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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
________________.

Upon request, this document is to be immediately returned to ________________.

____________________
Signature

_____________________
Name (typed or printed)

_______________
Date

This is a marketing plan. It does not imply an offering of securities.


Table of Contents

1.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2.0 Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1


2.1 Market Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1.1 Market Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1.2 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1.3 Market Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1.4 Market Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2.1 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2.2 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Product Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.6 Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.7 Historical Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.8 Macroenvironment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

3.0 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11


3.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Marketing Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.3 Financial Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.4 Target Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.5 Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.6 Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.7 Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.7.1 Product Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.7.2 Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.7.3 Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.7.4 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.8 Marketing Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

4.0 Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.2.1 Sales by Mail and Web Direct Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2.2 Sales by Retail Store Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.3 Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.4 Contribution Margins . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

5.0 Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.1 Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.2 Marketing Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.3 Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
The Boulder Stop

1.0 Executive Summary

This marketing plan is designed to give us a blueprint for marketing our new retail store, The
Boulder Stop. We have included a complete market analysis, target market summaries, a
SWOT analysis, a detailed milestones table, and other relevant discussions.

Our ambitions for this marketing plan include:

• Using our existing Internet and direct-mail marketing expertise to build local
promotions and marketing literature.
• Devising lucrative promotions that will draw sponsorships from possible strategic
partners. These promotions are key to our strategy of increasing our strategic
alliances through cross-promotions.
• Identifying our strengths, weaknesses, opportunities, and threats.
• Identifying the local market forces, target markets, and promotional opportunities.

We hope this marketing plan creates a long-term growth model for our retail success. The
Boulder Stop has been successful at direct mail and Internet sales, and we hope to make a
smooth transition into retail.

2.0 Situation Analysis

The Bend/Redmond area is growing faster than any other Oregon metropolitan area. This
growth is fueled by the purchase of 2nd homes, from home-buyers nationwide and retirees,
or those searching for an idyllic America. In addition, many people in Western Oregon make
the two to three-hour drive from Portland, Oregon's largest city, or Eugene, site of the
University and Oregon's and the state's second largest city, to escape the Spring, Fall, and
Winter cloud cover and rainfall. We count all tourists and locals as potential customers, since
we offer coffee and ice cream, as well as climbing gear and events.

Many locals in Redmond believe that growth, for the sake of growth, is a political disease.
They are right. We must make sure our physical and sociological impact is kept to a
minimum, and that locals maintain the quality way of life they deserve.

Our local competition is not as fierce as our direct mail and Web competition. They currently
do very little marketing and very few company-sponsored events. We won't rule out the
possibility that they may do so in the future as a response to our projected success in such
marketing. The competition for coffee is an issue, yet we aren't directly competing with the
downtown Starbucks(tm), since we don't cater to the urbane culture, but rather the natural
explorers, those who would rather go to a state park than city shops.

Page 1
The Boulder Stop

2.1 Market Summary

In a 1997 state-generated report, consumer expenditures for espresso beverages and rock
climbing equipment combined rose to $4,000,000 in Central Oregon. We expect sales to
increase steadily as Oregon's population grows and the rock climbing industry becomes
increasingly popular.

The proximity of several large cities in Western Oregon helps fuel our business, as does the
status of Smith Rock as an international destination for rock climbing enthusiasts. Individuals
from as far away as Japan, Europe, South America, and Australia travel to Smith Rock to
'recreate'.

• Direct Mail and Web Market

Our direct sales are fueled by our current list of customers and Web co-marketing. To
date, we have allocated minimal funds to marketing over the Web. We have relied on
word of mouth, free banner exchange programs, our printed catalogs, and Web
reviews to drive revenues to the site. We count worldwide readers of such publications
as Rock & Ice magazine and Outdoor Adventure among our target direct audience.

• Retail Market

Our three main target markets are weekend warriors, hard core climbers, and the
curious. We predict that the number of hard core climbers will grow faster than the
number of weekend warriors. Climbing is becoming more and more technical, an
"insider's sport", and we believe this will fuel the growth of dedicated, highly
sophisticated climbers. At the same time, amateur growth is leveling off.

This market analysis is conservative when compared with Oregon's predicted population
growth of 2% per year and Bend's 5% average gains over the last five years.

Target Markets

Weekend warriors
The curious
Hardcore climbers

Page 2
The Boulder Stop

2.1.1 Market Demographics

Direct Mail and Web Market

Geography: 80% U.S. customers.


15% European customers.
5% Other countries
Age: 18-34
Sex: 75% male
25% female

Retail Market

Geography: 90% U.S. customers


9% European customers
1% Other countries
Age: 15-45
Sex: 62% male
28% female

Males buy gear through catalogs and the Web more often than women. This skews the direct
sales toward male customers. In-store customers tend to be younger than catalog shoppers,
and a larger % of them are locals or native to the United States.

Table: Market Analysis

Market Analysis
2001 2002 2003 2004 2005
Potential Customers Growth CAGR
Weekend warriors 25% 40,000 50,000 62,500 78,125 97,656 25.00%
The curious 25% 30,000 37,500 46,875 58,594 73,243 25.00%
Hardcore climbers 30% 15,000 19,500 25,350 32,955 42,842 30.00%
Total 25.93% 85,000 107,000 134,725 169,674 213,741 25.93%

2.1.2 Market Needs

There are two important underlying needs, and the combination of gear and coffee serves
both. The Boulder Stop's function is similar to that of the ski lodge at the bottom of the
slopes; selling important gear while providing a place for snacks, beverages, and talk. We're
the rock climber's version of the ski lodge.

1. There is a real need for a highly professional provider of climbing gear near the Smith
Rock location. People forget to pack exactly what they need, and things break.
2. There is a practical need for coffee, a meeting place, and conversation. This is part of
the activity focus of the location.
3. There is a need for 'one-stop' shopping. Climbers, and recreationalists don't want to
have to buy their gear at one store, and drive miles to enjoy good coffee and
conversation at another. The Boulder Stop fulfills this need.

Page 3
The Boulder Stop

2.1.3 Market Trends

Trends are in our favor. We have three major trends that help us:

• The sport of rock climbing is enjoying growth. The success of rock climbing gyms in
the Silicon Valley, Seattle, Eugene, and other locations offer clear evidence of this
growth.
• Central Oregon is booming as a vacation destination and recreation spot. Oregon in
general is enjoying the growth of interest from Californians, Washingtonians, and
former urban dwellers searching for small, friendly communities.
• Gourmet coffee demand is very strong throughout the Northwest. Growing numbers
look to their expensive espresso drink as a way to enjoy a moment, and as a natural
part of an outing or activity.

