Business Plan for Marketing and Advertising Organization Creativity Sure
Offers to Customers
Business Model and Resources
Business Risks and Business Strategy
Planning and Financial Considerations
The contemporaneous business community is characterized by numerous features, one of the most notable of its characteristics being the incremental focus placed on customer attraction, retention and satisfaction. This feature has generated an intense need for marketing specialists that are able to support companies in developing and implementing the most suitable marketing strategies that maximize their chances of a successful outcome. Creativity Sure is such a company and the aim of this business plan is to reveal numerous features of the company, including its goals, product and service offering, an objective analysis of the market, the business model and the resources to be used, the barriers or planning considerations. The paper will come to an end with a section on financial estimates regarding the cash flows, P&L and balance sheet for the first three years of operations.
2. Company Description
Creativity Sure is a small size company, at the time hiring no more than 20 individuals, organized as follows: one marketing manager, one financial manager, five marketing specialists, three marketing assistants, two designers, two IT specialists, four sales personnel and two cleaning staff. The company was established to activate in the advertising industry and offer specialized assistance to numerous companies in the regional environment. Despite its relatively reduced size, Creativity enjoys several benefits, such as highly capable and adaptable staff members or the incorporation of cutting edge technologies in their product and service offering.
2.1 Mission Statement
Creativity Sure’s mission statement comprises of the elements most crucial to its operations — the customers, the employees and the profits. Basically, it has been constructed to state the following:
At Creativity Sure, we are committed to helping our customers adapt and respond to the emergent challenges of the modern marketing community by presenting them with high quality products and services, created and delivered by highly skilled staff members. In achieving our financial goals, we make customer satisfaction, employee satisfaction, environmental and social responsibility our main values.
2.2 Offers to Customers
Creativity Sure is able to handle an entire marketing campaign for any given customer. Our services commence at consulting in matters of packaging, product placement or enhancement of brand recognition to end with promotional sales and product strategies adjacent to the life cycle of a respective product (introduction, growth, maturity and decline). Aside consultancy services, Creativity Sure is also able to create advertisements applicable in various media channels (television commercials, street banners and flyers, radio advertisements, inscriptions for automobiles, internet advertisements and so on). The company ensures all customers of the uniqueness of their order, of the increased levels of commitment to serving the customer and of the customization of the marketing campaign to the unique characteristics of each client.
2.3 Organizational Goals
Creativity Sure’s objectives are organized onto three categories: (1) achieve customer satisfaction through the offering of high quality products and services; (2) create a pleasant and challenging working environment that cherishes and reaps the benefits of employee diversity and (3) register sufficient levels of profitability that allow us to continually reward our employees but also continually invest in improving our skills, increasing our popularity and maximizing our chances of success in the industry.
3. The Idea
The idea at the basis of Creativity Sure, as revealed by the actual name of the company and by its UPS is that of customization of each marketing endeavor to the unique features of each customer. Otherwise put, the unique selling proposition is that Creativity Sure responds to the specific requirements of each customer by developing marketing campaign suited to the personalized needs of each client. The company will not use the same ideas for more that one customers and will nominate a specialized team to address the specific needs of each customer.
The development of the idea occurred with the realization of the increasing levels of competition within the business community and the growing focus on marketing campaigns that attract the consumers. More specifically, increasing numbers of economic agents place more emphasis on marketing operations as a determinant of their overall success. However, not all companies are able to hire marketing specialists with full time norms. Creativity Sure comes to the aid of these economic agents by collaborating with them on temporary basis, as required by each marketing endeavor (such as the launch of a new product line or the strengthening of the brand). The costs of such a practice are reduced in comparison to those of hiring a permanent marketing team and the gains materialize in that the campaign or certain elements in the campaign, as requested by the client, are customized to meet unique needs. Despite the attractiveness of this idea, its feasibility is challenged by the need to invest large sums of money.
4. Industry Analysis
The generic name of the industry in which Creativity Sure will operate is that of Advertising and Public Relations Service Industry and the players within are generally focused on creating media campaigns that promote the products, the image or the interests of their customers. Throughout the past few years, the sector has significantly expanded and so has the number of people interested in getting a job in advertising. The competition for jobs (in fact, the number of job seekers is significantly higher than the number of available positions) can be simply explained through the fact that advertising is a glamorous domain. However, layoffs are current and they often occur whenever the advertising company loses a contract with a client and is unable to rapidly replace it. Also, jobs are lost when major clients cut their advertising budgets or when advertising organizations decide to merge. Mergers and acquisitions are also common and they are often decided in order to strengthen the competitive position of the respective entities.
