- Writing a Business Plan
- Financial Statements
- Business Forecasting
- Business Checklist
MARKETING (Scholarship Information Services)
The following section discusses Scholarship Information Services' product, place, price, description of the industry in terms of geographic and demographic variables, the consumer in terms of demographic and behaviouristic variables, the competition, the company's promotions, and a summary of the company's market entry strategy. Lets begin by describing our product.
The actual product is a list of foundations, trusts, and charitable institutions which provide financial assistance to high school graduates and university students. Included in the list are addresses and telephone numbers of organizations etc.. who participate in funding student's education. It is important to note that a customer receives information on desired regions and not all regions throughout Canada and the United States. For example, if a student from the California calls the service bureau or message centre, he or she is asked for the state/province in which his or her desired university is in. In this example it is California. Therefore, all scholarships and fellowships from the state of California would be processed and delivered to the customer. Also, many funding programs are not restricted to a specific state or county and therefore, all customers would receive these sources as well.
We also include in the list, other sources who spend a great deal of money on higher education. An example of this would be the National Society of Music and Arts. By including this information, a music student, for example, can contract this Society and ask for information regarding their policies on higher educational funding. Another feature included with our product is a step by step reference guild on the do's and don'ts of applying for assistance.
It is important to give a large quantity of quality funding information to our customers because this increases their chances of gaining financial assistance and, in turn, strengthens our corporate image.
Place stands for company activities that make the product available to target markets. As mentioned earlier, the product is to be made at the home of Josh Johnston. In addition, all advertising formulation, inventory control, and shipping and handling will be carried out at this location. A new facility, in later years, will be needed to carry out the production activities of our initial product and any newly developed product concepts. Distributions centres are not needed for our initial product.
Since our marketing objectives are to maximize current profit and to become a market share leader, we have decided to set our selling price at $26.00 for 200X. Management's judgement and perceived value also played an integral part when setting the price.. For example, if a consumer feels he or she can receive financial assistance totalling $500 (renewable each year), then the product is worthwhile. In other words, consumers place a price on the benefits that they receive from having or using our product. Furthermore, if these benefits outweigh the costs, then people will buy it.
In year two (200Y), the price will be lowered to $24.00. This decision (forecast) will only materialize if competition enters the Canadian marketplace by 200Y. Furthermore, if competition does not increase, the company will continue its pricing policy of $26.00. Please note, the forecasted financial statements allow for this decrease in price during the second year of operation.
DESCRIPTION OF THE INDUSTRY:
In dealing with the industry and market one must evaluate the economic, social, political, and other environmental factors. By doing this, we can demonstrate the attractiveness of the industry and thus the market.
The market size in terms of university students for the three Maritime Provinces is approximately 50 thousand. Also, the market size of senior high school students (grade 12 students) for this area is estimated at 160 thousand. According to Statistic Canada 1995 figures, approximately 1 million individuals are currently enrolled in Canadian universities. Also, in Canada, roughly 800,000 students are senior high school students, 55% of which, on average, will attend a university in the following year. The United States market, on the other hand, consists of over 13 million university students and over two million senior high school students. In addition, many sources indicate the annual growth rate in terms of total students is somewhere between 8% to 10%. (Note : see appendices for complete breakdown of the number of university and senior high school students by province and by state)
It has been documented that a student spends on average $150.00 per month on discretionary items such as compact disks, entertainment, stereo equipment, and sporting equipment (see articles from "Money Magazine" and "Students Annual" in the appendices). Another factor which makes this market look extremely attractive is the increased emphasis of education. This emphasis is seen extensively throughout North America. Many politicians take a strong position on "strengthen" the educational system. Thus, as more and more students attend university, the need for financial assistance increases. We can conclude that there is a socially accepted need for increasing the educational system which also includes financing students so that they have the opportunity to advance themselves. The following is an overall conclusion of our market in terms of geographic, demographic, and behaviouristic variables.
Initially, the primary focus for this product will be the Maritime Provinces in Canada (200X). In 200Y, the company will focus on all of Canada. In 200Z, we plan to enter the larger United States market. The United States market, although large, has many competitors that have been established for quite some time now. Our strategy is to form a strong capital base in Canada, so that we can better compete with the existing, more experienced US competitors. Once again, the timing for this exploration into the United States is expected to commence in year three (200Z).