Market Forecast

100,000
90,000
80,000
70,000
60,000
Weekend warriors
50,000 The curious
40,000 Hardcore climbers
30,000
20,000
10,000
0
2001 2002 2003 2004 2005

2.1.4 Market Growth

• According to [the latest available studies], spending on vacations in Oregon will grow
at better than 25% per year.

• Spending on climbing has grown faster than skiing or mountain biking, although from
a much smaller base, according to [the latest available studies]. They estimate 30%
growth in climbing-related sales for the next three years.

• Spending on coffee is up 15% this year, according to the [omitted] annual report. We
expect coffee and espresso beverage sales to level out in 1999-2000.

Page 4
The Boulder Stop

Target Market Growth

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
Weekend warriors The curious Hardcore climbers

2.2 SWOT Analysis

The Boulder Stop recognizes the following strengths, weaknesses, opportunities, and threats
(SWOT):

Strengths:

• Community commitment
• Experience in the sport of rock climbing.
• Nationwide marketing experience.

Weaknesses:

• Limited cash.
• Limited experience dealing with contractors/builders.
• Little experience with local politics.

Opportunities:

• No well-focused, well-marketed competition.


• The cost of Internet and other direct marketing opportunities have decreased in
recent years.
• Climbers and hikers are not as price-sensitive as other outdoor enthusiasts.

Threats:

• Locals are very sensitive to land use.


• La Nina weather.

Page 5
The Boulder Stop

2.2.1 Strengths

Our most significant strength lies in our management team's skills in both rock climbing and
running a small business. After years of working the pro circuit, Bill Walsh has gained insight
into the history, ethics, and progressive nature of traditional wall and sport climbing. Pan
Silverton has worked a number of years with small business clients looking for direction and
strategic cohesion. His insight has led to multi-million dollar finance deals that helped put
some $100K-500K a year businesses on the map. The combination of experience and proven
business acumen represent a strength for The Boulder Stop.

With a nationwide direct marketing business that includes Internet and catalog sales of more
than $50,000 per year, The Boulder Stop is in a natural position to expand into retail.
Gateway Computer started as a small start-up direct assembly business in North Dakota and
is now opening "Gateway Country" stores across America. Although The Boulder Stop is
taking a more conservative approach, the company also enjoys strong brand recognition. The
natural 'next-step' is to expand into retail, into Redmond, OR.

During it's 10 years of operation in Eugene, The Boulder Stop has contributed over $13,000
toward community events and involvement. We have hosted "Boulder Green" for three years.
A state wide bowling tournament, "Boulder Green" is about giving bowling balls and free
bowling passes to the less fortunate in our community. We view this as one more win in the
fight against badminton We are comfortable that our community involvement will only
strengthen our business in Redmond, as it has in Eugene.

2.2.2 Weaknesses

The Boulder Stop has access to a limited amount of cash. Initial financing will not be difficult
due to solid credit and the low inventory depreciation rate, but ongoing financing will be more
difficult to obtain. It's not the receivable days that will wreak havoc on the cash plan, since
sales are 100% cash, it is the operating and marketing expenses.

Nobody at the Boulder Stop has experience in negotiating with contractors. This is a liability
due to the difficulty in managing and maintaining the timeliness and budget for a contractor.
We will compensate for this weakness by retaining an expert contractual lawyer, Frank
Nussheim, to negotiate our side of the construction contract. Our lawyer will handle all
building commitments and authorize the disbursement of funds for such activities.

Although management at The Boulder Stop understands many of the concerns of local
citizens in Redmond, we have few opportunities to express our vision through a useful venue.
Eastern Oregon can be very 'status quo' and any new player threatens the old order and puts
the locals on the defensive. Instead of proclaiming our innocence and placing the blame on a
few radicals, we will pull the community together through free barbecues that include
children's' games such as gunny sack races. We're also sponsoring the "Run For Their Lives"
event which will raise money for children from broken and violent homes, donating medical
care and clothing.

Page 6
The Boulder Stop

2.2.3 Opportunities

The market for rock climbing and hiking gear, good coffee, and ice cream in Redmond is far
below saturation level. Our two local competitors do very little in the way of marketing, be it
advertising or community involvement PR. This gives us the opportunity to develop the
market and brand ourselves as the market 'original'.

The cost of selling via e-commerce and through mail-order has decreased tremendously in
recent years. Internet domain names (www.yourname.com) cost $35 a year, and e-
commerce servers may be set up for only $30 a month. Certain high-circulation catalogs will
develop custom catalogs for vendors and mail them for a fixed fee. This is incredibly cost
effective for companies that don't have costly relationships with printers, graphic artists, and
the like. Both direct mail and Internet sales are a growing segment of our business.

Weekend warriors and hard core climbers will pay anything to get into the latest gear. The
average climber carries around $1,200 of equipment. Since climbers place their lives on the
line when they use their equipment, the majority of them buy only name brand gear at a
price premium. Climbers associate high price with premium quality. Hikers are similar, but to
a lesser degree. Hikers look for gear that looks great and feels comfortable. Our typical
curious customer is lodging in Sunriver (20 miles), hiking at Smith Rock, Newberry Crater,
and lakeside trails in the mountains. They own a new VW, SUV, or 4WD station wagon, are
married, have a stable job, and are responsibly putting enough in savings to retire early. In
other words, they don't care what they pay for hiking gear, as long as it's not insulting. We
categorize insulting as 110% or more above REI (Recreational Equipment Incorporated)
prices.

Rock climbing service companies offer us a unique opportunity. We can team up with these
services to promote our events and store, and in return we will give them 'shelf-space'. This
gives service companies cost-effective market exposure. We will partner with companies such
as First Ascent LLC and other American Mountain Guides Association (AMGA) accreditees.

2.2.4 Threats

Locals are sensitive to the manner in which we develop our land for commercial use. The land
is state owned. Oregon will lease one, 1/4 acre parcel to The Boulder Stop. Since it is public
land, the public can revoke our lease without offering just cause.

The last three years have been 'La Nina' years, pummeling Oregon with rain and cold
weather. Last year, the rock climbing season began in May. When the season begins as late
as May, it means we have two to three fewer months of revenue with which to pay for our
leased land and equipment (fixed costs). Although we can hope for an Indian summer, this
doesn't happen very often in Oregon. By early October, the vacation season is over, kids are
back in school, and there are few people around to buy our coffee, gear, etc.

