLION $

SWATCH

20%

28%

1.4

5.5

FOSSIL

20%

24%

1.2

4.8

GUESS?

20%

21%

1.05

4.2

ANNE
KLINE

13%

13%

1.9

2.5

SPREE
PLAN

3%

5% [assumes
same level of
total
advertising as
last year]

5.0

1.0

Media will be targeted to our major market segments; women between 18

and 24 and between 25 and 34. Smaller amounts will be directed to other
segments.
FINANCIAL ANALYSIS AND EXPECTED RESULTS
As shown in Tables 1 and 2 of the financial appendix, we expect to
achieve a market share of three percent and sales of $8.5 million in the
first year. The Spree watch project will break-even in the first year.
We do not expect any watch technology breakthroughs during this period.
Competition is expected to be based on design, price, and achieving
widespread distribution, areas in which we expect to be very
competitive.
In conclusion, we will invest one million dollars in the Spree watch
project. We can achieve sufficient market share to achieve our financial
and marketing objectives. During the next five years the market is
expected to grow and our costs are expected to decline with experience
increasing unit contribution. Our greatest challenge will be tracking
the market's tastes in watch design and meeting and leading these with
creative and innovative designs.
CONTINGENCY PLANS
Table 4: Impact of Advertising Levels on Financial Results
TOTAL AD BUDGET BREAK EVEN YEAR NET PRESENT

VALUE IN MIL. $
$2,500,000

1998

$35.8

3,000,000

1999

34.0

3,500,000

1999

30.4

4,000,000

1999

28.6

It is not expected that there will be increased price competition due to

the entry of the Spree watch. Increased advertising, however, might lead
to an increase in industry advertising. A sensitivity analysis of the
effect of increased advertising on our break-even year and cumulative
profits appears in Table 4. Increases in advertising in steps of an
additional $500,000 dollars up to $4 million, assuming no additional
gains in market share, have fairly limited effect on our performance.
Therefore, in the event that there is increased industry advertising, we
are prepared to increase our advertising by as much as $1,500,000
annually. Our increase advertising also will allow us to react to lower
than expected consumer awareness, fewer distribution outlets than
planned, or less than expected consumer acceptance of Spree watch.

FINANCIAL APPENDIX

TABLE 1: PRO-FORMA INCOME STATEMENT AT $50 PRICE

CURRENT YEAR

1997
BEFORE

RESEARCH & DEVELOPMENT

RELEASE

$50.00 SUGGESTED RETAIL PRICE

INVESTIGATION COSTS

$250,000

$12.50 LESS RETAIL DISCOUNT (25%)

DEVELOPMENT COSTS

$750,000

$37.50 PRICE TO RETAIL

DISCOUNT RATE PER YEAR

12.00%

$7.50 LESS WHOLESALE DISCOUNT (20%)

$30.00 MFG SELLING PRICE

ANNUAL COSTS AND SALES

PRODUCER'S PRICE PER UNIT
VAR COSTS PER UNIT
FIXED COSTS PER YEAR
RETAIL SALES FORECAST [MIL $]
INDUSTRY SALES PER YEAR [UNITS]
COMPANY MARKET SHARE [UNITS]
COMPANY SALES PER YEAR [UNITS]

INCOME STATEMENT
SALES REVENUES
VARIABLE COSTS
FIXED COSTS
PROFITS
CUMULATIVE PROFITS
NET PRESENT VALUE

BEFORE
RELEASE

$1,000,000
($1,000,000)
$35,309,732

1998
$30.00
$15.00
$2,000,000
$524
10,480,000
2.00%
209,600

1999
$30.00
$14.00
$2,000,000
$574
11,480,000
4.00%
459,200

2000
$30.00
$13.50
$2,000,000
$616
12,320,000
6.00%
739,200

2001
$30.00
$13.25
$2,000,000
$672
13,440,000
8.00%
1,075,200

2002
$3
$1
$2,000

1998
$6,288,000
$3,144,000
$2,000,000
$1,144,000
$144,000

1999
$13,776,000
$6,428,800
$2,000,000
$5,347,200
$5,491,200

2000
$22,176,000
$9,979,200
$2,000,000
$10,196,800
$15,688,000

2001
$32,256,000
$14,246,400
$2,000,000
$16,009,600
$31,697,600

2002
$43,260
$17,304
$2,000
$23,956
$55,653

14,42
10
1,442

TABLE 2: PRO-FORMA INCOME STATEMENT AT $45 PRICE

CURRENT YEAR

1997
BEFORE

RESEARCH & DEVELOPMENT

RELEASE

$45.00 SUGGESTED RETAIL PRICE

INVESTIGATION COSTS

$250,000

$11.25 LESS RETAIL DISCOUNT (25%)

DEVELOPMENT COSTS

$750,000

$33.75 PRICE TO RETAIL

DISCOUNT RATE PER YEAR

12.00%

$6.75 LESS WHOLESALE DISCOUNT (20%)

$27.00 MFG SELLING PRICE

ANNUAL COSTS AND SALES

PRODUCER'S PRICE PER UNIT
VAR COSTS PER UNIT
FIXED COSTS PER YEAR
RETAIL SALES FORECAST [MIL $]
INDUSTRY SALES PER YEAR [UNITS]
COMPANY MARKET SHARE [UNITS]
COMPANY SALES PER YEAR [UNITS]

INCOME STATEMENT
SALES REVENUES
VARIABLE COSTS
FIXED COSTS
PROFITS
CUMULATIVE PROFITS
NET PRESENT VALUE

BEFORE
RELEASE

$1,000,000
($1,000,000)
$35,823,504

1998
$27.00
$15.00
$2,000,000
$524
10,480,000
3.00%
314,400

1999
$27.00
$14.00
$2,000,000
$574
11,480,000
5.00%
574,000

2000
$27.00
$13.50
$2,000,000
$616
12,320,000
8.00%
985,600

2001
$27.00
$13.25
$2,000,000
$672
13,440,000
10.00%
1,344,000

2002
$2
$1
$2,000

1998
$8,488,800
$4,716,000
$2,000,000
$1,772,800
$772,800

1999
$15,498,000
$8,036,000
$2,000,000
$5,462,000
$6,234,800

2000
$26,611,200
$13,305,600
$2,000,000
$11,305,600
$17,540,400

2001
$36,288,000
$17,808,000
$2,000,000
$16,480,000
$34,020,400

2002
$42,827
$19,034
$2,000
$21,793
$55,813

14,42
11
1,586