Dutch Boy Executive Summary
Table of Contents
I. Executive Summary 3
II. Marketing Plan 4 A. Situation Analysis 4
B. Environmental Analysis 8
C. Objectives 10
D. Marketing Strategy 11
E. Action Programs 18
F. Budgeting 22
G. Resources 25
H. Controls 25
I. Contingency Planning 27
III. Information Sources 28
IV. Appendix 29
I. Executive Summary
Founded in 1907, Dutch Boy continues to be an industry leader in delivering innovative and high-quality products and packaging solutions, and is one of the most recognizable brands in the market. Dutch Boy is one of the leading brands of Sherwin-Williams Company architectural coating product.
The goal of this marketing plan is to outline the strategies, tactics, and programs that will make the sales goals outlined in the Dutch Boy Paint business plan a reality in October 2007.
Dutch Boy, unlike a typical paint, provides a unique and convenient package made of plastic to easy work with it. Dutch Boy Paints is the answer to an increasing demand in Do-It-Yourself …show more content…
customers, most of them women, young couples and new homeowners, and starting business owners. The public wants: (1) easy to handle and storage product for less time consuming in painting and (2) a quality products, people buy painted walls not only the paint.
Marketing will play a vital role in the success of Dutch Boy Paints. Dutch Boy must build a brand around the products it offers by heavily promoting itself through local television, events promotions, and print advertising. The product launch event will be a key to success since it will have massive press and news coverage. Marketing efforts are just beginning by the time a potential customer tries the products for the first time. A strong emphasis will be put on keeping customers and building brand loyalty through programs focused on staffing, experience, and customer satisfaction.
For this year we expect to implement Dutch Boy products in the Puerto Rico market distributing through Sherwin-Williams already established stores and in the Wal-Mart mega stores. For this strategy we forecast a total of $1,858,251.00 of expenses and a projected net income of $1,611,933.30 during the first year of launch.
II. Marketing Plan
A. Situation Analysis
About 1906, a consortium of white lead manufacturers, newly combined under the name of The National Lead Company, were looking for a symbol to unite them. As the finest white lead manufacturers, using what was called the "Dutch method" of processing, and also because the people of Holland had a worldwide reputation for keeping their homes immaculately white-washed, they decided upon a little Dutch boy. Artist Rudolf Yook, an illustrator of Dutch ancestry, came up with the initial sketches of a little boy dressed in overalls and carrying a paint bucket and brush. The finishing touches to the character came when the company commissioned noted artist Lawrence Carmichael Earle to paint an oil portrait of the Dutch boy. Earle used as his model a little Irish boy from his own neighborhood. He was nine years old and played ball in the street outside the home of the artist. That little boy grew up to become Michael E. Brady, a well-known political cartoon artist.
Founded in 1907 and celebrating its 100th anniversary, Dutch Boy continues to be an industry leader in delivering innovative and high-quality products and packaging solutions, and is one of the most recognizable brands in the market.
Since 1907, Dutch Boy Paint has been one of the most recognizable and trusted paint brands in the United States. The Dutch Boy® icon was originally created to symbolize a superior method for creating paint products known as the "Dutch Process".
The "Dutch Process" originated with two chemists in 16th century Holland and set the standard of paint quality and beauty for centuries to come. That legacy lives on with Dutch Boy® Paint.
The Dutch boy is the most recognized paint icon. The paint is based on a 16th century 'Dutch Process.' His likeness is based on Rembrandt's style. Since 1907, the Dutch Boy logo has changed seven different times.
1907 1917 1947 1957 1967 1977 2000
As a result, we understand that Sherwin-Williams their target market with this product is a niche of middle class men are women, ages 25 to 55, of medium and high-income, who prefer customized paintings (flat, sating, high gloss/ interior or exterior/ ceiling, walls, floors, trim) within the US. Specially focusing on the Do it yourself market (DIY), of which 60% are women, and on new home owners.
This market segmentation covers the customers that would like, and are willing to pay, for a Dutch Boy Paint. This includes the generations Baby Boomers, Generation X and Y that are living in an owned house or have an own business, that likes to keep the property well painted internal and externally, and has the resources to do so. The paints are used on occasions, with an increase in the demand on the last trimester of the year due to Christmas season.
There are environmental factors like the economy crisis that may affect negatively our target market purchasing patterns. Since painting is not a need but a luxury, customers may rather prefer to spend their money is other critical needs than in a luxury.
We perform a survey of the population in Puerto Rico that knows the product and the brand, and none of the interviewed knows the product. However 100% of the prospective customers know the matrix company of Sherwin-Williams.
The Sherwin-Williams Company (Sherwin-Williams) is engaged in the manufacture, distribution and sale of paint, coatings and related products to professional, Industrial, commercial and retail customers primarily in North and South America. Effective January 1, 2006, the Company changed its operating segments to Paint Stores Group, Consumer Group and Global Group. In April 2007, the Company announced its entry into the Indian paint market with its acquisition of the business of Nitco Paints, a manufacturer and distributor of exterior specialty paints and coatings used in the construction of office buildings, high rise apartments, shopping malls, hospitals and schools.
Paint Stores Group The Paint Stores Group consisted of 3,046 Company-operated specialty paint stores in the United States, Canada, Virgin Islands, Puerto Rico and Mexico as of December 31, 2006. Each division of the segment is engaged in the related business activity of selling paint, coatings and related products to end-use customers. The Paint Stores Group markets and sells Sherwin-Williams branded architectural paint and coatings, industrial and marine products, original equipment manufacturer (OEM) product finishes and related items throughout North America and the Caribbean. These products are produced by manufacturing facilities and those in Consumer and Global Groups. Consumer Group
The Consumer Segment develops, manufactures and distributes a variety of paint, coatings and related products to third-party customers and the Paint Stores Group primarily in the United States and Canada. The products distributed through third-party customers are for resale to the ultimate end-user of the product.
Global Group
The Global Group develops, licenses, manufactures, distributes and sells a variety of architectural paint and coatings, industrial and marine products, automotive finishes and refinish products, OEM coatings and related products in North and South America, Jamaica, the United Kingdom, Europe and China. As of December 31, 2006, this Group included consolidated operations in the United States, 14 foreign countries, three foreign joint ventures and income from licensing agreements in 14 foreign countries.
Administrative Segment
The Administrative Segment included interest expense, which was unrelated to retail real estate leasing activities, investment income, certain foreign currency transaction losses related to dollar-denominated debt and foreign currency option and forward contracts, certain expenses related to closed facilities and environmental-related matters, and other expenses. Also included in the Administrative Segment was a real estate management unit that is responsible for the ownership, management and leasing of non-retail properties held primarily for use by the Company, and disposal of idle facilities.
As part of Sherwin-Williams, Dutch Boy Paints manufacture a range of household paints for interior and exterior applications. They provide a variety of paint types as flat, satin and high gloss for walls, ceilings, floors and trim. Features a product gallery, inspiration center, and store locations. Net sales in the Paint Stores Group in 2006 increased from $ 4,352,357 million in 2005 to $ 4,844,596 in 2006. The increase was due primarily to strong domestic architectural paint sales to contractors in the first half of 2006 and improved industrial maintenance product sales. Net sales from stores open for more than twelve calendar months increased 9.1 percent for the full year. During 2006, the Paint Stores Group opened 117 net new stores, increasing the total number of stores in operation at December 31, 2006 to 3,046 in the United States, Canada, Puerto Rico and the Virgin Islands. The Paint Stores Group's objective is to expand its store base an average of three percent each year, primarily through internal growth.
B. Environmental Analysis
The SWOT analysis provides us with an opportunity to examine the internal strengths and weaknesses Dutch Boy Paint must address. It also allows us to examine the opportunities presented to Dutch Boy Paint as well as potential threats.
