1	JOHN DOE, ARTIST (The real name of the artist was omitted to protect his identity) Marketing Plan UCLA, Marketing Principals and Practices Presentation by: Adrienne Papp June 7, 2006
2	Table of Content TARGET MARKET ECONOMIC ENVIRONMENT COMPETITION PRODUCT PRICE PROMOTION PLACE BREAKEVEN POINT
3	Target Market �� Demographics �� UNITED STATES OF AMERICA High net-worth individuals:�� 2.5 Million Corporations and Institutions:�� 2, 800 Government Offices:�� 52 Hotels:�� 500 Country and Golf clubs:�� 300 Universities/Collages:�� 200 Art collectors/Art Consultants:�� 2, 000
4	Target Market �Characteristics of Individuals Income: $ 1 Million + Age: Silent Generation (born before 1945) Baby Boomers (born between 1946-1964) Generation X (born between 1965-1978) Geographic Location: East Coast : From Boston to Washington Great Lakes Region: Greater Chicago, Toronto West Coast: Southern California, Bay Area Aspen, Veil and surrounding area, Colorado Las Vegas area, Nevada Some of the richest Zip codes in the US
5	Target Market Psychographics: Elite Individuals, High spenders, Businessman, CEO-s, Celebrities Values and Lifestyle (VALS) Actualizers: successful, sophisticated, �take-charge�, high self-esteem people with abundant resources. Diverse and rich life-styles. Achievers: career and work-oriented people. Image is important, they favor prestige products to demonstrate success to their peers.
6	Target Market Target specifically Celebrities CEOs of Fortune 500 companies Business Executives Owners and Investors City Councilmen who purchase public sculptures Real Estate Developers
7	Target Market � ��Corporate Characteristics Income: The combined market value of Publicly Traded Companies is approximately $20 trillion. These are large, midsize and small companies. Our main focus will be Fortune 1000 companies, banks and insurance companies. Generation: These companies represent a generational history from Silent Generation to Generation E Geographic Location: Our territory is the US, although a significant number of these companies are global.
8	Target Market Psychographics: These companies have a long track record of success and a positive cash flow. They place great emphasis on prestige. Image projection and name building is important. They must have good standing with the public and often feel obligated to support good causes, such as the arts. They take pride in attaching their names to monumental sculptures for advertising or decorative purposes. They like donating pieces of art usually for exposure. They like to demonstrate wealth through elegant office designs, (see interiors of Doe); often have sculpted portraits of historic and significant personalities displayed in their offices (see portraits of Doe.)
9	Target Market �� Characteristics of Governmental�� Agencies These are State and Federal Offices across the U.S. These agencies often have budgets to place sculptures in many public areas for decorative or educational purposes. They use sculptures to make positive statements and send symbolic messages. The Federal Government commissions sculptors to make pieces symbolic of the United States and place them in foreign countries either as a gift or as a �presence.�
10	Target Market �Characteristics of Hotels All of these hotels are expensive five star hotels. Some of them are chains like the Four Seasons, The Ritz Carlton, The Fairmont, and have presence in many international �� cities. Some of them are single ones, but owned by the same company or individual. The Bellagio, The Wynns and The Mirage are all under the same ownership. These hotels always have landscapes and prestigious interior decoration that are often sculptures. Their psychographics are very similar to that of our high net-worth� individuals, especially that their mission is to serve the �rich and famous.�
11	Target Market �� Characteristics of Country and Golf Clubs These clubs have members of very high net-worth individuals. They thrive to accommodate their clients in the most comfortable, upscale and pleasant environment to cater to their life style. Characteristics are basically the same as those of the hotels and individuals. Any landscape sculpture may pose as their �logo�, any artistic interior architecture will pose as an invitation to new clients by presenting exclusive taste and an inviting� �you will love to be here� environment.
12	Target Market Characteristics of Universities and Collages These institutions usually use a lot of landscape architecture The sculptures tend to be commissioned works of portraits of historic figures, philosophers, doctors, writers, poets, teachers and founders of institutions. Interior sculptures also tend to be educational or demonstrate a positive message. Usually these schools have yearly budget for outdoor and indoor decoration.
