InstaTAXI Start-Up’s Marketing Plan and Financial Projections Report

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Price Estimates

Products/services	Price
Apps Purchase	$0.99
Commission Per Trip	$0.50
Apps Upgrades	$0.50
VIP Status	$25.00
Advertising Boards on Apps Per Spot	$50-2000

Assumptions

The assumptions used to arrive at these prices are several and they include: 1) that costs do not exceed current estimates and do not vary significantly across different states, counties, and cities. 2) That there will be significant and rapid growth in demand that will enable economies of scale and achievement of the breakeven point. This is because the low prices of the products cannot be achieved in the absence of a mass market for the products.

Sales Estimates

Product/service	Year 1	Year 2	Year 3
InstaTAXI Apps purchases @ $0.99	$3,960,000	$9,900,000	$13,860,000
Trips Commissions @ $0.50	$35,790,000	$58,600,000	$90,000,000
AppsUpgrade @ $0.50	$0.00	$1,000,000	$2,000,000
VIP Status @ $25	$250,000	$500,000	$250,000
Advertising	$10,000,000	$30,000,000	$50,000,000
Total sales	$50,000,000	$100,000,000	$156,110,000

Assumptions

According to the Department of Education, there were 18.2 million students in colleges in the US in 2007 up from 14.5 million in 1997 (Nces.ed.gov). Assuming a linear rate of growth, then in 2011, there should be approximately 20 million students in US colleges today. Insta TAXI assumes that due to the significant importance of the new products to students regarding safety at night, avoiding drink driving situation it will quickly be adopted by students. Additionally, the low cost of the apps which is pegged at $0.99 is sufficient to allow impulse and peer-influenced purchases. Insta TAXI also plans to partner with renowned and reliable taxi companies and this is expected to add to the credibility of the product.

The company estimates that 40% of all students will sign up in the first year and increase gradually in the next two years. New enrollment of college students every year will provide a massive influx of new customers each year. The company expects non-students such as high school students, and slightly older people to also purchase and use the apps due to its practicality and usefulness. Regular upgrades of the Apps to include social networking ability will fuel upgrade purchases. Due to financial constraints, a limited number of students will be allowed to sign up for VIP status.

Advertising revenues are expected to grow rapidly and significantly as firms seize the opportunity to access the youth market through similar apps. Advertisement will be compromised of local companies such as restaurants, bars, cinemas, hotels, national advertisers such as beers, soft drinks, electronics, and computers amongst many other products popular with young adults.

Cost of Product

Product/service	Year 1	Year 2	Year 3
Apps	$800,000	–	–
Taxi Commissions – Records &Tracking	$100,000	$150,000	$250,000
Apps Upgrade		$1,000,000	$2,000,000
VIP Status – Cards, Communication @ 5	$50,000	$10,000	$50,000
Advertising per ad @ $10-500	$1,000,000	$ 3,000,000	$5,000,000
Total cost of goods sold	$ 1,950,000	$4,160,000	$7,300,000

Assumptions

Fundamentally, the business will be lucrative as the cost of input will be low and the most critical cost is the development of the Apps but this has already been done for $800,000 used in research and development as well as market testing. Marketing research has also been done that revealed the viability of the product. The company plans to carry out a regular upgrade of the apps to add more useful features to keep up with the IT trends in the industry. The company intends to have advertisers bring their advertising materials and thereby limit its involvement in advertising to reduce costs.

Three Years of Marketing Expenses

Marketing expenses	Year 1	Year 2	Year 3
Salaries & wages – marketing	1,500,000	3,200,000	3,800,000
Benefits & taxes – marketing	360,000	520,000	1,200,000
Commissions, reps & contractors	800,000	1,800,000	2,000,000
Advertising – broadcast	2,000,000	3,500,000	5,000,000
Advertising – brochures/ posters	700,000	1,900,000	3,800,000
Advertising – direct mail	500,000	1,300,000	1,500,000
Advertising – web & social media etc	960,000	2,520,000	4,000,0000
Marketing – print	1,200,000	2,400,000	3,400,000
Marketing – samples/trade shows	680,000	1,360,000	1,200,000
Other marketing expenses	1,000,000	1,500,000	2,000,000
Total marketing expenses	9,700,000	20,000,000	27,900,000

Assumptions

The company believes that marketing is the most critical function that will determine the success of the new product. Because of this, the company will deploy most of its resources towards marketing activities.