Dutch Boy Paint has a valuable inventory of strengths that will help it succeed. These strengths include: a value added to its products, Do-It-Yourself target market, and a competitive price among the market. Strengths are valuable, but it is also important to realize the weaknesses Dutch Boy Paint must address. These weaknesses include: a health problem issue and the Consumer Report test of fading.
Dutch Boy Paint's strengths will help it capitalize on emerging opportunities. These opportunities include, but are not limited to, a establish market of paining in Puerto Rico, and the Sherwin-Williams as an established company in this market. Threats that Dutch Boy Paint should be aware of include, the competitors already established and the consumer preferences, and the political and economical situation.
Strengths: Value Added. Lightweight, recyclable plastic container. Built-in roller tray can accommodate a standard 9" or 9 ½" roller. Easy to use and stored. Easy-to-open, resealable, airtight lid. Comfortable, ergonomic grip handle for easy transport. Perfect to introduce into the Do-It-Yourself (DIY) customer group, where the 60% are women. Competitive price. This paint has the Consumer Report's Best Price Value recognition being the first among all the marks studied.
Weakness:
Health problems. Although this paint is safe giving the EPA standard of Painting and Coating, it contains white lead which is important to advise these ingredients. Prone to fading. Consumer Report encounter that the paint fail in the fading proof more quickly than other brand marks and they don't recommend for sunny rooms.
Opportunities:
Establish market. The Puerto Rico Census demonstrates a constant rate in the sales of painting and coating industry and a gradual grow of the industry in the latest years. Recognizable company. Sherwin-Williams is a established company in Puerto Rico (have 31 stores and retail distributors) and their products are recognizable in the industry
Threats:
Competitors. Other band products already in the market and had created a customer loyalty and preference. Retail distributors like The Home Depot report a huge increment in their customers and they have exclusive competitors' product such as Behr Paints. Political and Economic situation. The constant changes in the political environment that affects the economic environment like the sales tax (IVU) and the instability of it.
C. Objectives
Dutch Boy Paint marketing objectives during the first year of operations include the following: To capture 8% of the people who paint their properties annually. The projected sales volumes are based on Puerto Rico census of 2000. Where there is an estimate of 1,418,476 house units occupied. An estimate of 10% of all house units will be painted this year. Diversify the service offering to insulate the business against fluctuations in any one component of the revenue stream. Build customer loyalty through workshops programs. Maintain a staff of enthusiastic employees excited to share painting knowledge with happy customers. Build the Dutch Boy paints brand to the point where it becomes a household word in the area.
The goal of this marketing plan is to outline the marketing strategies, tactics, and programs that will make the vision outlined in the Dutch Boy paintings business plan a reality in the October 2007. The vision outlined in the business plan and explained in detailed in the Budgeting section includes the following financial objectives: Grow total sales by 40% during the first quarter of operations, which is the high season for painting sales. Total Revenues of $2.2M during the first quarter of operations, and $4.6 M during the first year, Total Net Income of $.8M during first quarter of operations and an expected annual net income of $1.6M Attractive markup of 75% for all products. Expected Sales Volumes of 8% of the expected Painting sales of 141,847 during the first Year. This figure will represent 11,348 gallons to be sold yearly per 18 gallons required to paint a whole house equals 204,260 of Dutch Boy Paints gallons to be sold during the first year.
D. Marketing Strategy
Dutch boy paints manufacture a range of household paints for interior and exterior applications. They provide a variety of paint types as flat, satin and high gloss for walls, ceilings, floors and trim. Features a product gallery, inspiration center, and store locations.
The products for our marketing plan are the new Ready-To-Roll project-sized paint container with its convenient built-in-roller tray that holds 2.5 gallons of paint and the Easy to Pour 1 gallon plastic container. It is a very innovative packaging, which differentiate our product from the competitor's aluminum difficult to open traditional can. Dutch boy has created a product that is both better and different.
Their best buy product, Dutch Boy® HOME, is specially formulated to meet Wal-Mart's high standards for coverage and washability, while offering a unique container to make painting an enjoyable experience. Next we'll describe our products key features:
Readyto-Roll Product Key Features and Core Competencies to Consumer: One-coat application Rated Best Buy 5 years in a row by a national independent study Superior scrubbability Satisfaction Guaranteed or money back. Easy to-open, resealable, airtlight lid Eliminates the continual transfer of paint into a separate roller tray. Built-in roller tray can accommodate a standard 9"or 01/2 roller. A wide and deep paint well opening to accommodate any size brush or roller. Convenient pour spout minimizes spilling and dripping. Sloped floor so paint settles toward the front well. Comfortable, ergonomic grip handle for easy transport. Lightweight, recyclable plastic container. Zipper-like locking mechanism keeps the cover secure for easy storage and transport.
Ready-to-Roll Product Key Features and Core Competencies to Retailers: Consumers prefer the 2.5 gallons paint over the 5 and 3 gallon pails and 3 gallon containers. According to the paint coatings Research Panel, typical paint project is 2.38 gallons. Our packaging will maximize the paint utilization; reduce storage and waste, which lead to maximizing what the customer will get for the product price. Compatible with existing tinting equipment. Convenient square shape for stacking and store versus the traditional round shape difficult to stack. Packaging will not rust or dent since is plastic.
Easy to Pour Product Key Features and Core Competencies to Consumer: Twist off lid is easy to open and close. Eliminates need for screwdrivers or other tools to open. Eliminates need for rubber hammers to close. Tight seal protects leftover paint allowing for quick touchups when necessary. Convenient neat-pour spout minimizes spilling and dripping. Integrated handle for easier carrying and controlled pouring. Lightweight plastic container. Plastic container won't rust or dent. Convenient square shape for stackable and neat storage.
Easy to Pour Product Key Features and Core Competencies to Retailers: 14 "Twist & Pour" containers can be shelved in space previously occupied by 13 metal cans. Integrated grip makes the container easier to handle, display and stack. Significant reduction of dented or damaged containers. Twist-off and resealable lid speeds up the tinting process. Consumer preferred vs. traditional paint cans. Container shape promotes cleaner shelf presentation.
Products to be featured in these containers: Dirt Fighter ® interior and exterior coatings Dimensions Cabinet and Trim Kitchen and Bath Ceiling Paint Kid's Room ® Latex Multiple Purpose primer sealer Climate Guard Exterior Paint Dura Clean interior paint Dura Weather exterior paint
As an integral part of our marketing strategy we want the consumer to know that Dutch Boy paint has been used for some very prestigious jobs including: The Hollywood Sign The White House The Golden Gate Bridge Disney World US Naval Battleships and aircraft carriers
Establishing a first campaign of knowledge of the product that cover the months from August to November, since the greater sales of painting are carried out for November and December. The presentation of the product will be through various media of promotion emphasizing its easy management, storage and the value added. Also we will emphasize the quality of the product presenting projects where the products of Dutch Boy was used in the United States such as The White House, Disney among others of interest of the target market. This campaign will be based on announcements in locations of interest that the target market would visit or where would seek information on paintings such as:
Locate billboards in cities where located specialized stores that sells the product such as Wal-Mart and the Sherwin-Williams Paints Stores. Publications of interest for the target market as the local newspapers that have a section of the home improvements, also in magazines of greater sale at the local level whose publications targets the same market as ours and in publications specialized of decoration. Television Chains in which the target markets have access and had a high score of spectators. Other promotions according to the integration of the product in the market.
The Dutch Boy® brand, is an integral part of the Consumer Group, celebrates its 100th anniversary now in 2007. Dutch Boy was named a "Best Buy" by a leading consumer magazine for the fourth straight year in 2006. The Consumer Group also introduced the Dutch Boy® Color Simplicity Modular Color Center, a unique display providing multiple and simple solutions for selecting color.
