Business Plan: Reusable Ballerinas for Discos

Table of Contents

List of Diagrams

1 Executive Summary
1.1 Market & Competition
1.2 Marketing & Sales
1.3 Business System, Model & Organization
1.4 Founders Team, Management & Personnel
1.5 Opportunities & Risks
1.6 Implementation Schedule
1.7 Financial Planning and Financing

2 Service Delineation
2.1 The Need & Its Solution
2.2 Major Supply Components
2.3 Trademark Protection
2.4 Strategic Alliances
2.5 Unique Selling Proposition/Customer Benefit
2.6 In the Future

3 The Market & Competition
3.1 Competition
3.2 The Market
3.3 Porter’s Five Forces Framework
3.3.1 Threat of New Entrants
3.3.2 Threat of Substitutes
3.3.3 Bargaining Power of Customers
3.3.4 Bargaining Power of Suppliers
3.3.5 Intensity of Competitive Rivalry

4 Marketing & Sales Strategy
4.1 Product
4.2 Place
4.3 Promotion
4.4 Price

5 Business System, Model & Organization
5.1 Business System
5.2 Business Model
5.3 Organization

6 Founders Team, Management & Personnel
6.1 Mario Kempf
6.2 Siegfried Kuhn
6.3 Why Us?

7 Opportunities & Risks

8 Implementation Schedule

9 Financial Planning & Financing
9.1 Financing & Something about GmbH & Co. KGs
9.2 The Tax Advantage
9.3 Purchasing & Inventory
9.4 Unit Sales, Volume Assumptions & Price Increases
9.5 Setting the Tax Rate
9.6 Financial Highlights & Key Financial Ratios
9.7 3 Year Statements of Cash Flow - Normal Estimates
9.8 3 Year Income Statements - Normal Estimates
9.9 3 Year Balance Sheets - Normal Estimates
9.10 Notes to Financial Statements

Bibliography

Appendix A: Questionnaire Sample

Appendix A: Questionnaire Results

Appendix B: Ballerina Supplier Offer

Appendix C: Vending Machine Offer

Appendix D: Normal Monthly Statements of Cash Flow Year

Appendix D: Normal Monthly Statements of Cash Flow Year

Appendix D: Normal Monthly Statements of Cash Flow Year

Appendix E: Normal Monthly Income Statements Year

Appendix E: Normal Monthly Income Statements Year

Appendix E: Normal Monthly Income Statements Year

Appendix F: 3 Year Full Year Statements of Cash Flow - Best Case

Appendix F: 3 Year Full Year Income Statements - Best Case

Appendix F: 3 Year Full Year Balance Sheets - Best Case

Appendix G: Best Case Monthly Statements of Cash Flow Year

Appendix G: Best Case Monthly Statements of Cash Flow Year

Appendix G: Best Case Monthly Statements of Cash Flow Year

Appendix G: Best Case Monthly Income Statements Year

Appendix G: Best Case Monthly Income Statements Year

Appendix G: Best Case Monthly Income Statements Year

Appendix H: 3 Year Full Year Statements of Cash Flow - Worst Case

Appendix H: 3 Year Full Year Income Statements - Worst Case

Appendix H: 3 Year Full Year Balance Sheets - Worst Case

Appendix I: Worst Case Monthly Statements of Cash Flow Year

Appendix I: Worst Case Monthly Statements of Cash Flow Year

Appendix I: Worst Case Monthly Statements of Cash Flow Year

Appendix I: Worst Case Monthly Income Statements Year

Appendix I: Worst Case Monthly Income Statements Year

Appendix I: Worst Case Monthly Income Statements Year

Appendix J: Primary Research Evidence

List of Diagrams

Figure 1: Pocketfeet Product Offering

Figure 2: Cobblestone Streets of Landsberg

Figure 4: Business System

Figure 5: Business Model

Figure 6: Organization

Figure 7: SWOT Analysis

Figure 8: Implementation Table

Figure 9: Sales Volume per Month

Figure 10: Financial Highlights & Key Financial Ratios

Figure 11: 3 Year Full Year Statement of Cash Flows - Normal Estimates

Figure 12: 3 Year Full Year Income Statements - Normal Estimates

Figure 13: 3 Year Full Year Balance Sheets - Normal Estimates

Figure 14: Do High Heels Hurt?

