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ASSIGNMENT COVER SHEET

STRATEGIC MARKETING PLAN FOR green fuel

An example of an average 25/50 assignment

OVERVIEW

The attached report is an overview of the marketing audit report of the E-Co fueling business, its

environment, the industry that the firm is in as well as the issues and challenges that the firm

faces in order to sell and market its products and services to its customers.

E-Co fueling has a technology that has been developed to meet one of the many demands for

alternative sources of energy. The company provides energy solutions for diesel engines in

transportation, agricultural, mining and power generation sectors by increasing their efficiency

and lessening the impact of emissions, ensuring that the engines last longer and contributing to

lessening dependence on fossil fuels. Viewed 28 July 2011 <www.e-cofueling.com>

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According to E-Cofueling, apart from the fuel efficiency and associated benefits, companies that

will adopt and start utilizing this technology will have carbon trading credits that they can use to

offset emissions, start a green company campaign or sell as they wish for cash. The firms’ next

generation systems will also allow carbon tracking and will manage the process for clients.

Viewed 25 August 2011 <www.e-cofueling.com>

However the firm faces major challenges and issues in its quest to realize the dream of being a

major player in the alternative fuels industry in both Australia and Brazil, where its based. Some

of the issues include unproven technology, a marketing team that is not very strong, lack of

financial resources to sustain their research activities as well as very strong competitors who are

already rolling out similar products. The firm is also faced with product competition in the form

of alternative products like electricity and hydrogen that might end up being a direct threat to the

firm’s business model. The firms’ main challenge is to ensure that its technology stands out and

is marketed as one of the main alternative products to fossil fuels.

EXECUTIVE SUMMARY

This marketing plan and action planning report examines how the E co Fueling Company will

market their product in order to penetrate their identified target market as well as counteract the

business issues identified in the marketing audit, as summarized in the overview above.

The world is facing an energy crisis because of over reliance of fossil fuels and the emergence of

and development of alternative fuels has become a matter of strategic importance for most

governments in order to ensure economic as well as social stability in their countries.

The E-Co fueling Company technology is one of the many technologies that are being developed

in order to meet the demand for alternative sources of energy. The firms’ main challenge is to

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ensure that their offering stands out and is marketed as one of the major alternative products on

the market.

The report will focus on the following:

1) Background of the firm and industry

2) Situation analysis

3) The firms strengths, weaknesses, opportunities and threats

4) Company and marketing objectives

5) Target markets

6) Marketing strategy

7) Marketing tactics and contingencies

8) Conclusion and recommendations

TABLE OF CONTENTS

Page

OVERVIEW (SUMMARY OF MARKETING AUDIT) 2

EXECUTIVE SUMMARY 3

1. Introduction 5

2. Situation analysis 6

3. TOWS Analysis 8

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4. Company and Marketing Objectives 9

5. Target Markets 10

6. Marketing Strategy 11

7. Marketing Tactics and Contingencies 14

8. Conclusions & Recommendations 17

LIST OF REFERENCES 18

1. INTRODUCTION

This marketing plan examines the business potential of the E-Co fueling diesel engine retrofit kit

technology in the Australian and Brazilian market where the company has its bases and makes

recommendations on how best the company can go about marketing its technology in the most

efficient and cost effective way.

The E-Co fueling company was formed with the aim of providing energy solutions for diesel

engines through reducing fossil fuels, increasing efficiencies and lessening the impact of

emissions. The firm is targeting companies, municipalities, agencies, farms, villages and

individuals to install diesel engine retrofit kit in their equipment engines which will result in a

number of benefits such as increased fleet fuel economy, horsepower and torque as well as a

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reduction in emissions depending on engine age and type. In addition, by utilizing this

technology companies will have carbon trading credits that they can use to offset emissions, start

a green company campaign or sell as they wish for cash.

E-CoFueling has evaluated numerous alternatives to achieve the benefits as outlined above. The

development of the internationally patent pending EXD achieves these objectives while also

operating a cooler exhaust that laboratory tests show can contribute to longer engine. Viewed 25

September 2011 <www.e-cofueling.com>

There are so many alternative fuels technology companies in the industry, making it very

competitive. Our TOWS analysis concluded that the market is very attractive, even though E-

CoFueling is one of the weaker firms in the industry because of being a late entrant, unproven

technology and having a weak marketing team. We will thus outline possible strategies that the

firm could use to ensure its products gain a market share in this industry.

2. SITUATION ANALYSIS

Market Analysis

In general there has been a trend and awareness the world over to reduce carbon emissions and

because of this most people prefer to buy low carbon emission diesel cars. The Australian

government passed a carbon tax bill in Parliament on the 12th October,2011 that will force 500 of

the biggest polluters to pay for each ton of carbon dioxide emitted and will eventually turn into

an emissions trading scheme when fully operational.

Viewed 17 October 2011<http://www.bbc.co.uk/news/world-asia-pacific-15269033>

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Competitor Analysis

E-CoFueling has a number of alternative fuel technology companies that are direct competitors.

In Brazil for example, Iveco FPT Industrial and Bosch commissioned an Iveco Trakker Bi-Fuel

Ethanol-Diesel vehicle that can run on an ethanol and diesel mixture with lower fuel costs

compared to a conventional diesel engine. viewed 26 August

2011<www.greencarcongress.com/2011/05/iveco-trakker-bi-fuel-ethanol-diesel-truck-for-

brazil.html>.

