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April 2005

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Table of Contents

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

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


2.1 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 The Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2.1 Market Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2.2 Market Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2.3 Market Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2.4 Macroenvironment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3.2 Service Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3.3 Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3.4 SWOT Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3.4.1 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3.4.2 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3.4.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3.4.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3.5 Historical Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4.1 Direct Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4.2 Indirect Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

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


3.1 Value Proposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Financial Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.4 Marketing Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.5 Target Market Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.6 Messaging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.6.1 Branding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.7 Strategy Pyramids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

4.0 Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14


4.1 Product Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3 Promotion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3.1 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3.2 Public Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3.3 Direct Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.4 Web Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4.1 Website Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4.2 Website Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4.3 Development Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.5 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.6 Implementation Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.7 Sales Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.7.1 Sales Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.7.2 Sales Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.7.3 Prospecting Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

5.0 Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.2 Sales Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.3 Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.4 Linking Expenses to Strategy and Tactics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.5 Contribution Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Table of Contents

6.0 Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.1 Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.2 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.3 Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.4 Marketing Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Riverview Hotel

1.0 Executive Summary

The Riverview Hotel, Notown USA, is representative of the five star brand within the 'Exclusive
Business Hotels of the World' group. All Riverview Hotels are boutique properties, offering
between 25 and 35 exclusive rooms.

The Riverview properties are renowned for their convenient and strategic locations within
major cities throughout the country. Also synonymous with the brand are the high level of
personal service guests receive, and the extensive range of comprehensive business facilities
available in luxurious settings.

The Riverview Hotel, Notown has 35 exclusive rooms and is targeting corporate guests with a
two to three night stay requirement. Target business segments include the IT sector, due to
the proximity of the property to Silicone Hill, USA; the automotive industry in order to
capitalize on the strategic location of the hotel in relation to the Overall Motors Plant and HQ in
Notown and travel trade guests attending National and International Travel Fares at the
Notown Exhibition Halls.

Differentiating the type of business service offered, from that of the competition, will assist not
only in building the Riverview brand as a whole, but will attract frequent business travelers,
who require a higher level of personal service and recognition than they can receive at
competitive five star properties in Notown. This will provide the Riverview with an opportunity
to leverage its core competencies as regards servicing the business traveller in a luxurious
environment.

2.0 Situation Analysis

The 'Exclusive Business Hotels of the World' group is the ninth largest International Hotel chain
in the world, with over 320 wholly owned and managed properties. The group specializes in
occupying strategic, inner city locations and serving primarily corporate clients.

The properties range from three to five star plus categories, and include the following brands:
River Inns (3*), River Post Houses (4*), and Riverview Hotels (5*+). The group has a high
instance of repeat business across all its brands, particularly the Riverview Hotels properties,
which account for 68% of total revenue across the group.

The Riverview Hotel, Notown, is dependent on annually contracted clients from the travel
trade, automotive and IT sectors with guaranteed room nights per year. This area of business
accounts for 70% of the property's revenue.

The current market is somewhat depressed, due to the economic downturn and restrictions
being made on corporate travel within the U.S. This threat to the critical corporate sector could
be considered as short to medium term, as indications of a return to business travel are
observed. Riverview Hotel, Notown, must continue to focus on delivering an exemplary
business service, at affordable rates, in order to develop the customer relationship beyond one
stay.

Competitive room rates have been cut dramatically in order to attract contract clients over the
next 10-12 month period. The Riverview Hotel's survival in the current environment, will be
dependent on repeat corporate contract business and customer loyalty to the brand. The
brand must therefore continue to deliver on its promise and values.

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Riverview Hotel

2.1 Market Needs

The Riverview Hotel offers value and benefits to our clients, over and above the standard of
our facilities and affordable rates. We seek to provide our guests with an exemplary personal
service, and level of recognition that they have come to rely upon. We provide our guest with
a luxurious, relaxed environment within which to conduct their business.

An environment which they cannot find at our larger, more impersonal competitors. Our
guests need to know that they can develop a relationship with the hotel that will ensure
efficiency, value for their money and reliability in supplying them with the support they need,
when they need it. The Riverview Hotel operates in a city with a very strong sense of
community, and we want to stay an integral part of that community.

2.2 The Market

The Riverview Hotel is a boutique 5*+ hotel comprising 35 luxury guest rooms and specializing
in servicing business and corporate clients. It serves the business community, and visiting
business traveller, in the city of Notown USA.

Our key clients are contracted corporate clients originating from both international and
domestic markets from within the travel trade, automotive and IT segments. The strategic
location of the property is key to its success in these areas due to the proximity of the
Exhibition Halls, Overall Motors and Silicone Hill, USA.

Key to our business success is the level of customer loyalty and repeat business we receive on
an annual basis. We offer our guests the most up-to-date technical business facilities, both
inside the rooms and within the hotel's conference facilities.

Our guests feel that they can conduct their business from within a less austere atmosphere
than can be experienced in our competitive properties, where there is less personal
recognition. They appreciate being called by name when they arrive, and having staff
remember their specific requirements, time and again. This is key in developing the
relationship beyond an initial stay and evidences our added value in relation to competitive
properties in the vicinity.

Table: Market Analysis

Market Analysis
2005 2006 2007 2008 2009
Potential Customers Growth CAGR
Travel 7% 1,000 1,071 1,147 1,228 1,315 7.09%
IT Industry 8% 1,200 1,296 1,400 1,512 1,633 8.01%
Automotive 10% 1,500 1,643 1,799 1,970 2,157 9.51%
Total 8.38% 3,700 4,010 4,346 4,710 5,105 8.38%

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Riverview Hotel

Market Analysis (Pie)

Travel
IT Industry
Automotive

2.2.1 Market Demographics

Market Geographics: Notown, USA is a suburb of Seattle, Washington, with a population of


150,000.