Figure 15: Would You Purchase Ballerinas?

Figure 16: Ballerina Price Ranges

Figure 17: Price Increase of 10 to 15%

Figure 18: Ballerina Supplier Offer

Figure 19: Vending Machine Offer

Figure 20: Normal Monthly Statements of Cash Flow Year

Figure 21: Normal Monthly Statements of Cash Flow Year

Figure 22: Normal Monthly Statements of Cash Flow Year

Figure 23: Normal Monthly Income Statements Year

Figure 24: Normal Monthly Income Statements Year

Figure 25: Normal Monthly Income Statements Year

Figure 26: 3 Year Full Year Statements of Cash Flow - Best Case

Figure 27: 3 Year Full Year Income Statements - Best Case

Figure 28: 3 Year Full Year Balance Sheets - Best Case

Figure 29: Best Case Monthly Statements of Cash Flow Year

Figure 30: Best Case Monthly Statements of Cash Flow Year

Figure 31: Best Case Monthly Statements of Cash Flow Year

Figure 32: Best Case Monthly Income Statements Year

Figure 33: Best Case Monthly Income Statements Year

Figure 34: Best Case Monthly Income Statements Year

Figure 35: 3 Year Full Year Statements of Cash Flow - Worst Case

Figure 36: 3 Year Full Year Income Statements - Worst Case

Figure 37: 3 Year Full Year Balance Sheets - Worst Case

Figure 38: Worst Case Monthly Statements of Cash Flow Year

Figure 39: Worst Case Monthly Statements of Cash Flow Year

Figure 40: Worst Case Monthly Statements of Cash Flow Year

Figure 41: Worst Case Monthly Income Statements Year

Figure 42: Worst Case Monthly Income Statements Year

Figure 43: Worst Case Monthly Income Statements Year

Figure 44: Questionnaire Evidence Picture 1

Figure 45: Questionnaire Evidence Picture 2

1-Executive Summary

Pocketfeet is to be established to serve women in Landsberg and its contiguous area, alleviating their feet from the pains of wearing high heels, during the trip to and from the nightlife venue. Specifically for this purpose, Pocketfeet markets ballerinas, including a shoe bag through vending machines in 5 local nightlife venues. The ballerinas are sourced from a supplier in China.

1.1 Market & Competition

Landsberg, a city of 28,350 people is the central nightlife area for the surrounding Allgäu, Weilheim-Schongau and Landkreis Augsburg. The total population of these three districts is 1,017,055 people, according to official local statistics (Standortallgäu.de 2009, p.1; Bayerisches Amt für Statistik und Datenverarbeitung 2010, p. 6; Landratsamt Augsburg 2004, p. 18). The total market value in our sales district is €1,222,404, assuming a sales price of €4 growing at a rate of 1.37%, which is aligned to the population growth of Landsberg.

Currently, no competitor has entered the local market, which implies that we are the only provider presently there. We defend our competitive position by availing of exclusivity contracts with a lifetime of 5 years, after which they are up for renewal. A partnership with the local Lion’s Club (Lion’s Club Landsberg E.V.) assists us in striking these exclusivity contracts.

Although we face no direct competition in Landsberg and its surrounding area, indirect competition impinges on our competitive position through online sales of similar offers, albeit at much higher prices. Therefore, indirect competition poses only a minor threat to our operations, presently.

1.2 Marketing & Sales

Our product is to be marketed for €4 per unit and prices are to be increased by 50 cents per year, in accordance with primary findings. The ballerinas are to be marketed at 4 locations in Landsberg, and 1 location just outside of Landsberg. Promotion consists of posters in the venue and additional PR through media coverage by the local press.