The distribution strategy for Dutch Boy Paints will be a push strategy to carry, promote and sell the product to the purchaser within the retailer. The distribution network will be a one level channel for the Sherwin-Williams retail stores and a second or two level channels for the Wal-Mart wholesale distribution. The point of origin for the product will be La Ceramica Industrial Park at Carolina Puerto Rico where the Sherwin-Williams Master Coat Plant is located and the destination points will be Sherwin-Williams retail stores in Puerto Rico and Wal-Mart distribution center in Cataño.
Illustration of the distribution plan
The major advantage of this distribution network is that the numbers of intermediaries are limited and Dutch Boy will be able to overcome the issues of timeliness, place and possession gaps which normally separate goods and services from their end users. We can maintain control over the service levels and price will not be affected because we establish the price and a schedule of discounts and allowances that we think in equitable and sufficient. In this way every channel involved has the opportunity to be profitable. A disadvantage using the Sherwin-Williams stores distribution method is that at the moment, Dutch Boy Paints has no placement in our market knowledge and we need to get our target market to reach those specific stores in order to know the product. This is also an opportunity to improve on Sherwin's positioning.
With regards to carriers, insurance and documentation, Dutch Boy will use the services of Sherwin's shipping team in order to follow their state of the art inventory control for its planning, implementing and controlling the physical flow of the product from the warehouse (plant) to its point of destination. This shipping team is already up to date for documentation, insurance and all the other things required.
With 62 percent of total company sales, the Paint Stores Group was instrumental in helping Sherwin-Williams reach a record sales mark of $7.81 billion in 2006. The color and coatings innovations continue to fuel sales and solidify their standing as an industry leader. Sherwin-Williams paint stores are the exclusive outlet of Sherwin-Williams branded architectural and industrial maintenance paints, stains, and related products in North America. During the past year, they have added more than 100 new sales territories and opened 117 new stores, bringing the total to 3,046 company operated stores to serve their diverse customer base of architectural and industrial painting contractors, residential and commercial builders, property owners and managers, and DIY homeowners. In Puerto Rico their 30 stores are small to medium in size, with plenty of tools and supplies such as: brushes, rollers, pad applicators, sprayers, ladders, preparation materials and more. The Sherwin-Williams stores will not represent an impact on the price of the product since it will come from the same manufacturer. The only price impact that we'll see is in the distribution for Wal-Mart Puerto Rico. Since Wal-Mart is a reseller of Dutch Boy Paints in the United States and Puerto Rico they already have a distribution agreement with Sherwin-Williams and as a discount store, Wal-Mart receive a special discount from the original price on both size of the product.
Following the Dutch Boy and Sherwin-Williams basics, the price strategy for the Easy to Pour and for the Ready-To-Roll products will be:
$15 - $20 for a gallon on the Easy to Pour line. $34 - $48 for the 2.5 Ready-To-Roll line.
The price range responds to the type of finish the customer select on his base coating.
Since price of competitors (Glidden, Behr, Martha Stewart, Sherwin-Williams, Harris) range from $18 - $25 on the traditional can packaged gallon this will place the Easy-to-Pour line on a great advantage for a Premium Paint. We have a better price, excellent paint and state of the art packaging. For the Ready-To-Roll line the price strategy is even better, since there's no other paint company in the Puerto Rico market offering this project sized paint package the price is well fitted. The other sizes offered by the competitors are the 5 gallon bucket and its prices ranges from $90 to over $110 depending on the selected finish. Again, this will place us in a big advantage since is better to buy a project sized sate of the art with no mess paint; instead of a big bucket of 5 gallons of paint.
E. Action Programs
For the product strategy, we plan to invest in promotion and advertisement to brand our product in customer minds. Even though it is not a well known product, our expectative is that our strong core competencies will lead our product to be strongly accepted in Puerto Rico. The product will be advertised at prime time through different channels, and strategic places, in order to attract most of our target market, specially the DIY market.
We plan to strategically use the already well established Sherwin-Williams stores in order to brand our product and to release the product to the market starting on October 2007. The timing of the launching was determined based on the season where the paintings significantly increase due to Christmas and decrease in bad weather days. The brand behind our product, along with the product warranties, will allow our potential customer's to trust in our product, reducing the efforts of branding and gaining customer loyalty. We expect to obtain these benefits, with less efforts than a launching a new product without a well known brand behind the scene.
We will confront our paint category close competitors which are Glidden, Behr, Martha Stewart and Sherwin-Williams itself. Our marketing team will also use the selected retail stores to increase the market share and product accessibility. We plan to maximize our presence at stores like Home Depot to attract more customers, since we saw an opportunity in the solid acceptance that the store has gain in Puerto Rico, specially the stores located in Parque Escorial and Los Colobos in the city of Carolina, the one located in Caguas, and the one located in Plaza del Sol Bayamon. These are growing cities, with new developments under construction. We will offer different workshops at the stores, to show our customers why our product is best among what is commonly found in the market.
Additionally, we included in our plan continuous improvement strategy in order to develop value over the long term. The next products to be featured in the new container are ceiling and primer paints that will target an additional market, increase our market share and shape the offer.
Action Plan for Promotion:
i. Launch Event. A national event for the introduction will be being carried out to the presentation of Dutch Boy Paints products. We have an agreement with the personnel responsible for the maintenance of El Capitolio to provide the painting for the exterior façade and its outskirts, and utilize the project in the Launch Event and next promotions. The event will be for the press and people of the industry. The products will be presented the end of September to begin with the advertisement in October. Personnel will be assigned to develop the launch event of the products taking into account the associated costs. The departure assigned of budget will be divided into the following:
Location Decoration Personnel (product expert and service personnel) Food/Beverages Music Others
The theme and slogan for these promotions will be "Done, Easy" referring to the new and innovated packaging.
The art of its printing will include a picture of an all ready painted project (as The White House, Disney or Hollywood sign) and the containers.
ii. Billboards. Establishing advertisements, in which the advantages of the product were emphasized like the easy and innovative packing to use and to keep, additionally will include the logo of the Best Buy Award of Good Housekeeping Magazine. It will use the billboards of Lamar Advertisement Company that includes in its proposal the average cost given the Cost By Market (CPM).
The locating of smaller CPM and that we will establish to rule the announcements are:
LOCATION: CPM:
San Juan $0.48 - $0.55
Caguas $0.71 - $1.27
Carolina $1.55
Bayamón $2.06
Ponce $10.57
Mayagüez
$4.12
Fajardo $4.51
Arecibo $3.00
The time rate of the announcement with this media will be 3 months since October to December, also the monthly cost of the billboards will average the $2,500.00 depending the availability of the locations.
iii. Guidelines. The product will be being promoted in the different media as Newspaper, Television and Magazines.
Newspaper. A guideline will be established in the first two local newspapers that have a section of interest for the home and that respond to our target market (ages and socioeconomic level). The guidelines will leave once a week according the section of interest and its publication. It will be established other guidelines and the time according to the answer of the public.
El Nuevo Día (Construcción). First position in readers (56% total) that respond to our market goal with a 64% found between 25 and 54 years, with an income high/middle of a 21% and middle income of a 39%. Primera Hora (Hogar y Construcción). Has the second position in the total of readers (29%) that respond to our market goal, 48% of the readers among the ages from 18 to 34 years and 35% of readers that are between 35 and 54 years.
Television. Announcements of television will be established in the programs of greater audience by our target market in the different local channels.
Televicentro Univision Puerto Rico Telemundo
Magazines. The magazines with exclusive publication on themes of decoration and home improvements will be considered to promote the product. Also in others magazines of greater sale locally by the target market will be considered. Agenda de Decoración. Twice a year publication and with a massive distribution. Distributed by Casiano Communication Group.
iv. Promotions. Between November and December Dutch Boy Paint will be promoting its innovated containers in the different Wal-Mart locations as it's exclusively paint product. Wal-Mart will be in charge of invite their associates to meet the products and show its benefits. For this promotions local store managers will organize the event with the employees. It will be provided the material of promotion such as the Digital Printing Posters and the Retail Display. For these material quotations will be being chosen from different suppliers with the best offer. Also will include for the quotations the materials of promotion that were utilized in the stores Sherwin-Williams.