We can further segment our target markets through the use of an income dimension. The lower income classes will make up the majority of this market. With a lower income family making a "lower income", the need for financial assistance increases. By providing contacts for funding programs to this type of family, it provides ALL family members with a higher sense of security. We do recognize that many income classes will ultimately purchase our product, however, the percentage of sales in this market is expected to decrease as a family's income increases. As a result, we can better assess the size of our market and try to reach it more efficiently. In conclusion, affluent families may have "less need" for our product while lower income families may greatly desire it.
In behaviour segmentation, buyers are divided into groups based on their knowledge, attitude, use, or response to a product. A powerful form of this segmentation is to group buyers according to the different BENEFITS they seek from a product. Benefit segmentation requires finding out the major benefits people look for in a product. Some obvious benefits in which consumers look for are quality, service and economy. Our product is economical, of high quality, and after sales service is a must. As outlined earlier, one of our main goals is to fully satisfy the customer's needs and interests through our team members. We will go to any length to find financial assisting programs for our customers. If no information is found on a particular region in our database, we will do further research to locate such crucial information.
Competitive Analysis - Methodology
Telephone research was the primary method utilized to gather information on competitors. A sampling of universities and high schools were contacted in both the United States and Canada. Relevant new leads identified during conversations were also followed-up.
All United States colleges and universities contacted had financial aid offices. In Canadian universities, student services offices coordinated financial aid, while a designated guidance counsellor coordinated financial aid information in the United States and Canadian high schools contacted.
Contacts were asked what methods they were using to help students identify sources of financial aid. Probing questions were asked to find out details on "anything" that sounded like direct competition to Scholarship Information Services.
The following organizations were contracted when developing our competitive analysis.
Boston College, Massachusetts. Boston University, Massachusetts Bentley College, Massachusetts East Boston High School, Massachusetts Hyde Park High School, Massachusetts Madison Park High School, Massachusetts Bangor High School, Maine Bate College, Maine University of Maine, Maine Finance Authority of Maine Higher Education Information Centre, Massachusetts New England Association of Independent Schools and Colleges National Association of Independent School National Association of Student Financial Aid Administrators Sir John A. MacDonald Collegiate Institute - Ontario, Canada Don Mills Collegiate Institute - Ontario, Canada Georgetown District High School - Ontario, Canada University of Guelph - Ontario, Canada Cobourg Secondary School - Ontario, Canada University of Calgary - Alberta, Canada Henry Wise Senior High School - Alberta, Canada University of BC - British Columbia, Canada Charlottetown, Rural High School, Charlottetown, PEI, Canada University of PEI, Charlottetown, PEI, Canada University of New Brunswick, New Brunswick, Canada
In broad terms, financial aid is divided into two areas. The first area consists of merit-based scholarships, bursaries, and awards, while the second area is financial need-based and includes government and private loans and grants in addition to scholarships, bursaries, and awards. Each institution has both merit-based and financial need based awards exclusive to the institution in addition to regional, provincial, national programs administered by government and private organizations such as foundations trusts, charities, corporations, and service organizations.
In both United States and Canada, the demand for financial aid is very high while the supply is somewhat shrinking. Consequently, the application is very competitive and the awarding of aid is increasingly becoming polarized towards candidates with high financial need at one end, and candidates with exceptional merit at the other. Below provides competitor information on each of our planned markets - Canadian market and the United States market.
Competition in the Canadian Market:
No direct competition was identified as a result of the contacts made with the above Canadian educational institutions. At the high school level, the primary source of non- government financial aid appears to be school-specific bursaries and awards as well as financial assistance provided by local service organizations. These service organization awards, however, are often very candidate specific (IE: the physically challenged).
At the university level, the student services office maintain binders of scholarships, awards, and bursaries available either exclusively at the university or through provincial or national organizations. The majority of financial aid programs are awarded to first year students who often automatically become candidates when they enroll (register) in a university. Selection is most often based upon the faculty of study, high school graduation marks and high school ranking, with financial need being a key factor for specific aid.