1.3 Business System, Model & Organization

The operation will follow a fairly simple system. Ballerinas are to be sourced from China, delivered to our headquarters and distributed to the individual venues, where they are stocked by Pocketfeet’s management team, and the inventory levels in the individual locality will be monitored by their cleaning staff. The firm strives to operate a very lean, just-in-time scheme, whereby it will operate efficiently.

1.4 Founders Team, Management & Personnel

Pocketfeet’s two founding members will manage and execute all tasks. They will not earn a regular salary, but take their share from profits. Mario Kempf and Siegfried Kuhn are two individuals with extensive knowledge in risk management and both currently work as entrepreneurs in their own right.

1.5 Opportunities & Risks

Being the first entrant into the Landsberg market, poses a high level of uncertainty, which the company’s management will mitigate through extensive knowledge in risk management and low-cost operations. Renewals of exclusivity contracts pose a risk, because we could be jettisoned as a supplier. Having local ties to the local business community will help us diminish this risk, along with only small expenditures, which will help us at a later point, to make attractive offers to both existing or new venues post the three year period of this business plan.

1.6 Implementation Schedule

Operations are due to commence in July 2011. The individual milestones before the beginning of operations can be discerned on the implementation schedule.

1.7 Financial Planning and Financing

Our operation is due to break even in the first month of operations. The business will take the form of a GmbH & Co. KG, which bears tax advantages over other legal structures. Funding for the business will be obtained from a loan of €25,000 from the GmbH to the Kommanditgesellschaft (limited partnership) and the partnership will be established with €200 Euros, of which each founder will pay exactly 50%. The financial projections for the first three years are presented on an annual basis. A monthly representation is to be found in the appendix. Additionally, sensitivity analysis was carried out, whose results are also in the appendix.

2-Service Delineation

2.1 The Need & Its Solution

A Harvard Medical School study determined unfavorable effects of women wearing high heels, both on a long and short-term basis. Women are bedeviled by longer walks in high heels, causing sore feet short-term and medical complications like knee-osteoarthritis over the long-term (Kerrigan et al, 1998). Pocketfeet is to provide a solution to reduce the chance of any such anguish.

Itineraries to and from a nightlife venue, are a daunting task for women, due to a lack of space in the handbag for an extra pair of shoes and the inconveniency of carrying them. Pocketfeet furnishes a solution to this conundrum.

Oh lady are you in despair, don’t worry, Pocketfeet is there!

Pocketfeet is to be the sole market leading provider of reusable Ballerinas in Landsberg’s precincts and the contiguous area, targeting women between 16 and 50 years of age. The product offering is designed to assuage pains begotten by high heeled shoes. In a study conducted by the writer of this 86% showed a willingness to purchase our product. The full results of the study are detailed in the appendix (See: Apendix A). Pocketfeet’s product offering is detailed in the illustration to the left.

Pocketfeet’s offering is tripartite. The elements of the product offering are a) the dispenser, b) the ballerinas convolved into a sphere, with a diameter of 5cm and c) a shoe bag for

illustration not visible in this excerpt

Pocketfeet Product Offering: By courtesy of Joana Karg

high heels (also included in the sphere). Our ballerinas are water proof and should last for 10 itineraries. They are offered only in black, in German sizes 35-42.

Why are operations set up in Lansberg?

One of the founders is a local bar owner. Women have often complained about the town’s streets, paved with cobblestone. As the image of Landsberg’s city center illustrates, it cannot be counted amongst the most high heel friendly towns. This cogent fact resulted in the decision to set up Pocketfeet’s operations in this town,

Lansberg’s City Center, Source: Holidaycheck.de rather than in a municipality lacking these topological features. In addition, Landsberg is the nightlife hotspot for the surrounding regions, encompassing the Ammersee region and Kempten.