Market Demographics: The community is made up predominantly of households having two to


four children, either at home or away from home, with at least one parent/guardian having
attended college.

Market Psychographics: There is a strong 'small business' ethic in the community, and many
family-run enterprises have been prospering for generations. There is also a strong sense of
community and a high level of awareness as regards to caring for the environment.

Market Behaviors: Businesses in the area choose to support one another wherever possible, be
remaining loyal to long standing relationships with customers and suppliers. This acts as a
means of investing in, and supporting the community structure, rather than shifting alliances
to large 'newcomer' suppliers, despite the potential cost savings involved.

This attitude supports the brand principles of the Riverview Hotel, which has had a presence in
the city for 15 years, and is well supported by local business requirements for rooms,
conference facilities and catering business functions.

Based on research carried out in 2001, more than 68% of the population had some awareness
of the Riverview Hotel. Awareness levels were highest amongst small- to medium-sized
businesses with 20 or more employees, who had utilized the hotel's facilities either for visiting
business guests, or for their own functions.

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Riverview Hotel

2.2.2 Market Trends

Market trends can be categorized as follows: Corporate Travel Policies, Local Business Trends,
and Economic Cut Backs.

Corporate Travel Policies: As a result of various security issues, as regards travelling in


both domestic and international markets, there has been a significant drop in corporate guests
visiting the city. Although the level of corporate room business appears to be increasing again,
it has had a significant affect on last year's result and consequent projections for the future.

Local Business Trends: There has been a period of low activity in the area of conferencing
and business catering with local companies electing to conduct meetings and seminars on their
own premises in order to cost cut. This is changing however as group bookings, incoming
visitors and day use of conference facilities is on the increase.

Economic Cut Backs: The city cancelled three major trade events over the past three
months, and exhibitions held at the halls had attendance figures much lower than expected. All
booked events for the upcoming 12 month period however, including the Motor Show and the
Northwest Tech Exhibition, have pre-booked attendance figures in line with expectations and in
some cases in excess of projections.

Market Analysis (Trends)

2,500

2,000

1,500
Travel
IT Industry
1,000 Automotive

500

0
2005 2006 2007 2008 2009

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Riverview Hotel

2.2.3 Market Growth

The growth rate of the target markets has been steady over the past five years. The travel
trade sector has grown at an average of 7.1%, the automotive sector at an average of 9.5%
and the IT industry at 8%.

Recent world events have caused a reduction in the growth rate, but current trends indicate a
return to projected growth figures within the next three to six months. Once re-stabilized,
growth is anticipated to continue at a steady pace in line with the expansions in the region's IT
activities, the annual program of travel trade events taking place and the launch of a new
overall motors model this year.

Market Analysis (C.A.G.R)

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
Travel IT Industry Automotive

2.2.4 Macroenvironment

The external, environmental issues that affect the Riverview Hotel are:

• Political: a stable environment where little affects our ability to generate revenue.

• Economic: the recent recession has seen many smaller business-oriented hotel chains
go into liquidation, as they do not possess the infrastructure to support under-
performing properties as the larger chains do. Although recovery is beginning, it may
take some time before corporate travel policy restrictions are fully lifted and business
travel returns to the same levels of the past three years.

• Social: the trend towards cost effective business travel leads hotel guests to seek
more value for money, which is where our added value differentiation strategy comes
into play.

• Technological: the installation of 'on board' room reservations systems on certain


aircraft, will require a systems integration with the hotel group's own central
reservation system. This will require a high level of investment.

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Riverview Hotel

2.3 The Company

The Riverview Hotel, Notown USA, is representative of the five star brand within the 'Exclusive
Business Hotels of the World' group. All Riverview Hotels are boutique properties, offering
between 25 and 35 exclusive rooms.

2.3.1 Mission

The Riverview Hotel is dedicated to providing its guests with the highest quality of service and
standards. We seek to deliver on our promise of value and quality above all else. We value our
place in the community and will work to develop those relationships and to respect and protect
our environment.

We will continue to strive to create value for both owners and shareholders whilst honoring our
brand values and encouraging our personnel to develop themselves in an environment of trust,
loyalty and encouragement.

2.3.2 Service Offering

Service: high-quality facilities accompanied by exemplary personal service, differentiated from


competition in line with the overall brand strategy has proven to be a successful approach
generating high levels of repeat business.

2.3.3 Positioning

The Riverview Hotel is positioned as a five star plus, business traveler's hotel, strategically
located and offering a high level of personal service. Our focus is on offering our guests added
value and differentiating ourselves in our levels of personal service. We provide a quality hotel
experience where guests are valued, respected and their business is truly appreciated.

2.3.4 SWOT Summary

The following analysis highlights the internal strengths and weaknesses of our organization and
the opportunities and threats facing the company in our external environment. We must work
to improve our areas of weakness.

Organizational strengths must be leveraged in order to capitalize on external opportunities as


they arise, and contingency plans formulated in order to deal with threats presented by the
environment.

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Riverview Hotel

2.3.4.1 Strengths

• Strategy: established differentiation strategy.


• Structure: flat, decentralized structure.
• Skills: diverse range of service skills within management and staff.
• Style: strong, participative culture.
• Staff: specialized and experienced staff that are motivated and highly skilled. A well
trained team who are proud of their hotel and respect and promote the brand values.
• Shared Values: clear and well communicated.
• Brand Strength: brand values well represented engendering brand loyalty amongst
existing and new guests.
• Reputation: a strong reputation within the local market and corporate and travel
trade markets for reliability, exemplary service and quality.

2.3.4.2 Weaknesses

• Strategy: differentiation strategy needs to be more clearly communicated externally,


within local and national markets.
• Systems: formal systems result from the detail oriented work and environment.
Interdepartmental communications could be improved.
• Staff: seasonal turnover requires ongoing training and orientation of new staff.
• Facilities: certain rooms require renovation and upgrade as regards technical
equipment, such as high speed Internet access and laptop links.

