deals on demand body v2.25final

8/9/2019 Deals on Demand Body v2.25FINAL

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1. Market Analysis

A. INDUSTRY DESCRIPTION AND OUTLOOK

There are many reasons for distributing coupons. First a consumer must make a conscious

effort to cut out and save a coupon. Second, coupons help create brand awareness.

Customers see the brand on the coupon even when the coupon is not redeemed. Also, FSIs

(Free-Standing Inserts) encourage consumers to purchase brands on their next trip to the

store and are more likely to remember and buy the brand, even without a coupon.

B. INDUSTRY CHARACTERISTICS AND TRENDS

In the United States 336 billion coupons were distributed and 3.7 billion redeemed within one

year. This translates to about a 1.1% redemption rate and about $3 billion in consumer

savings, or about 81 cents per coupon. Approximately 78% of households use coupons and

64% are willing to switch brands with coupons.

About 80% of all coupons are issued by manufacturers and currently almost 90% of all

coupons in the US are distributed through print media. About 84% (251 billion) are

distributed through FSIs, which are primarily distributed through the Sunday newspapers.

An average US consumer receives an estimated 850 FSIs annually.

Other distribution mediums include in-store, on-shelf, electronically dispensed coupons and

coupons attached to free product samples. The rest are distributed mainly in or on product

packages, by direct mail, and in magazines and newspapers.

Coupon distribution in general has increased but redemption rates have decreased.

Coupons are not used equally among various ethnic groups; African American and

Hispanics have a lower redemption rate. Many ethnic groups tend to subscribe to ethnic-

oriented papers which often do not promote to the population as a whole. These groups of

consumers typically do not get FSIs. Magazines and newspapers targeting individual ethnic

groups contain far fewer coupon offers than more general-appeal, mass consumption print

media.

C. TARGET MARKETS (CUSTOMER DISCOVERY)

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Initially we had paradigms surrounding our product concept like: who would use the service,

what companies would participate, and what we would be able to sell. We believed our

offerings would reach across demographic lines providing savings for all types of

consumers. This consumer base would require all types of companies to be involved with us.

We initially believed with these two paradigms that we would sell a startup fee to include the

company in our online space and charge them on a per redemption basis.

After conducting customer interviews our paradigms changed entirely. We first realized that

our end user base had to be refined. As it turns out, the youth market accounts for 50% of

consumer spending and has a high likelihood of using coupons. With our end user defined

we were able to narrow our list of candidate companies to proposition as customers. Since

other companies already offer some type of coupon we now knew we had to differentiate

ourselves even more. By developing a end user information database we accomplish

several things: differentiate our company from competitors, increase redemption rates andbuild a information database that can be sold to improve others advertising.

Market Segmentation

Some of the demographics we collect include the following:

Category Age Range % of Total SpendingGeneration Y 18-24 5% of total spendingGeneration X 25-34 18%

Younger Boomer 35-44 26%Older Boomer 45-54 24%Empty Nester 55-64 13%Senior 65+ 14%

Unlike our competitors we will actively seek demographic information from our end-users to

better serve them with offerings from our retailer clients. Some of the demographic

information we are collecting include:

Age

Gender Ethnicity Education Level Annual Household Income Residence Industry Job Title

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Number of employees in company Buy, specify or recommend IT products? How often do you use air travel for business? What percentage of your business travel is international?

D. COMPETITIVE ENVIRONMENT & MARKET PENETRATIONTARGETSeveral companies offer the distribution of coupons, yet only a few offer a phone based form

of distribution. Three companies that could prove to be our direct competitors are

Text2Store and CellFire and Mobiqa.

Text2Store is a Chicago based company that was just recently founded. They offer mobile-

coupons yet offer them through text messages. Most of their coupons are for smaller mom

and pop retailers and restaurants so they offer a large quantity of coupons. They are more

specialized in their distribution; an end-user only receives the coupons for a topic they opt-in

on.

CellFire is a San Jose based company that was founded in 2005. They are a mobile-coupon

provider that offers coupons to all geographic regions. They started by offering their

services through a popular cell phone provider, yet are now distributing coupons through

their moble-website. They offer coupons to Hollywood Video, Domino Pizza and other well-known companies, yet the selection is relatively small. One drawback is their lack of

specialized coupons. The coupons they offer are generic coupons that can be found

through other mediums. CellFire also does not look to offer coupons to any specific

demographic of the population, and does not do research to better understand its end-

users.

