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Running Head: MEDIATRADER

 

 

Mediatrader: A marketing plan

 

 

Amber Brooke Kyler

Vincent Simeon Barronette

Lauren Robey Morris

 

 

 

University of Maryland University College

Dr. Newell Chiesl

AMBA 603.9015

April 7, 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

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

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

Contents

1. Executive Summary 3

2. Situation Analysis 3

2.1. Market Needs 4

2.2. The Market 4

2.2.1. Market Demographics 5

2.2.2. Market Trends 5

2.2.3. Market Growth 7

2.2.4. Macroenvironment 8

2.3. The Company 8

2.3.1. Mission 8

2.3.2. Service Offering 8

2.3.3. Positioning 9

2.3.4. SWOT Summary 9

2.4. Competition 11

2.4.1. Direct Competition 11

2.4.2. Indirect Competition 12

3. Marketing Strategy 13

3.1. Value Proposition 13

3.2. Critical Issues 13

3.3. Financial Objectives 14

3.4. Marketing Objectives 14

3.5. Target Market Strategy 15

3.6. Messaging 15

3.6.1. Branding 15

4. Marketing Mix 17

4.1. Product Marketing 17

4.2. Pricing 17

4.3. Promotion 18

4.4. Service 18

4.5. International Markets 19

4.6. Implementation Schedule 19

5. Financials 20

5.1. Break-even Analysis 20

5.2. Sales Forecast 21

5.3. Expense Forecast 23

5.4. Linking Expenses to Strategy and Tactics 24

5.5. Contribution Margin 25

6. Controls 27

6.1. Implementation 27

6.2. Keys to Success 28

6.3. Market Research 28

6.4. Contingency Planning 28

Executive Summary

The Internet is plentiful with websites that sell media through online auctions or sales. Some web-based companies even provide customers with the option to purchase various forms of used media. Mediatrader media exchange service will provide the online community another option, to the typical purchase or auction website, by providing an avenue to exchange media. Many individuals possess books, videos/DVDs, gaming software, and music media that are no longer of interest or use to them, but still in excellent working condition. For these individuals, the idea of using eBay, or other online auction forums, to sell such items outright, may appear daunting and expensive.  Mediatrader exchange gives people from various communities around the world access to a platform that posts items online for exchange with other members. People will have a viable option for dealing with older or unwanted items that they have accumulated over the years. Online customers will benefit from Mediatrader’s point system that can be utilized to “purchase” goods on the site. Media traded on Mediatrader will be assigned points instead of prices. Members will be able to “buy” media with the points they earn from selling their unwanted media. Moreover, a points system will rid the site of professional sellers, allowing the site to cater only to consumers looking to trade high quality goods. This document shall introduce, expose, and exploit the benefits of Mediatrader through an in depth review of Mediatrader’s marketing plan.

Situation Analysis

Mediatrader's goal is to give our customers the finest quality of online media exchange service.  Although, there are several niche trade sites offered throughout the Internet, many of them only allow trading within one field or genre.

Market leadership. Mediatrader's greatest strength is being the first broad-based online media exchange website. There is great potential for Mediatrader to become a household name across the world for the exchanging of used media materials.

Business Model. A further strength is the lack of inventory and low capital requirements. Mediatrader helps link customers to other customers, no inventory is maintained and operational costs can be kept low.

Ease of access. Mediatrader can be accessed from anywhere in the world. Customers will be able to form a loyalty to the service through dependence upon the website.

Client relationships will be of paramount importance to the success of Mediatrader. Mediatrader must be immediately welcoming to the new client and encourage ease of use and long-term working relationships. Through the development of strong client relations, turnover of accounts will be low and repeated use will grow exponentially.

Unknown name and service. The exchanging of a variety of "hard" media online has never been done in an online trading platform. Marketing the service and establishing the brand name in the marketplace will be an issue in the beginning.

Gaining Advertisers. Because a portion of the revenue is expected to come from advertisers, it is crucial to gain advertising relationships early in the business. Advertising revenue will truly grow only after the service has gained acceptance by the trading community. 

Competition. Mediatrader has no perfectly direct competitor, but other companies provide similar services that potentially cater to the same market. Mediatrader will have to stress the ideology of exchanging media without a price, in order to stand out in the marketplace. The critical issues for the Mediatrader venture include:

• Expansion of operations based upon steady growth

• Constantly maintaining the ability to serve existing customers

• Prompt deliveries worldwide.

• Monitor user satisfaction, a large percentage sales will be from returning customers

• Develop partnerships with advertisers, as a percentage of revenue is based upon advertising

• Investing in web based technology. This will ensure Mediatrader's infrastructure remains consistent as technological advancements in Internet based sales develop.

Advertising fees will also sustain profits and revenue from the website.  Advertising revenue, from companies marketing products for $500 per month, will bring in additional profits. 

Overall revenues for the service will be based upon assumptions made for Mediatrader's average per unit revenue and average per unit variable costs. These were estimated in the sales forecast and the estimated monthly fixed costs. Our analysis resulted in an estimate that suggests that Mediatrader will break even with 4,919 listings per month, or $13,713 in revenue each month.

1. Market Needs

The current need for an online marketplace that allows for consumers to trade various forms of media is great and relatively unmet. Many individuals possess books, videos/DVDs, gaming software, and music media that are no longer of interest or use to them, but still in excellent working condition. For these individuals, the idea of using eBay, or other online auction forums, to sell such items outright, may appear daunting and expensive.  

Mediatrader allows consumers to trade unwanted media for relatively little cost. Furthermore, Mediatrader will address several market needs: inexpensive media trading and the ability to trade multiple forms of media at one time. While, websites such as eBay and charge high percentages for the sale of each item, there is no trade function at play. A seller posts an item for a set price, or auction formatted sale, receiving funds, in various forms, in return.

Mediatrader allows for a consumer to find multiple forms of media and trade for them. Paying a small listing fee, each individual is able to trade an unwanted item for something more desired, accruing points that enhance the potential for future trades. Thus, the consumer does not have to directly buy or give a percentage of sale proceeds to the company, only the initial listing fees.

The main advantage of the Mediatrader venture is the ability to allow consumers to trade books, movies, gaming software, and other media for a small cost. Customers pay a listing fee for as low as $2.00 and use a points system for trading.

In addition, the points system ultimately eliminates the cost of purchasing the media from a trader. The points system encourages consumers to trade high quality and new media in order to receive more points for purchasing goods. Points are determined based upon the item and its current market value. The condition of the item is determined by the seller, but must be confirmed by the purchaser upon receipt for the seller to receive the maximum points available.

Although, there are several niche trade sites offered throughout the Internet, many of them only allow trading within one field. Mediatrader satisfies the consumer's need to be able to trade a video game for a movie or for music.