No databases or software listings of scholarships, awards, bursaries, were identified with the exception of "DISCOVER" - computer based career planning software. Published by Nelson Canada and created by the American College Training Program, this software is being beta-tested at the University of Ontario. It consists of several modules of which one covers financial aid by province. At the present time, the listings in this module are very limited, consisting primarily of national and provincial government-based loans, bursaries, and grants.
Competition in the United States
Unlike, the Canadian market, direct competitors were identified in the United States market. These direct competitors are commonly referred to as "scholarship search services" or "scholarship search agencies". For a fee, these companies claim to match students to sources of educational funding. It is not clear how many companies exist because many operate under several names and the promotion of services is often done through hundreds of brokers or licensees operating under a variety of names.
These companies generally market their services in two ways. The first is by direct mail solicitation to students using high school and university mailing lists. The other way is through brokers or licensees who pay a licencing fee and receive a commission for each application sent to the "parent company" for processing.
There was no doubt that financial aid professionals see these agencies as a waste of money. Contacts were unanimous that the same information was easily found in financial aid directories widely available at financial aid offices and libraries. The number of students who ever receive funding as a result of leads provided by these agencies is considered to be negligible, primarily because there is no matching of student qualifications with funding eligibility. At the same time, it is claimed that there is no consideration given to application deadlines when leads are supplied to students and many deadlines will have already passed.
In conclusion, in Canada there does not appear to be the level of sophistication which exists in the United States. Moreover, there is no evidence of scholarship search services nor of any computer databases of financial assisting programs in Canada. Knowing this, we plan to entre the Canadian market to form a strong capital base, and then enter the more competitive United States market. The key success factor, however, lies in our ability to match students to educational funding programs. By providing solid matches, students will receive adequate educational funding and this will restore their confidence in scholarship search companies in the United States (namely Scholarship Information Services). And in the long term, Scholarship Information Services will "control the market".
The most effective method of promoting this product is through advertising. Many reasons exist for the selection of this form of promotion. First of all, it is public. Advertising's public nature suggests that the product is standard and legitimate. Because many people see the ads for our product, buyers know that their motives for purchasing it will be publicly understood and accepted. Secondly, advertising is persuasive. Thirdly, it is expressive. In other words, advertising allows us to dramatize the characteristics of our product. Lastly, newspaper advertising can done on a relatively "Small Budget". Moreover, one of our major weaknesses is the lack of capital and thus the company is obligated to choose a form of media which considers this constraint.
By using this method of promotion (print advertising), we intend to communicate the merits of our product and "persuade" our target markets to buy it. Our primary and secondary target markets require different forms of advertising. Each target market is discussed below.
PRIMARY TARGET MARKET & PROMOTION:
Our primary target market consists of two entities; namely parents of university students and university students themselves. Below discusses promotion to both of these markets.
Parents will be reached by advertising under the classified ads in national and local newspapers throughout Canada and the United States. This will enable us to reach millions and millions of people daily at a relatively low cost. Another important factor which led us to newspaper advertising is the market itself. Parents of university students read the newspaper more readily than their children. Also, the majority of parents pay a large portion of their child's university education and if they believe this problem can be solved by purchasing our product, then they will purchase it. Our general newspaper advertising budget will be $25,998 for 200X and $34, 998 for 200Y.
University students represent our second segment of our primarily target market. They will be reached by advertising in university calenders under the section entitled "funding programs". Currently, this section of the "calender" provides students with an insufficient number of contacts for scholarships, bursaries, fellowships, and other sources of financial assistance. In many cases, addresses are not provided with the name of the funding program, thus, forcing the student to spend valuable time searching for these specific addresses. By purchasing our product, students will acquire the necessary information and will not have to worry about obstacles such as missing addresses, contact names and phone numbers. Our advertising budget for this market will be $8,000 in 200X and $12,000 in 200Y.
Another means of advertising to this group is through weekly university newspaper. University newspapers become a major part of a student's university lifestyle. By promoting our product through such newspapers, we are in fact reaching the end users of the product at a very low price. University weekly newspaper will prove an extremely effective means of reaching this market.