2.2 Major Supply Components

Major supply components of our product are the ballerina, the shoe bag and the sphere shaped packaging. All are sourced from a Chinese supplier. Our supplier, Shenzhen Jun Er Hui Trade Limited sells between 1000 and 3000 pairs per order. They charge between $1.8 and $3.00 a pair (Shenzhen Jun Er Hui Trade Limited, 2010). According to Ms. Slien Chi (December 16th, 2010), a sales agent for Shenzhen Jun Er Hui, $3.00 are charged for the minimum order quantity of 1000 pairs and 1.80 for the maximum volume of 3,000 per order. The ballerinas, the packaging and the shoe bag are supply components to be continuously replenished. The ballerina dispensers are ordered intermittently, depending on the extent of expansion into new nightlife venues.

2.3 Trademark Protection

According to Philipp Lanz (December 12th, 2010), a patent officer at the European Patent office in Munich, Pocketfeet Ballerinas are not patentable, because Ballerinas are extant. Only the trademark Pocketfeet can be protected. A trademark protection petition has been filed with the Office for Harmonization of the Internal Markets (OHIM). The trademark Pocketfeet will be protected within 8 months, according to the OHIM (OHIM, 2010).

2.4 Strategic Alliances

The co-founder of this venture is a member of the local Lions Club chapter. Lion’s Club has avowed to form a strategic partnership with Pocketfeet to provide succor in striking exclusivity contracts with local bar, restaurant and club owners.

2.5 Unique Selling Proposition/Customer Benefit

The products unique selling proposition (USP) consists of various benefits. One part is the low cost of our product and the second its convenience of being freed from afflictions of high heels by a product that can be carried expediently, due to its small size. Nanotechnology allows women to wear our ballerinas in rainy weather. They are impregnable to water and reusable for further night life itineraries or can be appropriated to other uses. The strategic implication of low cost is to guarantee a high turnover rate at a fairly tight gross profit margin and a fairly high relative bottom line, of which further discussion is to be postponed to the financial section. Furthermore, Pocketfeet is the first to set up its dispensers in the Landsberg market and its surrounding area.

2.6 In the Future

Going forward, the product colors will be enhanced and each venue will be allowed to post their name and/or logo on the product. New colors will include white and silver. Introduction of these product enhancements will take place in the second year of operations. Pocketfeet plans to grow organically.

3-The Market & Competition

3.1 Competition

Ballerinas are a more or less homogenous good. Our Ballerina differs from others in being water proof and more flexible than traditional ones. No direct competitor is present in our sales district. The closest competitor, Ballerina-to-Go sells in Munich for 7 Euros a piece, without a shoe bag. Indirect competitors are two online retailers. One is Konvine.com (Dec 26th, 2010), which offers its products at rates between $30-35, which translates into between €22-27 at $1.31 for the Euro. Konvine’s product pricing exceeds ours by far, rendering competition from this seller highly unlikely. Butterflytwists, a second indirect competitor was identified. It charges £14.99 for a pair of Ballerinas, which amounts to approximately €17.85, at €1.191 per pound (Butterflytwists, 2010). Our largest competitor on an international scale, with distribution centers in Belgium, the Netherlands, the UK, Australia and the United States is Rollasole (Rollasole.com, 2011). Rollasole has not attempted to penetrate the German market.

None of these competitors offer the extra shoe bag contained in our offering. What our product is short of, comparing our design to the indirect competition’s, is a tendency to embroidered designs, which our product lacks. This deficiency can be attributed to the low price we charge, rendering any such initiative unfeasible. Our product differentiates itself from the competition by offering Nano coating impregnable to water. One may deduce that indirect competitor’s products are based on style, whereas our product serves the basic utility of comfort and not comeliness.