In 2006, there were 48,000 players in advertising and public relations industry in the United States alone. From these, 40% offered full services to their customers, in the meaning that copy-write, design and air advertisements on multiple media channels — only these entities that offer full services are regarded as advertising agencies. Despite its relatively reduced sizes, Creativity Sure is an advertising agency as it offers the full range of marketing and advertising services. Of the remaining 60%, most of them are specialized in a single field of operations and on a niche market, such as the creation of billboards or the distribution of samples. The internet has come to play a major role in the operations of advertising companies as more and more economic agents use it to promote their customers’ interests. Ultimately, “advertising and public relations services firms have found that highly creative work is particularly suitable for their services, resulting in a better product and increasing their clients’ profitability” (Bureau of Labor Statistics, U.S. Department of Labor, 2009).
As previously mentioned, the advertising and marketing industry is characterized by intensifying competition. Yet, it has to be noted that just like in any other industry, there are two types of players — small size entities and large companies. The demand for the services of these institutions is generated by the needs of economic agents that manufacture and sell consumer goods, entertainment products and services (such as film makers or restaurants), financial services, technologies and telecommunication products and services. The success of an advertising organization depends directly on its ability to generate creative outcomes and maintain fruitful relations with its customers. The large size companies enjoy the benefits of scale economies, or increased access to resources and customers, whereas the small size entities are best able to compete in the local markets by offering a limited array of specialized products and services (Hoovers, 2009). Creativity Sure is set to defeat the odds in the meaning that we aim to offer a large scale of customer services, just like a large size company, but within the resource constraints of a small size company. Despite the challenges such a proposition implies, we believe that the current approach will minimize the limitations of the two separate types of advertising entitles, combine their benefits and maximize ours and our customers’ chances of successful outcomes.
The ten most notorious players in the American advertising industry are Yahoo! Sure, Google Sure, The Endeavor Agency Sure, Amazon.com Sure, Safeway Sure, AOL LLC, Staples Sure, the Convergys Corporation, the R.R. Donnelley and Cons Company and the Dun and Bradstreet Corporation (Hoovers, 2009). They are all present at a global level and possess large and loyal customers, as well as sufficient resources to maintain their customers and status. It is as such probable that they will not consider Creativity Sure as a threat. In terms of small size entities in the region, these refer to three players — Karina Advertising (specialized in billboards), Falling Agency (specialized in marketing via telephone) and Dorna PLC (offering only marketing consultancy services, without any advertising products). The existence and specialization of these three competitors materializes in the need for Creativity Sure to excel in the offering of the three types of products and services offered by challengers Karina Advertising, Falling Agency and Dorna PLC.
4.2 PEST Analysis
Political forces: The development of a full legislation within the advertising field has yet to become a complete process. Recent efforts have however limited the operations of advertising campaigns in the meaning of having eliminated all features that are not compatible with the product or which promise unrealistic outcomes, such as the tremendous loss of weight. Other issues regulated by the new laws refer to truth-in-advertising, product labeling requirements, online advertising and marketing, the advertising of specific products, telemarketing and direct marketing, and finally, regulations relative to environmental marketing (The Official Business Link to the U.S. Government, 2009). The new Obama administration has yet to take a new stand on advertising, but the current President has clearly established other goals and modifications in advertising legislation are less likely to occur in the immediate future.
Economic forces: Any company has to consider hedging against currency risk exchange, but since Creativity Sure only collaborates with national partners, the used currency is always the dollar and we do not need to consider hedging operations. An economic force that could however impact us is given by the contemporaneous financial crisis, which could materialize in both opportunities as well as threats (further detailed in the SWOT analysis section).
Socio-cultural forces: The American population is highly focused on consumption, meaning that advertising is just a step in pointing the already interested audience in the direction desired by the manufacturers and service providers (our customers). The demands of individuals clients have however significantly increased, meaning that the advertisements and other marketing endeavors will not only have to adjusted to the needs of the customer SMEs, but also to the individual customers of these small and medium size entities.
