Marketing Plan
The General Market
The market for management consulting services is the entire business community. Any size firm in any industry can utilize good thinkers. Traditionally, companies in high-growth industries employ consultants to manage the growth and to compete most effectively. Companies in stagnant markets will often utilize consultants to improve performance or to discover new markets. The latter are more common than the former, although the fees commanded in servicing the high-growth industries are normally higher than those in low-growth to stagnant markets.
Client Geography
Currently, Koshu clients are primarily in the American southwest—California, Arizona, and New Mexico. The company intends to develop its Asia practice, due to the recent interest in the southwest in relationships with Pacific rim countries.
Client Industries
Koshu's current direct and indirect clients are involved in the industries of:
- Healthcare
- Health and Beauty Aids
- Management Consulting
- Publishing
Previous client industries include:
- Telecommunications
- Aerospace
- Petrochemicals
- Raw lumber and wood products
- Specialty Steel
A particular niche that the company intends to market to is that of the sole practitioner senior management consultant or small firm. Typically, a more senior consultant will leave his or her position at a large firm or will begin practicing directly after exiting an industry. These consultants often lack the analytical skills, current techniques, and basic technological "horsepower" that Koshu has at its disposal. Larger firms are a smaller target market; these consultancies tend to employ their own staff analysts. Occasionally, however, these firms sell above their capacity or are in need of particular skills, and will outsource work.
The Consulting Purchase Decision and Critical Service Characteristics
Normally, Koshu works with executive-level clients, and it is at this level that the purchasing decision is made. The company customarily works at the executive level with Presidents, and Vice Presidents of Strategy, Planning, Operations, Information Systems and Quality Control, and their respective staffs. The priority that these executives place on the purchase of consulting services usually depends on the exigency of the issues facing them at the moment, and their lack of adequate skills or staff to combat these issues. While bids and proposals are occasionally solicited, customers are more often obtained through personal relationships and referrals. A consultant's value is based on his experience, knowledge, availability, personal compatibility with the staff of the client, and price.
Seasonality
Companies are less likely to engage consultants in December or in April, due to the calendar and tax year closings. The summer months are traditionally slower for consultants; the primary seasons of engagement are spring, fall, and early winter. These observations apply to the securing of contracts; an appropriate strategy to combat seasonality is to secure long-term contracts during favorable engagement sales periods that will run through the less favorable ones. Absolute volume and growth, therefore, are constrained more by Koshu's own ability to network and promote itself by any external factors: the industry has been argued to be both cyclical and counter cyclical with the economy.
Compensation
The company currently receives monetary payment in exchange for the services it provides. The professional rates are between $75-$125 per hour, depending on the client. This price is 25-250% lower than most independent consultants charge for their services, primarily because the professionals of Koshu are between 25-30 years old, while most independent consultants are between 40-60 years old. The price is highly competitive with large firm rates: a consultant with commensurate experience would be billed out at 2-3 times Koshi's going rate. Because the professionals of Koshu were trained at these larger firms, customers receive the same level of quality and service at one third the price. Billing is performed on a monthly basis; payment is expected within ten working days of receipt of invoice.
Management intends in the future to provide its services for an equity stake in its clients, and and to eventually use the corporate identity to provide full-time executive management for developing companies with which it is involved.
Competition
Koshu's niche market of outsourced analytical work transforms its competitors into potential customers. There are tens of thousands of small and large firms in the national market. McKinsey & Company, the Boston Consulting Group, Bain & Company, Monitor, and Andersen Consulting are the prominent large national firms; each of the Big 6 accounting firms has one or more consulting practices as well. Research shows approximately one hundred small to medium-size potential customer/competitor firms in the local Tucson market.
The larger firms are successful due to several factors:
- Prestige image is aided by the employment of a young prestige-school MBA staff.
- Customer base provided by partners who are former industry executives with large contact bases.
- Efficient networking and communication is encouraged and provides a large and rapidly growing knowledge base.
- Publication of research findings and case studies enhance the company image.
Customers will choose Koshu over its competitors because they want the same quality work, but are price-sensitive. Competitors will engage Koshu because its quality matches their own, and they turn a profit even with the utilization of Koshu professionals.
Koshu does not expect to gain a large share in its current market of consulting services. As its methodology is productized, however, the packages will be unique enough to gain a large share of their particular niches.
Location Analysis
Arizona is the fourth fastest growing state by population. Consumer and commercial real estate sales are up, and Tucson's publicly traded companies yield a higher rate of return on investment than any other group of securities when judged by geographic area. Overall, the city is an ideal location.
The actual location of the offices is in premier real estate at the Tuscon Center. The company sub-leases space from and is provided office staff by The Kelsey group. The Kelsey group, have contracted almost 75% of Koshu's capacity for 1994, is the company's largest client, and the tenancy is therefore ideal for both parties. If Koshu takes on additional employees, it will be forced to find additional offices.
Marketing Approach
Because of the personal nature of the purchase decision in the engagement of consulting services, the company must utilize "high-touch" networking as its primary mode of customer acquisition. Channels most suitable for this purpose are:
- High involvement in local professional activities and
- Chambers of Commerce
- World Trade Center
- Leads Clubs
- Entrepreneur's clubs and seminars
- Small Business Administration workshops
- Service organizations (Rotary, Lions)
- Asia-related clubs and activities
- Personal acquaintances
- Referrals by current and former clients
- Former Braxton colleagues
- Cornell/Kyoto alumnae
- Athletic and religious organizations
In addition, the company intends to promote its services through periodic mailers to potential clients that will be followed up with personal interviews. If these promotional attempts fail, they will be discontinued.
As the company develops hard products, it will utilize more standard channels of distribution for software packages and books.
Balance Sheet: Business & Personal
