Executive Summary

This article represents a business plan sample for Product Placement Opportunities®, a marketing services company that provides a platform for medium sized businesses to engage in product placement in a cost-effective manner through its website www.pp-opportunities.com.

The business plan sample is built upon the gap in the in the marketing services industry that relates to allowing media, special event and computer games businesses to utilise their product placement opportunities in a direct manner, without using the services of marketing agencies.

The comprehensiveness of the business plan sample is ensured by explaining mission statement, business strategy and objectives in a detailed manner.

The main source of revenue for Product Placement Opportunities® relates to charging media, special event and computer games and other businesses for adverting their product placement opportunities on www.pp-opportunities.com. Price skimming pricing strategy has been chosen as the most suitable for the business.

Analysis of principal personnel qualifications and experience contained within the plan highlights the ways in which competitive advantages are going to be derived.

Moreover, cash flow forecast, profit and loss accounts forecast and balance sheet associated with the business plan have been developed on the basis of situational analysis and analysing market size for Product Placement Opportunities® services.

The business plan sample also contains discussion related to relevant legal requirements, such as the company’s legal structure, commercial dealings, insurance and others.

Glossary of Terms

Business plan – “a document that sets out the basic idea underlying a business and related startup considerations” (Longenecker et al, 2005, p.117)

Product placement – “an advertising technique used by companies to subtly promote their products through a non-traditional advertising technique, usually through appearances in film, television, or other media” (Business Dictionary, 2016, online)

Organisational mission – “organisation’s fundamental purpose for existing, defining who the organisation is, its values, and the customers it wishes to serve” (Berkowitz, 2010, p.43)

 

1. Description of Business

This business plan sample is devised for Product Placement Opportunities®, a marketing services company that provides a platform for medium sized businesses, like www.pp-opportunities.com.

Product placement has been recognised as one of the most effective marketing techniques by marketing researchers and practitioners due to a range of benefits it offers such as ensuring continuity for the advertisement, effective targeting the specific customer segments and achieving celebrity endorsements (Saxena, 2009).

However, product placement is considered to be one of the most expensive marketing techniques (Smith, 2003) and finding appropriate product placement opportunities is can be highly complex and time-consuming experience (Winer, 2009), therefore currently the practice of product placement is mainly used by large multinational brand.

Today offering cost-effective product placement opportunities for businesses of various sizes can be identified as a gap in the marketing services industry and Product Placement Opportunities® aims to take an advantage from this situation in the marketplace for the purposes of profit maximisation.

The implementation of the business plan is going to involve setting up www.pp-opportunities.com website, where various media organisations, shows and special events organisers of all sizes, and computer games manufacturers would be able to showcase product their placement offers with a wide range of advanced website settings and capabilities, and organisations of various sizes would be able to contact media and event managers directly to discuss the potentials for product placement.

The essence of the business plan is that www.pp-opportunities.com is going to connect businesses and media and event hosts directly, thus saving considerable amount of financial resources that otherwise would be spent to pay the services of marketing agencies. Moreover, www.pp-opportunities.com is planned to contain hundreds of product placement opportunities providing businesses with a wide choice.

 

2. The Mission and Vision Statement

Product Placement Opportunities®, has the following mission statement:

Assisting clients to achieve long-term growth through providing innovative and efficient product placement services in a cost-effective manner

The business vision for Product Placement Opportunities®, involves increasing the size and reputation of www.pp-opportunities.com to an extent that the website would dominate as a platform for engaging in product placement in a global scale. In other words,

www.pp-opportunities.com is devised to become globally associated with   finding product placement opportunities, in the same manner as Facebook and Google are associated with social networking sites and search engines respectively.

2.1 Business Idea

Product Placement Opportunities® business idea is based on the gap in product placement marketing services. Specifically, not only large multinational businesses, but also various business enterprises of smaller sizes are going to be offered the opportunity to engage in product placement in a cost-effective manner.

The costs of utilising product placement opportunities are going to be reduced through eliminating the need for the services of various marketing agencies, and encouraging the hosts of regional media and special events to showcase their product placement opportunities.

2.2 Trading Status

Product Placement Opportunities® is going to operate under the trading status of Private Limited Liability Company. The rationale behind the choice of this specific trading status is the possibility of maintaining control and ownership of the company at the same time when limiting the level of liability towards the funds provided for setting up the business.