Pocketfeet needn’t be sheltered by an actual patent, barring competitors from designing a similar offering, but will instead employ exclusivity contracts to bar competitors from its locations. Here, the local Lion’s Club, Lion’s Club Landsberg e.V. plays a key role. Upon requesting the clubs assistance, members have offered to open their networks to Pocketfeet, in order to get a footing in local nightlife venues. Credit for the formation of the partnership amongst Pocketfeet and Lion’s Club may be ascribed to the laurels of one of the founding partners in the venture, Siegfried Kuhn, a high ranking member of Lion’s club.

Currently, no other competitors have entered Landsberg’s market. Our low cost approach and our early market entrance should dissuade competitors from attempting to gain foothold in the market. Specifically larger competitors, deriving their potency from economies of scale will be discouraged, as we have captured the largest outlets in the area, leaving only small and unattractive venues to competitors. Market entrance of indirect competitors is likely based on ballerina sales in existing shoe stores.

3.2 The Market

Pocketfeet’s target market for the first three years, as this is the scope of this business plan, are women visiting nightlife venues in Landsberg am Lech and its immediate area, between ages 16 and 50. Our definition of nightlife venues restricts itself to gastronomy businesses, which are open from 20:00 to open end. This need not imply that these venues are not equally open during the day, but that they also cover the night life genre. Specifically these venues will be restaurants, night clubs, lounges and bars.

No direct statistics are available, to ascertain the possible market for the ballerinas directly. This does not dissuade my vigor for this project in any way. It can be discerned as a good sign, because it augers that not many people have attempted it before. To get around this problem I will have to approach it by inductive reasoning.

According to the Landsberg’s 2010 statistics, 49.15% of its population is between 16 and 50. I deducted ¼ from the 15-18 brackets, representing 15 year old children in the statistic offered by the local government (Landsberg.de, 2010). Women comprise 51% of Landsberg’s population (Landsberg.de, 2010). Combining the two pieces of evidence, 51% of the 49.15% are potential customers. So, 25.07% of the populations are eligible targets. Landsberg’s population totals 28,350 people. Of those 25.07% are 7,107 (rounded to the nearest whole number) (Landsberg.de, 2010). Siegfried Kuhn (2011, April 1st), my partner in this venture and a bar owner in Landsberg, after having been shown these figures, stated that the number of prospects must be multiplied by 50 (no official data was available for nightlife visitors in Landsberg, so we must base it on professional judgment), because Landsberg is the focal nightlife area for the Weilheim-Schongau, Oberallgäu (Kempten), Ostallgäu (Kaufbeuren), Unterallgäu (area to the north of Memmingen) and Landkreis Augsburg area, according to Mr. Kuhn (2010, Dec 12th). Thus, the total market would be 355,350 women (7,107x50). This is thesis is buttressed by the number of inhabitants of the Allgäu area, which totaled 646,213 in 2008 (Standortallgäu.de 2009, p.1). Landkreis Weilheim-Schongau had 130,863 residents in 2009 and Landkreis Augsburg’s population was 239,979 in 2002 (last sensus available; excluding the city of Augsburg) (Bayerisches Amt für Statistik und Datenverarbeitung 2010, p. 6; Landratsamt Augsburg 2004, p. 18). Our survey (See: Appendix A) found that 86% of a random population of 100 women between ages 16-50 would buy our ballerinas; the total market would come in at about 305,601 prospective buyers (355,350*86%). The total market value in Euros would thus be €1,222,404 assuming a sales price of €4 (305,601*€4), based on the findings of the survey (see: Appendix A). Based on our projected first year sales (normal estimates), we will hold a market share of 27%, corroborated by selling in the areas largest nightlife venue Schön & Wild with an astounding number of 90,000 guests per month. Since 2000, population has grown at a rate of 1.37%, which we can commensurately use as our annual market growth rate (Landsberg.de, 2010).

3.3 Porter’s Five Forces Framework (Porter, 2008)

3.3.1 Threat of New Entrants

- Barriers to Entry are instigated by our exclusivity contracts and the fact that a venue can only accommodate one dispenser.
- Our brand being the first to enter the market, will have the “first come, first serve” advantage of building brand awareness. Pocketfeet should become an epithet for Ballerinas in the area. This barrier is built over time.
- Capital requirements are low. Thus, it would be easy for competitors to provide for requisite funding.
- Switching costs of our product is high, but could be rendered low if the owner of the venue were beckoned by a commission that would cover his costs.