Administrative Expenses

Administrative expenses	Year 1	Year 2	Year 3
Salaries & wages	2,400,000	5,600,000	7,600,000
Benefits & taxes	1,000,000	2,200,000	3,400,000
Meals & entertainment	400,000	740,000	960,000
Dues & subscriptions	380,000	380,000	380,000
Professional fees	120,000	120,000	120,000
Accounting/bookkeeping	380,000	380,000	380,000
Travel/automotive	500,000	2,400,000	4,100,000
Other administrative expenses	2,170,000	1,680,000	2,400,000
Total administrative expenses	7,350,000	13,500,000	19,340,000

General Expenses

General expenses	Year 1	Year 2	Year 3
Bank charges	160,000	380,000	980,000
Credit card fees	120,000	400,000	680,000
Interest	54,000	160,000	240,000
Insurance	800,000	2,400,000	3,600,000
Office supplies	360,000	900,000	1,400,000
Other supplies	240,000	800,000	1,280,000
Postage	200,000	260,000	480,000
Telephone	862,000	2,400,000	3,600,000
Utilities	800,000	1,400,000	2,200,000
Rent	280,000	940,000	1,800,000
Repairs & maintenance	24,000	360,000	800,000
Taxes & licenses	100,000	800,000	960,000
Other general expenses	500,000	3,200,000	4,800,000
Total general expenses	4,500,000	13,140,000	22,020,000

Assumptions

These expenses do not include depreciation, interest, and taxes. The costs of maintenance and repair are expected to increase with time while overheads are also expected to increase due to organizational complexity and growth.

Three Years Operating Statement

Product/service	Year 1	Year 2	Year 3
Sales	50,000,000	100,000,000	156,110,000
– Cost of goods sold	1,950,000	4,160,000	7,300,000
– Marketing expenses	9,700,000	20,000,000	27,900,000
– Administrative expenses	7,350,000	13,500,000	19,340,000
– General expenses	4,500,000	13,140,000	22,020,000
= Gross profit*	26,500,000	49,200,000	79,550,000

*Before taxes, amortization, and depreciation.

Startup Costs

Start-up costs	Year 1
Petty cash	100,000
Register cash	20,000
Opening inventory:- supplies	240,000
Rent (last month’s)	23,340
Security deposit	120,000
Telephone deposit	100,000
Utility deposit	160,000
Other deposits and start-up costs	236,700
Total start-up costs	1,000,000

Capital Expenditures

Capital expenditures	Year 1	Year 2	Year 3
Equipment	2,400,000	2,000,000	3,000,000
Furniture	460,000	800,000	960,000
Leasehold	340,000	800,000	400,000
Vehicles	200,000	480,000	600,000
Premises, fittings	840,000	960,000	800,000
Total capital expenditures	4,240,000	5,040,000	5,760,000

Evaluation and Control Metrics

The following measures will be established to guide the implementation of the InstaTAXI marketing plan.

Formal Controls: these include, Input controls and output controls. These controls define the quality and quantity of input to be used by the firm in its operations. These standards will also specify the acceptable cost of inputs at each stage; process controls will define what is required to be done to implement the marketing plan. The other category is the output controls which specify the quality of products.

Overall performance controls are the measures that will be used to determine the level of success of the whole organization. They include turnover, profitability, costs, market share, and customer retention amongst others. These financial standards are stated in the financial projections above.

Product performance standards are another control measure; these controls define the specification of the product and service of the Insta TAXI product and specify both the quality of the core product that is the apps and augmented product which includes social networking, maps, user information among others. Product performance standards will outline branding and positioning standards for the InstaTAXI apps.

Distribution standards are controlled that will determine the efficiency of the distribution network of the new apps. The apps will be distributed through mobile technology or the internet; this will be done from centrally located servers located at the company’s headquarters. Distribution standards will also outline supply chain operation and customer relations management through customer and company interaction.

Integrated marketing communication will specify the desired objectives and strategies for the company’s marketing communication activities. These include the media channels to use, budgets, level of brand awareness, and recognition that should be achieved. In addition to formal controls, informal controls will be established that will outline the desired and expected individual and group behavior as well as the organization culture. Finally, regular audits will be carried out to monitor performance to provide feedback on progress and guide planning activities.

Works Cited

Ferrell, O.C. & Hartline, D. M. “Marketing Strategy 5^th Ed.” Ohio: South-Western. 2011. Print.

Nces.ed.gov. “U.S. Department of Education, National Center for Education Statistics, Digest of Education Statistics, 2008.” Web.

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