 

2.3 Management & Ownership

As Private Limited Liability Company Product Placement Opportunities® is going to be owned by three shareholders in the following manner:

The first shareholder is going to contribute £60,000 in exchange for 40% of ownership. Similarly, the second shareholder will obtain 40% of ownership for £60,000. The share of the second shareholder is going to be 20% that will be obtained for £30,000.

Product Placement Opportunities® is going to be managed mainly by the first shareholder, and regular meetings are going to be organised with the participation of all three shareholders in order to discuss and develop strategic direction of the company.

2.4 Business Objectives

The following business objectives for Product Placement Opportunities® have been formulated according to SMART principle, where the acronym stands for specific, measurable, achievable, realistic and timely:

• To generate at least £1,000,000 cash from sales in total by the end of the first year of operations;
• To achieve break-even for the net cash flow no later than February, 2017;
• To be operating in at least 10 different countries by January, 2019;
• To maintain an annual shareholder returns of at least 16% starting from the second year in the business.

2.5 Business Strategies

Business strategies available to Product Placement Opportunities® can be effectively explained by referring to the model of Generic Strategies introduced by Michael Porter (1985). The model divides strategies into two broad – cost leadership and differentiation strategies that can also be applied in relation to narrow segments.

Figure 1 Porter’s Generic Strategies

Cost leadership is going to be used as the main business strategy for Product Placement Opportunities®. Accordingly, the company is going to compete with a wide range of marketing agencies through offering its services in significantly reduced prices.

However, it is important to note that the nature of Product Placement Opportunities® services is going to differ significantly from the services of marketing agencies in a way that Product Placement Opportunities® services are going to be limited to offering an online platform for advertising and finding product placement opportunities and providing relevant advices of a general nature.

3. Product and/or Service Plan

3.1 Product Placement Opportunities® service description

The primary service Product Placement Opportunities® offers its customers relates to providing an effective online platform through www.pp-opportunities.com website in order to advertise and find product placement opportunities. This service is planned to be provided in a convenient manner with the aid of advanced functions and features incorporated within the website.

Moreover, Product Placement Opportunities® customers are going to be supplied with valuable information and a wide range of text and video case studies free of charge that are going to assist them with implementing product placement with an increased level of efficiency.

3.2 Product Placement Opportunities® Unique Features

Services to be offered by Product Placement Opportunities® are associated with the following set of unique features that are intended to contribute to the company’s competitive advantages:

• Possibility of finding attractive product placement opportunities in a global scale
• The showcase of product placement opportunities for a wide range of budgets from several thousand to several million GBP
• Valuable marketing information, specific advices and case studies regarding effectively using product placement

 

3.3 Pricing Strategy & Value Issues

Main pricing strategies can be divided into three categories: cost-based, customer-based, and competitor-based (Boone and Kurtz, 2010). Cost-based pricing strategy involves adding pre-defined profit rate upon the level of costs incurred, whereas customer-based pricing relates to identifying specific rate that customers would be comfortable to pay.

Competitor-based pricing strategy, on the other hand, involves studying rates of main competitors and formulating prices accordingly.

The price skimming variation of customer-based pricing strategy is the most appropriate pricing approach to be adopted in relation to Product Placement Opportunities® services. “Price skimming means that a higher price is charged when a product or service is first introduced” (Hansen and Mowen, 2006, p.99) and the rationale behind the choice of this strategy is the absence of analogue service offered online in a global scale.

Accordingly, film and media, special events and computer games organisations that offer product placement opportunities for businesses through www.pp-opportunities.com are going to be charged premium prices. It is important to note that, the prices to be paid by film and media, special events and computer games organisations to advertise their product placement opportunities are going to be only a fraction of amount of money otherwise they would have paid to marketing agencies assisting with product placement.

4. The Market Plan

4.1 Market Research Methodology

Market research methodology comprises a set of specific techniques that are used to study various aspects of the market such as the level of demand for a product or service, the level of customer satisfaction, consumer attitudes regarding the brand image etc (Shimp, 2010).

Within the scope of this business plan in particular, a set of secondary and primary research methods have been utilised in order to identify the level of demand for the proposed services and to formulate business objectives accordingly.

4.2 Secondary Research

The results of a comprehensive secondary research involving a wide range of secondary data sources such as business journals and magazines, marketing industry reports, online publications, etc. indicate to the gap in marketing services industry that Product Placement Opportunities® aims to fill.

For example, the increasing level of popularity and effectiveness of product placement has been stressed by Baker and Hart (2007) and Trehan and Trehan (2011), whereas Cowey and Barron (2008) confirm that this form of marketing is mainly popular with multinational brands.