2. The Market

Based upon current trends within the online marketplaces, anticipated growth, and the demographics of the targeted consumer, it is anticipated that Mediatrader will serve the market in an entirely new way. Potential factors in the macroenvironment are discussed, but are not anticipated to hamper the venture's progress (Table 1).

|Table 1 - Market Analysis |

|  |  |Year 1 |Year 2 |Year 3 |Year 4 |Year 5 |  |

|Potential Customers |Growth |  |  |  |  |  |CAGR |

|Male Consumers between 44-49 years |10% |5,000 |5,500 |6,050 |6,655 |7,321 |10.00% |

|Female Consumers between 44-49 years |15% |7,500 |8,625 |9,919 |11,407 |13,118 |15.00% |

|Other |5% |1,000 |1,050 |1,103 |1,158 |1,216 |5.01% |

|Total |12.54% |13,500 |15,175 |17,072 |19,220 |21,655 |12.54% |

1. Market Demographics

Demographics:

The service of online trading offers room for a wide range market demographic. Mediatrader's specific demographic will include consumers with an average projected age of between 44 and 49 years old (Black, 2007), both male and female. Generally, the market will include moderately to highly educated individuals from various occupational backgrounds and income levels. These individuals will have computer and Internet experience and access.

Geographics:

The physical location of Mediatrader's clientele is irrelevant due to the online nature of the service. Consumers will be located around the world. The focus will begin in the United States market for the inception of the service, as this is the home base of the venture.

Psychographics:

Mediatrader will target individuals interested in reading books, watching movies, listening to music, or playing video games. The target psychographic will include those individuals and families that involve entertainment into their lifestyles.

Behaviors:

The target behaviors will include clients who are knowledgeable about the Internet; those familiar with the online purchasing process; those who frequently read, watch movies, listen to music, or play video games; those who wish to trade used media; and those who will benefit through the trade process by making many transactions.

2. Market Trends

Mediatrader will be operating within the global Internet marketplace and will be made available to all adult individuals with Internet access. All members must be at least 18 years of age and have a credit card or checking account available for address verification. All members must agree to posted membership terms and be willing to promote a safe and honest trading environment.  Current trends within the target population suggest that the availability of the online marketplace will encourage usage and that as the diversity of the clientele increases, the popularity of the service and the ability of Mediatrader to offer "something for everyone" will follow suit (Black, 2007).

Based upon current research in the demographics on online auction sites, it is anticipated that the target clientele will have an average age of between 44 and 49 years, an education level that is above the national average, an interest in shopping from their home or place of business in contrast to using a standard retail establishment, an awareness of the potential risk of online shopping, and an interest in getting the best value in a given purchase (Black, 2007, p.95). Such trends also suggest a slightly uneven distribution of female to male online purchasers, with females representing approximately 51% and males 49% (Black, 2007, p. 98) (Figure 1).

At present, the economic forecast for the United States, the home base of Mediatrader, appears unsettled with the potential for future recession. Such domestic issues can also impact foreign markets, global stock holdings, and the spending habits of the global public. These potential issues are a trend of great concern to Mediatrader, as instability in the economy discourages the personal spending on entertainment. It is possible that such trends could negatively impact the profits of the venture upon startup and stifle initial growth. It is expected, however, that such trends will eventually shift toward economic rebound, making the marketplace positive, once more.

It is in the best interest of Mediatrader to appear immediately welcoming to the new client and encourage ease of use and a long-term working relationship. It is hoped that through the development of strong client relations, turn over of accounts will be low and repeated use will grow exponentially. Further, it is hoped that the social climate of the online marketplace will encourage referrals from clients to others to enhance the view of the company in the eyes of the online world.

To further enhance Mediatrader’s global reputation and work toward maintaining status as a responsible corporate citizen, staff members will seek out opportunities to contribute to the global community, with the use of recycled shipping materials as a possible example. Marketing strategies may also choose to focus on the overall "recycling" nature of the company. Through the use of Mediatrader, the individual will be trading unwanted entertainment products for desired products from another individual. Products will be used, but in good condition, eliminating the need to purchase new products made from further new materials.

The online nature of the venture allows for constant evaluation and updating with the newest technological trends and innovative products and ideas. Mediatrader will be updated in intervals as determined by the system administration staff. These individuals will be responsible for researching the latest innovations and their feasibility for inclusion in the marketplace.

Mediatrader will be committed to the client and will encourage safe trading to the greatest possible extent in response to current trends in identity theft and fraud. No personal information or banking information will be stored on the site, instead relying on the use of online payments services, such as PayPal, to store and distribute information and funds on encrypted and insured frameworks.

Fig. 1 - Market Analysis (Trends)

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3. Market Growth

Developing and cultivating a market for an Internet start-up operation can be a very daunting task. An online business has to develop a trusting relationship with customers who are already accustomed to shopping at websites such as or , and who may be skeptical of trying out a new system. One of biggest factors in building a successful Internet start-up will be the ability to gain and retain customers.

It is hoped that due to the rapid expansion of the Internet throughout the world and its continued expansion, Mediatrader will be able to tap into a market that can be grown easily. In an effort to combat the potentially high costs of advertisement, viral Internet commercials posted on sites such as may present a successful alternative to more traditional systems; inexpensive advertisement ventures such as Google's Adwords will also be explored.

It is a common sense consumer practice to never enter any financial information into a website that is not trusted. In order to gain customer trust, Mediatrader will have regulations in place to discipline traders who violate website policies and will employ a secure payment system, such as PayPal. If a trader does not supply the other trader with the posted item, the trader will be considered in breach of his membership agreement, be banned permanently from the website, or even face criminal charges. Also, Mediatrader will install website security software such as SSL or CCNA for protection of consumer information.

Due to Mediatrader's variety of goods available for trade, the site can be marketed to millions of existing websites around the world and encourage consumers to trade goods in a large variety of genres. In addition, consumers may receive additional points for every member that they refer to Mediatrader. Thus, this will give consumers incentives to grow the market of trading goods because they receive points and the opportunity to trade with more people for a greater variety of media items.

4. Macroenvironment

External factors beyond a business's control can quickly destroy the success of that venture. Factors such as weather, technology changes, and political changes can destroy a business quicker than any sharp decrease in customers. Because Mediatrader is an Internet based operation, its external factors are limited to internet based factors. Factors such as increased usage in digital formatted of forms of media and legislation that blocks Internet trading can affect the success of Mediatrader.

In the past all forms of media had to be purchased in a store and in solid format such as a book, compact disc, and video game. Today, books, compact discs, and video games all come in digital downloadable format. Because Mediatrader targets previously purchased forms of media, it may suffer from consumers wanting new goods that do not take up physical space. With the increase of purchases of ebooks, mp3s, i-tunes, and online video games, Mediatrader may suffer.

3. The Company

Mediatrader is an online media exchange forum. Members can list their used media to be traded with other members. Mediatrader is a new to the world service, in that there is not currently a service allowing for media exchanging. Books, CDs, DVDs, and video games can be listed on the website to attract buyers to trade their used media.

