Marketing Plan- Pcc Essay
Protective Carbon Coating (PC) is a patented process that applies a protective grapheme coating to copper wire, retention the wire from corrosion that can cause wire failure and enhancing the wire’s electrical conductivity. As a result of its superior conductivity, a smaller diameter PC wire is able to perform the same Job as a thicker, heavier conventionally-coated copper wire. Competitive coatings (beryllium or cadmium- copper alloys) are heavier, vulnerable to corrosion, and produce highly-regulated hazardous waste products during production.
Substitute products, such as fiber- optic cabling and carbon annotate wiring are limited in function or are not yet compatible with current wire interconnect standards. The target market will be wiring manufacturers that serve aircraft manufacturers. Because of its more reliable and lighter weight protective coating process, PC will allow an aircraft wire manufacturer to differentiate itself in an otherwise commodity- like copper wiring market.
PC will be sold as a non-exclusive licensed process that provides the licensee with the technical knowledge, proprietary materials and training necessary to produce grapheme-coated copper wire that meets FAA-certified standards. A perceived value pricing strategy will support this position, as will rumination through demonstrations at major aircraft wiring trademarks, advertising in trade magazines, and in direct sales.
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The inventor of PC technology, Dry. Rodney Roof, a professor in the Department of Mechanical Engineering and Texas Materials Institute at the University of Texas at Austin, acts in an advisory role to FAT. The company has net assets of $150,000 in cash on hand. PC technology is a copper-coating process that uses grapheme to form an ultra-thin, impermeable visitation film on the surface of copper to inhibit corrosion.
When Marketing Plan- PC By schoolmarms applied as a protective coating to copper wire, grapheme is an exceptionally strong yet pliable barrier (its breaking strength is 200 times greater than steel, making it one of the strongest materials ever tested) that is ultra-lightweight, as well as thermally and electrically conductive. PC copper wire has been tested by the Federal Aviation Association (FAA) and is FAA certified for use in the aerospace industry.
FAT will not sell PC directly to aircraft wire end users (aircraft manufacturers and airline operators) but will instead offer a license to wiring manufacturers to produce it. Customers/Markets Wiring Manufacturers (Customers) Wiring manufacturers that serve aircraft manufacturers and airline operators are competing in a commodity market. Their customers have strong buyer power, and intense competition has driven margins very low. In addition, the airlines are constantly seeking better solutions to the weight and corrosion problems associated with standard aircraft wiring.
To address customer complaints regarding wiring weight, many wiring manufacturers have begun to sell fiber-optic cables for data transmission as a substitute for copper wire; however, for electrical transmission, copper wire is still the dominate technology. To help prevent corrosion of the wire that can result in electrical shorts, wiring manufacturers must coat the copper wires, typically with either beryllium or cadmium copper alloys. Use of these highly toxic heavy metals in the coating process produces hazardous waste.
As a result, aircraft wiring manufacturers are interested in licensing technology that would help them address these problems. For example, Boeing has expressed a strong interest in seeing the technology adopted by the wiring manufacturing industry. Boeing is a world leader in the aerospace industry and anticipates a market demand for the livery of 33,500 new airplanes over the next 20 years. According to the 2007 economic census there are 480 companies in the US current-carrying wiring device manufacturing market (NAZIS 335931), with an annual market size of $7. Billion, which represents a 4% increase from 2002. (See Exhibit A. ) A recent Google search displayed 71 aircraft wiring suppliers in United States, although three to four companies account for the majority of sales of wiring to the airline industry. The decision maker within these companies is often the Chief Technology Officer (COT). This person is typically highly educated with an engineering background and an in-depth knowledge of wiring technologies, components, and processes.
The COT bases his buying decisions on the efficacy of the product, demand from his customers, profit potential, and the potential to differentiate the company’s offerings from its competitors. (See Exhibit B for more information. ) Airline Operators (End Users) Airline operators are constantly striving to reduce weight in order to achieve greater fuel economy. In 2011, fuel costs accounted for 35 percent of airline operators’ operating costs, and aviation fuel prices are forecast to increase 50% over the next 20 years.
