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Executive Summary
DNi is a new business venture created to provide specialized
on-line services for small to medium size companies. Its initial focus
will be on companies in the Minneapolis/St.Paul area, but markets out-of-state
will be evaluated during the second year of operations.
The objective of DNi is to provide its clients with
superior on-line services to those provided by competitors, at a highly
competitive price. This approach is designed to attract clients that
wish to take advantage of this new marketing medium without going broke
doing it.
DNi will be successful in meeting these objectives, based on the following
factors:
- the strong business and computing orientation of its principals,
- the rapid growth of the Internet, particularly as a means of commerce
- the services that we provide, and the resulting benefits to our
clients.
We have determined a price of $1,500 for a basic site;
generally well below prices of our competitors.. Additional services
will be offered at modest cost.
Our clients for 1998 will be identified by researching
directories of companies that fit our definition of the target market.
During the first year of operations, we need to sell 104 Web Sites to
break-even, but we project a small operating loss. This number, however,
is conservative, since we have assumed that first year sales will consist
solely of 100 basic sites at $1,500.
Beginning with the second year, we expect operating
profits to continue to increase each subsequent year. Our growth will
be measured against the rate of industry growth. Although we expect
our growth to exceed that of the industry, we have chosen to base our
conservative projections on the industry growth rate.
Company Description and Location
DNi will be located in the growing metropolitan area
of the Twin Cities of Minnesota. It is important to note, however, that
a company such as DNi does not depend on geographic location in order
to achieve success. The initial focus will be towards local companies,
but with the possibility of expanding to selected markets across the
United States.
Strategic Focus and Plan
Mission and Vision
The mission and vision of DNi is to provide our customers
with individualized service, expert knowledge of all aspects of Internet
marketing and Web Site capabilities, and to ensure that our employees
are in command of the current technologies and innovative approaches
necessary to develop the best quality Web Sites available.
Goals
DNi will be striving to achieve the following goals:
Non-financial goals:
- Develop a reputation as the high quality, full service Web Site
design company.
- Continually attract new customers, while still focusing on satisfying
current customer's needs.
- Provide new technologies and innovations to our customers quickly
and efficiently.
Financial goals:
- Break even or better in our first year.
- Provide quality services at competitive prices.
- Continuously lower costs of operations without sacrificing effectiveness.
Core Competency and Competitive Advantage
The core competencies of DNi are our professionalism,
and extensive Web programming knowledge.
These skills will translate to a competitive advantage
over other Web Site developing companies by allowing us to stay on the
cutting edge of information and new technology, while providing our
customers with services that gain them maximum marketing effectiveness
for their Web Site. Our competitive advantage, then, will allow us to
provide high quality Web Sites with superior design and better service
than that of competitors.
Situation Analysis
The following SWOT analysis will identify the internal
strengths and weaknesses our company has, and the external opportunities
and threats with which we are confronted.
SWOT Analysis
Our strength is our team of technically experienced
and creative computer programmers and operators. Our team is also experienced
in business management, and is able to understand the needs of our customers.
We have very little overhead and low operating costs. Opportunities
are created by the acceptance and phenomenal growth of the World Wide
Web as a tool for business, commerce, and entertainment. The growing
access of the general population to personal computers with Internet
access, and the growing dependence of large and small companies on computers
for their everyday operations, are additional positive indicators for
our success.
Initially, our weaknesses are the size of the
company, and our newness in the marketplace. While rapid growth is a
goal, our limited financial resources may restrict our growth. Our external
threats include the problem of being in a market with very easy
entry. As the number of Web Sites increases, so does the number of companies
willing to help others create them. Also, companies of any size are
able to author their own Web Sites if they have personnel with the capability
and the time to develop them.
Industry Analysis
The Internet and the World Wide Web will most certainly
change the way companies do business, and the way customers shop. Those
that do not embrace the Internet will quickly fall behind. Considering
the rate at which the Internet has grown during the last several years.
More and more companies seek to promote their products and services
on-line, and as new technologies continue to develop, the reasons for
not taking advantage of this medium decrease.
Like most other technologies, on-line marketing must
be understood by the employees of a company, and this requires some
experience with the technology. If a company with no experience on the
Internet suddenly decides to use this medium, it is a safe bet that
most of its competitors already take advantage of it, and the company
is at a competitive disadvantage.
The infrastructure for a new economy is currently being
built by the Internet. The number of Web Sites on the Internet has been
estimated to double every 53 days (see Chuck Martin's "The Digital
Estate," McGraw-Hill,1996).
Sustaining this growth are:
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The increasing number of people with access to
a PC
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The increasing number of people with access to
the Internet.
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The increasing amount of investment in Internet-
and Intranet-servers.