Mediatrader has three investors/owners involved in the start-up of the company. The home base and office will be located in Baltimore, Maryland. There will be three full-time employees hired to work directly for Mediatrader. There will be a systems administrator to keep the website up and the network going. There will be an office manager to run the day to day tasks of Mediatrader, and there will be a Marketer to run the marketing campaigns of Mediatrader and the gaining of advertisers for the website.

1. Mission

Mediatrader is a new business committed to facilitating an online media exchange. The success of Mediatrader will thrive on providing our customers value-based transactions, 24-hour access to our online system, fast delivery, and a wide range of products to chose from. The worldwide web will facilitate global reach, global media exchange, and personal service to all that use Mediatrader services. Mediatrader's goal is to provide a platform for the trading of the media that consumers desire and give its customers the world's first media online exchange service. 

2. Service Offering

Mediatrader's main objective is to provide the consumer with a solid platform to trade media products through the Internet. Mediatrader provides a platform for consumers to trade in a direct and stress-free manner without the hassle of meeting face to face.

Moreover, Mediatrader provides a secure format for traders to make trades in by having secure login by SSL and utilizing PayPal for payment options. By providing a secure login and payment system consumers are insured that untrustworthy individuals will not compromise their personal information.  In addition, Mediatrader provides customer security by making every member sign a membership agreement that they will not violate the websites regulations. The membership agreement gives consumers a piece of mind that the other member thousands of miles away is not trying to take advantage of them.

3. Positioning

Positioning is one of the keys of making a marketing venture successful. Without correct positioning, consumers will fail to see why a new product or business is unique. For example, eBay allows any consumer to bid on goods in an open market and choose from a variety of goods. Mediatrader's position is that it is inexpensive and gives consumers real benefits from providing good customer service. In comparison to Mediatrader's main competitors, the service does not charge a percentage of the sale and there is a points system used for purchasing other media.

Mediatrader's uniqueness can be found in its main feature of trading. By allowing for consumers to pay a small listing fee, in contrast to a percentage of the sale, consumers can drive their online consumer costs down to a minimal. In a way, consumers are using Mediatrader as a space for listing advertisements for their media products, rather than a traditional sales format. In addition, the trading feature allows for a consumer to spend money on only shipping instead of purchasing a good on and incurring a large cost for an item that may be lower quality than the one expected. By trading with another consumer, the trader is more likely to get a good of higher quality, because money was not a factor in the exchange.

Another positioning feature of Mediatrader is the ability to benefit consumers by using a point system that can be utilized to “purchase” goods on the site. Media traded on Mediatrader will be assigned points instead of prices. Members will be able to “buy” media with the points they earn from selling their unwanted media. Moreover, a points system will rid the site of professional sellers, allowing the site to cater only to consumers looking to trade high quality goods.

4. SWOT Summary

The SWOT analysis will measure Mediatrader's overall strengths, weaknesses, opportunities, and threats. According to Kotler and Keller (2007), it analyzes both the internal and external environment of the service. The strengths and weaknesses are analyzed through the internal environment while the opportunities and threats are measured against the external environment.

1. Strengths

• Market leadership. Mediatrader's greatest strength is that it is the first online media exchange website. There is great potential for Mediatrader to become a household name across the world for the exchanging of used media.

• Lack of direct competitors. Because there are no completely direct competitors, there is opportunity for strong brand image and dominance over future and potential competitors.

• Ease of access. Another strength of Mediatrader is the ability to access the site from anywhere in the world. Customers will be able to form a loyalty to the service through the dependence of the website.

• Business model. A final strength is the lack of inventory and low capital requirements for Mediatrader. Because Mediatrader simply helps link customers to other customers there is no inventory for the company and the customer costs can be kept low.

2. Weaknesses

• Team members' lack of expertise. One weakness of Mediatrader from the beginning is the lack of expertise in website and business development among the team members. The lack of experience will cause more work and research among the group members to get a good start in the market.

• Unknown name and service. The exchanging of "hard" media online has never been done before. Marketing the service and getting the brand name out there will be an issue in the beginning.

• Gaining Advertisers. Because a portion of the revenue is expected from advertisers, it is crucial to gain relationships early in the business. However, because this is a brand new business, the name is not yet recognized and it will be difficult to gain well-known names to advertise on .

3. Opportunities

• Market expansion. Mediatrader has the ability to expand their market internationally because of the ease of access to the World Wide Web. Websites could be designed to cater to international markets by offering language selection and a web interface that caters to the needs of different countries.

• Use of internet. The Internet is continuing to expand and the uses of the Internet are meeting the varying needs of consumers all of the world. The more users that are present on the Internet expands the number of potential consumers of Mediatrader. Internet users will continue to expand their uses of the Internet as innovative technology continues to expand. Broadband Internet has played a big part in allowing consumers to expand their uses of the Internet.

• Market penetration. Because the use of the Internet will continue to expand their will always be an untapped market to penetrate. Mediatrader's business strategy will focus on gaining new users to continually penetrate the new users of the Internet.

4. Threats

• Competition. Although there is currently no direct competitor for Mediatrader, there are similar services that potentially cater to the same market. , for instance, offers an auction type service to sell used books online. Although there is a price paid for the media, the idea behind the service is very similar. Other websites, such as , , and Barnes and Nobel, also offer similar programs. Mediatrader will have to stress the idea of exchanging media without a price to stand out in the market.

• Foreign currency. When dealing with foreign markets and currency, there is always the threat of fluctuation in the exchange rates. If the exchange rates are not in our favor, the prices may decline significantly making it difficult to forecast revenue.

• Idea adoption. Because Mediatrader is a new idea and there are practically limitless opportunities on the web, there may be new businesses that adopt Mediatrader’s ideas. The threat lies with larger company's using the idea of a media exchange and expanding it through their currently established name.

• Copyright stigmatism. There may be a stigmatism of violating copyright laws associated with the term "Mediatrader" or "exchanging media". The stigmatism is there because of the illegal sharing and copying of media over the Internet. Because Mediatrader does not involve the copying of media in any way, there is no violation of copyright laws, however, the stigmatism may be a threat.

4. Competition

The online marketplace is in a state of constant flux with daily introductions of new ventures and services available to online consumers. While the vast majority of product offering sites appear to be focused upon direct sales in the traditional funding exchanged sense, little is available in terms of strict online trading, where no money is exchanged for the good. Specifically, sites involving the trading of media related products such as movies and hard music formats (in comparison to digital formats such as the mp3) are few and far between. These potential competitors, both direct and indirect, may offer a challenge for the Mediatrader venture over time.

1. Direct Competition

While it is anticipated that Mediatrader will be a venture, which is a new concept, direct competition does exist within the online marketplace.

. Founded in 2005 by Bill Nguyen, Billy Alvarado, Anselm Baird-Smith, and John Cogan III, "" offers an online platform for the trading of music CD's and other forms of musical media, specifically. Unlike Mediatrader, music products are also offered for direct online sale.