2.3.4.3 Opportunities

• Market: returning growth after a period of slump.


• Competitors: no direct competition exists at present, in terms of the five star
'boutique business property' niche.
• Suppliers: strong, long-term relationships established with suppliers.
• Guest Dependency: repeat corporate business based on personal service and quality,
in a small but luxurious environment.

2.3.4.4 Threats

• Market Entry: potential for a competitive, global brand to enter the market with a
similar product.
• Substitutes: fully furnished and serviced business apartments offering lower daily
rates.
• Economy: recovery from slight recession may take time.

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Riverview Hotel

2.3.5 Historical Results

Marketing activity in previous years, has produced positive results. The areas that have
produced the best results have been:

• Service: high-quality facilities accompanied by exemplary personal service,


differentiated from competition, in line with the overall brand strategy has proven to be
a successful approach generating high levels of repeat business.

• Price: pricing strategy has been consistent with the differentiation objective, to provide
added value for a reasonable rate as opposed to discounting and devaluing our
products and services.

• Place: service information is provided to the guest via personal selling, direct
marketing, advertising and the Internet. Delivery channels include travel agents and
international reservations systems.

• Promotion: primary focus has been on mass communication via print ads in trade
publications and on the Internet, direct mail campaigns to existing and prospective
clients and personal selling in the local market. Personal selling provides the means to
develop relationships within the local community and generate high levels of corporate
activity through the business community. Public relations plays an important role in the
marketing mix, presenting the hotel as a supportive member of the community and
participating in significant local events to assist in developing ongoing cooperation,
assures repeat business and good working relationships.

Table: Historical Data

Historical Data

Variable 2002 2003 2004


Industry Revenue $100,000,000 $110,000,000 $115,000,000
Company Market Share 2% 2% 3%
Company Revenue $2,000,000 $2,200,000 $3,450,000
Industry Variable Costs $70,000,000 $80,000,000 $80,000,000
Company Variable Costs $1,500,000 $1,700,000 $2,700,000
Industry Gross Contribution
$30,000,000 $30,000,000 $35,000,000
Margin
Company Gross Contribution
$500,000 $500,000 $750,000
Margin
Marketing Expenses $300,000 $350,000 $650,000
Company Net Contribution Margin $200,000 $150,000 $100,000

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Riverview Hotel

2.4 Competition

Although no direct competition exists, in terms of the five star plus boutique-style property,
other five star hotels and serviced apartments do compete for the same corporate business
sectors.

2.4.1 Direct Competition

• Hilton, Notown: 5 star city hotel, room rates on par with Riverview, older facilities.
• Marriott, Notown: 5 star city hotel, room rates approximately 10% higher than
Riverview, facility only four years old.
• Glendale Apartments, Notown: 5 star furnished apartments, daily rates vary
between Riverview's double deluxe and suite rates.
• Hyatt Residence, Notown: 5 star furnished apartments, daily rates 15% higher than
Riverview's double deluxe rates.

These properties offer similar facilities, although somewhat less focused on business needs,
and incorporate more leisure facilities than we currently provide.

Table: Growth and Share Analysis

Growth and Share

Competitor Price Growth Rate Market Share


Hilton $105 6% 20%
Marriot $115 8% 33%
Glendale Apts $105 6% 5%
Hyatt Residence $120 5% 12%
Riverview Hotel $105 8% 30%

Average $110.00 6.50% 20.00%


Total $550.00 32.50% 100.00%

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Riverview Hotel

Table: Competitive Analysis

Competitive Analysis

#1 #2 #3 #4 #5 #6
Competitor Hilton Marriot Glendale Hyatt Riverview Name me

Product and/or Service Hilton Marriot Glendale Hyatt Riverview Name me


Quality 6 7 4 8 9 0
Selection 5 7 5 6 9 0
Price 6 6 6 6 8 0
Other 0 0 0 0 0 0

Location and Physical


Hilton Marriot Glendale Hyatt Riverview Name me
Appearance
Traffic 4 5 7 7 8 0
Appearance 4 7 6 8 9 0
Visibility 7 6 7 9 8 0
Convenience Factors 7 6 6 8 9 0
Other 0 0 0 0 0 0

Added Value Factors Hilton Marriot Glendale Hyatt Riverview Name me


Pre and Post Sales Service 3 5 4 7 9 0
Experience 7 8 6 9 9 0
Expertise 6 7 5 8 9 0
Reputation 5 9 6 8 9 0
Image 6 9 4 8 8 0
Stability 6 8 4 9 9 0
Strategic Alliances 0 0 0 0 0 0
Other 0 0 0 0 0 0

Other Marketing Activities Hilton Marriot Glendale Hyatt Riverview Name me


Established Sales Channels 0 0 0 0 0 0
Advertising 0 0 0 0 0 0
Post-purchase Support 0 0 0 0 0 0
Incentives 0 0 0 0 0 0
Loyalty Components 0 0 0 0 0 0
Other 0 0 0 0 0 0
Total 72 90 70 101 113 0

Competitor by Growth and Share

9%

8% Hilton
7% Marriot

6% Glendale Apts
Hyatt Residence
5%
Riverview Hotel
4%
86 88 90 92 94 96 98 100 102

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Riverview Hotel

2.4.2 Indirect Competition

Riverview's indirect competition is "distance" meetings in the corporate world. The more
companies decide to conduct meeting over the phone, using web conferencing technology, and
video phone technology, the less business people travel and the more it affects Riverview
Hotel. Riverview has to keep abreast of all new distance meeting technology, and continue to
reinforce with clients that there is no better way to do business then face to face.