13	Target Market Characteristics of Art Collectors and Consultants Art Collectors are great target for direct mail. Art Consultants place sculptures in hotel chains, restaurants and new establishments. They are also excellent target for direct mail marketing.
14	Economic Environment While the prosperity of the economy is largely uncontrollable, the people and corporations that comprise our target market have an income (or net wealth) in the top one to two percent of the world. As such, the target market is only moderately affected, even in times of economic recession. In fact, especially during unstable economic times and lowered consumer spending, an investment in art and sculpture is stable because art does not lose value.
15	Economic Environment In the Los Angeles area � the home-base of our business, the high demand for real estate has kept local values rising. With rising values and low mortgage rates, many people have (and continue to) refinance their homes to pull equity from them. This increases the available cash for home renovations and remodeling from people who would not otherwise have the cash or liquidity to purchase art or sculpture for their homes.
16	Economic Environment Unemployment rates for the (economic) top one to two percent of the population are very low and certainly not a considerable factor for the decision to purchase a� Doe piece. Considering the above factors, for our target market, economic investments, desire, and esteem needs are the primary reasons for purchasing art and sculpture. The economic environment, while helpful in especially robust periods, is relatively inconsequential otherwise
17	Competition Level 1 / Direct Competition This level consists of products/producers in the exact same category and usage: other sculptures/sculptors with the same/similar price range and quality. We must narrow this group by their style, accomplishment and diversification. Contemporary competitors would be Alexander Ney, Robert Irwin, Igor Mitoraj, Robert Graham, Reno Carollo, William Jauquet, Molly Mason. However, these artists are classified as having their only one style, and are not as diverse as Doe. Statistically, only 25% of all sculptors in America would fall into the same category as Doe, which gives us approximately 63 competitors, or less.
18	Competition Level 2 / Indirect Competition This consists of products with similar use, other art-works such as� paintings; expensive photography (Anne Leibowitz); antique and contemporary interior decoration; landscape architecture and other art-works. �All of these products are in the same or similar price range and quality measure. In 2004 the total number of Fine Arts sold by auction houses, such as Christie�s, Sotheby�s and Bonham & Butterfield was 63,126 pieces. At least 50% of these works fall into a lower category of art than ours. It is estimated that a total of approximately 200,000 pieces of art are sold each year, and about 31,563 or 15% would be a level 2 competition to Doe.
19	Competition Level 3 / Indirect Competition This consists of different products with unrelated source, but same value,� -� collectively referred to as luxury items,� -� including sports cars, jewelry and boats. In this category the economic environment would play a larger part. However, our product is not particularly affected by the economy as pointed out in the Economic Environment section of this presentation. Even in unstable economic times and lowered consumer spending people still purchase art and sculpture because it is a lasting investment unlike �most luxury items, such as cars. Art purchase is a question of individual taste and as such the style of Doe�s art will be a very big distinguishing factor from his competitors and will play a very significant part in consumer response.
20	Product �� PRODUCT OBJECTIVES, STRATEGIES AND TACTICS Objective To reach $ 280,000 in sales. Strategies �� We will reach our $280,000 objective by: Offering a unique product that is desirable because of the quality craftsmanship and materials used (i.e. Cambrian black granite) Willingness and ability to create a piece to the customer�s specifications. Assurance of customer satisfaction. Offering seven diverse product line.
21	Product Tactics Material- Locating and using the highest quality material is crucial to create a long-lasting and aesthetic piece of art. Finding the most cost efficient material is important (high quality/lower price.) Size � Varies from small to large going over 7 feet tall Product guarantee � By using computer 3-Dimensional imaging, Doe creates a virtual reality enabling the client not only to see the piece for approval before it is sculpted, but to stage the sculpture into the very environment it was ordered for. Product warranty: all pieces are under warranty for a lifetime. Any spontaneous breakage or unusual change in patina color will be restored or the sculpture will be exchanged altogether. The only exception is natural wear and tear, which in our case would mean that the patina color ages over time and may become slightly lighter or darker.
22	Product Product Diversification or Product Line: (by diversification we ensure market segmentation) Exterior sculptures for landscape architecture. �Clamshell, Fisherman� s Memorial Interior sculptures for interior design and decoration �La Gardienne� Portraiture for both interior and exterior includes: a) Portraits of loved ones, such as children, spouses,�� and family members �Christy and Sean� b) Portraits of historical figures, founders, and celebrities. �King Roma the 5^th�, a classical portrait ordered by the Tibetans.