There is no points system used, though individuals targeted appear to be adults between the ages of 18 and 35 (though those younger and older could take part) as the use of iPod and other platforms is encouraged. The site is inviting though terms of use are not made directly available on the home page. After further research, fees and other charges remain unknown without sign-up. The terms of trading consist of an individual having the ability to trade one CD for each CD they have shipped. Based upon the website terms available, it appears that one must first sell to trade an item to another before being eligible to receive a trade ().

. Founded in 1980 by Rodney Spriggs, Steve Wilcox, and Ken Caviness, VintageStock offers buying, selling, and trading of music, video, and gaming media in physical stores. While the venture has a website (and a sister site called "Movie Trading Company") neither site functions beyond advertising for the stores and offering information for franchising. No target client information is offered, though due to the walk-in nature of the stores, it is anticipated that consumers would be teens and adults in various locations currently franchised.

The key marketing strategy appears to be focused on the high quality of the used items offered at significantly lower prices than the same items purchased new. Potential clients are encouraged to find a store near them for further information and to check available stock. Special ordering for items is available ().

. Copyrighted in 1996 by Kenyon Hill LLC., GameTradingZone offers video gamers a platform for the trading of only original copies of video games, specifically. The site works based off of forums posted between members. Trades are made for similar items, help with gaming related problems, or even for money in the same way as a traditional sale. Targeted demographics are outlined as those of any sex, race, religion, or sexual preference, though age parameters are not specifically outlined. The site is built around a chatroom forum setting. Terms of membership are difficult to understand and fees are not discussed on the main page ().

Based upon analysis of these direct competitors, it would appear that Mediatrader continues to the a unique venture through the offering of varying forms of media (music, videos, and gaming software) in an online trading forum. While other sites exist with similar offerings, these are not as all encompassing.

2. Indirect Competition

The indirect competitors of Mediatrader are potentially quite numerous. For the purposes of this analysis, the two most public and popular will be discussed as they are the most likely to add the additional services that will allow these ventures to incorporate a trading platform similar to that of Mediatrader.

. Copyrighted in 1995, eBay has quickly become one of the world's most popular online marketplaces. Originally called AuctionWeb by founder Pierre Omidyar, allows individuals who are aged 13 and older to buy and sell virutally anything worldwide. Using services such as PayPal, transactions are viewed as safe and legally binding. eBay offers a platform for the selling of items such as music media, videos, and gaming software among many others. The site does not offer trading, but members are able to post want ads to encourage others to post items for sale ().

. Founded in 1996, offers an online marketplace similar to eBay. Originally focused on the sale of new and used books, Amazon has branched into a variety of areas including musical media, videos, gaming software, home items, children's items, etc. While used items are offered at significantly lower prices, trading of these items is not part of the online platform. Targeted consumers include those over the age of 13 (with parental permission) with a desire to buy and sell media and other forms of products in an online setting ().

While both of these highly popular online marketplaces offer a wide variety of products on a highly publicized platform, neither site allows for the trading of used materials between users without the need for monetary transfer. The main goal of Mediatrader, allowing the consumer to pass on no longer wanted materials to another individual while gaining desired material in return in a direct trade, is not met with either site. The exchange of funds is key to the overall success of both sites, though it is possible that trading could be incorporated to either in the future, causing the two to become direct competitors of Mediatrader.

Marketing Strategy

Mediatrader's marketing strategy will detail its plan to market its trading technology to the public.  The marketing strategy will explain Mediatrader's critical issues, objectives, target markets, and product positioning.  Critical issues will explore the company's strengths and weakness and how the firm will overcome them. The firm target markets will determine and analysis on how the markets can be explored. Also the firm's product positioning will explain how the website will reach its target markets and how the website will the website will benefit consumers. The firm's financial objectives will evaluate to clearly define the financial goals of company to ensure profits and financial responsibility.

5. Value Proposition

As an Internet based company, the firm value proposition is based on its competitors and its benefits to consumers. Mediatrader's value proposition to consumers can be measured in its distinction from its competitors and its benefits to consumers.

Mediatrader’s distinction from its main competitors such as eBay and Amazon are its low cost and ability to allow trading. EBay and Amazon both charge consumers percentages of their products sold for shipping and selling on the websites. Mediatrader allows a consumer list media for a small listing fee. This allows members to advertise their products for a minimal cost to them and gain points for future transactions. For example if a consumer sells a textbook on Amazon for seventy-five dollars it will cost them eight dollars to sell it and they will only receive cash in return. If the same consumer trades a textbook on Mediatrader they pay the one time listing fee and gain points for future trades, thus gaining more from trading with Mediatrader. Mediatrader's point system is one of its main benefits to consumers.

Mediatrader's point system gives consumer more benefits for honest trading, than a rating system that is faulted by individuals selling for profit. By having an honest trade based incentive system, Mediatrader will have individuals looking for a good product instead of a profit.

6. Critical Issues

The Critical Issues for the Mediatrader venture include:

• Expansion of operations based on steady growth while constantly maintaining the ability to serve existing customers.

• Ensure prompt sales delivery worldwide.

• Monitor post customer behavior. Repeat customers will be the backbone of future sales.

• Mediatrader will strive on developing business relationships with advertisers. Part of Mediatrader's revenue is based off of online advertisements.

• Invest in web-based technology. This will ensure Mediatrader's infrastructure remains consistent as technological advancements in Internet based sales develop.

Based upon these issues, Mediatrader appears to be an ideal future venture as there are a great deal of opportunities for growth and advancement through the use of technology and the incorporation of greater product/service diversity. The venture has few threats, but this is not to say that they are nonexistent. It is anticipated that through careful analysis of the critical issues of Mediatrader, and adopting a strategy of remaining flexible to changes as they occur, the venture will be successful.

7. Financial Objectives

Mediatrader's financial objectives will address revenue, growth, profitability and financial accountability.

Mediatrader's first financial objective is to generate consistent revenues that will increase by at least five percent per quarter. By having a growing revenue stream, Mediatrader will be able to become a profitable company. In addition, Mediatrader's revenue stream will have to exceed its cost of advertising, initial set-up, and website maintenance in order for it to secure profitability.

Another financial objective is to achieve a strong increasing cash flow from increased membership. Mediatrader members are its strongest asset; without members signing up trading will be affected and the business will not be able to sustain itself.  Having a strong and growing membership base will allow the company to achieve its goals of profitability.

8. Marketing Objectives

Following website development in-house, initial start-up costs are expected to relate to website hosting and advertising needs. Focusing on print ads in publications in the areas of entertainment and technology, as well as search engine hosting and online ads, Mediatrader will attract target users, individuals aged 18 and older with internet access and a desire to trade audio and visual media in an online forum.

To enhance ease of use and avoid such pitfalls as online fraud and underage usage to the greatest possible extent, services such as the online payment system PayPal will be utilized, also allowing for a greater advertising advantage via the PayPal site. A points system will become the main mode of transfer between clients, while charges incurred for the listing of trading ads on the site will use this PayPal service. Developing relations with multiple delivery services such as UPS, FedEx, and DHL will be key in offering clients the greatest variety of shipping options and encouraging greater amounts of trade.