3.0 Marketing Strategy

Our marketing strategy's objective is to communicate the unique set of services that we offer
to discerning hotel guests. We attempt to direct the focus of our guests to the issues of quality
and value for the money as opposed to simply the bottom line costs associated with their stay.

Our marketing strategy will allow us to communicate our brand values, develop close working
relationships with our customers and suppliers and to identify the needs of our guests in an
effective manner. Continued differentiation and growth are two goals we have set for
ourselves. Growth will take place by targeting new areas of business within both local and
national communities.

3.1 Value Proposition

Riverview Hotel offers the best, most personalized service for the corporate traveler. We
include business essentials in every room, such as a nice desk, internet connection, wireless
access, and provide easy to access meeting rooms with all AV and technology needs as well as
catering for longer meetings.

3.2 Critical Issues

We have many strengths including our differentiation strategy, our flat structure and highly
skilled and well trained staff. Our weaknesses involve the need to communicate our strategy
more clearly in the external environment, our high staff turnover and training requirements
due to seasonal fluctuations.

Although there is a low to medium threat of a competitive brand entering the market, there
are also opportunities as regards the high level of dependency of our guests for our particular
service and our strong position within the community with both customers and suppliers.

Critical issues for the Riverview include:

• Continuing to differentiate from our competition and offering added value to our
guests.
• Retaining our current levels of repeat business and developing further customer loyalty
in a competitive market.
• Attract new market sectors such as the Notown University-based business sector.
• Continue to be perceived as a supportive member of the Notown community.

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Riverview Hotel

3.3 Financial Objectives

• Increase overall room revenue by 10% on the past year.


• Accomplish growth within the given budget of $250,000.
• Increase corporate contracted rates to reflect the return of confidence in the corporate
travel market.
• Keep payroll expenses down and reduce the level of overtime within the workforce.

3.4 Marketing Objectives

• To continue to communicate our strategic objectives to our target markets effectively.


• To provide a positive hotel experience to all our guests.
• To accomplish our growth targets within the given time and budget.
• Expand our markets and identify new markets for our product and services.

3.5 Target Market Strategy

Our primary targets continue to be professional visitors to the region from the following
industries, where annual corporate contracts can be entered into:

• Travel trade;
• IT industry;
• Automotive.

Local firms will be targeted for day use of conference facilities, room nights for visiting
executives and long stay professional guests.

3.6 Messaging

It is critical to the success of the Riverview Hotel to make sure that the hotel is kept up to the
highest level in order to keep the high quality branding that Riverview properties are known
for. Our messaging will reflect this high standard that we want to be associated with. We need
to print brochures with high quality photographs as well as on high quality paper. It will be
important to spend a little bit extra on marketing materials to ensure that they keep our "high
quality" message in front of our customers.

3.6.1 Branding

The Riverview Hotel, Notown USA, is representative of the five star brand within the 'Exclusive
Business Hotels of the World' group. All Riverview Hotels are boutique properties, offering
between 25 and 35 exclusive rooms.

The Riverview properties are renowned for their convenient and strategic locations within
major cities throughout the country. Also synonymous with the brand are the high level of
personal service guests receive, and the extensive range of comprehensive business facilities
available in luxurious settings.

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Riverview Hotel

Table: Target Market Messaging

Target Market Messaging

Market Segments Messaging


Travel Most Luxurious Small Hotel
IT Industry Business Ammentities and Proximity to IT Industry
Automotive Best Business Ammentities

3.7 Strategy Pyramids

Our marketing strategy is to focus customers' attention on the high quality of the services we
offer. Within this strategy are three main points aimed at different market segments.

We will provide:

• The Best Business facilities


• Personalized Services
• Luxurious Amenities

Strategy Pyramid

Strategy

Best Business Facilities

Free wireless access

Executive Business Rooms

Personalized Service

Employees trained to always provide first name personalized service

Keep customer file with all preferences

Luxurious Amenities

Include Spa Quality Bathroom amenities

Include Plush Bathrobes in every room

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Riverview Hotel

4.0 Marketing Mix

Place: product and service information are sold to the guest via personal selling, direct
marketing, advertising and the Internet. Delivery channels include travel agents and
international reservations systems.

4.1 Product Marketing

Product: high quality facilities accompanied by exemplary personal service, differentiated from
competition quality with the overall brand strategy has proven to be a successful approach
generating high levels of repeat business.

4.2 Pricing

Pricing strategy has been consistent with the differentiation objective, to provide added value
for a reasonable rate as opposed to discounting and devaluing our products and services.

Room rates quoted are net of tax and service, are per night, per room with continental
breakfast included:

• Corporate single - $95.00;


• Corporate double - $125.00;
• Corporate double deluxe - $ 175.00;
• Corporate suite - $225.00 (maximum occupancy 2 persons).

Conference room rates are net of tax and service, quoted per day use with tea and coffee
breaks (2) included:

• The Riverview Boardroom - $260.00;


• The Riverview Conference Hall - $320.00;
• The Riverview Ballroom - $875.00.

4.3 Promotion

Promotion: primary focus will remain on mass communication via print ads in trade
publications and on the Internet. Direct mail campaigns to existing and prospective clients will
increase as a cost effective means of targeted campaigning.

Personal selling in the local market will remain an important element of the mix in order to
continue to build long-term relationships within the local community and generate high levels
of corporate activity.

Public relations activities will continue to play an important role in the marketing mix,
presenting the hotel as a supportive member of the community and participating in significant
local events.

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Riverview Hotel

4.3.1 Advertising

The following table shows our primary advertising milestones.

Table: Advertising Milestones

Milestones

Advertising Start Date End Date Budget Manager Department


Contract media space 1/1/2005 4/1/2005 $20,000 Geoff Marketing
Ad agency liasonon print ad material 1/1/2005 3/28/2005 $11,000 Geoff Marketing
Dispatch/monitor campaign results 5/1/2005 8/1/2005 $2,000 Sally Marketing
Total Advertising Budget $33,000

4.3.2 Public Relations

The following table shows our primary PR milestones.