Page 7
The Boulder Stop

2.3 Competition

Direct Mail and Web Sales:

• REI (REI.com) and L.L. Bean (L.L. Bean.com) sell climbing gear to our target market.
They are large corporate entities, each with powerful online and retail presence.
Fortunately, they have not opened any retail stores in the Bend/Redmond area, so we
count them solely as direct mail and Web competitors. We hope to achieve .5-1% of
their gross yearly direct sales.

Retail Sales:

• [UnNamed#1] will be our toughest competitor, for they have already established
themselves in the rock climbing community. They have a very experienced and
knowledgeable staff of expert climbers, and they are located on the highway that
leads directly to Smith Rock. They carry 75-80% of the same gear that we sell.
• [UnNamed#2] sells limited gear (clothes), they do not promote, and they do not
market their products extensively. On the other hand, they sell ice cream and carry
more GenX apparel than The Boulder Stop. Their biggest weakness is small store size.

Competitor by Growth and Share

20% UnNamed#1
15%
UnNamed#2
10%
REI
5%
Other
0%
Competitor
-5%
-20 0 20 40 60 80 100 120 Other

Table: Growth and Share Analysis

Growth and Share

Competitor Price Growth Rate Market Share


UnNamed#1 $50 10% 45%
UnNamed#2 $35 3% 15%
REI $300 15% 35%
Other $0 0% 0%
Competitor $0 0% 0%
Other $0 0% 0%

Average $64.17 4.67% 15.83%


Total $385.00 28.00% 95.00%

Page 8
The Boulder Stop

2.4 Product Offering

Espresso is the big money maker for The Boulder Stop, with coffee peripherals coming in a
close second. Straight espresso bean re buys arrive on Mondays and Thursdays, ensuring the
freshest beans possible. Modified re buys begin on the first of each month. Bill Walsh will
oversee all purchases, shipments, and deliveries.

The Boulder Stop sells high-quality rock climbing gear to serious climbers. Rock climbing gear
is a long-term sales project that will rely on future catalog and "word-of-mouth" sales. The
gear is checked by knowledgeable employees who use and recommend equipment to
customers and management. The gear is purchased from well-known manufacturers like
Metolius Mountain Products, Black Diamond, Boreal, and Petzl. Management will rely on
employees and customers to shorten the feedback loop in product and service offerings.
Climbing gear is delivered every Thursday via UPS.

2.5 Keys to Success

To succeed in this business we must:

• Sell products that are of the highest reliability and quality. We must offer as many or
more high-end products than REI offers online and through their Eugene and Portland
stores. This means we must carry all high-end brands of harnesses, active protection,
passive protection, helmets, ice climbing gear, camping gear and mountaineering
gear.
• We will offer loss leaders and other promotions that bring customers into the store, to
buy goods and to generate awareness of promotional events.
• Provide for the satisfaction of 100% of our customers. Our customers are very
valuable to us, and we will design a customer care plan to manage complaints,
implement employee and customer feedback, manage supplier accounts, and predict
future conflicts.
• To partner with the appropriate service companies in order to supply our customers
with all the climbing products and services they need.
• Establish long-term relationships with great distributors such as Trago, Petzl, Black
Diamond, Beal, Metolius Mountain Products, and others.

2.6 Critical Issues

As we expand into retail, our success will depend on whether we will be able to maintain our
existing direct business. The retail model offers a more mature market than the direct model
and exposes us to fewer outside threats. In our direct business sales, we compete against big
players such as REI and LL Bean, among others. Our retail model competes against two
small, under-marketed gear stores that don't offer great espresso or a convenient locale.

The integration of retail and direct sales strategies will help The Boulder Stop build business
sales in both categories. It's critical that we view the 'big picture' when allocating resources
to marketing tactics. For instance, we will both gain allies and increase sales by discounting
Eastern Oregon vacations to our existing and potential direct customers. Our allies will offer
co-marketing discounts, and we will use their venues to advertise our rock climbing classes,
gear selection, and espresso beverages.

The most important issue is this: We must stay the course and build the business

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The Boulder Stop
conservatively and spend accordingly. Projects must be kept on budget and on time,
marketing programs must be cost efficient and backed by solid data gathering and a high
potential for success, measured or otherwise.

2.7 Historical Results

Our marketing strategies have always revolved around direct Internet and mail sales. We
have done little tele-sales, as that does not fit into our business practices model. To date, our
direct sales model has been successful in (1) keeping costs down, (2) giving us great ROI, (3)
building a business from nothing to $150,000 a year, and (4) restraining our growth to match
our level of financing.

As we expand into a new market and grow with a new business model, we will need to put
our direct mail sales experience to work. We will need to be just as aggressive about getting
our message out to the locals. Our direct mail sales experience will help us determine which
direct market tactics and programs work, and which ones don't. From flyers to magazine and
newspaper ads, we will use our connections and resources gathered through national direct
sales to focus our retail marketing on one region.

In addition, our Website and Website sales will be of much use to us. We will synch Website
sales orders with in-house ordering systems, to ensure that customers may buy over the Web
and pick up merchandise in the store if they wish, free of shipping charges. By adopting this
marketing program, we will gain from historical experience, while adapting to our retail direct
business model.

Things have changed tremendously in the direct catalog (mail) and especially the Internet
sales category. Major players such as REI and L.L. Bean now rely on Web sales to boost
catalog sales. Both companies put out the same number of catalogs, but use the Web for
product real-time pricing, order tracking, and customer feedback. Since 1995, Web business
has grown by 3,000%. Direct market growth, and our sales stability in the direct market, give
us the power to leverage our direct sales to build non-Internet retail sales.

Table: Historical Data

Historical Data

Variable 1998 1999 2000


Industry Revenue $2,000,000 $2,000,000 $2,000,000
Company Market Share 2% 4% 8%
Company Revenue $40,000 $80,000 $150,000
Industry Variable Costs $6 $6 $6
Company Variable Costs $4 $4 $3
Industry Gross Contribution
$1,999,994 $1,999,994 $1,999,995
Margin
Company Gross Contribution
$39,997 $79,997 $149,997
Margin
Marketing Expenses $1,000 $1,200 $2,000
Company Net Contribution Margin $38,997 $78,797 $147,997

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2.8 Macroenvironment

Rock climbing

The rock climbing industry is growing faster than ever. Although the gear is expensive,
people buy it because it provides them with long-term fun.