Mediatrader will be advertised as a safe surfing site, complete with encoding for the protection of consumer information. Parental controls may serve as potential attractant, as a credit card or bank account will be required for payments, with rating systems for media made available.

To best measure the overall profitability of the site, the various forms of media (music versus videos or gaming software) will be divided, with given advertising costs divided accordingly. The listing costs will be factored in as an expense, while the potential costs from using the PayPal system, such as charges incurred for the use of the credit card processing feature will be absorbed by Mediatrader. Collecting data on the fees accrued from the various forms of media; profit and loss statements will be formed to show the relative return of each.

Advertising and further incentives for use, such as hosting cost sales for multiple trade ads, will be adjusted based upon the data collected on a month-by-month basis for the first 12 months. Following this 12-month period, it is expected that trends in usage will become more evident and profitability data will begin to be collected on a quarterly basis. It is the goal of Mediatrader to maintain a minimum profit level of 15% for each quarter beyond the initial 12-month start-up period.

To assess the effectiveness of advertisement, all new consumers will be asked to submit information relating to their introduction to Mediatrader upon their first trade or payment for trade ad listing on the site. Data collected from this survey will be discussed along with the profitability data to determine the best venues for reaching new potential members.

9. Target Market Strategy

Mediatrader will have to aggressively seek out clients that are willing to not only utilize company services, but pass along recommendations to others as well. Our target market for the first five years will include the following areas:

• Educated adults in well developed countries. This group is more likely to be internet-savvy and to be users of the items listed on Mediatrader than the less educated counterparts.

• Students. With each new semester, students will be in need for different textbooks. Mediatrader can become a platform for exchanging textbooks between students all over the world.

As our customer base grows, we will be able to conduct further research and tactics to expand solicitation to overlooked segments within various countries.

10. Messaging

Mediatrader's goal is to meet customer needs with each time our service is used; Mediatrader is able to provide a new service that will enhance the public's exposure to online media services. The online platform is an exclusive system designed to help customers exchange various media with a value-focused approach to user satisfaction. The company focuses on the value and benefits with each personalized transaction. Mediatrader emphasizes meeting the customers' needs through a large selection of online media, personalized and efficient online trades.

1. Branding

For the purposes of venture branding, Mediatrader plans to utilize an individual name strategy focusing on the brand name Mediatrader and and the advertising tag line, " The Online Media Exchange". The brand will be represented by the main website and a general logo featuring an orange background with white text featuring the brand name "Mediatrader".

Based upon branding analysis of direct competition, the proposed branding strategy is in keeping with current trends. To encourage a greater number of Mediatrader members and increased brand recognition, further brand development will include adding a greater amount of color to the brand logo and the formation of a specific icon that becomes uniquely associated with Mediatrader. Based upon current research into the effects of color on individual moods, the use of orange appears an appropriate choice as the color is associated with warmth, balance, enthusiasm, and attention grabbing (Nicholson, 2002).

It is the goal of Mediatrader to represent an easily accessible and trustworthy platform for the trading of various media types. To meet this goal the main page of the website will remain simple and straightforward. Potential and existing members will be met with a concise description of the venture and its offerings. Sign-in and sign-up areas will be well noted and a sampling of recent listings will be visible to encourage trading interest and offer clear examples of the site's capabilities. Additional pages are linked to this main site, which allow visitors to learn more about the company, its founders, our marketing plan, and frequently asked questions regarding site use.

The effectiveness of the Mediatrader site layout and branding symbols will be tested during the listing payment stage, using an online feedback system. Described by Dellarocas (2003), a online feedback system is the best known method for ascertaining consumer feedback in an online marketplace environment, where direct communication between consumer and the company is limited, if existent. While this feedback survey will be optional for completion, it is expected that participation will be high as the survey is to be positioned at a time where the client is already in the process of providing information regarding their listing(s).

Based upon current research, it is hoped that the cost effectiveness and recycling nature of media trading will encourage company growth at a time when consumers are most cost conscious (Lodish & Mela, 2007). To further encourage initial use and site growth, the development of consumer trust will be a key concern. Based upon the findings of Pavlou and Gefen (2004), creating an online marketplace complete with security features and legally binding (mechanisms) fosters feelings of trust within the consumer and encourages their perception of overall company effectiveness.

To capitalize on this aspect of trust development, potential client risks such as identity theft and credit fraud will be addressed. No personal financial information will be stored on the site and all financial transactions will be routed through a payment processing service such as PayPal. Through the use of such a service, information and transactions will be insured against risk and clients will be comforted by the presence of a well-known and more universal payment service. It is hoped that the credibility of such a service will transfer to Mediatrader, as well.

Marketing Mix

11. Product Marketing

Mediatrader will focus marketing efforts primarily on Internet advertisement. In keeping with current Internet advertising trends, the use of viral video ads posted on social networking websites is of particular interest to Mediatrader. As explained by Jay (2008), the use of viral advertising allows for the presentation of a brand's product and ideas in a non-invasive forum, with which the consumer is already familiar and comfortable. Often entertaining, the ads are meant to be "catchy" while not extremely expensive to produce. Furthermore, rather than experiencing the traditional costs associated with advertising circulation, the venture is able to post only a few viral ads and reap the benefits of a "word of mouth" style of transmission. Specific marketing efforts will focus upon the ease of use of the Mediatrader marketplace, the safety and security of the systems involved, such as PayPal, and the overall "green" nature of the venture as the trading of media goods is essentially a form of recycling.

Following the initial interest and exploration of the site and its offerings, the potential client is made well aware of the systems in place to protect their personal security and avail them of the greatest possible benefits from trading with Mediatrader. As suggested by the research of Mangalindan (2007), the use of PayPal payment systems, and similar secure platforms, allows the client to feel that they are not only safe to provide payment information, but are eligible to receive a great many purchasing incentives simply for signing up. Consumers using the PayPal payment system are able to store their personal and financial information on a single secure site and use a simple login for purchases and payments all over the Internet. As an added benefit of membership, the consumer is also able to receive PayPal backed rebates, discounts, and rewards such as cash back. The incorporation of such a service not only benefits the consumer and the PayPal company, but also encourages consumer use of PayPal supporting sites, such as Mediatrader.

Having received various benefits from membership and found the use of the Mediatrader platform to be easily understood, the potential client will reap the added benefit of recycling goods rather than continuing a pattern of consumer waste. Through the trading of media items in good working condition, which are simply no longer desired by the owner, the need for production of entirely new products from new resources is diminished significantly. Based upon the research of D'Souza, Taghian, and Khosla (2007), incorporating the "green" ideals into a buying, or trading, situation can have lasting impacts on the relationship between the consumer and the provider of the product or service. Conceptualizing that a purchase or trade goes beyond the singular event in the marketplace to have a positive impact on an environmental issue may lead to a desire to continue the purchasing or trading behavior with the same provider in the future. The reputation of the provider as an environmentally conscious corporate citizen can also lead to further the growth and success of the venture. 