Accordingly, creating an online platform for businesses offering product placement opportunities and companies of various sizes seeking such opportunities to deal with each other without using the services of various marketing agencies can be identified as an attractive business opportunity.

4.3 Primary Research

Primary research relates to first-hand data collection that does not exist as yet (Easterby-Smith et al., 2008). There is a wide range of primary data collection methods available that include interviews, questionnaires, focus groups, experiments etc.

According to the findings of preliminary primary research conducted for the business plan with the use of informal unstructured interviews there is need for the services to be offered by Product Placement Opportunities®. The informal interviews have been conducted with a sample group of 3 people employed within marketing industry. When asked about their opinions regarding the concept of this business plan, all members of the sample group confirmed the demand for a website such as www.pp-opportunities.com.

4.4 Situational Analysis and Market Size

The macroeconomic situation in the industry of marketing services in UK can be characterised as a highly competitive with a set of large players and many medium and small marketing agencies offering their services. The majority of these firms offer a portfolio of marketing services that in some cases include product placement services.

“The UK ‘paid for’ product placement market is valued at £9.7 million to £29.1 million, according to NMG Product Placement” (Jaques, 2012, online).  However, there are alternative, bolder estimations as well. For example, “Product placement company MirriAd claims it should be worth at least 5% of the total UK TV advertising market, as in the US. That would give it an annual value of £150 million” (AdItWorld, 2012, online).

4.5 The Demand for Product Placement Opportunities® Services

Demand for the services to be offered by Product Placement Opportunities® has been identified and confirmed by conducting secondary and primary market researches as explained above.

This demand is fuelled by increasing popularity of product placement as an effective marketing strategy, evolution of new forms of product placement, such as product placement in increasing ranges of video games, and high level of cost various marketing agencies currently charge for the services of intermediating to facilitate product placement.

4.6 Product Placement Opportunities® Target Customers

Product Placement Opportunities® is going to operate on a B2B basis and accordingly, its target customers consist of media, special events, computer games and a range of other organisations seeking to generate revenue stream through utilising product placement opportunities within their own products and services.

Specifically, among the type of organisations described above Product Placement Opportunities® core customers are the ones that do not wish to pay premium fees to marketing agencies to find product placement opportunities due to their tight budgets or a range of other reasons.

 

4.7 The Competition

There is a fierce competition in marketing services industry in UK which is dominated with a number of large players such as Global Marketing Group, Wordbank, Experian and a large numbers of smaller online and offline marketing agencies.

Significant competitors for Product Placement Opportunities® include BRANDirector Entertainment, Weber Shandwick and New Media Group due to the specialisation of these firms on product placement in particular.

However, there is no direct competitor for Product Placement Opportunities® that operates with the same business strategy described in this business plan. In other words, currently there is no website that merely provides a platform for companies offering and seeking product placement opportunities to find each-other.

 

4.8 Unique Selling Point

The following unique selling points of Product Placement Opportunities® services can be highlighted as a competitive edge of the brand:

• Possibilities of finding businesses to utilise product placement opportunities for a small fraction of money that otherwise would have been paid for the services of marketing agencies
• High level of simplicity associated with advertising and finding product placement opportunities online
• Advanced website features and capabilities that allows customers to engage in highly informed decision making

 

4.9 Further Research Requirement

Further studies involving primary data collection need to be conducted in order to clarify certain points associated with this business plan. Specifically, prior to commencing business operations comprehensive information regarding consumer preferences need to be collected with the use of focus groups.

Moreover, new patterns and market tendencies in relation to product placement need to be studied so that proactive approach can be adopted by Product Placement Opportunities® management in terms of sophisticating services to be offered through www.pp-opportunities.com.

 

4.10 Product Placement Opportunities® Marketing Strategy

Marketing strategy for Product Placement Opportunities® involves utilisation of various components of marketing communication mix in an integrated manner with a heavy emphasis on advertising and direct marketing.

Namely, www.pp-opportunities.com advertising is going to be implemented online through relevant websites, and the direct marketing will involve sending personalised marketing messages to media, special events, and computer games organisations of various sizes and communicating to them unique selling points of the brand in an effective manner.

 

4.11 Selling Methods

Product Placement Opportunities® services are going to be sold with a wide range of online and offline methods such as PayPal, Bank Transfers, Maestro and Visa cards, Ukash, and Direct Debit.

 

5. Human Resource Plan

5.1 Principal’s Qualification and Experience

Qualifications and work experience of operations manager of Product Placement Opportunities® effectively contributes to the achievement of business objectives formulated above. Specifically Product Placement Opportunities® operations manager is currently studying towards a degree in business, and has an experience of managing people in formal and informal circumstances.