Coffee and Espresso

High profit margins on coffee sales and low overhead costs lead to high profit margins in the
espresso industry. Expansion of coffee and espresso retail outlets has increased exponentially
in the last five years as large companies such as Starbucks[tm] have increased their reach to
the East Coast in cities such as Boston, New York, and Washington D.C.

3.0 Marketing Strategy

• We will build strategic partnerships with climbing service companies.

• We will differentiate The Boulder Stop from competitors through aggressive


advertising and promotional campaigns that demonstrate our community support and
commitment.

• We will build retail store awareness through our direct mail and Web campaigns,
leading to greater word-of-mouth marketing.

3.1 Mission

The Boulder Stop is an equipment store specializing in rock climbing gear and coffee/espresso
drinks. Our mission is to provide an entertaining, fun, and knowledgeable atmosphere to
climbers who experience nothing but a rock face and nutrition bars all day. Rock climbing is
as much about storytelling and nostalgia as it is about routes and gear. The Boulder Stop
adds value by creating a 'campfire' social setting in a retail location.

We take care of our employees; that is, we pay them well and give them a share of profits.
We respect all customers who respect our store and people, and show respectful diligence
toward those who choose not show our people respect.

We work as a team, not as a socialist Mecca. Our people are paid according to their skills and
abilities. In addition, each employee will have the option of company-sponsored training
courses and outside curricula that build on their skill sets.

Our customers are our most important asset, and we rely on them for feedback. We do not,
however, send out unsolicited surveys to unsuspecting customers. We will accept in-store
suggestions and test them for results.

We have a plan and our goals are clear: To create a fun, entertaining, and respectful retail
environment that generates sales of espresso and climbing gear.

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3.2 Marketing Objectives

1. To make The Boulder Stop the number one destination for rock climbing equipment
customers in Oregon, and to achieve the largest market share in the region for rock
climbing gear. There are no resources for gauging market share for our local market,
but the State of Oregon provides yearly economic data by region. We will use this
data to compile an estimate of market share goals for 1998.

2. To be an active and vocal member of the community, and to provide continual re-
investment through participation in community activities and financial contributions.
We will sponsor two to three events during the year, including the Pacific Amateur
(PA) Golf Classic, charity events, and celebrity-hosted competitions.

3. To achieve 30% market share by August of 2000.

3.3 Financial Objectives

Our financial objectives are as follows:

• To always maintain a minimum cash balance of $10,000.


• To maintain year-end minimum contribution margins of 40%.
• To grow direct retail sales by a conservative minimum of 12% per year.
• To achieve sales of $190,000 in year one.

3.4 Target Markets

We will focus on the highly discriminating, hard-core climber segment first, because these are
the opinion leaders. Both the weekend warrior and the curious will follow the hard-core
climbers. If we can attract and keep the hard-core climbers, then they will become part of the
attraction for the others. To attract them, we will carry all the best high-tech gear, know the
jargon, use the latest technology, and become a "Futurist" product and services company.

We want to clearly differentiate the weekend warriors from the hard-core climbers. Less
competitive, or at least at a different competitive level, these climbers are usually at Smith
for fun. They respect the hard-core climbers and want to be like them, but don't want to be
classified as having "rock on the brain." Approximately 20-30% of these climbers will respond
to family events by bringing their families; the other 70-80% climb with friends and
occasionally try to outdo each other. This market is highly susceptible to getting stuck in a
coffee shop with friends, they will talk about their latest romance, conflict with other friends,
the future, or the fine espresso at The Boulder Stop. We will market the weekend warriors
with a combination of amateur climbing events and other sponsored activities.

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The Boulder Stop

3.5 Positioning

For climbers who need a place to stop for gear and coffee near Smith Rock, The Boulder Stop
offers high quality climbing gear, gourmet espresso drinks, and a comfortable place to meet
and talk. We will position The Boulder Stop as a community-involved organization that
creates value for the community while minimizing environmental impact.

3.6 Strategies

Our main marketing strategy is to focus on the overall experience needed by each customer.
Some of our customers will seek a friendly gathering place to discuss climbs and prospects.
Others want to shop in a semi-sterile retail environment. Still others don't want to linger at
all, but wish to get their 'treat' and enjoy the outdoor weather. Therefore, our strategy is to
fulfill these various customer needs while minimizing possible friction between these
customers. That is our focus.

3.7 Marketing Mix

Our marketing mix relies heavily on our promotions. Our unique promotions set us apart from
our local competitors, which sponsor few promotions. From the Perry Claw Rock Festival to
The Llama races, The Boulder Stop will seek to create high-impact local events that create
consumer recall and increase foot traffic.

Our prices are competitive, but we do not compete on price. We will not match prices; we will
simply perform monthly competitive shopping trips to gauge the average prices for goods.

Our store and location give us a competitive advantage. The Boulder Stop is located within
1/4 mile of Smith Rock itself, and within walking distance of the park.

Our opportunities for differentiating on service are limited. Our part-time staff are
experienced rock climbers, and are very knowledgeable about gear and the sport itself.
Beyond this expertise, there's no reason for us to create special services when we can co-
market climbing schools and services through store flyers and posters.

3.7.1 Product Marketing

As a reseller of name-brand products, we have very little control over how our customers
view each individual product. We do, however, have control over the customer environment
and the manner in which we display our products. From a standard retail standpoint, product
marketing appears to be very simple - display the products in an aesthetically pleasing
manner, and they will come. It is much more complicated for us. We have identified three
types of customers, and each group has it's own buying pattern.

The hard-core climbers need a great selection of gear, and will be disappointed if they aren't
offered a 'bargain bin' of last years' model gear. The hard-core gear shoppers will be
separated from the curious by a low glass partition. This partition will serve both to absorb
the noise of shoppers and eaters, and to separate and maintain the climbers' social order. We
will host climber discussion groups, with free coffee on Friday. and Sat. nights after 7:00
p.m. This will give hard-core climbers an opportunity to exchange stories and relax in our

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cafe, away from their nemesis: 'yuppie tourists'.

The weekend warriors won't feel excluded from the gear, and will also partake of the bargain
bin. The warriors will find comfort in the cafe area, where they can talk about their pursuits
rather than challenge them on the rock face. These people are not in great shape, and are
likely to flock to the store as early as 3:00 p.m. for ice cream and cookies. We'll have extra
staff on hand during these times.

The curious are difficult to gauge. They will flow in and out all day, and are likely to peruse
our magazine rack for hours (we've allowed for the magazine write-offs). This customer base
is our most lucrative, and is most likely to buy an iced espresso and/or ice cream before or
after their short day hikes. Since espresso is a cash cow for us, we'll offer them a solid
selection of beverages so nobody's disappointed.