23	Product Product Line cont. Gold sculptures - Investment in gold, especially favored by bankers, private equity placement firms and high net-worth individuals �Gold Falcon� Architectural Interiors, examples are:� a) basin carved out of stone for bathroom decoration. b) stairway decoration. �Nude� which is a 6� tall western red cedar piece holding a stairway. Commissioned art-work, which in all cases is custom-made and site-specific, making up 90% of Doe�s work. �Megaptera of � Photography � Doe chooses mother-child subject for his artistic photography and makes large prints for sale. He also has a line of sculptures representing the same subject. �Newborn., Mother-Child�
24	Product Notes about the Product Doe is noted for his diverse product line, which enables him to penetrate various market segments. The diversification of Doe�s craft and style is unique and usually ensures that the customer buying his art will commission him in more than one area of design. His �work is an elegant sculptural fusion of traditional and contemporary, in a variety of media and stylistic forms, reflecting elements of other creative expressions: structure of architecture, movement of dance, rhythm of music, color of painting and subtle emotions of poetry. His signature piece is the �Freedom�, which he became famous for.
25	Price Price Objective:� Gross profit of 75%. Calculated as follows: Cost of Goods Sold (COGS) =25% of Sale Price So Gross Profit = (Sale Price-COGS)/Sale Price=75% Price Strategy: Use market skimming to position our product in the high price, high quality segment.
26	Price Price Tactics: Following is the break-up of how we are going to achieve our objective depending on the product: Carved materials(limestone/marble/granite �Wings of Prey�): Marble is more expensive than granite, but granite takes twice as long to carve, which pushes up the cost of tooling. Therefore, careful evaluation for cost sensitivity prevails all undertakings. Approved vendors for well-priced materials, depending on the materials needed are: Montoya Sculpture Supply, FL Sculpture House, NY Dodd Marble, CA. The average cost of a product made from carved materials is 15% of the sale price.
27	Price Bronze casting (�Jade Princess") is a long, step by step process and is more labor sensitive than material sensitive. In this case we must look for a low foundry price for casting, yet high quality, which will also include bronze material cost. The artist submits the model in clay, carved wood or stone, all of which is a negligible expense as these materials are inexpensive. Foundries are the following, dependent on type of sculpture: Monterey Sculpture Center Art Works Art Foundry Froistad Atelier �The average cost of a product of bronze casting is 25% of the sale price.
28	Price Fabricated sculptures (�Daring Children�): Includes labor and cost of materials that can be very inexpensive such as steel and aluminum or very expensive, such as stainless steel. The cost of stainless steel is transferred over to the buyer as an expense. It is realistic to say that, with the exception of stainless steel, the cost of materials will be negligible, and the only significant cost would be the charge for labor. The average cost of a fabricated sculpture is 30% of total selling price.
29	Promotion PROMOTION OBJECTIVES, STRATEGIES AND TACTICS Objective Create Image / Awareness ( make the artist into a celebrity, create an image that the product is in demand) Create name recognition, positioning Create 650 Exposure (This year we need to sell 13 sculptures, with a 2% response rate, we need to create 650 exposures) Close sales Increase sales
30	Promotion Strategy 1. Media Exposure 2. Gallery Exhibitions 3. Professional Exhibitions 4. Public Relations 5. Direct Mail (includes �bundled� advertisement) 6. Internet advertisement 7. Architectural Bookstores 8. Create free exposure by displaying sculptures 9. Museum Exhibitions 10.Donations in return of exposure 11.Art-Festivals
31	Promotion Tactics 1) Media Exposure: Advertise in the following magazines at various times of the year. Address the Christmas Holidays (both shopping and vacation seasons), construction and remodeling seasons, such as spring and fall. Run the ads as many times as budget of $20,000 allows, which is about 2-3 times in each. Show photo image with the artist and/or without (various for various magazines) and add contact information. Schedule interviews with the artist, and/or PR presentation of unveiling a monumental piece. PR should be for free.