Mobiqa is an English firm that offers mobile-coupons as well. They are not our current

competitors, seeing how we plan to do business in the American market, yet if we move to

international markets Mobiqa will become our competitor. Mobiqa has many divisions in itscompany, yet mobile-coupons are just a minor part. Much of their resources are not spent

on their mobile-coupon department. Their main form of advertising is tradeshow marketing,

where they attend one or two shows a months. Mobiqa uses barcodes to offer their coupons

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through their website or through text messages, yet they use QR-codes for their ticketing

department (other division of company).

The main weakness of this industry is the unawareness of mobile-coupons to the end-

users. Not many people know that coupons are currently offered through cell phones. It is

true that the end-user does not contribute directly to a mobile-coupon firms revenue, though

it is necessary for end-users to be aware of this coupon distribution option otherwise no

revenue could ever be created. There are many established coupon companies and few that

distribute in a similar medium and style to Deals on Demand. We have an advantage over

these companies due to our specified offerings to end users based on demographics and

buying patterns.

E. PRICING, GROSS MARGIN TARGETSWe are going to charge our customers based on the coupon redemption rate. At the end ofeach month, our billing department would send out invoices to customers with the numbers

of coupons redeemed. The total billing amount would be determined by the numbers of

redemptions times the dollar amount per redemption rate. Customers would also have the

option to pay with net terms such as 30 or 60 days. The two methods of payment that would

be offered to customers are electronic billing (preferred) and via check.

F. REGULATORY RESTRICTIONSThere are no regulatory limitations to advertising beyond typical legal issues. We can

advertise to virtually anyone but obviously although a minor may see magazine ads for

alcohol doesnt allow them to purchase it and the same holds true in our case. We will

continue to work and operate to the highest ethics and standards which we feel is the utmost

importance to our advertiser clients, end users and investors.

02. Company Description

A. NATURE OF BUSINESS

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We are offering a free, mobile web-based solution for mobile phones and PDAs that allows

both consumer and B2B marketers the ability to target and reach their audiences with

specific market segmentation.

Brick and mortar retailers who desire a more targeted way of distributing coupons can

collaborate with the Deals on Demand service which is an effective medium for driving

customers to their business and increasing coupon redemption rates. Unlike our competitors

our service will deliver coupons through the mobile web to a younger, more contemporary

target market.

Deals on Demand is a innovative advertising media. We provide the most convenience way

for our end user to search and obtain various coupons through their cell phones. For our

clients, we are not only helping them to reach their target customers and increase the

coupon redemption rate. More importantly, the information we obtained from the end usersthrough every usage of the coupon will give our clients the resources on making better

marketing or product strategy. Unlike our competitors, who are simply distributing the

coupons, we have added significant values to both the end user and clients.

In the United States 336 billion coupons were distributed and 3.7 billion redeemed within one

year. This translates to about a 1.1% redemption rate and about $3billion in consumer

savings, or about 81 cents per coupon. Approximately 78% households use coupons and

64% are willing to switch brands with coupons. About 80% of all coupons are issued by

manufacturers and currently almost 90% of all coupons in the US are distributed throughprint media. About 84% (251 billion) are distributed through freestanding inserts (FSIs

sheets of coupons distributed primarily in Sunday newspapers). An average US citizen

receives an estimated 850 FSIs annually.

B. DISTINCTIVE COMPETENCIES

Our core competencies include data mining, demographic information, customer data bases,

and variety of targeted coupons. Another factor that sets us apart from our competitors is the

fact that our clients (businesses) would be able to obtain immediate knowledge of coupon

redemption rate through electronic communication. Since our competitors don't yet offer

these benefits, this gives us a competitive advantage to capture the market.

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Our clients would be able to measure the effectiveness of their campaign through the

redemption rate of the coupons. This would allow them to know what people are buying, who

is buying and what can be done to push the items through the channels.