3.7.2 Price

We are a store that is positioned for impulse buying; therefore, it is important that we
maintain a flexible pricing strategy.

• Our pricing strategy will be based on competitive parity guidelines. We will not
exceed competitors' prices by more than 10%.
• Price says a lot about a product. The products that are innovative and not available
elsewhere in the region will be marked up to meet the demand curve. We are not
afraid of premium pricing a premium product.
• Espresso beverages will be priced a little below the industry average. Although we
will still make money off the beverages, we consider this a "Loss Leader" strategy
whereby word-of-mouth advertising brings customers in for the drinks, simply to
make them aware of our additional products and services.

3.7.3 Promotion

The Boulder Stop will implement a strong sales promotion strategy. Advertising will be
secondary.

• [Omitted] will be paid up to $2,000 to determine the needs of the surrounding


population and how the company may best meet those needs with promotions,
literature and other marketing programs..
• Promotional campaigns will be partially outsourced to [Omitted].
• Advertising will be consistent with [Omitted].
• Sales promotions and public relation strategies will work together to inform
customers of new products, to encourage an image of community involvement for The
Boulder Stop, and to limit environmental impact.

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3.7.4 Service

Service is important to our mix. We have an obligation to provide quality products and
cheerful service, fast and efficiently. Our service goals are simple and easy to maintain.

We will make plain our policy that we do not accept returns or exchanges without receipt and
proof of product failure. We are in this to make money, as a business, and cannot afford to
give our value to free riders or people with 'buyer's remorse', who choose not to take
responsibility for their purchase(s).

3.8 Marketing Research

We will obtain market research through in-store customer comment cards and the local
Chamber of Commerce.

4.0 Financials

• Sales are expected to grow from $193,000 the first year to $262,000 by year three.

• Expenses will increase with the rate of inflation (3%) minus diminishing cost of goods
(1%).

4.1 Break-even Analysis

For our break-even analysis, we have chosen $3 to represent our average revenue per unit.
Although revenue from ropes and other gear amount to significantly more revenue per unit,
such items skew the revenue curve toward less units sold. We want to engage in a practical
analysis of precisely what it will take to turn the company profitable by using the P&L
statement. In light of this, the Break-even analysis merely becomes a gauge by which we can
measure our monthly revenue streams to predict long-term profitability.

According to the analysis, we will break-even at 1,333 units.

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The Boulder Stop

Break-even Analysis

$2,000

$1,000

$0

($1,000)

($2,000)

($3,000)

0 400 800 1200 1600 2000


Monthly break-even point

Break-even point = where line intersects with 0

Table: Break-even Analysis

Break-even Analysis

Monthly Units Break-even 1,333


Monthly Revenue Break-even $4,000

Assumptions:
Average Per-Unit Revenue $3.00
Average Per-Unit Variable Cost $0.75
Estimated Monthly Fixed Cost $3,000

4.2 Sales Forecast

We will promote to the weekend warriors by hosting fun events like the "Llama Run". Our
part-time sales clerks, also trained in the ways of promotional tactics, will call businesses
within the Bend area and establish additional sponsors for these events.

For in-store sales, our strategy will be to maintain as much on-site POP (point-of-purchase)
literature as possible. Our part-time staff will be responsible for informing customers of the
products and creating the best fit between customer and product. Our employees do not work
on commission.

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Sales Monthly

$30,000

$25,000 Carabiners
Ropes
$20,000 Books and Magazines
Cookies and Cones
$15,000
Espresso Regulars
Espresso Shakes
$10,000
Gear Rentals

$5,000 All Other Gear


Other
$0
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

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Table: Sales Forecast

Sales Forecast
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006
Unit Sales
Carabiners 3,577 4,007 4,488 5,026 5,629
Ropes 331 370 415 465 520
Books and Magazines 181 203 227 254 285
Cookies and Cones 17,358 19,441 21,773 24,386 27,313
Espresso Regulars 23,867 26,731 29,938 33,531 37,555
Espresso Shakes 2,387 2,673 2,994 3,353 3,755
Gear Rentals 362 405 454 508 569
All Other Gear 2,172 2,433 2,725 3,052 3,418
Other 0 0 0 0 0
Total Unit Sales 50,234 56,262 63,013 70,575 79,044

Unit Prices FY 2002 FY 2003 FY 2004 FY 2005 FY 2006


Carabiners $9.13 $9.50 $9.88 $10.27 $10.68
Ropes $141.95 $147.63 $153.54 $159.68 $166.07
Books and Magazines $12.15 $12.64 $13.14 $13.67 $14.21
Cookies and Cones $1.01 $1.05 $1.10 $1.14 $1.18
Espresso Regulars $1.77 $1.84 $1.92 $1.99 $2.07
Espresso Shakes $2.68 $2.79 $2.90 $3.02 $3.14
Gear Rentals $4.05 $4.21 $4.38 $4.56 $4.74
All Other Gear $20.30 $21.11 $21.95 $22.83 $23.74
Other $0.00 $0.00 $0.00 $0.00 $0.00

Sales
Carabiners $32,669 $38,052 $44,323 $51,628 $60,136
Ropes $46,946 $54,682 $63,694 $74,191 $86,417
Books and Magazines $2,197 $2,559 $2,980 $3,472 $4,044
Cookies and Cones $17,574 $20,470 $23,843 $27,773 $32,350
Espresso Regulars $42,287 $49,256 $57,373 $66,828 $77,841
Espresso Shakes $6,403 $7,459 $8,688 $10,120 $11,787
Gear Rentals $1,464 $1,706 $1,987 $2,314 $2,696
All Other Gear $44,084 $51,349 $59,811 $69,668 $81,149
Other $0 $0 $0 $0 $0
Total Sales $193,623 $225,532 $262,700 $305,993 $356,421

Direct Unit Costs FY 2002 FY 2003 FY 2004 FY 2005 FY 2006


Carabiners $3.54 $3.64 $3.75 $3.87 $3.98
Ropes $55.57 $57.24 $58.96 $60.73 $62.55
Books and Magazines $0.76 $0.78 $0.80 $0.83 $0.85
Cookies and Cones $0.10 $0.10 $0.11 $0.11 $0.11
Espresso Regulars $0.25 $0.26 $0.27 $0.28 $0.28
Espresso Shakes $0.40 $0.42 $0.43 $0.44 $0.45
Gear Rentals $0.25 $0.26 $0.27 $0.28 $0.28
All Other Gear $12.13 $12.50 $12.87 $13.26 $13.66
Other $0.00 $0.00 $0.00 $0.00 $0.00