Table: PR Milestones

Milestones

PR Start Date End Date Budget Manager Department


Public relations functions to schedule 2/1/2005 3/1/2005 $0 Anne PR
Evaluate sponsorship requests 3/1/2005 4/1/2005 $0 Anne PR
Establish list of sponsorship
4/1/2005 6/1/2005 $6,000 Anne PR
events/companies
Total PR Budget $6,000

4.3.3 Direct Marketing

Our direct marketing will be handled by our PR agency. We will buy select targeted list of
corporate companies and send them information about Riverview Hotel. We know that we are
no experts in direct marketing so it will be important that our PR agency handles every aspect
of direct marketing for us.

Table: Direct Marketing Milestones

Milestones

Direct Marketing Start Date End Date Budget Manager Department


Direct mail lists to purchase/prepare 2/1/2005 3/1/2005 $6,000 Sally Marketing
Ad agency liason on direct mail
3/1/2004 3/1/2005 $7,000 Sally Marketing
material
Total Direct Marketing Budget $13,000

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Riverview Hotel

4.4 Web Plan

Our website is already up and running, but needs to be revamped to give it an updated look
and feel, as well as to add secure interactivity. The content is good -- it just need a little
refresher.

We need:

1. New home page design and navigation


2. Online reservations capability
3. Printable brochure

4.4.1 Website Goals

Our website needs to be able to do the following:

1. Convey our messaging of high quality, luxury business accommodations


2. Be indexed on major travel websites so that people find us
3. Be able to take reservations online and make changes to reservations online

4.4.2 Website Marketing Strategy

Our main website marketing strategy hinges upon making sure all major travel sites such as
Expedia.com, Orbitz.com, and Hotels.com list our hotel when customers search for hotels in
our area.

4.4.3 Development Requirements

To attain the level of interactivity we want in our redesign, we need to increase the features
allowed (security for reservations and credit-card processing, daily back-ups, and real-time
database linking) and service-level of our hosting service. This will slightly increase our
monthly hosting fee.

Sally has contracted with a database developer to update our reservations system to be
compatible with the online reservation requirements. The new website will be ready to launch
in April.

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Riverview Hotel

Table: Pay-per-click ROAS

Pay-Per-Click
ROAS

Network Monthly Leads Monthly Cost-per- Cost-per-


Clicks Orders ROAS
Cost Generated Revenue click lead
Google $3,000 600 75 10 $5,000 167% $5.00 $40.00
Yahoo! $2,000 300 40 5 $4,000 200% $6.67 $50.00
Other $500 100 30 3 $1,500 300% $5.00 $16.67
Total 5500 1000 145 18 10500 222% $5.56 $35.56

Table: Website Milestones

Milestones

Web Development Start Date End Date Budget Manager Department


Homepage Re-design 1/1/2005 1/15/2005 $1,000 Shelly Marketing
Printable Brochures 1/1/2005 1/15/2005 $2,000 Shelly Marketing
Online reservations 1/1/2005 1/15/2005 $6,000 Shelly Marketing
Total Web Development Budget $9,000

4.5 Service

Our hotel provides guests with an alternative to the impersonal, large five star properties in
the city. Strategically located, our property enables our guests to be at the heart of the
business community and yet in an environment of calm and professionalism. We seek to
differentiate our product and services in the following areas:

• Personal recognition of our frequent travelers who return time and again.
• Luxurious rooms that offer a sense of doing business from 'home.'
• Staff that have a strong customer-service ethic.
• Business facilities second to none in town.

4.6 Implementation Schedule

New marketing campaign efforts will be focused from January through April, aimed at the
launch of the redesigned website in April. We will continue to track the results of this capaign
for the remainder of the year.

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Riverview Hotel

Table: Milestones

Milestones

Advertising Start Date End Date Budget Manager Department


Contract media space 1/1/2005 4/1/2005 $20,000 Geoff Marketing
Ad agency liasonon print ad material 1/1/2005 3/28/2005 $11,000 Geoff Marketing
Dispatch/monitor campaign results 5/1/2005 8/1/2005 $2,000 Sally Marketing
Total Advertising Budget $33,000
PR Start Date End Date Budget Manager Department
Public relations functions to schedule 2/1/2005 3/1/2005 $0 Anne PR
Evaluate sponsorship requests 3/1/2005 4/1/2005 $0 Anne PR
Establish list of sponsorship
4/1/2005 6/1/2005 $6,000 Anne PR
events/companies
Total PR Budget $6,000
Direct Marketing Start Date End Date Budget Manager Department
Direct mail lists to purchase/prepare 2/1/2005 3/1/2005 $6,000 Sally Marketing
Ad agency liason on direct mail
3/1/2004 3/1/2005 $7,000 Sally Marketing
material
Total Direct Marketing Budget $13,000
Web Development Start Date End Date Budget Manager Department
Homepage Re-design 1/1/2005 1/15/2005 $1,000 Shelly Marketing
Printable Brochures 1/1/2005 1/15/2005 $2,000 Shelly Marketing
Online reservations 1/1/2005 1/15/2005 $6,000 Shelly Marketing
Total Web Development Budget $9,000
Other Start Date End Date Budget Manager Department
Name me 1/1/2006 1/15/2006 $0 ABC Department
Name me 1/1/2006 1/15/2006 $0 ABC Department
Name me 1/1/2006 1/15/2006 $0 ABC Department
Other 1/1/2006 1/15/2006 $0 ABC Department
Total Other Budget $0
Totals $61,000

4.7 Sales Plan

Our sales plan hinges upon our sales strategy, sales process and, prospecting plan. As long as
we follow the plans laid below we should be in good shape.