C. MANAGEMENT TEAM / EXECUTIVES

CHUNG CHAI

Chung is born in Guangzhou, China and moved toHong Kong at the age of 11. He has been interestedin having his own business since young. Chung is amarketing major student from San Jose StateUniversity. After graduated in the coming May, Chungis planning to go back Hong Kong and start pursuinghis business.

JOSH GLOVIN

A young ambitious businessman from centralCalifornia shows aptitude in creating groupcohesiveness and productivity while bringing a newperspective to current paradigms. His rescue andmaritime background root his experience deeply in

judgment and decisiveness. Two years aboard thediving research vessel Cypress Sea from MontereyCalifornia he worked side by side with underwaterfilm crews and the U.S. Naval Postgraduate School's

AUV program

FAISAL GOWANI

Faisal Gowani has a diverse set of skills. He hasbeen involved in the promotions for the bars andnightclubs scene and has a great understanding ofmarketing, coupled in part to his education at SanJose State University. Mr. Gowani holds degrees inBusiness Marketing, Business Management, &Economics.

Mr. Gowani comes from a family of small businessowners; the family has vested interest in convenientstores, gas stations, ice cream shops, dry cleaners,fast food locations, sit down restaurants and even amovie theater. Mr. Gowani has run and operatedmany small businesses in his lifetime originating fromhis first lemonade stand. Mr. Gowani has also workedin the corporate environment, and understands the

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needs of all types of business.

Mr. Gowani wrote the top seller: Profitability = HigherMargins + Efficiency. Quote from the top seller:"Higher efficiency relates to higher profitability. Thus,recognizing the needs of a business and making it

more efficient can help you become more profitable."ERIC T. LEE

Eric is a serial entrepreneur having launched startupssince 1991 including a clothing company, design firm,marketing consulting, music label, special events andentertainment, retail boutique, and real estate personally generating millions of dollars.

Eric is a marketing major armed with a Bachelorsdegree from San Jose State University, was thepresident of the Entrepreneurial Societys foundingchapter at SJSU during his time on campus and iscurrently pursuing graduate work and careeropportunities. Eric finds solitude in the arts and is aprofessional designer and musician having touredboth domestically and abroad collecting hundreds ofthousands of frequent flyer miles and sellinghundreds of thousands of units under the recordingname Dj Liquid.

ONIEL DEAN

Oniel has been working for an Investment firm for thepast 3 years, where he was involved in BusinessStart ups and Investment in Franchises.

Oniel has a degree in Business Management and iscurrently pursuing another degree in Marketing.Oniel also have a solid background in Financial andManagerial accounting. Apart from serving as apresident of Asian Pacific Islander club in FoothillCollege, Oniel has also been involved with anHIV/AIDS organization for the past 8 years.

NATALIE SUMNER

As an outgoing, part African American / partArmenian woman, I plan to go far in the future. At an

early age, I always stood out in the crowd with mybold attitude and wit. I consider myself a free spirit,whom lives for the moment and knows onescapabilities. Being a very people oriented person andmy love for travel, swayed my design some yearsback to study Business Marketing in college. In thenear future, I plan on graduating with an MBA inBusiness, take my knowledge / love for the field and

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apply it in Sports Marketing. I want to work andestablish my carrier (to become successful), travel,get married, have three wonderful boys and livefulfilling life.

MIKE SYKORA

Michael is a marketing major alumni from San JoseState University. He has an abundance of internshipexperience from many well-regarded bay areacompanies. He has over 7 hours of experience fromworking at AKT. He was also an intern at the GoldenState Warriors and helped in the achievement of theteam reaching the playoffs in over 12 years.

// MANAGEMENT TEAM / ADVISORS

RICH BURKHARD

Richard Burkhard, M.B.A, M.S., Ph.D. MIS Faculty atSan Jose State University and Student at School ofInformation Science, Claremont Graduate UniversityRich is gives great insight to the operations andlogistics model.

Richs specialties include Collaboration Systems,Technology Management, Systems Analysis,Systems Simulation, Virtual Organization, andInformatics.

WEN ENG

Wen graduated with honors as a chemical engineerfrom UC Berkeley before earning his MBA atStanford. Wen currently operates a multi-million dollarconsulting company in Silicon Valley with his wifeRonalyn Goo also a Stanford MBA.