Technological forces: The media supporting advertisements has significantly enlarged throughout the past years, with the internet playing a crucial part. Marketing and advertising companies create and promote their campaigns with the usage of cutting edge technologies and mostly on the internet. However, a study of the industry reveals that the customers are not always online and that, while technology is important, it should harmoniously blend in with more traditional approaches (LeClaire, 2000).
5. Marketing Analysis
Conducting the marketing analyses is a most important part in planning a business as it allows the organization to view the features of the industry in which it activates, including the competition, and develop the most suitable strategies in response to these characteristics.
5.1 Target Market
Creativity Sure is able to offer all types of marketing and advertising products and services. However, due to its relatively limited size and resources, the ability to simultaneously offer them to numerous customers is limited. Also, its limitations come from the increased demands of large size corporate clients, which might at one time generate an order that would engage all of Creativity’s staff and financial resources. Therefore, in light of the material constraints associated with a small size entity, Creativity Sure will for now address the target market formed from small and medium size companies in the local region. There is a total of 500 SMEs in the region, some working with either Karina Advertising, Falling Agency or Dorna PLC, or internally dealing with the marketing needs. The number of potential customers is expected to increase in the future years due to two reasons. First of all, the number of SMEs will grow; secondly, Creativity Sure will strengthen its position and increase its resources and will reconsider its initially established target market.
5.2 SWOT Analysis
The team at Creativity Sure is young, strong, capable and easily adaptable, we are creative and committed to fully satisfying our customers
The owners of the company possess sufficient financial resources to get the business running and their favorable credentials and references will allow the company to contract advantageous bank loans
We have already developed partnerships with some potential customers, as well as partners, such as purveyors
Since we are in the advertising business, promotion of our brand and the attraction of SME customers will not generate additional expenditures
Despite our abilities and commitment, we are faced with the limitations of small size companies, mostly increased start-up costs, lack of brand recognition and a yet unformed customer palette
The financial crisis could mean that the SMEs unaffected by it strive harder to succeed in a context in which their competition faces intensified challenges, materializing as such in increased demands for the services of Creativity Sure
Despite its constituting an unfortunate event, the financial crisis has also forced advertising companies out of business, generating as such better development opportunities for Creativity Sure
The three main competitors in the region are focused on niche markets; even if, in the most pessimistic scenario, Creativity Sure cannot compete in terms of marketing consultancy, billboards or telephone marketing, it can still register tremendous success with its complementary offering
The economic crisis could mean that the target market formed from the SMEs in the region cut their advertising costs as a response to the current financial challenges, meaning a reduced demand for the products and services of Creativity Sure
Despite the emergence of the financial crisis, the advertising industry remains a highly dynamic one, with increasing competition. Foremost, if we succeed in offering agency services to our customers, it is likely that in the future we raise the interest of major players that possess more resources and will likely win the battle
5.3 Marketing Mix
The analysis of the marketing mix is necessary to make the controllable decisions in terms of product, price, promotions and distribution (Net MBA, 2007).