Direct Cost of Sales


Carabiners $12,658 $14,603 $16,845 $19,433 $22,418
Ropes $18,379 $21,202 $24,459 $28,215 $32,549
Books and Magazines $137 $158 $182 $210 $242
Cookies and Cones $1,752 $2,021 $2,331 $2,690 $3,103
Espresso Regulars $6,022 $6,947 $8,014 $9,245 $10,665
Espresso Shakes $964 $1,112 $1,282 $1,479 $1,706
Gear Rentals $91 $105 $121 $140 $162
All Other Gear $26,353 $30,401 $35,071 $40,457 $46,672
Other $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $66,356 $76,549 $88,306 $101,870 $117,518

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4.2.1 Sales by Mail and Web Direct Sales

Our direct sales are seasonal in nature, yet, unlike retail sales, we can maintain small
margins throughout the Northern Hemisphere's Fall/Winter months. We will maintain these
sales by temporarily discontinuing our direct mail sales in favor of Web sales. Website
management costs are between $25-50 a month. Banner advertising on sites such as
outside.com, rockandice.com, and others will cost under $1,500 and will help us maintain
market exposure during the off season.

We will create direct mail catalogs again in April.

4.2.2 Sales by Retail Store Sales

Retail store sales will end in November and begin again in April. Retail sales figures rely
heavily on espresso and carabiner purchases.

The average climber loses one carabiner every trip, and The Boulder Stop will be there to
provide them with the best selection of 'biners in the Redmond area. We will price the 'biners
competitively, but not too competitively. At an average price of $9 per 'biner, we priced
higher than REI, but lower than any of our local competition.

In-store espresso sales are driven by our marketing promotion machine. As people learn that
we are a community-involved, neighborhood organization, we'll gain the trust of locals who
will choose to drive five miles to the The Boulder Stop, at scenic Smith Rock, rather than visit
the local 'strip malled' ice-cream parlor for a cone. This goes back to our main objective: To
become a place where locals and expert climbers can mingle to enjoy good gear, coffee, ice
cream, cookies, etc.

4.3 Expense Forecast

Our expense forecast relies on a conservative inflation forecast of 4% per year minus a 1%
diminishing cost allowance.

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Monthly Expense Budget

$12,000

$10,000

$8,000

Advertising/Promotion
$6,000
Sponsored Activities
Other
$4,000

$2,000

$0
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

Table: Marketing Expense Budget

Marketing Expense Budget FY 2002 FY 2003 FY 2004 FY 2005 FY 2006


Advertising/Promotion $3,000 $3,000 $3,000 $3,000 $3,000
Sponsored Activities $11,250 $9,000 $9,000 $8,000 $7,000
Other $49,500 $42,000 $42,000 $42,000 $42,000
------------ ------------ ------------ ------------ ------------
Total Sales and Marketing Expenses $63,750 $54,000 $54,000 $53,000 $52,000
Percent of Sales 32.92% 23.94% 20.56% 17.32% 14.59%

4.4 Contribution Margins

May and August will provide us with the lowest contribution margins. May, because we are
opening our doors in May, requiring plenty of promotional material, and the supplies
necessary for our big Grand Opening celebration. August, because we've scheduled the Perry
Claw Rock Festival during August. This event will bring some of the finest local musicians and
nationally recognized climbers to Smith Rock for a three-day climbing celebration/contest.

The rest of the seasonal year, our contribution margins will average 40% for the first three
years. Not great for the industry, but then we are marketing more aggressively than our
industry. With our current financial backing and direct sales, we can maintain these 40-50%
contribution margins for at least three years, or long enough to gain local recognition and at
least 70% market share.

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Contribution Margin Monthly

$12,000

$10,000

$8,000

$6,000

$4,000

$2,000

$0
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr

Table: Contribution Margin

Contribution Margin
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006
Sales $193,623 $225,532 $262,700 $305,993 $356,421
Direct Costs of Goods $66,356 $76,549 $88,306 $101,870 $117,518
Other Variable Costs of Sales $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------
Cost of Goods Sold $66,356 $76,549 $88,306 $101,870 $117,518

Gross Margin $127,267 $148,984 $174,394 $204,123 $238,903


Gross Margin % 65.73% 66.06% 66.39% 66.71% 67.03%

Marketing Expense Budget FY 2002 FY 2003 FY 2004 FY 2005 FY 2006


Advertising/Promotion $3,000 $3,000 $3,000 $3,000 $3,000
Sponsored Activities $11,250 $9,000 $9,000 $8,000 $7,000
Other $49,500 $42,000 $42,000 $42,000 $42,000
------------ ------------ ------------ ------------ ------------
Total Sales and Marketing Expenses $63,750 $54,000 $54,000 $53,000 $52,000
Percent of Sales 32.92% 23.94% 20.56% 17.32% 14.59%

Contribution Margin $63,517 $94,984 $120,394 $151,123 $186,903


Contribution Margin / Sales 32.80% 42.12% 45.83% 49.39% 52.44%

5.0 Controls

Our marketing plan is designed around a dynamic internal and external business
environment. We will complete this topic as we gain new insight into our market and program
effectiveness.

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5.1 Implementation

The first milestone is distribution of a flyer to announce our grand opening celebration. The
flyer will appear on telephone poles (where legal), in outdoor stores, and will be mailed to our
list of direct-mail customers. Our celebration will consist of an outdoor barbecue, gunny sack
races, climber-dunking festivities, and llama racing. Local vendors have been invited to set
up booths and participate, subject to prior approval.

During the flyer campaign, Pan Silverton will arrange for Yellow Pages print ads and Internet
Web banner advertising within the Bend/Redmond area, as well as the Portland area. The
Yellow Page ads are purchased through a flat-fee to USWest Dex, and The Yellow Pages
company. Banner ads are more complex and require a media kit with a value-added offering
to retailers with Internet websites. The pitch will be - help us market ourselves and we will
add your company to our online listing of outside resources.

The first annual Llama Run is a special event for the St. Charles Medical Center in Bend.
Llamas and their owners will converge on Redmond for races that include 1st, 2nd, and 3rd-
place winners. First prize wins $1,000, 2nd wins $750, and 3rd wins $250. The Most Colorful
Llama award will be given to one winner at the end of the show, and will include a bag of
llama feed and a $100 gift certificate to the Heathman restaurant. The entry fee will be $100
per llama, and all fees will go directly to St. Charles Medical Center.