32	Promotion a) Magazines and Newspapers Architectural Digest Aspen California Homes Western Interiors Robb Report Luxury Homes American Art Review Antigues & Fine Art Elle Decor Los Angeles Times The New Yorker Business Week Chicago Tribune New York Times Habitat Home & Lifestyle
33	Promotion b) Other Professional Publications (mostly local publications) �� Advertise in form of images in as many publications and as many times as budget of $ 4,000 allows. (About 20 exposures) Mainly do press releases and interviews here. (Press release on his �new art-books� and perhaps the unveiling of his monument �Wings of Prey�, as PR and free of charge) Art News Art World News Art Business News Popular Photography International Artist Metropolis Digital Fine Art
34	Promotion Digital Output Fine Furnishings International Flash Art Hospitality Design Art Forum Architecture Art in America c) List him in professional directories, (these listings are usually free or use $2,000) such as the The Franklin Report The L.A. Home Book Information Source: Audit Bureau Circulation; Traffic Audit Bureau; Internet search, etc.
35	Promotion 2) Gallery Exhibitions Organize one gallery opening a year with reception. Invite the clientele of the gallery and target audience from our list. As galleries usually have limited resources to purchase, give pieces on consignment in the introductory period. Only chose those galleries that are upscale and are selling in the same price range.
36	Promotion List of some galleries around the States includes: Artist in Residence Artist�s Woods Design Company Mienso Gallery Markamfee Gallery Quigley Lynn�s Gallery, Nantucket Golden Deco Gallery Visions Fine Art Gallery James Ratliff Gallery Exposures International La Louver The Lowe Gallery Information Source: Gallery Guides of States/Cities.
37	Promotion 3) Professional Exhibitions Schedule Doe in two or three annual Professional Exhibitions, such as Elegant Interior Decoration and Landscape Show The Los Angeles Interior Design and Antiques Show Artbrewery � LA Bergamott Station - Santa Monica
38	Promotion 4) Public Relations Make him a celebrity, build on previous exposure, create sensation, use celebrity contacts to make statements. a) Create interviews on Television PBS KCET Local Public Channels Jay Leno, by creating sensation and doing a sculpting trick on the show Other talk shows, by creating sensation based on his previous exposure Architectural TV Shows
39	Promotion Radio All local radio channels (Interviews�) �Write script of interview, carefully verbalize all information, and be to the point, yet very descriptive. Be sensational. The new Michelangelo, etc� �b) Introduce him to Consulates and Commercial Offices Information Source: Nielson rating Services
40	Promotion 5) Direct Mail Use direct mail to our target audience and distribution channels. See a list of these targets under �Target Market� and �Place � Distribution Channels� in this presentation. Purchase specific and narrow lists from Direct Mail Houses, such as list of owners of Porsche, Mercedes, BMW, yachts, million dollar properties and jewelry. Use the services of Standard Rate and Data (charges a flat $ 600/year for providing search engines and databases of lists of companies administering addresses) and obtain lists from Art Galleries and Art Communities. � (Budget: $ 2,000)
41	Promotion Marketing Materials used in direct mail: 1) There is 1,000 copies of� high-end, glossy �art-books�/catalogues printed, showcasing a couple of pieces of Doe�s work, his Biography, Pricelist (detachable), a two-page PR on his most famous piece as well as lists of his exhibitions and accomplishments. We also printed flyers and three different business cards that go with the booklet in the form of: Continuity Similarity High quality medium Tasteful pick of colors and arrangement Cost: cost of printed material is included in our $ 70,000 one time investment or fixed cost.� Printing cost for catalogues is $ 7/each.
42	Promotion 2) Print electronic business cards that will showcase the entire �art-book� and images of any new sculptures that he may have made recently. List his web address and all contact info including the name of his Art and Marketing Director representing Doe exclusively. The card will also accommodate sculptures in a staged home environment and virtual projections. These cards can be a hand-out, or an electronic transmission via email.
43	Promotion 3) Collaboration with Architects, Interior Designers and Landscape architects by: �� Showcasing �bundled� products for promotion, such as projections into landscapes of houses and buildings. See our joint services with Ron Firestone, a recognized name in architectural design. Lake Arrowhead insertion, Shopping Moll insertion. These images will also be printed on the electronic card in a slide-show format. 4)There is also a complete ADVERTISING CAMPAIGN in development for Doe.