The products and services will be sold under the Creativity Sure brand name, with the specification that this brand will be mostly familiar to the SME customers; the individual customers will be presented with the brand name of the SME, as they are the ones interested in promoting their interests. However, small inscriptions will also be available within the realized products (billboards, fliers, commercials and so on) stating the Creativity Sure brand name
The functionality of each product or service in the offering is that of promoting the interests of the SME customers (brand recognition, product promotion and so on); each offer will however meet specific functionality requirements, based on the characteristics of the respective products and/or service as well as the unique demands of each customer
The styling of the advertisements is by all means tasteful, but other characteristics are agreed upon discussions with the customers as some might prefer a more modern approach, whilst others would rather an “antique” look
Regardless of the features customized to customer demands, all Creativity products and services share the commonality of high quality
The material products, such as the billboards, have a warranty of three months, during which time the company will replace or restore any damaged goods
The warranty feature is more difficult to apply relative to the services, but it is being replaced with an acceptance to add three modifications to the initial design, if the customer is unsatisfied with the final outcome
Given that the company possesses sufficient financial resources, we will implement a penetration pricing strategy throughout the first three months of operations; this approach will ensure that we attract customers with our low price and promotional prices and convince them of the high quality of our products and services
Starting with the fourth month of operations, we will implement a variable pricing strategy, in the meaning that our retail prices will be real, similar to those of the competition and will suffer modifications whenever we come across changes in the expenditure incurred in our product manufacturing or service delivery
Loyal customers will receive discounts; it is however impossible to establish an actual percentage in the discount offering as this will be established based on the particularities of each individual customer-company relationship; the figures for discount sales for loyal customers could be between 5 and 25%
It is difficult at this time to offer a suggested retail price as this will vary based on the characteristics of each order, products, service, as well as the unique demands of each customer
The marketing consultancy and advertising operations will occur at both Creativity Sure’s offices as well as in the offices of our customers and in the street, whenever necessary
We will use numerous medias to distribute our products and services
Given that we mostly offer services and that the products we create are easy to handle, logistics concerns (such as inventory management, transportation or warehousing) are insignificant
We will use numerous media channels to promote both our services, as well as the interest of our customers; the most prominent means of promoting interests include television, radio, the internet, specialized magazines and journals, street fliers and banners
Throughout the first three months of operations, we will offer our services at a 30% off promotional price
We will create our own advertisements to promote Creativity Sure and this will not only have the benefit of reduced costs, but also of the development of a campaign that is best able to reveal the core competencies of Creativity Sure
Our managers will also engage in public conversations and will feature in televised pr edited interviews in specialized programs or journals and magazines. This will have the benefit of increasing brand awareness as well as attracting customers
6. Business Model and Resources
The specialized literature is filled with references and examples of business models. However, the final success of any venture is directly dependent on the company’s ability to create its own business model that best applies to its characteristics and serves its needs (Quick MBA, 2007). The diagram of Creativity Sure’s business model can be revealed as follows:
Source: Business Model Design and Innovation, 2005
Creativity Sure’s value proposition identifies the problem of small and medium size enterprises in developing and implementing the most suitable marketing and advertising campaigns. We come to help these institutions by presenting them with cost efficient and high quality products and services. Through the offering of superior quality and highly customized products and services, the ability of the SME customers to rely on our high skills and commitments will turn into increased levels of demand, and eventually, in profits.
In order to achieve our desiderate however, we must employ numerous resources, beginning from labor force and technologies and ending with capitals. The issue of the capitals required will be addressed in a following section. The matter of the human resource has already been addressed as Creativity Sure has hired 15 specialists from specific the domains of information technology, management, marketing, design and sales. The two managers will oversee the operations, respectively the financial and marketing implications of the operations, and will both share an equal vote in making final decisions. The next category of resources required is composed from the necessary commodities. Given the object of the activities undergone by our company, the commodities and technological resources are one and the same in many cases. In this order of ideas, the company has already purchased 18 computers with printers and other accessories as well as the adjacent software applications.
7. Business Risks and Business Strategy
The marketing and advertising industry is extremely dynamic, meaning as such that it is constantly exposed to various risks. Some of the most notable risks that could affect Creativity Sure are succinctly revealed below:
the legislation is under constant revision and its modification could imply additional costs and limitations the technologies used continually develop, meaning that their replacement generates additional expenditure small size advertising companies do not have sufficient power to compete against large size advertising agents — this is even more so relevant when Creativity Sure does intend to offer the ‘big league’ services the character of the demand is fluctuating and the loss of a major customer could materialize in significant challenges for the company (such as the need to downsize the staff)
job security is reduced within the industry (Kellner and Heuberger, 1994) and the fact that we have yet to attract major clients could materialize in an inability to retain our current staff
Before actually presenting Creativity Sure’s business strategy it is of vital importance to make the distinction between the business model and the business strategy, as these are often confounded. In this order of ideas, in his Open Innovationâ€¦, Henry Chesbrough (2003) differentiates between the two concepts with the aid of three components. First of all, he argues that the business model if focused on creating value, when the business strategy is focused on transforming the value into an organizational advantage. Secondly, the business model strives to convert technology into economic advantage through the creation of value; the business strategy on the other hand takes this business value and transforms it into shareholder value (profits). Finally, the business model is more focused on internal desires and capabilities, whereas the business strategy is also considering the forces in the macroenvironment.