5.2 Personnel Qualifications and Experience

Product Placement Opportunities® personnel are going to be organised under three different departments according to their functions: IT, marketing, and finance.

The main requirements to be imposed to Product Placement Opportunities® IT staff include work experience, track record proved through a portfolio of projects and high level of creativity. Notably, formal qualifications are not included into requirements for Product Placement Opportunities® IT staff in order not to eliminate the chances of employing individuals who do not possess formal IT degree, nevertheless, they are highly skilled IT professionals and have impressive portfolio of works.

Requirements for marketing and finance staff include degree equal to or above undergraduate level, formal work experience of at least 3 years, creativity and interpersonal skills.

6. Financial Plan for Product Placement Opportunities®

6.1 Cash Flow Forecast

The following table represents a summary of Product Placement Opportunities® cash flow forecast for the duration of three years. Detailed cash flow forecast for each month for the duration of three years can be found on Appendix of this business plan.

	Total	Total	Total
	Year-1	Year-2	Year-3
Opening Cash Balance	£75 000,00	£69 400,00	£316 600,00
CASH IN
Cash From Sales	£1 000 000,00	£1 500 000,00	£2 000 000,00
TOTAL CASH IN	£1 000 000,00	£1 500 000,00	£2 000 000,00
CASH OUT
Cost of Sale (COS)	£440 000,00	£600 000,00	£800 000,00
Staff Expenses	£240 000,00	£240 000,00	£288 000,00
Marketing Expenses	£240 000,00	£240 000,00	£288 000,00
Rent	£120 000,00	£120 000,00	£120 000,00
Financial	£4 800,00	£4 800,00	£40 000,00
Taxes	£0,00	£0,00	£58 320,00
IT/Website expenses	£48 000,00	£48 000,00	£72 000,00
TOTAL CASH OUTFLOW	£1 092 800,00	£1 252 800,00	£1 666 320,00
Net Cash	-£92 800,00	£247 200,00	£333 680,00
Closing Cash Balance (Cummulative)	-£17 800,00	£316 600,00	£650 280,00

Table 1 Cash Flow Forecast

 

6.2 Profit & Loss Accounts Forecast

 

	Year ending June 2017	Year ending June 2018	Year ending June 2019
Sales	1000000	1500000	2000000
Cost of Sales	-440000	-600000	-800000
Gross Profit	560000	900000	1200000
Salary and Wages	-240000	-240000	-288000
Marketing Costs	-240000	-240000	-288000
Rent	-120000	-120000	-120000
IT Expenses	-48000	-48000	-72000
Finance Costs	-4800	-4800	-40000
Profit Before Tax	-92800	247200	392000
Tax	15840	-74160	-129600
Net Profit	-76960	173040	262400

Table 2 Profit and Loss Accounts Forecast

6.3 Balance Sheet

 

	Year 1: July 2016- June 2017			Year 2: July 2017 – June 2018			Year 3: July 2018 – June 2019
Fixed Assets	Total	Fixture & Fittings	Office Equip.	Total	Fixture & Fittings	Office Equip.	Total	Fixture & Fittings	Office Equip.
	£	£	£	£	£	£	£	£	£
Cost at beginning of year	0	0	0	14130	6750	7380	36077	19005	17072
Additions during year	15700	7500	8200	27700	15200	12500	29300	16100	13200
Total Cost	15700	7500	8200	41830	21950	19880	65377	35105	30272
Accumulated depreciation at the beginning of year	0	0	0	1570	750	820	5753	2945	2808
Depreciation for the year	1570	750	820	4183	2195	1988	6537,7	3510,5	3027,2
Total Accumulated at the end of year	1570	750	820	5753	2945	2808	12290,7	6455,5	5835,2
Net Book Value	14130	6750	7380	36077	19005	17072	53086,3	28649,5	24436,8

Table 3 Balance Sheet

7. Legal Requirements

7.1 Product Placement Opportunities® Legal Structure

Product Placement Opportunities® legal structure has been selected as Private Limited Liability Company. The reasons for the choice of Private Limited Liability Company legal structure include the fact that the members cannot be held for the actions of the company, yet their have full control over the organisation (Hall et al., 2007).

7.2 Business Name

The official business name of Product Placement Opportunities® is going to be reserved for the company through Companies House UK. The name of Product Placement Opportunities® effectively addresses two main concerns associated with business names: legal requirements and commercial use.