44	Promotion 6) Internet Advertisement His website can be viewed at www.website.com. An upscale, classy, and esthetic design that is still under construction. Create exposure by �� Pay-per clicks (Goggle, Yahoo, etc. �� News and blog �� Cross linking. �� This would ensure that his site pops up at all relevant searches and under numerous keywords, such as: art; sculptures; interior decoration; exterior decoration; landscape; sculpting; portraits,etc� Estimated cost: $ 2,000
45	Promotion Post his sculptures on EBay Featured items Post his sculptures on sites of auction houses, such as Bonham and Butterfield, etc� List him on sites relating to sculpting, such as www.guild.com www.World Artist Directory.com www.South Coast Luxury Place.com, etc. Email to already existing clients for follow-up, create extension of exposure.
46	Promotion 7) Architectural Bookstores Doe�s �art-book� is displayed at present at the Hennessey and Inglass Art and Architecture Store in Santa Monica. Create more exposure by doing same with other stores.
47	Promotion 8) Create free exposure by displaying sculptures Sculptures are currently placed on display in Rodeo Drive (Rodeo Collection Building) in a prominent doctor�s office. These sculptures are our Mother-Child Subject/ Product line Sculptures are also displayed in designers and architect�s offices. Display sculptures at highly visited places by affluent clientele, such as Jose Eber, Spa and Salon on Rodeo Drive where we are to exhibit �Jade Princess.� Display at least 13 sculptures a year (currently 6 + 1 Photography is displayed)
48	Promotion 9) Museum Exhibitions Same principle as galleries.� Exhibit once a year. 10)Charity Events and Donations Donate two pieces to charities in return of exposure, i.e.: we are scheduled to be listed as donors with Saint Jude�s Children�s Hospital. They organize expensive $ 500/ person events for 800 or more well to do people who will buy the donated items at the gala dinner, which will finance the charity. 11) Presence at art festivals Once a year.
49	Promotion Budget allocation in total: Magazines and Newspapers:�� $ 20,000 Professional Publications:�� $�� 4,000 Direct Mail Lists:�� $�� 2,000 Internet�� $�� 2,000 Total:�� $ 28,000 CONCLUSION: We build on Doe�s name and recognition in Canada and use all media exposure from the past by reference. We create �sensation� based on the �Story of Wings of Prey� and refer to him as �a Michelangelo of modern times.� We emphasize the fact that art is an investment and as the artist reaches name recognition the value of his pieces increase.
50	Place Objective: Employ 100 salespeople on a commission only basis, exhibit and sell at ten galleries on a commission basis, and exhibit on five internet sites to sell Doe�s art and sculpture. Strategies: Hire salespeople. Choose and contract with galleries. Choose channels through which to advertise and sell the product lines on the internet.
51	Place Tactics: Make contacts with potential salespeople in various fields: Work with high-end (over $1 million projects) architects on a 10% commission basis. Work with interior designers on 10% commission basis; focusing on high-end designers. Work with real estate developers, on a 10% commission basis, to add as an element of landscape design: Shopping centers High-rise office buildings Casinos City Centers Country clubs Major hotel chains such as the Four Seasons, the Ritz Carlton, the Summit, and the Peninsula Restorers of antiques on 10% commission basis
52	Place Investment Bankers on a 10% commission basis Doctors who would exhibit a piece in his or her office for a 10% commission basis Auction houses on a 15% commission basis Contact, visit, and discuss the opportunities for exhibitions and sales at galleries in areas of economic wealth Select galleries and employ them on a commission basis, between 30-50% Target high net worth individuals, those with over $1 million in assets (business acquaintances; friends, data source lists, and word of mouth)
53	Place Focus on likely consumer characteristics: Extravagant spenders Businessmen, Senior Executives Celebrities Successful career and work-oriented individuals Sophisticated individuals Well-educated individuals High self-esteem individuals Abundant resource individuals People with a taste for the aesthetic People to whom image is important � they favor prestigious products and services that demonstrate success to their peers. Art and sculpture collectors
54	Place Develop online resources for sales Enhance existing www.website.com website Develop a seller account on EBay and list products and services for sale List products for sale at online auction houses.