Aircraft manufacturers, commercial aircraft operators, the U. S. Military, and private aircraft owners are always seeking opportunities to reduce aircraft weight because aircraft weight directly affects fuel usage. For example, a one- percent reduction in the amount of fuel ($2. 00/gallon) used across the entire combined United-continental fleet in one year results in $42 million in savings. Copper wiring and connectors make up two to five percent of an aircraft’s total weight.
An average Boeing 747 contains about 140 miles of wiring, weighing approximately 3,500 pounds. In a move to reduce overall weight, some airlines have gun to substitute lighter fiber-optic cables in place of copper wiring for data transmission purposes. Conventionally-coated copper wiring is also susceptible to failure when the coating is breached as a result of corrosion; particularly in areas of the aircraft that are subject to harsh environments such as the landing gear and engine harnesses.
Airlines must regularly remove and visually inspect aircraft wiring harnesses in order to detect corrosion, and will often replace the entire harness to avoid the dire consequences of electrical shorts and wire failure caused by corrosion. This maintenance is typically performed once every five years at a significant cost to the airlines in terms of labor, materials, and aircraft down time. According to the 2007 Economic Census, there are 3,129 companies providing scheduled air transportation services (NAZIS 48111), with total revenue of $133 billion per year. See Exhibit C. ) Airline operators are large, complex organizations, so purchasing decisions require buy-in from top-level executives including the Chief Technology Officer, Chief Operating Officer, and/or Chief Maintenance Officer. The FAA requires that all copper wiring used in airplanes meet certain specifications in order to be considered FAA-certified, and therefore copper wiring is a commodity item for which price is the main factor affecting the airline operator’s purchasing decision.
When considering a new wiring technology, the top-level executives require that the technology be FAA-certified and rigorously tested for safety and performance. They purchase their wiring components in large quantities directly from wiring manufacturers. The airline industry is extremely competitive because their end-users (airline passengers) have ready access to competitor pricing, which drives ticket prices down and squeezes airline margins. Industry FAT will compete in the metal coating, engraving (except Jewelry and silverware), and allied services to manufacturers industry (NAZIS 332812).
This industry uses multiple methods to coat metal and metal products; including aluminum coatings, pondering metal, flocking metal and gallivanting metal. The industry consists of 2,579 participants, with a total of $14. 4 billion in revenue in 2007 representing a 49% increase in revenue from 2002. The threat of rivalry is low in this industry, as there are very few companies providing wire coating services to airline wiring manufacturers and there is no single dominant player among aircraft wiring manufacturers.
The threat from new entrants is also low because the amount of research and development required to devise a new coating technology is a significant barrier to entry. However, the threat from substitute products is high. In addition to conventionally-coated copper aircraft wiring, there are some different technologies that can be substituted to perform the same Job, including fiber-optic cabling and wiring made from sheets of carbon annotates. Because the chemicals required to create the coating tort aircraft wiring are commodity materials, supplier power in this industry is low.
Buyer power is moderate to high as aircraft manufacturers are very price sensitive. Taking into account these factors, the overall attractiveness of this industry is 4 out of 5. Competition All wire used on aircrafts must be coated in some manner to protect the wire against corrosion. FAT holds the exclusive license for PC technology, so there are no other competitors that provide a process for coating wires with grapheme. However, there are a number of coated wire alternatives available to wire manufacturers and airplane operators.
Directly Competing Technologies: Conventionally-coated copper aircraft wiring (using cadmium or beryllium-copper alloys) has been the market-standard since the asses, and while the technology has limitations (degradation due to aging, chafing, etc. ); it remains a robust, adequate solution. Wiring prices range from $. 10 to $10. 00 per foot, based on gauge size (the diameter of the wire. ) Cadmium and beryllium are heavy metals that are toxic to humans and the environment. European Union regulations already ban the use of cadmium, and wiring industry experts anticipate that the U.