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GUY KAWASAKI

Guy Kawasaki is a founder and Managing Director ofGarage Technology Ventures. Prior to this position,he was an Apple Fellow at Apple Computer, Inc. andsits on the board of BitPass, FilmLoop, and

SimplyHired. A noted speaker and the founder ofvarious personal computer companies, Guy was oneof the individuals responsible for the success of theMacintosh computer. He is also the author of eightbooks including The Art of the Start, Rules forRevolutionaries, How to Drive Your CompetitionCrazy, Selling the Dream, and The Macintosh Way.Guy holds a B.A. from Stanford University and anM.B.A. from UCLA, as well as an honorary doctoratefrom Babson College.

DAVE MILLS

David Mills, MBA, has 20+ years of businessexperience in research, strategy, and planning. Hecurrently owns his own consulting firm where hehelps emerging businesses hone their customerfocus, size new and potential market opportunities,position product concepts against the competition,and identify potential revenue streams.

Prior to launching his own company, Dave heldsenior management positions at Adobe Systems,where he was an Entrepreneur in Residence andSenior Director of Worldwide Research and Planning.

Before Adobe, Dave was Director of WorldwideResearch operations at Dataquest/Gartner Group. Hestarted his career in direct marketing for a largefinancial services company.

Dave's philanthropic interests center on youth,education and the performing arts. He is currently amember of the Board of Directors for the San JoseYouth Symphony.RANDAL PINKETT

Dr. Randal Pinkett has established himself as an

entrepreneur, speaker, author, scholar andcommunity servant. He is the Co-Founder, Presidentand CEO of BCT Partners, a multimillion dollarmanagement, technology and policy consulting firmbased in Newark, NJ. BCT Partners works withcorporations, government agencies and nonprofitorganizations in the areas ofhousing and communitydevelopment, economic development, human

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services, nonprofitand community technology,healthcare and education.A partial list of BCT'sclients includes: Johnson & Johnson, FordFoundation, Pfizer, the U.S. Department of Housingand Urban Development, Hewlett-Packard, Annie E.Casey Foundation and Microsoft. Randal was the

winner of Donald Trumps The Apprentice.

03. Sales & Marketing/ Marketing Plan

A. OVERALL MARKETING STRATEGY

The marketing strategy stresses our competitive advantage of offering highly targeted

advertising and coupon space and a greater variety of exciting coupons to a younger

market. We will launch this concept with a range of local and nationwide offerings. Having

end user information, like zip code, we can make offerings by geographic region reducing

limitations on our service. Additionally, we will have the ability to build scale into our

business by developing relationships with customers who have multiple locations across the

country.

The current competitors do not offer advertising or coupon space to a youth market. By

targeting these individuals, who are likely to access the system, we will increase redemption

rates. In addition to highly targeted offerings we have our user information database

collected on a voluntary, not requisite, basis when end users sign up through the website.

Our customer contact will occur within the target market through selected mediums: event

marketing, periodicals, television and trade shows. Both the events and print advertisements

will require high visibility and an intriguing premise to initiate customer and end user

participation. We will be challenged to attract both groups to our system efficiently; however,

our profitability will come from an infectious penetration and inclusion of all parties in the

redeeming and purchasing process. As more end users become interested more customers

will be willing to participate and vice versa, the process is circular and it begins with aspecific marketing plan targeting both customers and end users. We have identified four key

aspects our marketing strategy:

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1) Have a well-trained public relation team: The importance of the PR team

is to maintain quality communication with our customers. We must have a deep

understanding to their demands in order to provide the best service to them. It will

also give us opportunities on having 1 on 1 meeting with our clients to educate them

on the benefit of using our service.

2) Advertising and promotions: We will advertise our service

through various tradeshows (CES, MacWorld), events, (Hot Import Nights,

extreme sports) TV ads like on MTV, websites like (MySpace, FaceBook,

Friendster), magazines (Wired), sponsorship/ endorsement (later stages)

and campus promotions. Through these mediums, product benefits

advertising will be used. We will have to introduce our new approach to

solving a users need and comparison to the old approaches which are

insufficient.