As the Internet becomes a utility, and hundreds of
millions of people and companies get connected, DNi believes that there
will be little choice for companies but to publish as much on the Internet
as possible. This will include everything from applications to services.
Competitor Analysis
The competitors in the field of Web Site authoring are many, and
their numbers are increasing every day. A quick search on the World Wide
Web for companies who will help you place a static advertisement in the
homes of millions of spellbound Internet surfers yields the following
results:
- There are many who will set up a site with your company's name
on it, and add a little information about you. But there are very
few who will take the time to consult with you about your type of
business, what information about your customers is important to you,
and what information about you is most important for your customers
to see.
- Many of our competitors are out for the quick sale, moving quickly
to the next. What makes us different is our commitment to our clients.
Our goal is to tailor our services based on a complete understanding
of their business needs; after the construction of their site is complete,
we continue to support them by maintaining and updating the content
and design of their site frequently. Many other companies are able
to offer maintenance and continual improvement, but a scan of the
field shows that there are few that are willing to go the extra steps.
- We have also chosen to price our services competitively, as we
believe that this lower price will enable us to "lock in"
customers who currently do not have the budget required to buy the
services offered by our competitors.
Company Analysis
The "new" DNi began in January of 1997, as
the current principals expanded on an earlier plan, while building on
and merging with an existing Web domain. DNi's major asset is its expertise
in one of the most significant new marketing tools to come along since
the advent of television.
The company's presence on the Web will be the company
brochure, showing prospective customers exactly what our services can
do for them and how they will benefit from our help. We will supplement
this with advertising in the local media, and through referrals by our
satisfied customers.
Customer Analysis
Our target market is small to medium-sized businesses
with a need for inexpensive advertising and marketing tools that will
reach the highest number of customers possible. Any business with a
product or a service to sell would be able to make use of our services;
this is not a very exclusive club.
Those most likely to purchase our service are the smaller
businesses seeking inexpensive advertising, an efficient way to take
orders, and a reliable way to collect and analyze data about the visitors
to their site. In general, these businesses will have computers in use
in their workplace, do a good portion of their everyday tasks with their
computer's help, and will be familiar with and/or have access to the
Internet.
A study by Hoffman, Novak, and Chatterjee, entitled
"Commercial Scenarios for the Web: Opportunities and Challenges,"
estimated that 62% of
businesses with annual sales between $10,000 and $100,000 use computers
for at least part of their business applications. Of those businesses,
55% have Internet access. Businesses with annual sales between $100,000
and $500,000 have a rate of 96% of computer usage, with 85% of those
having Internet access.
With all this computer usage and Internet familiarity,
most small to medium sized businesses have already realized the benefits
of the Internet. However, the same study also estimated that only 8%
of all businesses with annual sales less than $500,000 have their own
Web Sites.
Obviously, the market is wide open for companies such
as DNi. While our initial focus will be on customers in the Minneapolis-St.
Paul area, this is an online market, where location matters little.
Market/Product Focus
Marketing and Product Objectives
DNi's marketing intent is to take advantage of the
increasing number of individuals and companies going on-line, which
is creating an increased demand for Internet service providers and Web
Site developers. The product objectives of DNi are to continually provide
high quality, error free Web Site developing, in addition to staying
up-to-date with new technologies that will increase the marketing potential
and effectiveness of our customers.
Target Markets
DNi will initially target small to medium sized businesses
in the Twin City area who do not currently have Internet access and
Web Sites. We will identify these companies through business directories.
The market could then expand to larger companies based
in the Twin Cities, and companies throughout the United States who will
have access to DNi through our Web Site. One of the great advantages
of being on-line is that our "local" market is a global one.
Points of Difference
DNi has four main points of difference that set it
apart from competitors:
Staff - A professional consulting staff that
understands all aspects of business and the full marketing capabilities
of the Internet and Web Sites.
New Technologies - DNi strives to provide customers
with cutting edge technology, such as tracking Web Site visitors, that
will give them a competitive advantage in their line of business.
Consulting Services - DNi provides customers
with more than just a Web Site. Consulting with customers regarding
their Web Site on an ongoing basis will enable them to utilize the full
potential of their on-line presence.
Full Internet Service - DNi can equip their
customers with Internet access, an electronic mail program, and site
capabilities that include on-line product ordering.
Positioning
DNi will position their Internet service package as
a very effective, low cost way to market a company's products. Internet
marketing also allows a company to easily update pricing and product
information. Other services provided by DNi , such as on-line product
ordering and electronic mail capabilities, will increase companies'
operational effectiveness.
Product Strategy
In addition to our design expertise, we can also offer
the hosting of client sites on the DNi server. The primary function
of the Web Sites we develop for our clients will be to market products
and collect information. The typical DNi site might contain up to 20
Web "pages," and data collection and interactivity capabilities.