S. May publish similar regulations in the future. There are no regulations banning the use of beryllium at this time; however, future regulations are also anticipated. Substitute Products: Fiber-optic technology, as a substitute for traditional copper wiring, is emerging as a fierce competitor in the aircraft wiring industry. In January 2011, the US military announced it is developing prototype photonic gear for use in all aircraft that could replace current aircraft wiring with a single-mode fiber-optic network, where each fiber carries multiple digital and analog signals.
Fiber-optic cabling reduces the diameter of the wiring bundle by 50% compared to copper wiring, which requires an increased diameter to provide electro-magnetic shielding (MI). Fiber-optic cabling is ritually immune to MI problems and provides a smaller, faster, lighter solution. However, fiber-optic cabling is not a complete solution because, unlike copper wiring, fiber-optic wires cannot be used to transmit electric power. This limits the function of fiber-optic cabling on aircrafts to communication tasks. Carbon annotate wires may also emerge as a viable aircraft wiring industry competitor.
One company, Noncom, is in early stage development to fabricate carbon annotates into physically strong, lightweight, electro-thermally conductive spun yarns and sheets that may be rolled into wires. According to a carbon annotate wire expert, annotate wiring can be used in place of traditional copper wiring, obtaining as good or better electrical performance with significantly less weight (at about 20 percent of the weight of the same volume of copper wire). Compared to PC wires, carbon annotate wires are significantly lighter.
Like PC wire, carbon annotate wires provide great electronic conductivity and are not susceptible to corrosion. Carbon annotate technology is still in early stage development, so the compatibility between carbon annotate wires and existing wiring and connecting systems on airplanes remains a question. The price for carbon annotate wires is expected to be high. Context Fuel Prices Global fuel prices have been trending upward over the last decade, with crude oil regularly topping $100 per barrel. The International Air Transport Association estimates the average price paid at the refinery for aviation Jet fuel to be $128. 0 per barrel. This represents a $61 billion increase in global airline fuel costs in 2011 compared to the previous year (See Exhibit D). This sharp increase in fuel costs has forced the airline industry to seek new ways of reducing fuel consumption. Any crease in weight can translate into large cost savings for the airlines. New Emphasis in Industry Towards Improved Wiring Standards The Aging Transport Systems Relearning Advisory Committee (ATSC) recently finished a multi-year project aimed at making recommendations for new laws.
In this study, ATSC went into business and commercial aircrafts to check and test wiring for deterioration. As a result of this inspection effort, the aviation industry and government realized that substantive changes needed to be made. Tactic’s recommendations included research and development of wiring properties, changes o design, installation and maintenance practices, and improvement of testing, training and inspection procedures. In addition, other emerging regulatory standards are taking aim at aircraft wiring systems.
The relatively new Electrical Wiring Interconnection System (EWES) regulation addresses the decisions made during the system integration process, as well as subsequent maintenance and service of the resulting wire harnesses. As a result of the ATSC study and regulations like EWES, there is a renewed emphasis in the airline industry towards improved wiring standards. Precious Metal Prices Like many other precious metals, the price of copper has been increasing over the past decade (See Exhibit E).
An average Boeing 747 contains about 140 miles of copper wiring, (approximately 3,500 pounds. ) Any technology that can reduce the amount of copper wiring required would be extremely beneficial to the airline industry. Environmental Concerns The wiring industry currently uses beryllium and cadmium copper alloys to protect against corrosion. These materials are documented environmental hazards that are costly to remove. Cadmium is already banned in Europe and there is eminent in the industry that both cadmium and beryllium will be banned in the U.
S. Soon. There is a high level of interest in the wiring industry for corrosion resistant coatings that do not produce hazardous waste. Potential for Patent Litigation Grapheme is a new and promising material with new uses being announced every month by research institutions and corporations in the U. S. And around the world. Patents relating to this new material are being filed at a fast pace with seemingly similar claims. (See Exhibit F). It is likely that this area may become highly litigated, which could prove costly for our company.