3) Create added value for our clients: It is very important for us to maintain

the data we have collected from the end users. It helps our clients to develop

features to enhance their product and company images such as packaging, stuff

training and other sales strategies.

4) Easy access: Our service provides different solutions to our end users to

achieve the same goal- search and obtain instant coupons through their cell phones.

Therefore, we must maintain the availability of technical support, the accessibility of

service outlets and the quality of the customer service.

B. OVERALL MARKET PENETRATION STRATEGY

As a start-up in the advertising industry, our goal is to penetrate the market and build up our

reputation. In order to do that, we are waving the set up cost for our business partners. We

believe it will attract more companies to use our service at the beginning stage.

C. DISTRIBUTION CHANNELS

In order to reach our target audience (end users), our distribution channels rely on three

factors; Mobile web, our official website and search engines. Our ultimate users would be

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able to log on to our website to obtain information and direct coupons to their mobile phone.

Another way of getting coupons is through the mobile web enabled phones. Search engines

like Google would also be used so that people are able to find us on the web. Our end users

would want to use us because we would offer them coupons and savings that are more

accessible and targeted to what they would want to buy. The won't have to go through the

mess of paper coupons. They would also be able to instantly search and redeem coupons

on spot. Also, since majority of coupons have expiration dates, our users won't have to worry

about it as they would have access to all the current coupons.

To obtain clients, we would have 1 on 1 sales meeting with the customer. Since our clients

would have to be educated on the benefits of using our service, no other medium would be

as powerful as our sales force. Other channels that we are also going to be using are

business periodicals, concerts, and sponsoring events. Business would like to use us

because we would give them the ability to measure the effectiveness of their couponpromotions. They would also be able to measure the redemption rate of their coupons.

Business would also be able to get information about their targeted market. They would be

able to get information as to who is buying and what is that they are buying. Along with the

mentioned benefits, business would be able to get their name out, which in return would

increase foot traffic in their stores.

D. COMMUNICATIONS

Initially customers will have to be contacted via a direct sales force. Since our product is nota concept immediately understood (Ex: toothbrush) we will need to speak directly to decision

makers in our customer companies. Like our customers, end users will need to be compelled

to become educated about what our service can do for them. Once the understanding of our

offering spreads through reports, articles, blogs, etc. then our sales force will be reduced.

Examples of initial promotions and advertising strategies are based on exposure to increase

awareness. Billboards, banners and periodicals that create awareness and questions in the

minds of customers and end users will drive them to educate themselves on our service. By

raising questions the customer and end user are both affected by the advertisement and thiswill lead to adoption of our service.

Each of our competitors offers the same movie, food or flower coupons. By expanding this to

areas like clothing, electronics and entertainment we can capture a larger youth market.

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Also, since the information collected on each end user can be referenced to what coupons

they redeem, we can uncover trends, patterns and make predictions on future behavior.

E. SALES STRATEGIES

As the sellers of this service, we have identified two primary customer; the client advertisers

as our primary customers and the people that actually use the service, as the end users.

Strategies that we have implemented in marketing our produce are as follows (keep in mind

the demographics of the ages we are targeting):

We would go to actual retailers such as restaurants, clothing companies, etc and directly sell

our service, stating the benefits of the product and why it would be of use to them and their

establishment. Give them incentives to want to use the service and once we have gained

their loyalty, after seeing the end result, introduce new innovations.

Another sales strategy would be to exhibit at trade shows and market our service. Some

tradeshows can be CeBIT, CES, MacWorld, Wired Next Fest and others. Tradeshows give

us a great one to one opportunity to showcase advantages of using the service. Personally

connecting with, communicating and demonstrating how we stand apart as a unique,

differentiated advertising medium and innovative is important in our success.

Being that we are a new venture people are skeptical of trying our advertising service for thesimple fact that it is risk. Waiving setup fees is a sales strategy we feel that can help

decrease the advertisers risk. As marketers, it is not only our job to sell the service but also

to sell the idea. By this I mean get others to believe in what we are selling and make them

believe that they need this service in order to strive and be successful.

For our continued success Deals On Demand must continue to innovate strategies to reach

our new and existing customers and their customers and provide new ways to shift the way

they advertise and do business in the future.