3.3.2 Threat of Substitutes

- Our product can be substituted, albeit unlikely. These needn’t be another product (see: Drakopoulos, 1992). Our competitive generally stymies the threat of substitutes for:
- Higher Priced Ballerinas in shoe stores
- The loss of utility when having to purchase a substitute somewhere else (nearness of our good to the point of impulse)
- Psychological threshold where a substitute, like walking home barefoot or in pinching high heels, would come into play is very high.
- Switching costs to other products are fairly high, considering the excess cost of competitor’s products and the distance to the point of impulse.

3.3.3 Bargaining Power of Customers

- Switching costs are fairly high for customers, because we are the only game at the venue.
- The questionnaire revealed that our product tends toward price inelasticity (not absolutely inelastic, somewhere between unit and inelastic), in a way that a shift in the price of the product creates a far lower shift in the demand.

3.3.4 Bargaining Power of Suppliers

Suppliers have low bargaining power, because it would be easy to switch to a new Chinese supplier, taking into account that many suppliers could readily supply our ballerinas (see: alibaba.com).

- Therefore, we will keep trading good prices constant at the €1,80 per unit over the three years of financial planning. Should our supplier try to increase prices, we will switch to a new one that will make them available to us at the stated price.
- The concentration of suppliers is very high, which makes it easy for us to switch within China. It could become problematic though, if we were to switch to another country.

3.3.5 Intensity of Competitive Rivalry

- At present we have a first mover’s advantage and face no competition apart from indirect competitors as outlined further above.
- Our current position is that of a monopolist through the exclusivity contracts in each venue. This exclusivity contract is up for renewal every five years, when our advantage needs to be renegotiated. This puts us into a precarious situation every time the contracts are up for renewal, but guard us again once they are renewed. Chances for renewal are very good, because management is personally acquainted with the owners of the venues and the old saying holds: rather trust a devil you already know, than one you don’t know. We believe that we will be able to come to mutually advantageous terms for all parties concerned in the future. Upon wanting to retain all profits in the first 3 years, we will have enough cash on hand to match any competing offer, when contracts are up for renewal.
- Therefore, we believe competitive rivalry in our target market to be low.

4-Marketing & Sales Strategy

Pocketfeet’s strategy is to grow organically. Upon commencement of operations, we intend to market our goods in existing venues and tap into our regional contacts to ferret out new profitable locations. Our marketing strategy will be based on the 4P’s framework, as elaborated below:

4.1 Product

Our product is our flexible pair of ballerinas convolved into a small sphere along with a shoe bag in which women can place their high heels. The ballerinas are sold pair wise. Their design is simplistic and lacks any embellishments. Upon commencement of our business operations these shoes will be available in black only. In the second year of operations we will consider offering a spectrum of colors (silver, red and gold). A further enhancement is to post the locations name on the product. Our existing venues have given us permission to sell our products free of charge. To reciprocate, we offer our ballerinas as their marketing tool. Negotiations with our existing venues have concluded that we start posting names on our shoes when our operations break-even financially, to obviate any financial strain as we recoup our initial investment. The locations name will be posted in the factory. No extra charge will come due, as this is already part of the original offer (including up to 4 colors), but we aren’t making use of these features in the beginning. The rationale behind this is that we might be selling more ballerinas in one location than in another and can quickly move them around, whereas if we had the name of the venue on them this strategy couldn’t be employed. Only after we have gained a years experience, are we able to judge how much of what we need. We will try to manage the business in a way that we work with just-in-time methods and don’t carry the burden of inventory.