Collaborators Boeing has worked closely Witt the inventor since the research phase to this technology. The company has assisted with testing and benchmarking of the PC wiring in their labs and aboard test aircraft. This testing helped the PC wiring achieve FAA-certification and provided the basis for much of our product’s technical specification and procedural documents. Boeing also assisted with writing the technical compliance specifications for PC wiring. As a result of the collaboration, Boeing has expressed significant interest in PC wire. Market Potential
The potential market for licensing the PC technology is part of the current-carrying wiring device manufacturing industry (NAZIS 335931). This industry consists of 434 companies in the US. Within this industry, there are approximately 71 companies that serve the aircraft manufacturers and airline operators. The total market potential for the PC technology is 71 licenses, with potential annual royalties on 41 feet of PC wiring installed on new aircraft and 34,025,376 feet of PC wiring used to replace corroded or damaged conventionally-coated wires on existing aircraft. Ill. Opportunities and Issues Analysis
External Opportunities Aircraft Users As indicated above, aircraft manufacturers, commercial aircraft operators, the U. S. Military, and private aircraft owners are always seeking opportunities to reduce aircraft weight because aircraft weight directly affects fuel usage. Moreover, corrosion and the possibility of wiring malfunctions in flight present a safety hazard and major concern. PC technology offers aircraft wiring manufacturers the ability to reduce the weight of their products, while maintaining the same conductive performance and reducing performance problems cause by corrosion.
This reduced wiring weight will save fuel costs, and will be a value added for all aircraft operators. Metal Prices Although the use of the PC technology will not eliminate copper, the PC wire enhances the electric conductivity of copper wire, which will allow the wiring manufacturers to reduce the gauge size (diameter) of the wire, thus reducing the manufacturer’s cost of materials. Environmental Concerns There wiring industry is very interested in corrosion-resistant coatings that do not require the use of toxic chemicals or produce hazardous waste. Macro Environment and Collaborators
Through our alliance with Boeing to performance test and obtain FAA certification for the PC technology, Boeing expressed a strong interest in seeing the technology adopted by the wiring manufacturing industry. Commodity Market The aircraft wiring is viewed as a commodity among aircraft manufacturers and airline operators. There are a number of leaders in the industry, but all manufacturers can supply FAA certified wiring to the aerospace industry. Therefore PC could provide aircraft wiring manufacturers with a true competitive advantage, the ability to produce differentiated aircraft wiring.
External Threats The aerospace industry and the U. S. Government continue to study advancements in wiring technologies to improve performance, reliability, and weight savings. Carbon annotate wiring will be a threat, provided the technology can achieve a scalable production capability, and a reliable installation and compatibility process. Traditional wire coating companies will perceive PC as a threat, and will most likely reduce pricing to the wire suppliers and wire manufacturers. Many copper wire manufacturers also assemble fiber-optic products for the aerospace industry.
The fiber-optic technology industry will look to improve the durability of the technology to compete with PC copper wiring. Internal Strengths The PC process is patent protected, and has been certified by the FAA for use on all U. S. Registered aircraft. The process is safe, does not use toxic chemicals and produces no hazardous waste. PC technology is consistent with the industry pursuit of improved standards and practices, without requiring significant changes to current procedures. Internal Weaknesses FAT is a start up company with only $150,000 in cash resources at this time.
This will inspiration the firm’s ability to reach out to potential customers. PC technology still relies on the use of copper and copper-alloy metals as the base, and therefore is not as lightweight as the emerging carbon annotate wiring technologies. Even though fiber-optic cables cannot fully replace the need for copper wiring on airplanes, fiber- optic cabling is already available and installed for signal transmission purposes on some airplanes. The aerospace industry may not wish to absorb the cost of replacing fiber cables and connectors with PC wire, which will reduce our market penetration potential.
Key Issues Summary There is a major problem among potential customers that the PC technology can address better than competition. Aircraft wiring manufacturers are seeking non- toxic methods to address airline operators’ concerns about weight, fuel, and corrosion. For example, Boeing is pushing wiring manufacturers to pursue technologies across their product line that will reduce weight and maintenance downtime in order provide greater cost savings. Moreover, aircraft wiring manufacturers constantly face margin pressure because of the commodity nature of their product.