04. OperationsA. PRODUCTION AND SERVICE DELIVERY

Gaining Access to our Service

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The first and primary method is via mobile web which is easily accessed from ones web

enabled mobile phone. This is available on any handset that currently has mobile web and

typically requires a user to subscribe to the mobile service which typically ranges from $0-25

a month depending on market and usage. Users can typically access most sites that are on

the internet but many are businesses are now offering a mobile optimized version of their

site for the hundreds of millions of web enabled phones in the US alone.

Figure 4.2Screen shot of mobile web homepage

The primary method is through our proprietary mobile web site accessed directly through

GetDealsOnDemand.com (see Figure 4.2 above). A user navigates our optimized mobile

website and the main different categories. The top-level main categories we have are:

Auto (Pep Boys, Kragen, Hertz, etc)

Clothing (Live2Ride, Remix, Hot Topic, The Gap, Fox Racing, Metro Park, etc)

Food (McDonalds, Chevys, Chilis, Los Altos Country Club, Starbucks, TGI

Fridays, etc)

Fun (concerts, sporting events, amusement parks, etc)

Home (Pottery Barn, Sur La Table, Target, The Cellar at Macys, etc)

Music (Target, Circuit City, etc)

Toys (Toys R Us, Game Stop, Best Buy, Circuit City, Apple store, etc)

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Figure 4.4 The wired version of our companys website

In addition to browsing for our coupons on ones mobile phone we have developed adynamic website (pictured above, Figure 4.4) which allows one to easily browse for coupons

and still capture them on ones mobile with their camera phone (Figure 4.5 below). This is

particularly useful is the user does not have mobile web service.

Figure 4.5Capture of QR code with a camera phone for storing on users device

QR CODE TECHNOLOGY

QR codes are not new but now coming into wider use. A QR Code is a two-dimensional

matrix bar code that was created by Japanese corporation Denso-Wave in 1994. The "QR"

is derived from "Quick Response", as the creator intended the code to allow its contents to

be decoded at high speed.

In May 2006 the Wall Street Journal (WSJ) published a detailed and positive article about

the value of barcode applications for camera phones and reports on the software leaders.Nokia has already incorporated barcode and QR recognition software into several of its

camera phones such as the Nokia Series 60 and Nokia 6225 that have been available in the

US since last year. However, for wireless bar-coding and QR code to really explode with

mass market penetration there has to be either one universal standard or camera phone

software has to be able to read multiple formats.

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QR Codes were initially used for tracking parts in vehicle manufacturing but the uses has

expanded and are now used for inventory management in a wide variety of industries. UPS

has adopted QR code on each shipping label. Colgate Palmolive has integrated QR codes

on their packaging on products such as Soft Soap. More recently, the inclusion of QR Code

reading software on camera phones has led to a wide variety of new, consumer-oriented

applications, aimed at relieving the user of the tedious task of entering data into their mobile

phone. QR Codes storing addresses and URLs are becoming increasingly common in

magazines and advertisements in Japan (examples shown below, Figure 4.9).

Figure 4.9 Actual

The wide use of QR Codes on business cards (see Figure 4.10 below) is also becoming

increasingly common, greatly simplifying the task of entering the personal details of a new

acquaintance into the address book of one's mobile phone.

Figure 4.10Actual sample of a business card with QR code.

QR codes have tremendousadvantages over regular one-dimensional bar codes (UPC

codes), which are typically used / found on most products in the US. These UPC have a

maximum capacity of 20 characters of information. In contrast, depending on size QR code

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can hold a current maximum of 7,089 numeric characters or 4,296 alphanumeric over 200

times the information. With this added capacity our proprietary interpretation information

system tracks a variety of valuable information including:

Mobile number of person redeeming coupon

Quantity of item purchased Sale price and discount of item purchased

Retailer purchased from and geographic location

Products purchased along with item

And a variety of other valuable information demographic and otherwise. The

possibilities are virtually limitless.

B. PRODUCTION AND SERVICE DELIVERY CAPABILTY

We can technically operate as a garage-based startup but as outlined in our budget we are

anticipating the need for a small office space where we can put the wheels in motion most

effectively. We are projecting a need for about 5,000 square feet centrally located in Silicon

Valley which can house our operations and sales team.