12. Pricing

Mediatrader pricing objective will provide a value-based service of media exchange, but low cost pricing will allow maximum market share and higher use rate by customers.  Our standard fixed pricing for services gives customers the ability to know upfront costs for services. Pricing is more advantageous compared to Ebay for media related transactions. Mediatrader customers are subject to a one time fixed fee for each exchange posting and item shipping.  Mediatrader's pricing and marketing will be based off perceived value pricing.  When compared to our closest competitors, our everyday low listing rate offers substantial value compared to other methods of acquiring media.  High website usage will bring in profits for website services (Table 2). 

|Table 2 - Price List |

|Item |Description |Per Unit Price |

|Book Listing |Price for listing one book. |$2 |

|CD Listing |Price for listing one CD. |$3 |

|Video Game Listing |Price for listing one video game. |$3 |

|DVD Listing |Price for listing one DVD. |$3 |

|Advertising Revenue |Price for one month of advertising on . |$500 |

| |Mediatrader will have three slots on their website for | |

| |advertising. | |

|  |  |  |

13. Promotion

Mediatrader will promote the company through the use of various online search engines and through corporate sponsorship. Promotion through corporate sponsorship will assist in getting the services provided by Mediatrader online exchange service further recognition and exposure. Advertising on a variety of popular online search engines will expose Mediatrader to a diverse technology-dependent audience who would also be prime candidates to use Mediatrader services, though familiarity with online platforms. 

14. Service

Mediatrader is a pure service business and success will rely upon the quality of the service provided to the members. Mediatrader is dedicated to the delivering quality service through focusing on: quality service through use of website design, customer service, and quality control.

Website Design. Mediatrader’s website will aid in adding a look, provide a feel to Mediatrader's service and provide a platform for business to take place. Mediatrader web design will offer easy navigation, use, and will remain member friendly.

Customer Service. Mediatrader service will be customer based. Most interaction will remain between consumers. Mediatrader will facilitate and act as a point of contact for member concerns, technical problems, issues, or questions. Mediatrader's goal is to satisfy all members and provide quality service without major problems. The "Contact Us" link on the website will be the main means of communication between Mediatrader and the members. Members' concerns and questions will always be answered within a 24-hour period.

Quality Control. Services are highly variable in that they are not consistent in who is providing the service and where it is provided (Kotler and Keller, 2007, p. 203). Mediatrader's service is variable because it relies heavily on the actions of the members. Members are responsible for smooth transactions and the speedy delivery of the items that are traded. Mediatrader will help aid in smooth transactions by providing quality control. The quality control will focus on monitoring all member activity and all transactions. The quality of the members' transactions will be monitored by feedback provided by both the parties of the transaction. Mediatrader will not tolerate members who do not consistently provide smooth transactions and speedy delivery. Mediatrader will have a member agreement from each member and if the terms of the agreement are broken, the member will lose membership to Mediatrader.

15. International Markets

Mediatrader will be operating within the global Internet marketplace and will be made available to all individuals with Internet access. The physical location of Mediatrader's clientele is irrelevant due to the online nature of the service. Consumers will be located around the world. We will focus on the United States market for the inception of our service, as this is the home base of the venture. The worldwide web will facilitate global reach, global media exchange, and personal service to all that use Mediatrader services.

Market expansion. Mediatrader has the ability to expand their market internationally because of the ease of access to the worldwide web. Websites could be designed to cater to international markets by offering language selection and a web interface that caters to the needs of different countries.

Use of Internet. Mediatrader's business strategy will focus on gaining new users by continually penetrating the new users of the Internet worldwide.

16. Implementation Schedule

Mediatrader's marketing strategy will be implemented through the schedule laid out in the table shown below (Table 3).

|Table 3 – Implementation Schedule - Milestones |

|  |  |  |  |  |  |

|Advertising |Start Date |End Date |Budget |Manager |Department |

|Online Advertising |4/14/2008 |7/14/2008 |$5,000 |Vincent |Marketing |

|Register website w/ search engines (top hits) |4/14/2008 |4/14/2009  |$2,500 |Kelvin |Marketing |

|Total Advertising Budget |  |  |$7,500 |  |  |

| | | | | | |

|PR |Start Date |End Date |Budget |Manager |Department |

|Corporate sponsorship |7/15/2008 |10/15/2008 |$5,000 |Lauren |Marketing |

|Mail Campaign |7/15/2008 |10/15/2008 |$2,000 |Kelvin |Marketing |

|Total PR Budget |  |  |$7,000 |  |  |

| | | | | | |

|Direct Marketing |Start Date |End Date |Budget |Manager |Department |

|Marketing Plan |1/21/2008 |4/13/2008 |$0 |All |Marketing |

|Total Direct Marketing Budget |  |  |$0 |  |  |

| | | | | | |

|Web Development |Start Date |End Date |Budget |Manager |Department |

|Website Development |2/4/2008 |4/13/2008 |$3,000 |Amber |Marketing |

|BETA Release |4/14/2008 |7/14/2008 |$0 |Amber |Marketing |

|Total Web Development Budget |  |  |$3,000 |  |  |

| |  |  | |  |  |

|Totals |  |  |$17,500 |  |  |

Financials

17. Break-even Analysis

Kotler and Keller (2007) define break-even analysis as the simplest financial measure to evaluate new-product or service proposals. Both variable and fixed costs are taken in to consideration when meeting the break-even point.

Mediatrader’s unit is defined as one media listing on the website. The price associated with each listing is defined as the unit price.

The fixed cost table below outlines the estimated monthly fixed costs associated with operating Mediatrader. Rent is estimated by taking location and space needed into consideration. Website hosting prices are estimated using Asmallorange as the provider (). Payroll is estimated on having three full-time employees, a systems administrator, an office assistant, and a marketer. Estimated utilities include water, electricity, Internet, and telephone. The recurring marketing expense is estimated based on having monthly web advertisements.

Based on assumptions made for Mediatrader’s average per unit revenue, and average per unit variable cost estimated in the sales forecast and the estimated monthly fixed cost (Tables 4 and 5), it is estimated that Mediatrader will break even with 4,914 listings per month, or $13,713 (Figure 2).

|Table 4 - Fixed Costs |

|Cost |  |

|Rent |$1,500 |

|Website Hosting |$100 |

|Payroll |$10,000 |

|Utilities/Phone |$1,000 |

|Recurring Marketing Expense |$500 |

|  |  |

|Total Fixed Costs |$13,100 |

|Table 5 - Break-even Analysis |

|Monthly Units Break-even |4,845 |

|Monthly Revenue Break-even |$13,522 |

|  |  |

|Assumptions: |  |

|Average Per-Unit Revenue |$2.79 |

|Average Per-Unit Variable Cost |$0.09 |

|Estimated Monthly Fixed Cost |$13,100 |

Fig. 2 - Break-even Analysis

[pic]