The Perry Claw Rock Festival will bring big-name climbing stars such as Louis Baruqe and
Sheri Lassiter to Smith Rock for a full day climb. Climbers will be available to sign autographs
on gear and such. Admission will be $7 and all proceeds will go to support prostate cancer
research.

The Boulder Stop will be one of the sponsors of the PA Golf Classic held in Bend, OR on Sept.
1, 1999.

Table: Milestones

Milestones

Advertising Start Date End Date Budget Manager Department


Yellow pages print and web listings 4/1/1999 5/1/1999 $500 Silverton Marketing
Print and distribute Grand Opening
4/1/1999 5/15/1999 $400 Silverton Marketing
flyer
Other $0
Total Advertising Budget $900
PR Start Date End Date Budget Manager Department
Grand Opening Celebration 5/15/1999 5/15/1999 $3,500 Walsh Marketing
1st Annual Llama run 7/23/1999 7/23/1999 $2,000 Walsh Marketing
Perry Claw Rock Festival 8/1/1999 8/3/1999 $3,500 Walsh Marketing
PA Golf Classic -- Sponsor for
9/1/1999 10/1/1999 $2,000 Walsh Marketing
evening hikes
Total PR Budget $11,000
Direct Marketing Start Date End Date Budget Manager Department
Print and distribute Grand Opening
4/1/1999 5/15/1999 $400 Silverton Marketing
flyer
Other $0
Total Direct Marketing Budget $400
Web Development Start Date End Date Budget Manager Department
Other $0
Other $0
Total Web Development Budget $0
Other Start Date End Date Budget Manager Department
Other $0
Other $0
Total Other Budget $0
Totals $12,300

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5.2 Marketing Organization

We are a small company where sales and marketing consist of two to three people. Bill Walsh
and Pan Silverton will lead and implement the marketing programs, while part-time
employees will carry out many of the tasks. The marketing organization is very informal, but
tightly managed, with clear obtainable goals, and a thorough list of deadlines. Details are
very important to the implementation of our marketing plan, the most important being those
that are unseen. Marketing will do its very best to plan for the unforeseeable.

5.3 Contingency Planning

Contingency planning is an important part of the marketing organization, as noted in the


previous topic.

Our biggest potential problems, the ones that will limit our ability to create programs, are
financial. Our budget relies on sales figures that are reliable and well-researched, but are also
affected by such things as weather and political difficulties. Our first plan is a 'scale-down'
plan; that is, we will eliminate the Llama run, Rock festival, and PA Golf sponsorship and wait
out the year, relying on website and direct sales to cover our cost of doing business. The
direct business alone will not support our financial commitments, but with excellent credit,
inventory as collateral, and basic Smith Rock foot traffic, we will survive without popular
marketing programs.

If we lose a part-time employee, there will be plenty to find elsewhere. If we lose Pan
Silverton, his skills will be difficult to replace, but we will have plenty of quality applicants
living in the Bend/Redmond area. Will also have the option of hiring away competitors'
employees, as they are poorly paid and are given very little company ownership.

Our climbing gear supply chain will survive as long as there are many competitors making
climbing gear and powerful international service companies to deliver the gear. We will never
have difficulty finding coffee, because this IS the Pacific Northwest and fresh-roasted
coffee/espresso beans are available in abundance.

Page 23
Appendix

Appendix Table: Sales Forecast

Sales Forecast
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
Unit Sales
Carabiners 0% 420 428 437 446 455 432 108 108 108 108 108 420
Ropes 0% 40 41 42 42 43 41 10 10 10 10 10 30
Books and Magazines 0% 25 26 26 27 27 26 0 0 0 0 0 25
Cookies and Cones 0% 2,400 2,448 2,497 2,547 2,598 2,468 0 0 0 0 0 2,400
Espresso Regulars 0% 3,300 3,366 3,433 3,502 3,572 3,393 0 0 0 0 0 3,300
Espresso Shakes 0% 330 337 343 350 357 339 0 0 0 0 0 330
Gear Rentals 0% 50 51 52 53 54 51 0 0 0 0 0 50
All Other Gear 0% 250 255 260 265 271 276 69 69 69 69 69 250
Other 0% 0 0 0 0 0 0 0 0 0 0 0 0
Total Unit Sales 6,815 6,951 7,090 7,232 7,377 7,027 187 187 187 187 187 6,805

Unit Prices May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
Carabiners $9.00 $9.03 $9.06 $9.09 $9.12 $9.15 $9.18 $9.21 $9.24 $9.27 $9.30 $9.34
Ropes $140.00 $140.47 $140.93 $141.40 $141.88 $142.35 $142.82 $143.30 $143.78 $144.26 $144.74 $145.22
Books and Magazines $12.00 $12.04 $12.08 $12.12 $12.16 $12.20 $12.24 $12.28 $12.32 $12.36 $12.41 $12.45
Cookies and Cones $1.00 $1.00 $1.01 $1.01 $1.01 $1.02 $1.02 $1.02 $1.03 $1.03 $1.03 $1.04
Espresso Regulars $1.75 $1.76 $1.76 $1.77 $1.77 $1.78 $1.79 $1.79 $1.80 $1.80 $1.81 $1.82
Espresso Shakes $2.65 $2.66 $2.67 $2.68 $2.69 $2.69 $2.70 $2.71 $2.72 $2.73 $2.74 $2.75
Gear Rentals $4.00 $4.01 $4.03 $4.04 $4.05 $4.07 $4.08 $4.09 $4.11 $4.12 $4.14 $4.15
All Other Gear $20.00 $20.07 $20.13 $20.20 $20.27 $20.34 $20.40 $20.47 $20.54 $20.61 $20.68 $20.75
Other $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Sales
Carabiners $3,780 $3,868 $3,959 $4,052 $4,146 $3,952 $991 $995 $998 $1,001 $1,005 $3,921
Ropes $5,600 $5,731 $5,865 $6,002 $6,143 $5,855 $1,469 $1,474 $1,478 $1,483 $1,488 $4,357
Books and Magazines $300 $307 $314 $322 $329 $314 $0 $0 $0 $0 $0 $311
Cookies and Cones $2,400 $2,456 $2,514 $2,572 $2,633 $2,509 $0 $0 $0 $0 $0 $2,489
Espresso Regulars $5,775 $5,910 $6,048 $6,190 $6,335 $6,038 $0 $0 $0 $0 $0 $5,990
Espresso Shakes $875 $895 $916 $937 $959 $914 $0 $0 $0 $0 $0 $907
Gear Rentals $200 $205 $209 $214 $219 $209 $0 $0 $0 $0 $0 $207
All Other Gear $5,000 $5,117 $5,237 $5,359 $5,485 $5,613 $1,408 $1,413 $1,417 $1,422 $1,427 $5,186
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total Sales $23,930 $24,489 $25,063 $25,649 $26,249 $25,405 $3,868 $3,881 $3,894 $3,907 $3,920 $23,369