4.7.1 Sales Strategy

Riverview Hotel's sales strategy hinges upon repeat visits by key corporate accounts. We need
to develop a relationship with the companies listed in our Sales Account Plan, as well as
actively generate new accounts by soliciting first time corporate visitors.

It will be important to remain competitive on price, as well as amenities. The corporate


accounting department wants to make sure they limit the amount of money spent per night
per employee on a business trip, but the business traveler will be able to express preference.
If the price is right, and the business traveler knows that they will have all amenities they need
while at the Riverview Hotel, we will be assured of keeping and attracting key accounts.

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Riverview Hotel

4.7.2 Sales Process

We will be sure to mail out corporate packets every 6 months to our key accounts, as well as
any new accounts we acquire. The packets will have information about corporate pricing and
discounts, as well as information about rooms and amenities for the companies to share with
business travelers.

The biggest piece of our sales process will depend on personal relationships. We will need to
make every business traveler feel like we remember them and we know their likes and
dislikes. We also need to cultivate good relationships with the person at the company who
makes travel arrangements.

Table: Sales Account Plan

Sales Account Plan

Target Accounts History Status Annual Sales Potential Key Account


Manager
Company A disappointed w/ proposal made
$20,000 Geoff
current
Company B referral from Jack designing
$15,000 Geoff
proposal
Company C request on 12/15 drafting
$10,000 Sally
response

Existing Key History Status Key Account


Annual Sales Potential
Accounts Manager
Company 1 3 years Stable $40,000 Sally
Company 2 5 annual conferences check next
$60,000 Geoff
month
Other - - $0 -
Total $145,000

4.7.3 Prospecting Plan

Whenever a new customers stays at our hotel we need to be able to determine whether it is
for leisure or business. If it is for business -- we need to make sure to get the customers
business name and address so that we can send a corporate packet to the company letting
them know about corporate pricing and special business amenities.

5.0 Financials

Our annual marketing budget is $100,000. Sales are anticipated to achieve revenue of
$1,172,925. Our marketing expenses will equate to approximately 8.5% of the overall revenue.

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Riverview Hotel

5.1 Break-even Analysis

Table: Fixed Costs

Fixed Costs

Cost
Rent or Lease $0
Professional Services $1,000
Payroll $10,000
Interest Payments $2,000
Utilities & Telephone $5,000
Non-discretionary marketing
$0
expenses
Other $0
Total Fixed Costs $18,000

Table: Break-even Analysis

Break-even Analysis

Monthly Units Break-even 145


Monthly Revenue Break-even $19,929

Assumptions:
Average Per-Unit Revenue $137.14
Average Per-Unit Variable Cost $13.28
Estimated Monthly Fixed Cost $18,000

Break-even Analysis

$10,000

$5,000

$0

($5,000)

($10,000)

($15,000)

($20,000)

0 40 80 120 160 200


Monthly break-even point

Break-even point = where line intersects with 0

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Riverview Hotel

5.2 Sales Forecast

Room revenue for this year is based on an average growth rate of 10%. This is based on the
number of pre-contracted corporate rooms, and an anticipated return to business levels
projected.

Table: Sales Forecast

Sales Forecast
FY 2006 FY 2007 FY 2008
Unit Sales
Corporate Single 1,925 2,118 2,118
Corporate Double 3,665 4,032 4,032
Corporate Deluxe 2,695 2,965 2,965
Corporate Suite 268 294 294
Total Unit Sales 8,553 9,409 9,408

Unit Prices FY 2006 FY 2007 FY 2008


Corporate Single $95.00 $95.00 $99.00
Corporate Double $125.00 $125.00 $135.00
Corporate Deluxe $175.00 $175.00 $195.00
Corporate Suite $225.00 $225.00 $240.00

Sales
Corporate Single $182,875 $201,210 $209,633
Corporate Double $458,125 $504,000 $544,253
Corporate Deluxe $471,625 $518,875 $578,175
Corporate Suite $60,300 $66,150 $70,560
Total Sales $1,172,925 $1,290,235 $1,402,620

Direct Unit Costs FY 2006 FY 2007 FY 2008


Corporate Single $7.86 $11.00 $11.00
Corporate Double $13.92 $13.50 $13.50
Corporate Deluxe $17.50 $18.50 $18.50
Corporate Suite $0.84 $0.00 $0.00

Direct Cost of Sales


Corporate Single $15,138 $23,298 $23,293
Corporate Double $51,033 $54,432 $54,425
Corporate Deluxe $47,163 $54,853 $54,853
Corporate Suite $225 $0 $0
Subtotal Direct Cost of
$113,558 $132,583 $132,570
Sales

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Riverview Hotel

Sales Monthly

$140,000

$120,000

$100,000

Corporate Single
$80,000
Corporate Double
$60,000 Corporate Deluxe
Corporate Suite
$40,000

$20,000

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

5.3 Expense Forecast

Marketing expenses are projected to be approximately 8.5% of overall annual revenue. The
breakdown of expenditures is as follows:

Table: Marketing Expense Budget

Marketing Expense Budget FY 2006 FY 2007 FY 2008


Print Advertising $10,600 $11,600 $12,826
Internet Advertising $21,000 $23,100 $25,410
Public Relations $6,000 $6,600 $7,260
Other $21,000 $23,100 $25,410
------------ ------------ ------------
Total Sales and Marketing Expenses $58,600 $64,400 $70,906
Percent of Sales 5.00% 4.99% 5.06%

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Riverview Hotel

Monthly Expense Budget

$6,000

$5,000

$4,000
Print Advertising
$3,000 Internet Advertising
Public Relations
$2,000 Other

$1,000

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

5.4 Linking Expenses to Strategy and Tactics

Our marketing expense is structured to reflect the corporate strategy differentiation. Quarterly
travel trade publications and interim monthly press ads communicate our message to key
corporate clients in one of our most significant target markets. Monthly Internet advertising
expenses include banner ads, and strategic links with car hire, airline and destination
management companies' websites to drive business to the hotel. Direct mail activity builds our
targeted customer database, not only in terms of improving the quality of the data we
currently hold, but on increasing the size of the database with prospective customer
information. Public relations expenses cover PR events, participation at local functions and
sponsorship funds. Overall, the percentage of total revenue required to support the marketing
expense is considered a moderate amount.