18. Sales Forecast

Mediatrader projects approximately 40% growth between year one and year two. The most important components to sales performance is increasing the number of members and keeping the advertising spaces filled. The number of members will directly affect the sales performance due to the listing fee being the source for revenue. Mediatrader will have three spaces for advertising on the website. Companies will be charged a monthly price to keep their advertisement in that space. The main risk involved is the business not taking off as early as projected. This could definitely turn the sales forecast downward. Mediatrader is assuming the growth will be positive and that the word-of-mouth advertising will keep the sales forecast on the rise (Table 6, Appendix I, and Fig. 3).

|Table 6 - Sales Forecast |

|  |Year 1 |Year 2 |Year 3 |

|Unit Sales |  |  |  |

|Book Listings |27,900 |35,000 |50,000 |

|DVD Listings |31,800 |40,000 |55,000 |

|CD Listings |24,600 |25,000 |23,000 |

|Video Game Listings |22,300 |30,000 |45,000 |

|Advertising Revenue |36 |36 |36 |

|Total Unit Sales |106,636 |130,036 |173,036 |

|  |  |  |  |

|Unit Prices |Year 1 |Year 2 |Year 3 |

|Book Listings |$2.00 |$2.00 |$2.00 |

|DVD Listings |$3.00 |$3.00 |$3.00 |

|CD Listings |$2.50 |$2.50 |$2.50 |

|Video Game Listings |$3.00 |$3.00 |$3.00 |

|Advertising Revenue |$500.00 |$500.00 |$500.00 |

|  |  |  |  |

|Sales |  |  |  |

|Book Listings |$55,800 |$70,000 |$100,000 |

|DVD Listings |$95,400 |$120,000 |$165,000 |

|CD Listings |$61,500 |$62,500 |$57,500 |

|Video Game Listings |$66,900 |$90,000 |$135,000 |

|Advertising Revenue |$18,000 |$18,000 |$18,000 |

|Total Sales |$297,600 |$360,500 |$475,500 |

|  |  |  |  |

|Direct Unit Costs |Year 1 |Year 2 |Year 3 |

|Book Listings |$0.06 |$0.06 |$0.06 |

|DVD Listings |$0.09 |$0.09 |$0.09 |

|CD Listings |$0.08 |$0.08 |$0.08 |

|Video Game Listings |$0.09 |$0.09 |$0.09 |

|Advertising Revenue |$25.00 |$25.00 |$25.00 |

|  |  |  |  |

|Direct Cost of Sales |  |  |  |

|Book Listings |$1,674 |$2,100 |$3,000 |

|DVD Listings |$2,862 |$3,600 |$4,950 |

|CD Listings |$1,845 |$1,875 |$1,725 |

|Video Game Listings |$2,007 |$2,700 |$4,050 |

|Advertising Revenue |$900 |$900 |$900 |

|Subtotal Direct Cost of Sales |$9,288 |$11,175 |$14,625 |

Fig. 3 - Sales Monthly

[pic]

19. Expense Forecast

The table below outlines the marketing expense budget for Mediatrader's first three years. Mediatrader will use the percentage-of-sales method to establish the marketing budget. The marketing budget goal is 10% of sales and will be executed in the first three years of business. The percentage-of-sales method links promotion to the amount of sales and focuses the attention on the relationship between selling price, profit, and promotion cost. This method will allow for stability in the first few years of operation (Kotler & Keller, 2007). The first year budget is set at $29,591, which is 9.94% of projected sales in the first year. The 10% marketing expenses are dedicated to establishing the Mediatrader name in several marketing campaigns such as online advertising, event sponsorship, and the website (Table 7, Appendix II, and Fig. 4).

|Table 7 - Marketing Expense Budget |

|  |Year 1 |Year 2 |Year 3 |

|Google Search Ad Hosting |$2,100 |$3,000 |$3,500 |

|PayPal Business Account Transaction Fees |$5,641 |$6,850 |$9,035 |

|Website |$1,200 |$2,000 |$3,000 |

|Internet Advertising |$4,800 |$5,500 |$6,500 |

|Event Sponsorship |$6,000 |$7,000 |$8,500 |

|Graphics and Printing |$6,000 |$6,500 |$8,500 |

|Other |$3,850 |$5,000 |$6,000 |

|  |------------ |------------ |------------ |

|Total Sales and Marketing Expenses |$29,591 |$35,850 |$45,035 |

|Percent of Sales |9.94% |9.94% |9.47% |

Fig. 4 - Monthly Expense Budget

[pic]

20. Linking Expenses to Strategy and Tactics

Mediatrader’s marketing expenses represent a small portion of total revenue generated.  A lack of inventory and low capital requirements keep our expenses to a minimum.  It will be imperative to gain advertising relationships early in the business.  Expansion of operations will be based on steady growth while constantly maintaining the ability to serve existing customers. Mediatrader's Internet based transactions will ease the expansion to untapped market penetration (Fig. 5).

Fig. 5 - Sales vs. Expenses Monthly

[pic]

21. Contribution Margin

Based upon projected sales for the first three years of the Mediatrader venture, it is anticipated that the percentage of sales allocated toward marketing and sales driven expenses will be between 9.47 and 9.94% (Table 8). The primary marketing focus will be based upon online ad hosting via search engine sites such as Google, a website which is growing in popularity and usage. This marketing effort will be supported by print advertisement, along with inclusion as a PayPal merchant.

Focusing upon the popular search engine, the fees associated with online ad hosting, based upon the keywords chosen (trade, media, trading, DVD, books, CD, game), at approximately $100.00 to $250.00 per month (). It is anticipated that the venture will begin with fewer keywords and expand usage over time to hone in on untapped targets within the various media markets. Thus, over the first year, the expense assigned to this program will increase to the maximum, where it is likely to remain over the next two-year period.

The use of the online payment system PayPal is expected to generate greater interest in the venture than would the use of an in house payment option. Focusing on the notoriety and overall reputation of the brand, it is anticipated that the target client will not only be more likely to spend, but also to discover Mediatrader through a listing of PayPal supported online merchants from the PayPal site. Users familiar with the payment platform will be easily transitioned to the trading platform. The expenses incurred are based upon the total amount of transactions processed through the site, at a rate of 1.9%. The total sales projected have been met with this percentage to calculate the potential monthly and annual cost of PayPal usage, though depending upon the type of payment made (bank transfers versus credit card payments) this percentage may vary. The figures above are meant to act as a worst-case scenario (Appendix III and Fig. 6).