Creativity Sure’s business strategy is channeled onto three directions — corporate strategy, business unit strategy and operational strategy (Tutor2U) — as observed in the identification of our goals. In this order of ideas, the corporate strategy focuses on attracting sufficient numbers of customers to generate profits. The business unit strategy focuses on creating the highest quality products and services in order to satisfy customer needs but also create and maintain a strong competitive position within the industry. Finally, the operational strategy revolves around the creation of a pleasant and challenging working environment in which our employees feel free, valued and creative.
8. Planning and Financial Considerations
A first question that needs to be addresses refers to the legal formation of Creativity Sure. Despite the fact that the limited company is most commonly found in the United Kingdom, the United States has also adopted the formation of limited liability companies, or LLCs. Creativity Sure is organized as a limited liability company in the meaning that it is established based on the partnership between the two managers, who are limitedly liable in case of bankruptcy. Additionally, under this formation, the advertising organization will not be able to trade stocks. Initially, this was considered as a limitation, but the managers decided that they would not sell organizational shares to increase their capitals. They already possess 75% of the investment necessary and the remaining 25% will be retrieved from bank loans, guaranteed with the company’s assets (hardware equipments and the owned building). The entire cost of the investments if of $500,000, with the two owners deposing equal shares of $187,500, for a total of $375,000 and the remaining $125,000 will be retrieved through bank loans. There are two main advantages of this financing technique — first of all, it does not imply the sharing of control and the involvement of tertiary parties (the shareholders) in the decision making process. Secondly, the credit to the bank is accounted for as a debt and is therefore not taxed under U.S. legislation. Had we decided to finance our operations through the issuing of stocks, we would have encountered increased operational costs as the money given to investors in the forms of dividends is accounted for as profits and is therefore taxed by the American authorities (Fabozzi and Peterson, 2003).
The first milestone that has to be overcome is the granting of the bank loan. The endeavors in this direction have been commenced and the credit officers seemed confident that the transaction would be completed. Given that this is successfully accomplished, the operations of Creativity Sure could commence as early as two months from today. Once the operations are launched, the next milestone is that of attracting customers. Despite the challenges employed by such an endeavor, we are confident that our product and service offering will quickly attract small and medium size entities. Foremost, the promotional prices throughout the first three months will play an important role in attracting clients. The challenge will however materialize in retaining these customers once the promotional period is over and they are required to pay for the full price of our services. We will achieve this by convincing them of our high skills, abilities and commitment to promoting their interests.
Sales are expected to be significantly high in the first quarter of the first year due to promotional sales. They are then expected to decrease during the second quarter, but the remaining customers will be subjected to customer loyalty programs. Overall, with the costs of investment, the first year is likely to be a crucial one, with reduced net gains. However, the situation will peak up during the second and third years, as revealed by the estimations in the excel tables.
Table 1: Cash Flow Estimations
Cash Flow Surplus / Deficit at the end of year 1 = Total Receipts year 1 — Total Payments year 1 = 1,025 — 772.6 = 252.4
Cash Flow Surplus / Deficit at the end of year 2 = Total Receipts year 2 — Total Payments year 2 = 1,400 — 748.7 = 651.3
Cash Flow Surplus / Deficit at the end of year 3 = Total Receipts year 3 — Total Payments year 3 = 1,800 — 825.8 = 074.2
Table 2: Planning and Licensing Estimates
Net Income at the end of year 1 = Total Gross Income year 1 — Total Gross Expenditure year 1 = 1,025 — 620.0 = 405.4
Net Income at the end of year 2 = Total Gross Income year 2 — Total Gross Expenditure year 2 = 1,400 — 641 = 759
Net Income at the end of year 3 = Total Gross Income year 3 — Total Gross Expenditure year 3 = 1,800 — 664 = 11364
Table 3: Balance Sheet Estimates
In the Balance Sheet, Total Assets = Total Liabilities
Chesbrough, H.W., 2003, Open Innovation: The New Imperative for Creating and Profiting from Technology, Harvard Business Press School, ISBN 1578518377
Fabozzi, F.J., Peterson, P.P., 2003, Financial Management and Analysis, 2nd Edition, John Wiley and Sons, ISBN 0471234842
Kellner, H., Heuberger, F.W., 1994, Hidden Technocrats: The New Class and New Capitalism, Transaction Publishers, ISBN 1560007877
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