Other services offered our clients will include registration of the
site with all major search "engines," and site maintenance
and consulting services after the development process.
Product Quality
The differentiating factor in the webs we design is
the ability of the Web Site to collect information from those who visit
it. The information that will be collected includes:
Product marketing information: This includes
a site visitor access profile regarding the various products or services
that our client is offering. This information will enable our client
to adjust their marketing strategies, change their product line, etc.,
in an informed and customer-oriented manner.
Demographics: This includes information on
visitor name, geographic area, previous visits to our site, previous
purchases from the site, etc. Like any marketing organization, we want
to know our customers as well as possible so that we may continuously
refine our marketing strategy.
Product Packaging
"Packaging" in this business refers to the
design of Web pages. Our designs will reflect simplicity with a high
level of functionality. One of the big concerns of web design is the
accessibility of the page to visitors, that is time required to load
at the visitor's computer. Currently, most people access the Internet
by dial-up connections (see Georgia Tech Research Corp. "GVU's
4th WWW User Survey", 1995). The standard phone line is a rather
slow channel for information flow, and Web site design must acknowledge
this limitation.
Price Strategy
The typical DNi site will be priced at $1500. This
is a very competitive price, lower than that of competitors who offer
similar characteristics in webs. Research done by ActivMedia Inc.
shows that a typical site's development costs by a company with 500
employees is in the range of $10,000 to $100,000 (see Web Marketing
Insider "Reports and Surveys", 1996).
NetMarketing sent out bids for three prototypical
sites to 21 web developers and ad agencies. Each participant was given
a site description and asked to submit a bid for a small site (about
20 pages), a medium-sized site (about 100 pages) and a large advanced
site (custom programming, database front-end, secure transaction capability,
etc.). NetMarketing's findings indicate that prices for web development
vary greatly. For example, bids for the large site ranged from $15,000
to $2.8 million.
We have chosen to price our product at the lower end
of the price continuum in our industry, even though our product is relatively
high in quality, so that we can more easily penetrate the market. Since
there is so much competition present in this fast-growing industry,
our strategy is to lead the market in both cost and quality.
Promotion Strategy
The primary goal of our promotion strategy is to bring
about name recognition and brand awareness. We hope to make "DNi
web" connote a highly interactive data collection and marketing
tool. Promotion will be done through on-line, print, and referral methods,
and sales presentations to prospective customers.
On-line: We will promote our products by advertising
in frequently visited sites on the Web, registering our Web Site with
search engines, and participating in on-line forums for Web development
questions. Also, we will provide a daily tip in Web development at our
site for beginning, intermediate and advanced Web developers; daily
tips elicit frequent visits and also associate our name with expertise
in Web development.
Print: We will have ads in small business journals
and other popular business and Web development magazines to promote
our name in our targeted market.
Referrals: Our clients will find it easy to
refer our services to acquaintances. Through our close and on-going
relationship with our clients, we will develop many promising leads.
Sales Presentations: We will identify potential
clients that will benefit from our services, and offer to present them
full explanations of the advantage of a DNi site.
Place (Distribution) Strategy
Distribution of the product will take place entirely
on-line; there is no need to have a traditional place of distribution.
For face-to-face consulting, our offices will be in the Minneapolis
area. We will also consult via "cyber-conferencing," and personal
visits to remote client locations, depending on their needs and preferences.
Organization
DNi will begin with four principals, each with business
expertise and extensive computer training. They will also serve as the
board of directors, and work full-time in the business.
The principals are Ben Eason, Amanda Shull, Chad Allen,
and Cari Lee. Mr. Eason will serve as president of the corporation;
the Board will elect the corporate secretary.
Financial Data and Projections
Clearly, on-line marketing has benefited greatly from
the explosive growth of the Internet and Web. The number of users of
the Net/Web was projected to reach a high of 6.7 billion people
worldwide in the
year 2008 (see
Internet Usage
Statistics for current estimates).
Since DNi is a new venture, it has based its projections
on extensive research of the general market. Although attempts to predict
future growth should be considered carefully, DNi is confident of future
demand for its services.
Two financing scenarios are offered: a self-financed
startup, and one utilizing venture capital.
Scenario 1:
The first assumes that the venture will be financed
through the limited resources of the principals and any family money
that they can borrow. The expense structure under this scenario is as
follows:
| Expenses
| Annual Fixed Costs |
| Rental of Office |
$6,000 |
| Rental of Office Furniture |
$3,600 |
| Rent of PC/Server Equipment |
$6,400 |
| Wages for 4 Employees |
$140,000 |
| Total Fixed Costs |
$156,000 |
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