Another means of promotion that the company may later focus on is broadcast. The majority of universities have their own radio station. This may, in fact, push many students further through their "buyer readiness state". For example, a student may be aware of the product, but not completely at the purchasing stage. After many broadcasts on their university radio station, undecided students may be "pushed" into the purchase stage and, thus, buy our product. Also, this form of promotion should give the company and product more credibility.
This concludes our discussion on advertising to our primary target market. The next paragraph deals with promoting to our secondary target market.
SECONDARY TARGET MARKET:
High School Senior Students:
High school students represents our secondary target market. As mentioned earlier, this group forms approximately 25 percent of all university students. Letters and pamphlets will be sent out to selected (large and medium populated) high schools and forwarded to the school's guidance counsellors. These letters will describe the company's background, mission, and product. As students inquire about university funding programs, the counsellor can provide them with information regarding our product and the procedures necessary in acquiring it. From here, the company is heavily relying on word of mouth advertising which high school students are greatly noted for!!! The advertising budget set aside for our secondary target market is $4,000 in 200X and $2,000 for 200Y.
Our advertising objective is to inform potential customers of our product and move them towards a purchase. As direct competition overwhelm the industry, persuasion becomes our new advertising objective. Many messages have been considered however two remain outstanding as of present day. Each message is directed towards a different target market. That is, parents of university students(media being general newspapers) and students attending university (media being collegiate weekly newspapers). Both messages are illustrated below.
Advertisement # 1:
ENJOY YOUR LIFE !!!
For the first time university students can enjoy a better lifestyle. Scholarship Information Services provides thousands of scholarships contacts for needy and\or academically achieved students. For more info. or to order call Toll Free 1-800-555-5555 "The GOOD TIMES are just a call away"
Advertisement # 2:
ATTENTION PARENTS OF STUDENTS
Tried of scrimping and saving so that your son or daughter can acquire a good education? Now there's a better, more efficient way to finance post secondary education. Scholarship Information Services provides thousands of sources of financial aid to needy and academically achieved students. For more info. or to order call Toll Free 1-800-555-5555
The first ad is to be shown in college newspapers and thus, directed solely towards college students. Since only university student read collegiate newspapers, no advertising dollars are lost. First of all, the majority of students have very little money and they are constantly searching for ways to improve their monetary deficiencies. The ad tries to provoke a students recurring money problem. At the same time, it tells a student directly that this irritation can be resolved only through the use of Scholarship Information Services.
The second ad is mainly directed towards both parents of university and college students. It focuses on the problems parents must endure when providing their children with the necessary education. For example, worrying about their child's monetary status(do they have enough to eat or pay rent) as well as their own monetary status(how can we afford to send our child to college when we have already fallen behind in our mortgage payment). Moreover, there seems to be a constant worry over money issues.
This concludes the promotional section of the business plan. The next topic summaries Scholarship Information Services' market entry strategy.
MARKET ENTRY STRATEGY - SUMMARY
On July 1, 200X, the company plans to begin advertising to parents of university students and both parties of our secondary market. Senior high school students begin searching for financial assistance for higher educational institutions in July and August. In September 200X, as students return back to university, additional advertising will commence. Moreover, university students publish a weekly paper which the company will use to exploit our product.
Advertising to university and high school seniors in such forms possess many advantages. For example, unlike general newspaper advertisements, the company is reaching the end users of our product and thus, no advertising dollar is "LOST". Also, it is much cheaper to advertise to university and senior high school students. On the other hand, many parents must finance their child's entire education and thus, they applaud any monetary contribution or assistance that might be available. As a result, the company feels that each type of media is necessary. This, in fact, will allow the company to grow in market share and contribute the necessary resources needed in order to pursue diversified ventures.
In year three, the same markets will be exploited, however, entry into the United States market will be on the agenda. Like the Canadian market, the United States market possess two similar TARGET markets - Parents of senior high school and university students and the students themselves. The same media used in the Canadian market is to be used in the United States market.
A very important note to make is that approximately 55% of all senior high school students will attend a university or college. At the same time, these senior students make up an estimated 25 percent of the TOTAL university student population. Thus, continuous efforts in years one and two will be made to capture a large portion of this group. By capturing this group two things can be achieved. First of all, the company can increase its profitability due to its market size. Secondly, we can attain future sales as a result of loyal customers, thus, further increasing profitability.