In terms of legal requirement, it has been confirmed through Companies House UK website that no company currently operates under the business name of Product Placement Opportunities®, and in terms of commercial use this name fully communicates the main service proposal of the business.

7.3 Business Property

No physical business properties are going to be possessed by Product Placement Opportunities® at the initial stages of operations and the company office is going to be rented. In terms of intellectual properties, any innovations authored by Product Placement Opportunities® are going to be protected by obtaining relevant patents in a timely manner.

7.4 Commercial Dealings

Due to B2B nature of Product Placement Opportunities® business operations, the company is going to engage in commercial dealings with a wide range of other organisations. Terms of conditions of commercial dealings are going to be clearly specified in contracts in accordance to the current relevant legislation.

7.5 Tax, NI and VAT

A range of financial issues such as taxes, national insurance (NI) and value added tax (VAT) are going to be dealt with by Product Placement Opportunities® in a responsible manner according to relevant rules and legislations. It is important to note that failure to adhere to this principle is most likely to result in highly detrimental consequences for the business.

 

7.6 Insurance

Insurance is an important consideration for Product Placement Opportunities®. Insurance is going to be used in order to safeguard the company against various risks and specific forms of insurance to be used by Product Placement Opportunities® include but not limited to life insurance of partners, and medical insurance for key members of the team.

8. Contingency Plan and Exit Strategy

Contingency options need to be provisioned within business plans in order to be able to accommodate various crises and unforeseen circumstances effectively (Palepu et al., 2007). Such circumstances in relation to Product Placement Opportunities® in particular might include revenues being lower than expected, start-up costs amounting higher than expected, higher than expected operating costs, and/or unexpected shocks in the market. Upon the occurrence of any of these circumstances meeting is going to be organised with the participation of all three partners and modifications to the business strategy will be made if necessary.

The most rational exit strategy for Product Placement Opportunities® is the sale of the business and distribution of the money among partners according to their share of the company. Specifically, upon the sale of Product Placement Opportunities® two partners that have initially invested £60,000 each are going to obtain 40% of the sale money each, whereas the third partner is going to obtain the remaining 20%.

9. References

• AdItWorld (2012) Available at: http://www.adworldit.com/news/news-headline/
• Baker, MJ & Hart, S. (2007) “The Marketing Book” Butterworth-Heinemann
• Berkowitz, E.N. (2010) “Essentials of Health Care Marketing” Jones and Bartlett Learning
• Boone, LE & Kurtz, DL (2010) “Contemporary Business” John Wiley & Sons
• Cowey, E. & Barron, C. (2008) “When product placement goes wrong: the effects of program liking and placement prominence”, Journal of advertising, vol.37, pp. 89-98

• Easterby-Smith, M, Thorpe, R. & Jackson, P. (2008) “Management Research” 3rd ed, SAGE Publications Ltd., London
• Hall, R, Jones, C, Raffo, I, Chambers, D. & Gray, B.  (2007) “Business Studies, Pearson Education”  Third edition, UK

• Hansen, D.R. & Mowen, M.M. (2006) “Cost Management” Cengage Learning
• Jaques, L. (2012) “UK paid for product placement market estimated to be £9.7m to £29.1m” Media Trends, Available at: http://mediatel.co.uk/media-trends/news/2012/03/14/uk-paid-for-product-placement-market-estimated-to-be-9-7m-to-29-1m/
• Longenecker, J.G., Moore, C.V., Palich, L.E. & Petty, J.W. (2005) “Small Business Management: An Entrepreneurial Emphasis” Cengage Learning
• Michael, P. (1985) “Competitive Advantage” The Free Press, NY
• Palepu, K.G., Healy, P.M., Geek, E. & Bernard, V.L. (2007) “Business Analysis and Valuation: Texts and Cases” Cengage Learning
• Product Placement (2012) Business Dictionary, Available at: http://www.businessdictionary.com/definition/product-placement.html
• Saxena, R. (2009) “Marketing Management” 4^th edition, Tata McGraw-Hill Education
• Shimp, T.A. (2010) “Advertising, promotion, and other aspects of integrated marketing communications” Cengage Learning
• Smith, P.R. (2003) “Great Answers to Tough Marketing Questions” Kogan Page
• Trehan, M. & Trehan, R. (2011) “Advertising and Sales Management” FK Publications
• Winer, R. (2009), “New Communications Approaches in Marketing: Issues and Research Directions,” Journal of Interactive Marketing, 23 (2), 108–17.