PC technology can be licensed to aircraft wiring manufacturers to reduce FAA-certified wiring that addresses their concerns for weight and corrosion problems without producing hazardous waste products. ‘V. Objectives Financial Objectives To achieve a net profit margin of $4. 7 million in the first year of launch. Marketing Objectives In the launch year, our company goals are to: * achieve 100% awareness of the PC technology among the top 10 U. S. Wiring manufacturers by market share. * achieve 100% awareness of the PC technology among U. S. Aircraft manufacturers and airline operators. , * reach a non-exclusive license agreement with one leading wiring manufacturer, and one trial agreement tit a second manufacturer. V. Marketing Strategies Segmentation and Targeting We will target wiring nutcrackers who sell primarily to aircraft nutcrackers and airline operators. This segment is especially attractive for the following reasons: First, this target has a compelling reason to buy. They currently sell an undifferentiated commodity item in a highly competitive industry with low margins.
Their customers are not satisfied with the weight and failure rate of traditional copper wiring and are actively seeking solutions that can reduce their fuel and maintenance costs while keeping them in compliance with current and future wiring isolations. Second, as indicated above, this is a large and growing market, both in terms of new aircraft manufacturing and older plane maintenance. Third, competitive intensity is low; there are few competitors who can deliver a comparable solution. Finally, there is good market access (Boeing will provide an entry).
Company fit may be a challenge given the start up nature of the business and the large size of the market. However, this market segment is small compared to the entire wiring manufacturing market, with three to four companies accounting for the majority of sales of aircraft wiring. The rate of adoption by this segment should be high because PC technology is FAA-certified, easy to understand and use, easy to try, appears superior to other methods, matches their current experience, and provides a result that is easily observable by others, which should translate into positive word of mouth. See Exhibit G for more details. ) Differentiation Our target wire manufacturer customer is seeking a process to safely produce coated wire for airplanes that is less vulnerable to corrosion and lighter in weight than standard copper wire that associated with heavy metals like beryllium or cadmium. The PC process that is available for license produces a superior wire coating with three qualities that are important to the wire manufacturer.
First, PC forms an impenetrable barrier around the wire, which stops the wire from corroding and failing after it is installed on an airplane. Second, PC enhances the wire’s ability to conduct electricity so substantially (compared to standard coating materials) that aircraft manufacturers are able to use a smaller diameter, lighter-weight carbon- coated wire to perform the same Job as thicker and heavier conventionally-coated wire. Finally, PC can be applied by the wire manufacturer without toxic chemicals or hazardous waste.
Positioning Statement For wiring manufacturers that serve aircraft manufacturers and airline operators who are dissatisfied with fielding complaints regarding wiring failures and the weight of the wire; disposing of toxic waste generated by manufacturing the wire coating; and competing in a commodity-like industry with constantly shrinking margins and increasing competition from substitute products like fiber-optic cabling and wires made from sheets of carbon annotates; PC is a method to produce lighter weight, sees corrosive FAA-certified aircraft wire.
Unlike standard wire coatings that use beryllium or cadmium, and are susceptible to corrosion and add to the overall weight of the wire, We have assembled a protective grapheme coating process for wire that produces a coated wire in a non-toxic process that results in a better-protected, more reliable, lighter coated wire. Unlike substitute products that compete with coated wire, such as fiber-optic cabling or wires made from carbon annotates, the grapheme coated wire is not limited in I TTS donation like ;beer-optic cables that are unable to induct electricity and does not require new EWES standards like wires made from carbon annotates.
Marketing Mix Product Strategy It is recommended that the PC technology be sold to aircraft wiring manufacturers as a non-exclusive license. FAT will provide licensees with the technical knowledge, proprietary information, and training necessary to produce FAA-certified PC copper wire in their existing manufacturing facilities. Engineering assistance will be provided to licensees during the equipment assembly process to ensure that all necessary equipment is properly installed to the appropriate scale.