Direct Unit Costs May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
Carabiners 0.00% $3.50 $3.51 $3.52 $3.53 $3.54 $3.54 $3.55 $3.56 $3.57 $3.58 $3.59 $3.60
Ropes 0.00% $55.00 $55.14 $55.28 $55.41 $55.55 $55.69 $55.83 $55.97 $56.11 $56.25 $56.39 $56.53
Books and Magazines 0.00% $0.75 $0.75 $0.75 $0.76 $0.76 $0.76 $0.76 $0.76 $0.77 $0.77 $0.77 $0.77
Cookies and Cones 0.00% $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10 $0.10
Espresso Regulars 0.00% $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.26 $0.26 $0.26 $0.26
Espresso Shakes 0.00% $0.40 $0.40 $0.40 $0.40 $0.40 $0.41 $0.41 $0.41 $0.41 $0.41 $0.41 $0.41
Gear Rentals 0.00% $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.25 $0.26 $0.26 $0.26 $0.26
All Other Gear 0.00% $12.00 $12.03 $12.06 $12.09 $12.12 $12.15 $12.18 $12.21 $12.24 $12.27 $12.30 $12.33
Other 0.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

Direct Cost of Sales


Carabiners $1,470 $1,503 $1,537 $1,572 $1,607 $1,531 $384 $385 $386 $386 $387 $1,511
Ropes $2,200 $2,250 $2,300 $2,352 $2,405 $2,291 $574 $576 $577 $578 $580 $1,696
Books and Magazines $19 $19 $20 $20 $20 $20 $0 $0 $0 $0 $0 $19
Cookies and Cones $240 $245 $251 $257 $262 $250 $0 $0 $0 $0 $0 $247
Espresso Regulars $825 $844 $863 $882 $902 $859 $0 $0 $0 $0 $0 $848
Espresso Shakes $132 $135 $138 $141 $144 $137 $0 $0 $0 $0 $0 $136
Gear Rentals $13 $13 $13 $13 $14 $13 $0 $0 $0 $0 $0 $13
All Other Gear $3,000 $3,068 $3,137 $3,208 $3,280 $3,354 $841 $843 $845 $847 $849 $3,084
Other $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Subtotal Direct Cost of Sales $7,898 $8,076 $8,258 $8,445 $8,635 $8,454 $1,798 $1,803 $1,807 $1,812 $1,816 $7,553

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Appendix

Appendix Table: Sales Breakdown by Mail and Web Direct Sales

Sales by: Mail and


Web Direct Sales
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
Sales
Name me 0 0 0 0 0 0 0 0 0 0 0 0
Name me 0 0 0 0 0 0 0 0 0 0 0 0
Other 6,815 6,951 7,090 7,232 7,377 7,027 187 187 187 187 187 6,805
Total 6,815 6,951 7,090 7,232 7,377 7,027 187 187 187 187 187 6,805
Average 2,272 2,317 2,363 2,411 2,459 2,342 62 62 62 62 62 2,268

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Appendix

Appendix Table: Sales Breakdown by Retail Store Sales

Sales by: Retail Store


Sales
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
Sales
Name me 0 0 0 0 0 0 0 0 0 0 0 0
Name me 0 0 0 0 0 0 0 0 0 0 0 0
Other 6,815 6,951 7,090 7,232 7,377 7,027 187 187 187 187 187 6,805
Total 6,815 6,951 7,090 7,232 7,377 7,027 187 187 187 187 187 6,805
Average 2,272 2,317 2,363 2,411 2,459 2,342 62 62 62 62 62 2,268

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Appendix

Appendix Table: Sales Breakdown by Region

Sales by: Region


May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
Sales
Name me 0 0 0 0 0 0 0 0 0 0 0 0
Name me 0 0 0 0 0 0 0 0 0 0 0 0
Other 6,815 6,951 7,090 7,232 7,377 7,027 187 187 187 187 187 6,805
Total 6,815 6,951 7,090 7,232 7,377 7,027 187 187 187 187 187 6,805
Average 2,272 2,317 2,363 2,411 2,459 2,342 62 62 62 62 62 2,268

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Appendix

Appendix Table: Contribution Margin

Contribution Margin
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
Sales $23,930 $24,489 $25,063 $25,649 $26,249 $25,405 $3,868 $3,881 $3,894 $3,907 $3,920 $23,369
Direct Costs of Goods $7,898 $8,076 $8,258 $8,445 $8,635 $8,454 $1,798 $1,803 $1,807 $1,812 $1,816 $7,553
Other Variable Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Cost of Goods Sold $7,898 $8,076 $8,258 $8,445 $8,635 $8,454 $1,798 $1,803 $1,807 $1,812 $1,816 $7,553

Gross Margin $16,031 $16,413 $16,804 $17,204 $17,614 $16,951 $2,070 $2,078 $2,087 $2,095 $2,103 $15,817
Gross Margin % 66.99% 67.02% 67.05% 67.08% 67.10% 66.72% 53.51% 53.55% 53.59% 53.62% 53.66% 67.68%

Marketing Expense Budget May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
Advertising/Promotion $900 $350 $350 $350 $350 $350 $0 $0 $0 $0 $0 $350
Sponsored Activities $3,500 $0 $2,000 $3,500 $2,000 $0 $0 $0 $0 $0 $0 $250
Other $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $1,500 $1,500 $1,500 $1,500 $1,500 $6,000
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Sales and Marketing Expenses $10,400 $6,350 $8,350 $9,850 $8,350 $6,350 $1,500 $1,500 $1,500 $1,500 $1,500 $6,600
Percent of Sales 43.46% 25.93% 33.32% 38.40% 31.81% 25.00% 38.78% 38.65% 38.52% 38.39% 38.27% 28.24%

Contribution Margin $5,631 $10,063 $8,454 $7,354 $9,264 $10,601 $570 $578 $587 $595 $603 $9,217
Contribution Margin / Sales 23.53% 41.09% 33.73% 28.67% 35.29% 41.73% 14.73% 14.90% 15.06% 15.23% 15.40% 39.44%

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