Finally, the inclusion of print based marketing has been estimated using data from local and regional newspapers as a source of comparison ( and ). It is anticipated that print advertising will increase in the first year of the venture and then decrease over time as the service offering matures and gathers greater recognition.

|Table 8 - Contribution Margin |

|  |Year 1 |Year 2 |Year 3 |

|Sales |$297,600 |$360,500 |$475,500 |

|Direct Cost of Sales |$9,288 |$11,175 |$14,625 |

|Costs of Sales |$0 |$0 |$0 |

|  |------------ |------------ |------------ |

|Total Cost of Sales |$9,288 |$11,175 |$14,625 |

|  |  |  |  |

|Gross Margin |$288,312 |$349,325 |$460,875 |

|Gross Margin % |96.88% |96.90% |96.92% |

|  |  |  |  |

|Marketing Expense Budget |Year 1 |Year 2 |Year 3 |

|Google Search Ad Hosting |$2,100 |$3,000 |$3,500 |

|PayPal Business Account Transaction Fees |$5,641 |$6,850 |$9,035 |

|Website |$1,200 |$2,000 |$3,000 |

|Internet Advertising |$4,800 |$5,500 |$6,500 |

|Event Sponsorship |$6,000 |$7,000 |$8,500 |

|Graphics and Printing |$6,000 |$6,500 |$8,500 |

|Other |$3,850 |$5,000 |$6,000 |

|  |------------ |------------ |------------ |

|Total Sales and Marketing Expenses |$29,591 |$35,850 |$45,035 |

|Percent of Sales |9.94% |9.94% |9.47% |

|  |  |  |  |

|Contribution Margin |$258,721 |$313,475 |$415,840 |

|Contribution Margin / Sales |86.94% |86.96% |87.45% |

Fig. 6 - Contribution Margin Monthly

[pic]

Controls

22. Implementation

Beginning on April 14, 2008, the venture will embark on the path first laid out in the completed marketing plan implementation schedule, as approved by all managing members. The first major developmental milestone will revolve around the creation of the website. BETA release for the trading platform will commence on this date, opening the site to usage and membership worldwide.

To further enhance target awareness and adoption of the service, an advertising initiative consisting of an online advertising component with hosting on major search engines such as , and the registering of the website domain.

A public relations campaign encouraging corporate sponsorship will follow, in hopes of attracting greater visibility and usage through attachment to the existing branding of larger, more established, ventures. A mail campaign will engage potential members in the target market on an individual level (Table 3).

23. Keys to Success

• Creativity

• Address market needs

• Generate repeat business

• Exceed customer's expectations

• Offer comprehensive, flexible services

• Develop and build upon customer advertising relationships

• Further develop areas of specialization to attract and retain key clients

24. Market Research

Mediatrader will utilize market research throughout the company's existence to maximize stakeholder and customer satisfaction. The services of JTN research will be used to help identify and market prospects in America and Europe. The use of outside marketing firms will help identify demand estimation and assist in forecasting demand for services.

25. Contingency Planning

Mediatrader has planned for several undesirable scenarios:

Entrance of direct competition. In the event of direct competition, Mediatrader will adjust their marketing scheme to focus on the factors that differ from the competition. More aggressive promotions and advertising will take place.

Problem with idea adoption. With a new idea there is always the potential that the consumers may not adopt it. This would result in lack of sales and profits. Mediatrader's focus is geared directly towards gaining new customers and introducing the new idea associated with the business. In the event that the idea does not catch on, promotions and aggressive marketing campaigns will help to reach the untapped consumer to try and gain adoption of the idea.

Lack of funding. Mediatrader does not require a great deal of start-up capital and will access to several small business loan options

Loss of key personnel. There is always a chance in losing a key person involved in the start up of a new idea. Our business model allows the easily transition new employees, but high employee turnover could affect business operations.

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|Appendix I - Sales Forecast (Expanded) |

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  |  |Month 1 |Month 2 |Month 3 |Month 4 |Month 5 |Month 6 |Month 7 |Month 8 |Month 9 |Month 10 |Month 11 |Month 12 | |Sales |  |$7,350 |$9,450 |$11,550 |$13,650 |$17,850 |$22,500 |$29,250 |$31,400 |$33,250 |$36,400 |$40,150 |$44,800 | |Direct Cost of Sales |  |$251 |$314 |$377 |$440 |$566 |$705 |$908 |$972 |$1,028 |$1,122 |$1,235 |$1,374 | |Costs of Sales |  |$0 |$0 |$0 |$0 |$0 |$0 |$0 |$0 |$0 |$0 |$0 |$0 | |  |  |------------ |------------ |------------ |------------ |------------ |------------ |------------ |------------ |------------ |------------ |------------ |------------ | |Total Cost of Sales |  |$251 |$314 |$377 |$440 |$566 |$705 |$908 |$972 |$1,028 |$1,122 |$1,235 |$1,374 | |  |  |  |  |  |  |  |  |  |  |  |  |  |  | |Gross Margin |  |$7,100 |$9,137 |$11,174 |$13,211 |$17,285 |$21,795 |$28,343 |$30,428 |$32,223 |$35,278 |$38,916 |$43,426 | |Gross Margin % |  |96.59% |96.68% |96.74% |96.78% |96.83% |96.87% |96.90% |96.90% |96.91% |96.92% |96.93% |96.93% | |  |  |  |  |  |  |  |  |  |  |  |  |  |  | |Marketing Expense Budget |  |Month 1 |Month 2 |Month 3 |Month 4 |Month 5 |Month 6 |Month 7 |Month 8 |Month 9 |Month 10 |Month 11 |Month 12 | |Google Search Ad Hosting |  |$100 |$100 |$100 |$100 |$100 |$100 |$250 |$250 |$250 |$250 |$250 |$250 | |PayPal Business Account Transaction Fees |  |$140 |$180 |$219 |$246 |$339 |$428 |$556 |$597 |$632 |$692 |$763 |$851 | |Website |  |$100 |$100 |$100 |$100 |$100 |$100 |$100 |$100 |$100 |$100 |$100 |$100 | |Internet Advertising |  |$400 |$400 |$400 |$400 |$400 |$400 |$400 |$400 |$400 |$400 |$400 |$400 | |Event Sponsorship |  |$500 |$500 |$500 |$500 |$500 |$500 |$500 |$500 |$500 |$500 |$500 |$500 | |Graphics and Printing |  |$500 |$500 |$500 |$500 |$500 |$500 |$500 |$500 |$500 |$500 |$500 |$500 | |Other |  |$250 |$250 |$300 |$300 |$300 |$350 |$350 |$350 |$350 |$350 |$350 |$350 | |  |  |------------ |------------ |------------ |------------ |------------ |------------ |------------ |------------ |------------ |------------ |------------ |------------ | |Total Sales and Marketing Expenses |  |$1,990 |$2,030 |$2,119 |$2,146 |$2,239 |$2,378 |$2,656 |$2,697 |$2,732 |$2,792 |$2,863 |$2,951 | |Percent of Sales |  |27.07% |21.48% |18.35% |15.72% |12.54% |10.57% |9.08% |8.59% |8.22% |7.67% |7.13% |6.59% | |  |  |  |  |  |  |  |  |  |  |  |  |  |  | |Contribution Margin |  |$5,110 |$7,107 |$9,054 |$11,065 |$15,045 |$19,418 |$25,687 |$27,731 |$29,491 |$32,486 |$36,053 |$40,475 | |Contribution Margin / Sales |  |69.52% |75.21% |78.39% |81.06% |84.29% |86.30% |87.82% |88.32% |88.69% |89.25% |89.79% |90.35% | |

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