F. Budgeting
This is a one year (presented on a quarterly basis) Projected Sales and Projected Marketing Expense statement. Witch details the projected Sales, Cost of Good Sold and Gross Profit for each quarter including the whole year. In the Projected Marketing Expense Budget it details all the expenses involved with the marketing campaign for the year such as launch events, billboards and Media expenses. The projected sales are base on the average price of $18 per easy to pour gallon and $40 easy to roll gallon of Dutch Boy Paints. The projected production is based on Puerto Rico census of 2000. Where there is an estimate of 1,418,476 house units occupied. An estimate of 10% of all house units will be painted this year. We target 8% of this market. Of the total target market, we expect easy to pour paint to capture 4.5%, and ready to roll 3.5%. The percentage of sales differs from quarter due to the expected high volume of sales in Christmas and summer. The estimated cost on painting an average house (18 gallons of paint X price per gallon) in Puerto Rico according to paint chosen. A projected 25% of sales will be part of the Cost of Good Sold witch includes distribution cost, commission and sale incentives.
The promotions and advertisements expense is composed of the following: 1. A daily 30 seconds advertisement in Televicentro de Puerto Rico, during prime time daily news time. Cost $5,500 per month.
2. An announcement in El Nuevo Día, Revista de Construcción. ¼ color page. The magazine is issued every Saturday.
3. A billboard will be posted in Puerto Rico's main avenues and turnpikes in Caguas, Bayamon, Carolina, Mayaguez, Arecibo and San Juan. The monthly cost per billboard will be $2,500. We negotiated with the supplier, and a flat fee of $2,500 will be provided for all the 6 billboards.
4. For the product launch, we offered the government to paint the so important building "El Capitolio" for free. The agreement was signed and the product will be launch on October 2007.We will have press and news coverage for the event. We estimated the product launch cost in $25,000 which includes paints, painting materials, sales promotions, and human resources.
5. We will also advertise our product in the Agenda de Decoración Magazine. The product will be announced in ½ a page, twice a year. The cost will be $6,625 per announcement.
The retailer fee will be a 10% reduction of the sales price, according to sales volumes. We estimated that the municipal taxes will be .005 of total gross sales.
G. Resources
The marketing plan implementation date on 2007 will require an initial expense of $794,136. To brand our Dutch boy paints we will require a promotion plan that will include radio, TV, billboard and news advertisement. We will require a space at the different stores and retailers to offer DIY workshops in order to familiarize our target market with the product. We have a budget of $25,000 in order to successfully execute our product launch. We will require that the strategic hours, billboard places, and news spaces selected for promotion be available.
The sales task force is already trained to sell Sherwin-Williams products, however we will train the sellers in product knowledge in order for to develop the marketing skills required to attain the expected sales volumes.
The execution of our distribution plan requires that the retailers be open to introduce our product in their stores and to fairly compete with our strongest competitors. Additionally, we will require having inventory space available in the already established Sherwin-Williams stores. In order to full fill our customer's needs, we will require an efficient and friendly customer service and inventory management system.
H. Controls
The goal of this marketing plan is to outline the strategies, tactics, and programs that will make the sales goals outlined in the Dutch Boy Paint business plan a reality in the year 2008. We have these marketing obstacles to face: The promotion of unique, innovative, upscale products that will differentiate Dutch Boy Paint from other brands. The establishment of Dutch Boy Paint as a leading brand in the paint industry.
Our marketing efforts will be focused on building the image outlined above. We have milestones and sales goals to meet and a business plan outlining our first of business in detail. It will be critical to use this marketing plan and the Dutch Boy business plan as living/working documents. They must be used as a map for the future success of Dutch Boy Paints.
Implementation Milestones
The milestones chart below outlines key dates that the marketing team must meet. The milestones table includes both sales goals and deadlines for major projects that impact the programs outlined in the Marketing Expense Budget. Each milestone will be assigned to a manager to have ownership of the task and is responsible for its success. We will track our successes and failures by reviewing planned-vs.-actual results. Successes and failures will be reviewed and addressed and a quarterly basis.
Milestones
(first promotion quarter) Start Date End Date
Advertisement
TV Ad Creative 10/1/2007 12/15/2007
Newspaper Ad Creative 10/1/2007 12/15/2007
Magazines Ad Creative 10/1/2007 12/15/2007
Billboards 10/1/2007 12/15/2007 Promotions
Launch Event 9/29/2007 9/29/2007
Wal-Mart Promotions 11/1/2007 12/15/2007
Sherwin-Williams Stores Promotions 11/1/2007 12/15/2007
At the end of the first quarter it's important to evaluate the marketing ROI of the product and analyze the data provided.
I. Contingency Planning
This marketing plan is just that, a plan. Plans don't always work out and we have to be ready to deal with the likelihood that Dutch Boy Paints won't make good on the projections outlined in this plan. We also have to prepare ourselves for overwhelming success.
The following are some possible scenarios:
Revenues exceed projections - A serious increase in revenues over projections will give us an opportunity to increase our marketing budget above the allocated 20%. We'll be able to hire the marketing manager earlier, and we'll be able to provide more equipment and possibly add additional promotions in location.
Revenues miss projections - We have to be prepared for this possibility. If we miss our projections, we simply have to re-double our marketing efforts. The danger in this scenario is that the first reaction to missed projections is to decrease spending, particularly marketing expenses. We have to get our message out to the target market, and we can't do that if we stop spending on marketing. Additional capital infusions may become necessary and that possibility is detailed in the business plan.
Customers play a lesser role - Our customers might not be willing to pay for a different product or its new design. If this scenario materializes, we will need to move our focus into how to educate customers with the new design.
III. Information Sources
Web Pages:
www.dutchboy.com
The Sherwin-Williams 2006 Annual Report. http://www2.sherwin-williams.com/InvestorRelations/Annual_Reports/2006_Annual_Report.pdf
http://finance.google.com/finance?q=SHW
Estudio de lectoría de Periódicos en Puerto Rico. http://www.elnuevodia.net/Docs/Estudiolectoria.pdf
http://www.ventaselnuevodia.com/index%20files/Tarifario%202004.pdf
http://www.gobierno.pr/Censo/CensoPoblacionVivienda/Censo2000/
Rates and Market. Lamar Advertising Company. http://www.lamaroutdoor.com/StateRates.aspx?State=PR
http://www.televicentropr.com/ventas.asp
Articles:
Lead lawsuits go to U.S. court: 4 actions filed; paint companies targeted
John Diedrich and Tom Held. Knight Ridder Tribune Business News. Washington: May 1, 2007. pg. 1
Sherwin-Williams Buys Nitco Paints to Enter India
Anonymous. Products Finishing. Cincinnati: May 2007. Vol.71, Iss. 8; pg. 9, 1 pgs
WHO'S AFRAID OF A HOUSING SLUMP?; Not Sherwin-Williams. Despite downturns, the paint giant hasn't had a loss since 1977
By Michael Arndt. Business Week. New York: Apr 30, 2007. , Iss. 4032; pg. 76
Plastic breaks into the paint market
Canadian Plastics. Don Mills: Nov 2002. Vol.60, Iss. 11; pg. 10
Dutch Boy brushes up its paints with HDPE 'bucket'
Anonymous. Packaging Digest. Chicago: Oct 2002. Vol.39, Iss. 10; pg. 4, 1 pgs
What's hot: Easy-open paint
Anonymous. DSN Retailing Today. New York: Aug 12, 2002. Vol.41, Iss. 15; pg. 17, 1 pgs
Dutch Boy can make painting much easier
Packaging Magazine. Tonbridge: Jul 25, 2002. pg. 5
I. Executive Summary 3
II. Marketing Plan 4 A. Situation Analysis 4
B. Environmental Analysis 8
C. Objectives 10
D. Marketing Strategy 11
E. Action Programs 18
F. Budgeting 22
G. Resources 25
H. Controls 25
I. Contingency Planning 27
III. Information Sources 28
IV. Appendix 29
I. Executive Summary
Founded in 1907, Dutch Boy continues to be an industry leader in delivering innovative and high-quality products and packaging solutions, and is one of the most recognizable brands in the market. Dutch Boy is one of the leading brands of Sherwin-Williams Company architectural coating product.