As our service is primarily web-based we need robust web servers immediately. The majority

of our software is expected to be hosted off-site on dedicated enterprise servers and upward

scalable as we expand.

There are really no legal or regulatory concerns. Clients opt in to our service and we do not

spam our users, nor do we send them mountains of junk mail in coupons.

C. OPERATING COMPETITIVE ADVANTAGES

One of the primary advantages we can offer over our competitors is the ability to service our

advertising clients with a variety of demographic data that is collected from redeemed

coupons.

Another large advantage we have over our competitors is that we are waiving our set-up

fees which give us an opportunity for deeper and broader market penetration.

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A third and profound advantage is that we have a much more exciting product mix of

offerings as well as a potential for much wider distribution. In addition to the previously

mentioned competencies, we offer a much broader advertising and promotions strategy in

comparison to our major competitors who include but are not limited to CellFire.com and

Text2Store.com.

D. SUPPLIERS

A tremendous advantage with QR codes is that there is no licensing fees required at least

at this time. The developer Denso Waves own website has this note. "QR Code is open in

the sense that the specification of QR Code is disclosed and that the patent right owned by

Denso Wave is not exercised."Denso Wave offers consulting and software solutions to help

integrate the code into custom solutions which would be very helpful to our company and

their software integration is part of our supply chain as more of a one-time setup fee and

occasional maintenance. .

Figure 4.11Symbol omni-directional scanners

Our data mining capabilities gives us a competitive edge that gives us a unique stance in the

industry. Many retailers already have the capability to read this with their system. If the

retailers system does not interpret the code they may simply need a software upgrade or the

purchase of new scanners (Symbol/ Motorola scanners shown above, Figure 4.11) which

are widely available from companies such as NCR and Symbol. We have a department

dedicated to the consultation and experience to help retailers integrate this technology. Thus

we do not foresee any problems in helping retailers adapt to our technology.

05.Financials

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A. PROJECTED OPERATIONS BUDGET

OPERATIONS FORECAST AMOUNT TOTALEQUIPMENT

Enterprise Web Server $5,000

WAP server $2,000

$7,000

LICENSING

Denso-Wave licensing $0

Denso-Wave Integration software $10,000

$10,000

OFFICE

Annual office lease - 5,000 sq feet at $1.5/ft 90,000

Annual utilities - $600 7200

T1 broadband line - $300/month 3600

Phone system 2000

12 desks 12,000

Reception desk 3000

12 Workstations 1000

1 server 2500

Router and switch 750

13 Herman Miller chairs 13,000

$135,050

DEVELOPMENT

Website design 5000

WAP mobile web design 5000

Data warehouse maintenance 60,000

$70,000

SUPPLIES

Paper, fax toner, etc 1000

$1,000

OTHER

Trademark 375

Assorted legal fees 5000

$5,375

SALES AND MARKETING

3 sales managers at $75,000 salary 225,000

$225,000ADVERTISING

Mass Communication (radio, tv)

Sporting events

Print (magazines)

Online (Google Ad, Yahoo ads)

Concerts

College campuses

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$500,000

B. 3 YEAR REVENUE OUTLOOK

2008 2009 20101) Market Unit Growth(Increase due to InternetRedemption Method)

72% 72%

2) Market Unit Size (InternetDistributed Coupons -Redeemed)

65,000,000 90,000,000 125,000,000

3) Market Unit Size Outlook(Growth)

65,000,000 90,000,000

4) Unit Market Share (MarketShare of Redeemed Internet

Coupons)

10.00% 20.00% 30.00%

5) Unit Market Share Outlook(Growth)

10.00% 10.00%

6) Unit Sales Outlook(Coupons Redeemed Yearly)

6,500,000 18,000,000 37,500,000

7) Unit Price (Price PerRedemption)

$0.35 $0.35 $0.35

8) Revenue Forecast $2,275,000 $6,300,000 $13,125,000

C. SUMMARY OF SIGNIFICANT ASSUMPTIONS

Our business hinges on two significant assumptions: adoption by customers and adoption by

end users. these two numbers are expressed through our advertising campaign as a

percentage of total coupon usage and percentage of internet coupon market share.