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Riverview Hotel

Sales vs. Expenses Monthly

$140,000

$120,000

$100,000

$80,000
Sales
$60,000 Expenses

$40,000

$20,000

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

5.5 Contribution Margin

Contribution margins should increase due to:

• Differentiation/focus strategy increases ability to specialize.


• Maintenance of expenses within specified levels.
• Increased efficiency in capacity utilization.
• Economies of scale due to increased purchasing efficiencies.

Table: Contribution Margin

Contribution Margin
FY 2006 FY 2007 FY 2008
Sales $1,172,925 $1,290,235 $1,402,620
Direct Cost of Sales $113,558 $132,583 $132,570
Other Costs of Sales $0 $0 $0
------------ ------------ ------------
Total Cost of Sales $113,558 $132,583 $132,570

Gross Margin $1,059,368 $1,157,653 $1,270,050


Gross Margin % 90.32% 89.72% 90.55%

Marketing Expense Budget FY 2006 FY 2007 FY 2008


Print Advertising $10,600 $11,600 $12,826
Internet Advertising $21,000 $23,100 $25,410
Public Relations $6,000 $6,600 $7,260
Other $21,000 $23,100 $25,410
------------ ------------ ------------
Total Sales and Marketing Expenses $58,600 $64,400 $70,906
Percent of Sales 5.00% 4.99% 5.06%

Contribution Margin $1,000,768 $1,093,253 $1,199,144


Contribution Margin / Sales 85.32% 84.73% 85.49%

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Riverview Hotel

Contribution Margin Monthly

$120,000

$100,000

$80,000

$60,000

$40,000

$20,000

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

6.0 Controls

Our marketing plan is structured to enable us to achieve the strategic goals we have set for
ourselves, in terms of increasing overall revenue as a result of differentiating our products and
services from the competition.

Our marketing team will ensure that the plan is implemented to the best of their ability and
with the highest levels of efficiency and accuracy.

6.1 Implementation

All figures will be monitored on an ongoing basis in relation to projections versus actuals, and
the ongoing plan will be altered or manipulated as necessary in order to react to and,
wherever possible, anticipate external changes to the environment.

Annual results will be evaluated at the Region General Manager's meeting where the structure
of the plan for the approaching year will also be established.

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Riverview Hotel

6.2 Keys to Success

• Continue to develop ongoing relationships with frequent and new guests.


• Continue to develop and implement a strong communications plan in both national and
international markets.
• Leverage our strength in the local market as a member of the community by
supporting local events.
• Identify new markets for our services such as University-based target groups.
• Continue ongoing staff training and skill development to ensure the highest standards
of service.

6.3 Contingency Planning

Contingency plans have been made for the following unexpected developments:

• A slower recovery from the recession than public opinion: this has been reflected in the
moderate increase in levels of corporate business expected.
• The entry into the market of a competitively aligned hotel: differentiation would
continue to be the strategic approach with the development of added value and
benefits to leverage long standing relationships and repeat business based on
familiarity and personal attention to detail.

6.4 Marketing Organization

Our marketing director, Geoff Watkins, leads our PR and marketing team of four in all
advertising, promotional and public relations related activities. Geoff works closely with the
members of the team, to implement and monitor the effectiveness of the marketing plan and
evaluate results.

Page 26
Appendix

Appendix Table: Sales Forecast

Sales Forecast
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar FY 2006 FY 2007 FY 2008
Unit Sales
Corporate Single 0% 180 175 175 160 150 175 175 125 100 160 175 175 1,925 2,118 2,118
Corporate Double 0% 280 260 375 300 280 375 360 280 200 300 375 280 3,665 4,032 4,032
Corporate Deluxe 0% 260 240 250 225 200 250 220 225 175 225 200 225 2,695 2,965 2,965
Corporate Suite 0% 10 5 45 15 5 75 60 15 3 15 5 15 268 294 294
Total Unit Sales 730 680 845 700 635 875 815 645 478 700 755 695 8,553 9,409 9,408

Unit Prices Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar FY 2006 FY 2007 FY 2008
Corporate Single $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $95.00 $99.00
Corporate Double $125.00 $125.00 $125.00 $125.00 $125.00 $125.00 $125.00 $125.00 $125.00 $125.00 $125.00 $125.00 $125.00 $125.00 $135.00
Corporate Deluxe $175.00 $175.00 $175.00 $175.00 $175.00 $175.00 $175.00 $175.00 $175.00 $175.00 $175.00 $175.00 $175.00 $175.00 $195.00
Corporate Suite $225.00 $225.00 $225.00 $225.00 $225.00 $225.00 $225.00 $225.00 $225.00 $225.00 $225.00 $225.00 $225.00 $225.00 $240.00