The goal of this marketing plan is to outline the strategies, tactics, and programs that will make the sales goals outlined in the Dutch Boy Paint business plan a reality in October 2007.
Dutch Boy, unlike a typical paint, provides a unique and convenient package made of plastic to easy work with it. Dutch Boy Paints is the answer to an increasing demand in Do-It-Yourself …show more content…
customers, most of them women, young couples and new homeowners, and starting business owners. The public wants: (1) easy to handle and storage product for less time consuming in painting and (2) a quality products, people buy painted walls not only the paint.
Marketing will play a vital role in the success of Dutch Boy Paints. Dutch Boy must build a brand around the products it offers by heavily promoting itself through local television, events promotions, and print advertising. The product launch event will be a key to success since it will have massive press and news coverage. Marketing efforts are just beginning by the time a potential customer tries the products for the first time. A strong emphasis will be put on keeping customers and building brand loyalty through programs focused on staffing, experience, and customer satisfaction.
For this year we expect to implement Dutch Boy products in the Puerto Rico market distributing through Sherwin-Williams already established stores and in the Wal-Mart mega stores. For this strategy we forecast a total of $1,858,251.00 of expenses and a projected net income of $1,611,933.30 during the first year of launch.
II. Marketing Plan
A. Situation Analysis
About 1906, a consortium of white lead manufacturers, newly combined under the name of The National Lead Company, were looking for a symbol to unite them. As the finest white lead manufacturers, using what was called the "Dutch method" of processing, and also because the people of Holland had a worldwide reputation for keeping their homes immaculately white-washed, they decided upon a little Dutch boy. Artist Rudolf Yook, an illustrator of Dutch ancestry, came up with the initial sketches of a little boy dressed in overalls and carrying a paint bucket and brush. The finishing touches to the character came when the company commissioned noted artist Lawrence Carmichael Earle to paint an oil portrait of the Dutch boy. Earle used as his model a little Irish boy from his own neighborhood. He was nine years old and played ball in the street outside the home of the artist. That little boy grew up to become Michael E. Brady, a well-known political cartoon artist.
Founded in 1907 and celebrating its 100th anniversary, Dutch Boy continues to be an industry leader in delivering innovative and high-quality products and packaging solutions, and is one of the most recognizable brands in the market.
Since 1907, Dutch Boy Paint has been one of the most recognizable and trusted paint brands in the United States. The Dutch Boy® icon was originally created to symbolize a superior method for creating paint products known as the "Dutch Process".
The "Dutch Process" originated with two chemists in 16th century Holland and set the standard of paint quality and beauty for centuries to come. That legacy lives on with Dutch Boy® Paint.
The Dutch boy is the most recognized paint icon. The paint is based on a 16th century 'Dutch Process.' His likeness is based on Rembrandt's style. Since 1907, the Dutch Boy logo has changed seven different times.
1907 1917 1947 1957 1967 1977 2000
As a result, we understand that Sherwin-Williams their target market with this product is a niche of middle class men are women, ages 25 to 55, of medium and high-income, who prefer customized paintings (flat, sating, high gloss/ interior or exterior/ ceiling, walls, floors, trim) within the US. Specially focusing on the Do it yourself market (DIY), of which 60% are women, and on new home owners.
This market segmentation covers the customers that would like, and are willing to pay, for a Dutch Boy Paint. This includes the generations Baby Boomers, Generation X and Y that are living in an owned house or have an own business, that likes to keep the property well painted internal and externally, and has the resources to do so. The paints are used on occasions, with an increase in the demand on the last trimester of the year due to Christmas season.
There are environmental factors like the economy crisis that may affect negatively our target market purchasing patterns. Since painting is not a need but a luxury, customers may rather prefer to spend their money is other critical needs than in a luxury.
We perform a survey of the population in Puerto Rico that knows the product and the brand, and none of the interviewed knows the product. However 100% of the prospective customers know the matrix company of Sherwin-Williams.
The Sherwin-Williams Company (Sherwin-Williams) is engaged in the manufacture, distribution and sale of paint, coatings and related products to professional, Industrial, commercial and retail customers primarily in North and South America. Effective January 1, 2006, the Company changed its operating segments to Paint Stores Group, Consumer Group and Global Group. In April 2007, the Company announced its entry into the Indian paint market with its acquisition of the business of Nitco Paints, a manufacturer and distributor of exterior specialty paints and coatings used in the construction of office buildings, high rise apartments, shopping malls, hospitals and schools.
Paint Stores Group The Paint Stores Group consisted of 3,046 Company-operated specialty paint stores in the United States, Canada, Virgin Islands, Puerto Rico and Mexico as of December 31, 2006. Each division of the segment is engaged in the related business activity of selling paint, coatings and related products to end-use customers. The Paint Stores Group markets and sells Sherwin-Williams branded architectural paint and coatings, industrial and marine products, original equipment manufacturer (OEM) product finishes and related items throughout North America and the Caribbean. These products are produced by manufacturing facilities and those in Consumer and Global Groups. Consumer Group
The Consumer Segment develops, manufactures and distributes a variety of paint, coatings and related products to third-party customers and the Paint Stores Group primarily in the United States and Canada. The products distributed through third-party customers are for resale to the ultimate end-user of the product.
Global Group
The Global Group develops, licenses, manufactures, distributes and sells a variety of architectural paint and coatings, industrial and marine products, automotive finishes and refinish products, OEM coatings and related products in North and South America, Jamaica, the United Kingdom, Europe and China. As of December 31, 2006, this Group included consolidated operations in the United States, 14 foreign countries, three foreign joint ventures and income from licensing agreements in 14 foreign countries.
Administrative Segment
The Administrative Segment included interest expense, which was unrelated to retail real estate leasing activities, investment income, certain foreign currency transaction losses related to dollar-denominated debt and foreign currency option and forward contracts, certain expenses related to closed facilities and environmental-related matters, and other expenses. Also included in the Administrative Segment was a real estate management unit that is responsible for the ownership, management and leasing of non-retail properties held primarily for use by the Company, and disposal of idle facilities.
As part of Sherwin-Williams, Dutch Boy Paints manufacture a range of household paints for interior and exterior applications. They provide a variety of paint types as flat, satin and high gloss for walls, ceilings, floors and trim. Features a product gallery, inspiration center, and store locations. Net sales in the Paint Stores Group in 2006 increased from $ 4,352,357 million in 2005 to $ 4,844,596 in 2006. The increase was due primarily to strong domestic architectural paint sales to contractors in the first half of 2006 and improved industrial maintenance product sales. Net sales from stores open for more than twelve calendar months increased 9.1 percent for the full year. During 2006, the Paint Stores Group opened 117 net new stores, increasing the total number of stores in operation at December 31, 2006 to 3,046 in the United States, Canada, Puerto Rico and the Virgin Islands. The Paint Stores Group's objective is to expand its store base an average of three percent each year, primarily through internal growth.
B. Environmental Analysis
The SWOT analysis provides us with an opportunity to examine the internal strengths and weaknesses Dutch Boy Paint must address. It also allows us to examine the opportunities presented to Dutch Boy Paint as well as potential threats.