Depending on our advertising and marketing communication effectiveness will determine

how much adoption will actually occur. Currently we estimate reaching over 10 million end

users and aiming for 50 customer accounts per year. with these goals acheived by our

assumptions we will reach our revenue goals.

D. ANALYSIS

Total coupons being distributed have not changed much over the past 10 years. The

difference is in the medium by which they are offered. The majority of coupons are still (and

will be through 2009) distributed on paper. We predict that the percent of coupons

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redeemed through Internet services will raise 3.5% from now until 2009, which leads to a

72% growth rate from one year to the next in just the "Internet sector." We also feel we can

capture a large amount of this market being a front-runner in cell phone/mobile/Internet

distributed coupons.

E. PRO FORMA INCOME STATEMENT

2008 2009 2010

Revenue $2,275,000 $6,300,000 $13,125,000

COGS $300,000 $300,000 $300,000

Gross Margin $1,975,000 $6,000,000 $12,825,000

% Revenue 86.8% 95.2% 97.7%

A. Sales & Marketing Expense $2,000,000 $4,000,000 $5,000,000

% Revenue 87.9% 63.5% 38.1%

B. Research & Development $30,000 $60,000 $100,000% Revenue 1.3% 1.0% 0.8%

C. General & Administrative $1,400,000 $1,500,000 $1,600,000

% Revenue 61.5% 23.8% 12.2%

D. Total Operating Expense $3,430,000 $5,560,000 $6,700,000

% Revenue 150.8% 88.3% 51.0%

Operating Income -$1,455,000 $440,000 $6,125,000

% Revenue -64.0% 7.0% 46.7%

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07. Referenceshttp://geoinfo.amu.edu.pl/wpk/factbook/geos/us.htmlhttp://mobile.yahoo.com

http://en.wikipedia.org/wiki/Coupon

http://www.safeway.com/suppliers/usa/default.asp

http://www.couponmonth.com/

http://print.coupons.com

http://www.pmalink.org

http://www.cellfire.com

http://www.mrrebates.com

http://www.slashfood.com

Kaywa;

Mobile Actus; < http://www.mobiles-actus.com/actualite/qr-code-barre-japon.htm

>

OP3; < http://www.op3.com >

Opera Mini; < http://www.operamini.com/demo >

QR Code; < http://en.wikipedia.org/wiki/QR_Code>

SemaCode; < http://www.semacode.org >

Shot Code;

Wireless Moment blog;

Quickpons

MoBull

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http://geoinfo.amu.edu.pl/wpk/factbook/geos/us.htmlhttp://mobile.yahoo.com/http://en.wikipedia.org/wiki/Couponhttp://www.safeway.com/suppliers/usa/default.asphttp://www.couponmonth.com/http://print.coupons.com/http://www.pmalink.org/http://www.slashfood.com/http://qrcode.kaywa.com/http://www.mobiles-actus.com/actualite/qr-code-barre-japon.htmhttp://en.wikipedia.org/wiki/QR_Codehttp://www.semacode.org/http://www.shotcode.com/http://www.shotcode.com/http://www.shotcode.com/http://www.wirelessmoment.com/barcodes_and_scanning_camera_phoneshttp://geoinfo.amu.edu.pl/wpk/factbook/geos/us.htmlhttp://mobile.yahoo.com/http://en.wikipedia.org/wiki/Couponhttp://www.safeway.com/suppliers/usa/default.asphttp://www.couponmonth.com/http://print.coupons.com/http://www.pmalink.org/http://www.slashfood.com/http://qrcode.kaywa.com/http://www.mobiles-actus.com/actualite/qr-code-barre-japon.htmhttp://en.wikipedia.org/wiki/QR_Codehttp://www.semacode.org/http://www.shotcode.com/http://www.wirelessmoment.com/barcodes_and_scanning_camera_phones


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Karen Holt, Coupon Crimes Promo 17, no. 5 (April 2004) pp. 23-29

The Four Steps to the Epiphany; Steven Gary Blank; Third Edition, 2006; CafePress

Marketers Have Eyes on the Third Screen; Pfanner, Eric, Thursday March 22, 2007. New

York Times.

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