Sales
Corporate Single $17,100 $16,625 $16,625 $15,200 $14,250 $16,625 $16,625 $11,875 $9,500 $15,200 $16,625 $16,625 $182,875 $201,210 $209,633
Corporate Double $35,000 $32,500 $46,875 $37,500 $35,000 $46,875 $45,000 $35,000 $25,000 $37,500 $46,875 $35,000 $458,125 $504,000 $544,253
Corporate Deluxe $45,500 $42,000 $43,750 $39,375 $35,000 $43,750 $38,500 $39,375 $30,625 $39,375 $35,000 $39,375 $471,625 $518,875 $578,175
Corporate Suite $2,250 $1,125 $10,125 $3,375 $1,125 $16,875 $13,500 $3,375 $675 $3,375 $1,125 $3,375 $60,300 $66,150 $70,560
Total Sales $1,172,92 $1,290,23 $1,402,62
$99,850 $92,250 $117,375 $95,450 $85,375 $124,125 $113,625 $89,625 $65,800 $95,450 $99,625 $94,375
5 5 0

Direct Unit Costs Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar FY 2006 FY 2007 FY 2008
Corporate Single 0.00% $9.50 $9.50 $0.50 $9.50 $9.50 $0.50 $9.50 $9.50 $9.50 $9.50 $9.50 $9.50 $7.86 $11.00 $11.00
Corporate Double 0.00% $12.50 $12.50 $12.50 $12.50 $12.50 $12.50 $12.50 $21.50 $12.50 $21.50 $12.50 $12.50 $13.92 $13.50 $13.50
Corporate Deluxe 0.00% $17.50 $17.50 $17.50 $17.50 $17.50 $17.50 $17.50 $17.50 $17.50 $17.50 $17.50 $17.50 $17.50 $18.50 $18.50
Corporate Suite 0.00% $22.50 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.84 $0.00 $0.00

Direct Cost of Sales


Corporate Single $1,710 $1,663 $88 $1,520 $1,425 $88 $1,663 $1,188 $950 $1,520 $1,663 $1,663 $15,138 $23,298 $23,293
Corporate Double $3,500 $3,250 $4,688 $3,750 $3,500 $4,688 $4,500 $6,020 $2,500 $6,450 $4,688 $3,500 $51,033 $54,432 $54,425
Corporate Deluxe $4,550 $4,200 $4,375 $3,938 $3,500 $4,375 $3,850 $3,938 $3,063 $3,938 $3,500 $3,938 $47,163 $54,853 $54,853
Corporate Suite $225 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $225 $0 $0
Subtotal Direct Cost of
$9,985 $9,113 $9,150 $9,208 $8,425 $9,150 $10,013 $11,145 $6,513 $11,908 $9,850 $9,100 $113,558 $132,583 $132,570
Sales

Page 27
Appendix

Appendix Table: Marketing Expense Budget

Marketing Expense Budget Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar FY 2006 FY 2007 FY 2008
Print Advertising $2,000 $400 $400 $2,000 $300 $300 $2,000 $300 $300 $2,000 $300 $300 $10,600 $11,600 $12,826
Internet Advertising $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $21,000 $23,100 $25,410
Public Relations $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $6,000 $6,600 $7,260
Other $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $21,000 $23,100 $25,410
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Sales and Marketing
$6,000 $4,400 $4,400 $6,000 $4,300 $4,300 $6,000 $4,300 $4,300 $6,000 $4,300 $4,300 $58,600 $64,400 $70,906
Expenses
Percent of Sales 6.01% 4.77% 3.75% 6.29% 5.04% 3.46% 5.28% 4.80% 6.53% 6.29% 4.32% 4.56% 5.00% 4.99% 5.06%

Page 28
Appendix

Appendix Table: Contribution Margin

Contribution Margin
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar FY 2006 FY 2007 FY 2008
Sales $1,172,92 $1,290,23 $1,402,62
$99,850 $92,250 $117,375 $95,450 $85,375 $124,125 $113,625 $89,625 $65,800 $95,450 $99,625 $94,375
5 5 0
Direct Cost of Sales $9,985 $9,113 $9,150 $9,208 $8,425 $9,150 $10,013 $11,145 $6,513 $11,908 $9,850 $9,100 $113,558 $132,583 $132,570
Other Costs of Sales $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Cost of Sales $9,985 $9,113 $9,150 $9,208 $8,425 $9,150 $10,013 $11,145 $6,513 $11,908 $9,850 $9,100 $113,558 $132,583 $132,570

Gross Margin $1,059,36 $1,157,65 $1,270,05


$89,865 $83,138 $108,225 $86,243 $76,950 $114,975 $103,613 $78,480 $59,288 $83,543 $89,775 $85,275
8 3 0
Gross Margin % 90.00% 90.12% 92.20% 90.35% 90.13% 92.63% 91.19% 87.56% 90.10% 87.52% 90.11% 90.36% 90.32% 89.72% 90.55%

Marketing Expense Budget Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar FY 2006 FY 2007 FY 2008
Print Advertising $2,000 $400 $400 $2,000 $300 $300 $2,000 $300 $300 $2,000 $300 $300 $10,600 $11,600 $12,826
Internet Advertising $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $21,000 $23,100 $25,410
Public Relations $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $6,000 $6,600 $7,260
Other $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $1,750 $21,000 $23,100 $25,410
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Sales and Marketing
$6,000 $4,400 $4,400 $6,000 $4,300 $4,300 $6,000 $4,300 $4,300 $6,000 $4,300 $4,300 $58,600 $64,400 $70,906
Expenses
Percent of Sales 6.01% 4.77% 3.75% 6.29% 5.04% 3.46% 5.28% 4.80% 6.53% 6.29% 4.32% 4.56% 5.00% 4.99% 5.06%

Contribution Margin $1,000,76 $1,093,25 $1,199,14


$83,865 $78,738 $103,825 $80,243 $72,650 $110,675 $97,613 $74,180 $54,988 $77,543 $85,475 $80,975
8 3 4
Contribution Margin / Sales 83.99% 85.35% 88.46% 84.07% 85.10% 89.16% 85.91% 82.77% 83.57% 81.24% 85.80% 85.80% 85.32% 84.73% 85.49%

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