Dutch Boy Paint has a valuable inventory of strengths that will help it succeed. These strengths include: a value added to its products, Do-It-Yourself target market, and a competitive price among the market. Strengths are valuable, but it is also important to realize the weaknesses Dutch Boy Paint must address. These weaknesses include: a health problem issue and the Consumer Report test of fading.
Dutch Boy Paint's strengths will help it capitalize on emerging opportunities. These opportunities include, but are not limited to, a establish market of paining in Puerto Rico, and the Sherwin-Williams as an established company in this market. Threats that Dutch Boy Paint should be aware of include, the competitors already established and the consumer preferences, and the political and economical situation.
Strengths: Value Added. Lightweight, recyclable plastic container. Built-in roller tray can accommodate a standard 9" or 9 ½" roller. Easy to use and stored. Easy-to-open, resealable, airtight lid. Comfortable, ergonomic grip handle for easy transport. Perfect to introduce into the Do-It-Yourself (DIY) customer group, where the 60% are women. Competitive price. This paint has the Consumer Report's Best Price Value recognition being the first among all the marks studied.
Weakness:
Health problems. Although this paint is safe giving the EPA standard of Painting and Coating, it contains white lead which is important to advise these ingredients. Prone to fading. Consumer Report encounter that the paint fail in the fading proof more quickly than other brand marks and they don't recommend for sunny rooms.
Opportunities:
Establish market. The Puerto Rico Census demonstrates a constant rate in the sales of painting and coating industry and a gradual grow of the industry in the latest years. Recognizable company. Sherwin-Williams is a established company in Puerto Rico (have 31 stores and retail distributors) and their products are recognizable in the industry
Threats:
Competitors. Other band products already in the market and had created a customer loyalty and preference. Retail distributors like The Home Depot report a huge increment in their customers and they have exclusive competitors' product such as Behr Paints. Political and Economic situation. The constant changes in the political environment that affects the economic environment like the sales tax (IVU) and the instability of it.
C. Objectives
Dutch Boy Paint marketing objectives during the first year of operations include the following: To capture 8% of the people who paint their properties annually. The projected sales volumes are based on Puerto Rico census of 2000. Where there is an estimate of 1,418,476 house units occupied. An estimate of 10% of all house units will be painted this year. Diversify the service offering to insulate the business against fluctuations in any one component of the revenue stream. Build customer loyalty through workshops programs. Maintain a staff of enthusiastic employees excited to share painting knowledge with happy customers. Build the Dutch Boy paints brand to the point where it becomes a household word in the area.
The goal of this marketing plan is to outline the marketing strategies, tactics, and programs that will make the vision outlined in the Dutch Boy paintings business plan a reality in the October 2007. The vision outlined in the business plan and explained in detailed in the Budgeting section includes the following financial objectives: Grow total sales by 40% during the first quarter of operations, which is the high season for painting sales. Total Revenues of $2.2M during the first quarter of operations, and $4.6 M during the first year, Total Net Income of $.8M during first quarter of operations and an expected annual net income of $1.6M Attractive markup of 75% for all products. Expected Sales Volumes of 8% of the expected Painting sales of 141,847 during the first Year. This figure will represent 11,348 gallons to be sold yearly per 18 gallons required to paint a whole house equals 204,260 of Dutch Boy Paints gallons to be sold during the first year.
D. Marketing Strategy
Dutch boy paints manufacture a range of household paints for interior and exterior applications. They provide a variety of paint types as flat, satin and high gloss for walls, ceilings, floors and trim. Features a product gallery, inspiration center, and store locations.
The products for our marketing plan are the new Ready-To-Roll project-sized paint container with its convenient built-in-roller tray that holds 2.5 gallons of paint and the Easy to Pour 1 gallon plastic container. It is a very innovative packaging, which differentiate our product from the competitor's aluminum difficult to open traditional can. Dutch boy has created a product that is both better and different.
Their best buy product, Dutch Boy® HOME, is specially formulated to meet Wal-Mart's high standards for coverage and washability, while offering a unique container to make painting an enjoyable experience. Next we'll describe our products key features:
Readyto-Roll Product Key Features and Core Competencies to Consumer: One-coat application Rated Best Buy 5 years in a row by a national independent study Superior scrubbability Satisfaction Guaranteed or money back. Easy to-open, resealable, airtlight lid Eliminates the continual transfer of paint into a separate roller tray. Built-in roller tray can accommodate a standard 9"or 01/2 roller. A wide and deep paint well opening to accommodate any size brush or roller. Convenient pour spout minimizes spilling and dripping. Sloped floor so paint settles toward the front well. Comfortable, ergonomic grip handle for easy transport. Lightweight, recyclable plastic container. Zipper-like locking mechanism keeps the cover secure for easy storage and transport.
Ready-to-Roll Product Key Features and Core Competencies to Retailers: Consumers prefer the 2.5 gallons paint over the 5 and 3 gallon pails and 3 gallon containers. According to the paint coatings Research Panel, typical paint project is 2.38 gallons. Our packaging will maximize the paint utilization; reduce storage and waste, which lead to maximizing what the customer will get for the product price. Compatible with existing tinting equipment. Convenient square shape for stacking and store versus the traditional round shape difficult to stack. Packaging will not rust or dent since is plastic.
Easy to Pour Product Key Features and Core Competencies to Consumer: Twist off lid is easy to open and close. Eliminates need for screwdrivers or other tools to open. Eliminates need for rubber hammers to close. Tight seal protects leftover paint allowing for quick touchups when necessary. Convenient neat-pour spout minimizes spilling and dripping. Integrated handle for easier carrying and controlled pouring. Lightweight plastic container. Plastic container won't rust or dent. Convenient square shape for stackable and neat storage.
Easy to Pour Product Key Features and Core Competencies to Retailers: 14 "Twist & Pour" containers can be shelved in space previously occupied by 13 metal cans. Integrated grip makes the container easier to handle, display and stack. Significant reduction of dented or damaged containers. Twist-off and resealable lid speeds up the tinting process. Consumer preferred vs. traditional paint cans. Container shape promotes cleaner shelf presentation.
Products to be featured in these containers: Dirt Fighter ® interior and exterior coatings Dimensions Cabinet and Trim Kitchen and Bath Ceiling Paint Kid's Room ® Latex Multiple Purpose primer sealer Climate Guard Exterior Paint Dura Clean interior paint Dura Weather exterior paint
As an integral part of our marketing strategy we want the consumer to know that Dutch Boy paint has been used for some very prestigious jobs including: The Hollywood Sign The White House The Golden Gate Bridge Disney World US Naval Battleships and aircraft carriers
Establishing a first campaign of knowledge of the product that cover the months from August to November, since the greater sales of painting are carried out for November and December. The presentation of the product will be through various media of promotion emphasizing its easy management, storage and the value added. Also we will emphasize the quality of the product presenting projects where the products of Dutch Boy was used in the United States such as The White House, Disney among others of interest of the target market. This campaign will be based on announcements in locations of interest that the target market would visit or where would seek information on paintings such as:
Locate billboards in cities where located specialized stores that sells the product such as Wal-Mart and the Sherwin-Williams Paints Stores. Publications of interest for the target market as the local newspapers that have a section of the home improvements, also in magazines of greater sale at the local level whose publications targets the same market as ours and in publications specialized of decoration. Television Chains in which the target markets have access and had a high score of spectators. Other promotions according to the integration of the product in the market.
The Dutch Boy® brand, is an integral part of the Consumer Group, celebrates its 100th anniversary now in 2007. Dutch Boy was named a "Best Buy" by a leading consumer magazine for the fourth straight year in 2006. The Consumer Group also introduced the Dutch Boy® Color Simplicity Modular Color Center, a unique display providing multiple and simple solutions for selecting color.