4.2 Place

Pocketfeet’s ballerinas are marketed in bars, restaurants and night clubs in Lansberg and its surrounding area. Operations will commence in 5 venues, whose number should steadily increase over time, by constant additions of new locations beginning in year 4. Our beginning locations are:

- Schön & Wild: is the area’s mega nightclub focusing on motto parties for a maximum of 3000 guests, open 7 days a week (about 90,000 guests a month). To date, this will be our largest outlet and the one with the most turnover. The venue employs a card system to book consummated drinks and food, which are paid upon leaving the venue. We consider designing a special machine for this venue, by which guests can use the venues card to buy the shoes, which will have the same effect on consumption as with drinks. In the presence of those cards, consumption tends to rise on average. Secondly, we can commensurately capture those revenue streams, which wouldn’t be obtainable if a prospective customer would lack adequate change, when forced to pay in cash.
- Heaven Bar: is located in Landsberg’s city center and specialized in gin drinks. The maximum number of guests permitted to enter the location before congestion is 100 persons. It’s open 7 days a week. Siegfried Kuhn, one of the founders of this venture, owns a ½ interest in the Heaven Bar.
- Monidal Restaurant & Bar: is a venue mingling both restaurant and bar. It is open 7 days a week, closing at 1am in the morning. Special events at this venue encompass after work parties twice a week. This venue is owned by Siegried Kuhn’s partner in the Heaven Bar.
- Moritz: is the local “posh” nightclub, similar to the “P1” in Munich or “Lilly’s Bordello” in Dublin. Moreover, it is the only place where one can eat Sushi in Landsberg. Sushi’s are prepared 3 times a week: Thursday, Friday and Saturday; bearing relatively interesting economics for our business, because a first round of Sushi guests fill the entire venue until 10pm, which then leave and a second round of people comes to enjoy sushi & dance. The maximum number of people that fit into venue is 400, which means that the number of prospective customers is double those of normal ‘disco only’ days.
- Ristorante Stadt München: is the local Italian restaurant, which is open until 1 a.m. and and its guest capacity is 200 people. Stadt München is always teeming with guests and next to never has any free spaces. The venue is open 7 days a week.

Shoe dispensers will be located in the ladies bathroom of each venue. They are especially slim and designed to fit into small locations like ladies bathrooms (see: Appendix C). Our shoe dispenser is low cost and sourced from abroad, enabling cost savings on the expenditure for the machine. On the operational side, capital expenditures related to costly repairs will be circumvented by a 3 year warranty on our machines by the supplier and their cheap price of €3125, for five machines. They will be able to accept cash only, as a machine with an interface to collect money from a person’s bank account would be too sophisticated. This condition doesn’t hold for the machine we devised for Schön & Wild, which a data system to read and feed the electronic card used in the venue. The required modifications will be defrayed by the venue.

The shoe dispensers will be monitored by the cleaning staff of each venue. They will inform Pocketfeet when the machines are empty and Mr. Kempf or his partner Mr. Kuhn will come and load the dispensers. Expediency is derived from eliminating staff for replenishment and paying someone to monitor the level of the machines. The cleaning staff is paid by each venue so that we incur no costs associated to the monitoring process.

4.3 Promotion

Our promotion is quite simplistic. It is based on the notion that our product fulfills a basic need: when a woman’s feet start to ache. The extra dollar spent on marketing our product will not increase our marginal benefit in a way rendering these expenditures viable.

Therefore, our promotion strategy will entail posters. They will be placed in the venues’ ladies bathrooms and in the corridors leading up to the bathrooms. Our job is to create awareness; the aching feet will be enough of an impetus to initiate the purchase. Posters should satisfy this condition, entailing the following advantages: a) they are cheap b) they do not require continuing expenditures for both personnel and the promotional activity in progress.

Posters in the corridor are to create awareness amongst male guests, who will be our “viral marketers” spreading the news of this new product. Merely posting them in the lady’s bathroom would minimize the number of people knowledgeable of our product and would restrict our “bug” from spreading as effectively as possible.

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