55	Place Physical Product Distribution John Doe owns his own large delivery truck. United Postal Service delivery A local messenger service
56	Breakeven point and Marketing Budget �� Doe has a $70,000 one time investment. His annual �fixed cost� is 50% of sales.� �Fixed� cost� in our case consists of cost of marketing.� His annual �variable cost� is an estimate 25% of revenues.� The �variable costs� include: foundry, patina, cost of various materials, plus labor cost for his workers.� Using the breakeven point formula (total sales = fixed costs + variable costs + investment) sales of $280,000 must be made in order to breakeven. (Variable 25% , or $ 70,000 of sales;� plus fixed� 50% or $ 140,000 for marketing;� plus 25% or $70,000 which in our case is a 100% return on investment that would otherwise be net profit) This leaves us with a breakeven point. Note that Doe�s overall cost after the initial investment is all VARIABLE taken that no cost occurs unless there is a sale. At that point 50% will be fixed cost for marketing, and 25% will vary depending on the material used.
57	Breakeven point and Marketing Budget In order for us to achieve the $ 280,000 in annual sales we have to sell 6.3 sculptures/ year using the mathematical average by adding up the sales prices of already existing and sold sculptures and dividing that figure by the number of items sold.� Using a very conservative figure and excluding his most expensive pieces (a $ 450,000 original and $170,000 museum edition sculpture)� we must sell 13.1 sculptures a year. This also assumes that Doe does not receive any commissioned orders at all in the first year. Taken the sales history of him making 90% of his pieces by larger commissioned orders it is very realistic to say that with proper marketing selling 6.3 sculptures would break us even.
58	Breakeven point and Marketing Budget Further, the artist either pays 50% commission on sold items, and incurs no fixed cost except material cost, or pays a fixed marketing cost of $ 70,000 plus 35% commission. Never both, which, in this case, leaves him with $ 70,000 profit (this would pay back his one time investment of exactly $ 70,000), or $42,000 profit (in the case of fixed marketing expense plus 35% commission) from a $280,000 sale/year. In both cases the cost of doing business is about $ 7,000 / year, which is insignificant and we omitted that for simplicity. The current way of operation is 50% commission on sold items and no fixed cost.� If we maintain the sale of 13 sculptures per year, the artist makes $ 70,000/yearly. However, the nature of his business is such that with one commissioned work he can make double our target $280,000 in sales, which we can achieve with good promotional and marketing efforts. It would only be a question of time.
59	Breakeven point and Marketing Budget Following the formula used in this presentation, his true business model excludes fixed cost in the text book sense and he only operates on 75% variable cost of sale price.� A fixed percentage of 50% of this variable is a �fixed� marketing expense; 25% or less is �fixed� material cost. Yet both of these are variables because the amounts all depend on the sale.
60	Breakeven point and Marketing Budget Marketing Budget: The standard monetary allotment for the art industry spending on advertising and promotion is around ten percent of total sales.� As such, for the first year of business, a promotional budget of $28,000 has been set (which is 10% of the price objective of $280,000).� A reinvestment of 10% each year would further increase revenues in time, taken the fact that the artist will have achieved name recognition. We will at that point switch to market penetration strategy and push the price as high as possible
61	Breakeven point and Marketing Budget (Summary) BREAKEVEN POINT IN Doe�S CASE 25% variable (within which some cost is FIXED, but it only exists when there are sales) 50% �fixed� variable ( in his case the set up of his business requires marketing to be present and fixed at all times and his cots from sales is a fixed percentage ) 25% net profit 25% one time investment (25 % of the Breakeven Gross Income) 25% (investment) + 25% (variable) + 50% (fixed variable) = 100% $70,000�� + $70,000�� + $140,000�� = $ 280,000 This means return on investment. ___________________________________________________________ Once investment is, at any given time, returned: 25% (variable)�� + 50% (fixed variable) + 10% (advertising) + 15% (profit) = 100% $ 70,000�� + $140,000�� + $28,000�� + $42, 0000�� = $280,000 Assuming that there is no growth rate, a $ 42,000 + any amount that might come from variable will be realized as Net Profit.
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