The distribution strategy for Dutch Boy Paints will be a push strategy to carry, promote and sell the product to the purchaser within the retailer. The distribution network will be a one level channel for the Sherwin-Williams retail stores and a second or two level channels for the Wal-Mart wholesale distribution. The point of origin for the product will be La Ceramica Industrial Park at Carolina Puerto Rico where the Sherwin-Williams Master Coat Plant is located and the destination points will be Sherwin-Williams retail stores in Puerto Rico and Wal-Mart distribution center in Cataño.
Illustration of the distribution plan
The major advantage of this distribution network is that the numbers of intermediaries are limited and Dutch Boy will be able to overcome the issues of timeliness, place and possession gaps which normally separate goods and services from their end users. We can maintain control over the service levels and price will not be affected because we establish the price and a schedule of discounts and allowances that we think in equitable and sufficient. In this way every channel involved has the opportunity to be profitable. A disadvantage using the Sherwin-Williams stores distribution method is that at the moment, Dutch Boy Paints has no placement in our market knowledge and we need to get our target market to reach those specific stores in order to know the product. This is also an opportunity to improve on Sherwin's positioning.
With regards to carriers, insurance and documentation, Dutch Boy will use the services of Sherwin's shipping team in order to follow their state of the art inventory control for its planning, implementing and controlling the physical flow of the product from the warehouse (plant) to its point of destination. This shipping team is already up to date for documentation, insurance and all the other things required.
With 62 percent of total company sales, the Paint Stores Group was instrumental in helping Sherwin-Williams reach a record sales mark of $7.81 billion in 2006. The color and coatings innovations continue to fuel sales and solidify their standing as an industry leader. Sherwin-Williams paint stores are the exclusive outlet of Sherwin-Williams branded architectural and industrial maintenance paints, stains, and related products in North America. During the past year, they have added more than 100 new sales territories and opened 117 new stores, bringing the total to 3,046 company operated stores to serve their diverse customer base of architectural and industrial painting contractors, residential and commercial builders, property owners and managers, and DIY homeowners. In Puerto Rico their 30 stores are small to medium in size, with plenty of tools and supplies such as: brushes, rollers, pad applicators, sprayers, ladders, preparation materials and more. The Sherwin-Williams stores will not represent an impact on the price of the product since it will come from the same manufacturer. The only price impact that we'll see is in the distribution for Wal-Mart Puerto Rico. Since Wal-Mart is a reseller of Dutch Boy Paints in the United States and Puerto Rico they already have a distribution agreement with Sherwin-Williams and as a discount store, Wal-Mart receive a special discount from the original price on both size of the product.
Following the Dutch Boy and Sherwin-Williams basics, the price strategy for the Easy to Pour and for the Ready-To-Roll products will be:
$15 - $20 for a gallon on the Easy to Pour line. $34 - $48 for the 2.5 Ready-To-Roll line.
The price range responds to the type of finish the customer select on his base coating.
Since price of competitors (Glidden, Behr, Martha Stewart, Sherwin-Williams, Harris) range from $18 - $25 on the traditional can packaged gallon this will place the Easy-to-Pour line on a great advantage for a Premium Paint. We have a better price, excellent paint and state of the art packaging. For the Ready-To-Roll line the price strategy is even better, since there's no other paint company in the Puerto Rico market offering this project sized paint package the price is well fitted. The other sizes offered by the competitors are the 5 gallon bucket and its prices ranges from $90 to over $110 depending on the selected finish. Again, this will place us in a big advantage since is better to buy a project sized sate of the art with no mess paint; instead of a big bucket of 5 gallons of paint.
E. Action Programs
For the product strategy, we plan to invest in promotion and advertisement to brand our product in customer minds. Even though it is not a well known product, our expectative is that our strong core competencies will lead our product to be strongly accepted in Puerto Rico. The product will be advertised at prime time through different channels, and strategic places, in order to attract most of our target market, specially the DIY market.
We plan to strategically use the already well established Sherwin-Williams stores in order to brand our product and to release the product to the market starting on October 2007. The timing of the launching was determined based on the season where the paintings significantly increase due to Christmas and decrease in bad weather days. The brand behind our product, along with the product warranties, will allow our potential customer's to trust in our product, reducing the efforts of branding and gaining customer loyalty. We expect to obtain these benefits, with less efforts than a launching a new product without a well known brand behind the scene.
We will confront our paint category close competitors which are Glidden, Behr, Martha Stewart and Sherwin-Williams itself. Our marketing team will also use the selected retail stores to increase the market share and product accessibility. We plan to maximize our presence at stores like Home Depot to attract more customers, since we saw an opportunity in the solid acceptance that the store has gain in Puerto Rico, specially the stores located in Parque Escorial and Los Colobos in the city of Carolina, the one located in Caguas, and the one located in Plaza del Sol Bayamon. These are growing cities, with new developments under construction. We will offer different workshops at the stores, to show our customers why our product is best among what is commonly found in the market.
Additionally, we included in our plan continuous improvement strategy in order to develop value over the long term. The next products to be featured in the new container are ceiling and primer paints that will target an additional market, increase our market share and shape the offer.
Action Plan for Promotion:
i. Launch Event. A national event for the introduction will be being carried out to the presentation of Dutch Boy Paints products. We have an agreement with the personnel responsible for the maintenance of El Capitolio to provide the painting for the exterior façade and its outskirts, and utilize the project in the Launch Event and next promotions. The event will be for the press and people of the industry. The products will be presented the end of September to begin with the advertisement in October. Personnel will be assigned to develop the launch event of the products taking into account the associated costs. The departure assigned of budget will be divided into the following:
Location Decoration Personnel (product expert and service personnel) Food/Beverages Music Others
The theme and slogan for these promotions will be "Done, Easy" referring to the new and innovated packaging.
The art of its printing will include a picture of an all ready painted project (as The White House, Disney or Hollywood sign) and the containers.
ii. Billboards. Establishing advertisements, in which the advantages of the product were emphasized like the easy and innovative packing to use and to keep, additionally will include the logo of the Best Buy Award of Good Housekeeping Magazine. It will use the billboards of Lamar Advertisement Company that includes in its proposal the average cost given the Cost By Market (CPM).
The locating of smaller CPM and that we will establish to rule the announcements are:
LOCATION: CPM:
San Juan $0.48 - $0.55
Caguas $0.71 - $1.27
Carolina $1.55
Bayamón $2.06
Ponce $10.57
Mayagüez
$4.12
Fajardo $4.51
Arecibo $3.00
The time rate of the announcement with this media will be 3 months since October to December, also the monthly cost of the billboards will average the $2,500.00 depending the availability of the locations.
iii. Guidelines. The product will be being promoted in the different media as Newspaper, Television and Magazines.
Newspaper. A guideline will be established in the first two local newspapers that have a section of interest for the home and that respond to our target market (ages and socioeconomic level). The guidelines will leave once a week according the section of interest and its publication. It will be established other guidelines and the time according to the answer of the public.
El Nuevo Día (Construcción). First position in readers (56% total) that respond to our market goal with a 64% found between 25 and 54 years, with an income high/middle of a 21% and middle income of a 39%. Primera Hora (Hogar y Construcción). Has the second position in the total of readers (29%) that respond to our market goal, 48% of the readers among the ages from 18 to 34 years and 35% of readers that are between 35 and 54 years.
Television. Announcements of television will be established in the programs of greater audience by our target market in the different local channels.
Televicentro Univision Puerto Rico Telemundo
Magazines. The magazines with exclusive publication on themes of decoration and home improvements will be considered to promote the product. Also in others magazines of greater sale locally by the target market will be considered. Agenda de Decoración. Twice a year publication and with a massive distribution. Distributed by Casiano Communication Group.
iv. Promotions. Between November and December Dutch Boy Paint will be promoting its innovated containers in the different Wal-Mart locations as it's exclusively paint product. Wal-Mart will be in charge of invite their associates to meet the products and show its benefits. For this promotions local store managers will organize the event with the employees. It will be provided the material of promotion such as the Digital Printing Posters and the Retail Display. For these material quotations will be being chosen from different suppliers with the best offer. Also will include for the quotations the materials of promotion that were utilized in the stores Sherwin-Williams.