Licensees will eave the non-exclusive right to use our patent protected processes for a negotiated term and will receive technical support as needed throughout the term. It is important to note that licensees are purchasing a licensed process, not a finished product, and therefore no warranties are made regarding the final output of PC wiring in the licensee’s factory although technical support will be provided to ensure that their finished product is made to specification. Price To calculate the price for the PC technology license and royalty fee, FAT has calculated an estimated economic value.
Exhibit H follows the value from FAT to he end user. Exhibit I calculates the economic value. PC technology will be priced based on a percentage of the future benefit it provides. The PC wire will be priced somewhat higher than conventionally-coated wiring, but the difference is Justified by the weight savings and reduction in maintenance costs attributable to PC wire. License fee: A normal aircraft-wiring manufacturer can produce 1000 miles of aircraft wire per year. We would like to take 40% of the ten-year benefit from the technology in advance as a license fee.
This calculates to 4 million per license. See Exhibit I for explanation. Royalty fee: FAT Inc. Will charge 50% of the increased revenue from PC wiring relative to the revenues for conventionally-coated wiring that the wiring manufacturer receives, which is $0. 83, as a royalty fee per foot of wire. Place Non-exclusive licenses for PC technology should be distributed through direct sales and marketing channels only. Demand generation, demand fulfillment, after-sales service, and feedback should all be handled directly by FAT.
This direct strategy fits well with the small, highly knowledgeable target market, while allowing our company to maintain a high level of quality control. The decision to pursue non-exclusive license agreements strategically positions FAT and PC technology for maximum market penetration. Retaining the right to pursue more than one potential partner allows FAT the advantage of finding multiple compatible licensees which will result in increased sales, advertising, and market penetration.
FAT will build upon its alliance with Boeing to meet with major aircraft wiring manufacturers that supply Boeing. We will seek strategic alliances Witt other major aircraft nutcrackers including Airbus, Lockheed Martin, and Bell Textron for product improvement information and industry-wide adoption. Promotion/Communication We will pursue multiple promotion/communication strategies in order to generate awareness, knowledge, preference, and purchase of a non-exclusive license to manufacture PC wiring.
The majority of our efforts will be directed towards the top 10 wiring manufacturers that supply the majority of wiring to aircraft manufacturers and airline operators, with an emphasis on personal selling/direct marketing. This strategy will allow for maximum awareness and knowledge in our target market segment. Emphasizing the benefits of the technology in terms of increased reparability and differentiation will help to develop a positive attitude toward the product and ultimately end in a purchase.
Purchasing a booth at the top two wiring industry trade shows coupled with minimal targeted advertising in the top two industry publications will allow for maximum reach and increased awareness and knowledge. Promotional materials for the trade shows should be developed to highlight the key benefits of PC technology as it relates to both the wiring manufacturers and the end-users of the product. The first sale of a license is the most important, as it will lend credibility to FAT and PC genealogy, and other manufacturers are likely to follow the leader in order to maintain competitiveness in their highly competitive industry.
In order to facilitate this first sale, we will offer manufacturers a one-time license fee discount of 10% should they purchase a license in the first month. It is also important to generate awareness, knowledge, and preference among aircraft manufacturers and airline operators. Boeing has been involved in the evaluation and testing of PC wiring and already has extensive knowledge about the product and its performance. As Airbus is the only other major passenger aircraft manufacturer, further effort should be directed towards the company to generate awareness and knowledge.
This can be achieved both directly and via public relations/publicity. Communicating with the end-users of the PC product will result in increased demand from wiring manufacturers for the technology, as the end-users will likely speak to their wiring sales representatives asking for PC wiring. VI. Research Next Steps FAT will conduct more market research to better define how the end user learns about PC and the reasons that the end user decides to install PC wiring on the airplane.
Interviews of at least 30 end users and potential end users will need to be conducted and comparative analysis of different products will be performed to ensure that the value proposition of using PC as a substitute to conventionally- coated aircraft wiring remains high. FAT will follow market trends and emerging environmental regulations that may positively or negatively impact the adoption rate of PC. FAT will begin early market research into automobiles and maritime applications by beginning interviews with chief technology officers (or similar military ranking) in those markets and probing to learn how to make an entry into these new