F. Budgeting
This is a one year (presented on a quarterly basis) Projected Sales and Projected Marketing Expense statement. Witch details the projected Sales, Cost of Good Sold and Gross Profit for each quarter including the whole year. In the Projected Marketing Expense Budget it details all the expenses involved with the marketing campaign for the year such as launch events, billboards and Media expenses. The projected sales are base on the average price of $18 per easy to pour gallon and $40 easy to roll gallon of Dutch Boy Paints. The projected production is based on Puerto Rico census of 2000. Where there is an estimate of 1,418,476 house units occupied. An estimate of 10% of all house units will be painted this year. We target 8% of this market. Of the total target market, we expect easy to pour paint to capture 4.5%, and ready to roll 3.5%. The percentage of sales differs from quarter due to the expected high volume of sales in Christmas and summer. The estimated cost on painting an average house (18 gallons of paint X price per gallon) in Puerto Rico according to paint chosen. A projected 25% of sales will be part of the Cost of Good Sold witch includes distribution cost, commission and sale incentives.
The promotions and advertisements expense is composed of the following: 1. A daily 30 seconds advertisement in Televicentro de Puerto Rico, during prime time daily news time. Cost $5,500 per month.
2. An announcement in El Nuevo Día, Revista de Construcción. ¼ color page. The magazine is issued every Saturday.
3. A billboard will be posted in Puerto Rico's main avenues and turnpikes in Caguas, Bayamon, Carolina, Mayaguez, Arecibo and San Juan. The monthly cost per billboard will be $2,500. We negotiated with the supplier, and a flat fee of $2,500 will be provided for all the 6 billboards.
4. For the product launch, we offered the government to paint the so important building "El Capitolio" for free. The agreement was signed and the product will be launch on October 2007.We will have press and news coverage for the event. We estimated the product launch cost in $25,000 which includes paints, painting materials, sales promotions, and human resources.
5. We will also advertise our product in the Agenda de Decoración Magazine. The product will be announced in ½ a page, twice a year. The cost will be $6,625 per announcement.
The retailer fee will be a 10% reduction of the sales price, according to sales volumes. We estimated that the municipal taxes will be .005 of total gross sales.
G. Resources
The marketing plan implementation date on 2007 will require an initial expense of $794,136. To brand our Dutch boy paints we will require a promotion plan that will include radio, TV, billboard and news advertisement. We will require a space at the different stores and retailers to offer DIY workshops in order to familiarize our target market with the product. We have a budget of $25,000 in order to successfully execute our product launch. We will require that the strategic hours, billboard places, and news spaces selected for promotion be available.
The sales task force is already trained to sell Sherwin-Williams products, however we will train the sellers in product knowledge in order for to develop the marketing skills required to attain the expected sales volumes.
The execution of our distribution plan requires that the retailers be open to introduce our product in their stores and to fairly compete with our strongest competitors. Additionally, we will require having inventory space available in the already established Sherwin-Williams stores. In order to full fill our customer's needs, we will require an efficient and friendly customer service and inventory management system.
H. Controls
The goal of this marketing plan is to outline the strategies, tactics, and programs that will make the sales goals outlined in the Dutch Boy Paint business plan a reality in the year 2008. We have these marketing obstacles to face: The promotion of unique, innovative, upscale products that will differentiate Dutch Boy Paint from other brands. The establishment of Dutch Boy Paint as a leading brand in the paint industry.
Our marketing efforts will be focused on building the image outlined above. We have milestones and sales goals to meet and a business plan outlining our first of business in detail. It will be critical to use this marketing plan and the Dutch Boy business plan as living/working documents. They must be used as a map for the future success of Dutch Boy Paints.
Implementation Milestones
The milestones chart below outlines key dates that the marketing team must meet. The milestones table includes both sales goals and deadlines for major projects that impact the programs outlined in the Marketing Expense Budget. Each milestone will be assigned to a manager to have ownership of the task and is responsible for its success. We will track our successes and failures by reviewing planned-vs.-actual results. Successes and failures will be reviewed and addressed and a quarterly basis.
Milestones
(first promotion quarter) Start Date End Date
Advertisement
TV Ad Creative 10/1/2007 12/15/2007
Newspaper Ad Creative 10/1/2007 12/15/2007
Magazines Ad Creative 10/1/2007 12/15/2007
Billboards 10/1/2007 12/15/2007 Promotions
Launch Event 9/29/2007 9/29/2007
Wal-Mart Promotions 11/1/2007 12/15/2007
Sherwin-Williams Stores Promotions 11/1/2007 12/15/2007
At the end of the first quarter it's important to evaluate the marketing ROI of the product and analyze the data provided.
I. Contingency Planning
This marketing plan is just that, a plan. Plans don't always work out and we have to be ready to deal with the likelihood that Dutch Boy Paints won't make good on the projections outlined in this plan. We also have to prepare ourselves for overwhelming success.
The following are some possible scenarios:
Revenues exceed projections - A serious increase in revenues over projections will give us an opportunity to increase our marketing budget above the allocated 20%. We'll be able to hire the marketing manager earlier, and we'll be able to provide more equipment and possibly add additional promotions in location.
Revenues miss projections - We have to be prepared for this possibility. If we miss our projections, we simply have to re-double our marketing efforts. The danger in this scenario is that the first reaction to missed projections is to decrease spending, particularly marketing expenses. We have to get our message out to the target market, and we can't do that if we stop spending on marketing. Additional capital infusions may become necessary and that possibility is detailed in the business plan.
Customers play a lesser role - Our customers might not be willing to pay for a different product or its new design. If this scenario materializes, we will need to move our focus into how to educate customers with the new design.
III. Information Sources
Web Pages:
www.dutchboy.com
The Sherwin-Williams 2006 Annual Report. http://www2.sherwin-williams.com/InvestorRelations/Annual_Reports/2006_Annual_Report.pdf
http://finance.google.com/finance?q=SHW
Estudio de lectoría de Periódicos en Puerto Rico. http://www.elnuevodia.net/Docs/Estudiolectoria.pdf
http://www.ventaselnuevodia.com/index%20files/Tarifario%202004.pdf
http://www.gobierno.pr/Censo/CensoPoblacionVivienda/Censo2000/
Rates and Market. Lamar Advertising Company. http://www.lamaroutdoor.com/StateRates.aspx?State=PR
http://www.televicentropr.com/ventas.asp
Articles:
Lead lawsuits go to U.S. court: 4 actions filed; paint companies targeted
John Diedrich and Tom Held. Knight Ridder Tribune Business News. Washington: May 1, 2007. pg. 1
Sherwin-Williams Buys Nitco Paints to Enter India
Anonymous. Products Finishing. Cincinnati: May 2007. Vol.71, Iss. 8; pg. 9, 1 pgs
WHO'S AFRAID OF A HOUSING SLUMP?; Not Sherwin-Williams. Despite downturns, the paint giant hasn't had a loss since 1977
By Michael Arndt. Business Week. New York: Apr 30, 2007. , Iss. 4032; pg. 76
Plastic breaks into the paint market
Canadian Plastics. Don Mills: Nov 2002. Vol.60, Iss. 11; pg. 10
Dutch Boy brushes up its paints with HDPE 'bucket'
Anonymous. Packaging Digest. Chicago: Oct 2002. Vol.39, Iss. 10; pg. 4, 1 pgs
What's hot: Easy-open paint
Anonymous. DSN Retailing Today. New York: Aug 12, 2002. Vol.41, Iss. 15; pg. 17, 1 pgs
Dutch Boy can make painting much easier
Packaging Magazine. Tonbridge: Jul 25, 2002. pg. 5