Clean Flex Power Systems, based in Nebraska, USA but worth mentioning because of they

produce similar technology and their prices are competitive developed a system for bringing a

mixture of ethanol and water to a diesel engine just before the point of combustion, increasing

the diesel engine’s efficiency and reducing emissions. The fuel and the retrofit are available for

an estimated price of $5,000 to $7,500, depending on the vehicle and the engine. Viewed 29

September ,2011<http://cleanflexsystems.com/?page_id=15>

<http://www.ethanoltoday.com/index.php?option=com_content&task=view&id=5&Itemid=6&fid=70>

One of the most competitive companies, also based in the US,H2Booster, claims that their

technology can reduce emissions up to 50%, reduce gas mileage by 50%, horsepower by up to

15% and boost torque by up to 8%. Their prices range from USD 595 for an SUV to USD 2495

Viewed 17 October 2011<http://h2booster.com/Diesel-Emissions-Retrofit-Kits_c5.htm>

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Another competitor, based in Australia is called Terra Fuel Technologies. They are also at a very

advanced level in terms of testing and taking their technology to market Viewed 17 October

2011<.http://www.lgfocus.aus.net/index.php?view=editions/2008/april/fuel>

Customer Analysis

E-CoFueling is targeting companies, municipalities, agencies, farms, villages as well as

individuals in the list of its potential customers that will purchase its retrofit kit. Because of the

type of market that the firm is playing in this would mostly fall into the category of benefit

segmentation as their potential customers look more at the benefit that they will accrue from the

product. It would also be beneficial for the firm if it could tie up a partnership agreement with a

diesel engine manufacturer as ultimately this is the market that it is trying to service.

According to the International Atomic Agency renewable energy sources and alternative fuel

sources will play a central role in providing a much more reliable and sustainable energy path in

the world and will see market share increase globally to at least 8% in road transport fuel

demand by 2035. The biggest challenge lies in the development of these fuel sources and

alternatives as the processes are capital intensive. Viewed 25 August 2011, <

www.worldenergyoutlook.org>

3. TOWS ANALYSIS

The following TOWS table indicates strengths, weaknesses, opportunities and identified in E-

CoFueling and their possible solutions

TOWS ANALYSIS (Figure 1.)

Strengths-S Weakness-W

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1. New Technology 1.Unproven technology2. Ready availability of ethanol 2.Weak marketing team3.Carbon credit programs 3.Technology testing lagging

behind4.Kyoto Protocol

O-Opportunities SO-Strategies WO-Strategies1.Green technology easily embraced

Aggressive marketing (S1,O1) Hire professional marketing team(W2,O1)

2.High fossil fuel costs Take advantage of situation(S2,O2,O3)

3.Finite fossil fuel resources4.Government support programs Capitalize on carbon credit

programs by signing up customers(S3,O4)

Capitalize on carbon credit program(W3,O4)

5.International protocols

T-Threats ST-Strategies WT-Strategies1.Alternative products like electric and hydrogen

Market technology better (S1,T1)

2.Patents might not be granted3.Main competitors already teamed up with big companies and already testing

Look for a partner in industry, maybe second largest producer ( S2,T3)

Find partners to test products with (W3,T3)

4.Limited of R&D capital compared to competitors

4. COMPANY AND MARKETING OBJECTIVES

Company Objectives

E-CoFueling has successfully completed tertiary laboratory testing and infield trials in Michigan

(USA), fleet trials in Australia, technical presentations at Caltech, USA and completed an

Australian Government commercialisation grant. Through the Australian federal government-

sponsored COALAR Clean Energy Trade Mission to Latin America, the firm finalised their

corporate structure in Brazil. Investor discussions have taken place and alliance partners are

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keen to conduct the technology validation and scale ROI-based rollout plans on the current

technology, alongside of accelerating the research and intellectual property pathways for the

technology's next generation.

E-CoFueling acts on the premise that there is no single solution to the Diesel equation and that

each will have their niche. It is the firms’ belief that its technology can play its part in a country's

energy security platform by using home-made energy sources, such as Ethanol.

Marketing Objectives

Thus with the firm strategy of operating in a very attractive market but the firm itself being weak

in terms of its marketing, still to be proven technology and technology testing which is lagging

behind, the firms objective would be to capture at least a 10% market share in both the

Australian and Brazilian markets by positioning itself as a cost leader. The firm will aim to do

this by selling 9000 number of units and breaking even by the end of its first year of operations

5. TARGET MARKETS

The number of vehicles registered with diesel fuel in 2011 accounted for 14.7% (or 2.4 million

vehicles) of the total vehicles in Australia. A greater numbers of Passenger vehicles and Light

commercial vehicles registered with diesel fuel were the major contributors to this increase.

While the number of Passenger vehicle registrations increased by 11.9% between the 2006 and

2011, the number of Passenger vehicles registered with diesel fuel increased by 102.2%.

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Viewed 15 October 2011 < http://www.abs.gov.au/ausstats/abs@.nsf/mf/9309.0>. In general

there has been a trend and awareness the world over to reduce carbon emissions and as a result of

this most people prefer to buy low carbon emission diesel cars.

Using PESTEL factors identified in our marketing audit, which included the political will as seen

from the passing of the carbon tax bill in Australia and the fact that Brazil is one the foremost

countries in terms of renewable energy technology, the firm can now go ahead and position itself

as a cost leader in order to penetrate the market and gain market share. The strategies used will

be discussed in the following chapter.

6. MARKETING STRATEGY

Market Strategy

We have used Ansoff Matrix (below) to determine E-CoFueling strategy for growth

  Existing products New products

Existing markets Market Penetration Product development

New markets Market development Diversification

We have thus decided to focus on market penetration as our strategy. Our focus will be to ensure

that we adopt an aggressive pricing strategy, increase customer awareness through increased

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advertising spend and strengthen our sales and marketing team. We are confident that by

adopting this strategy we will eventually be the cost leader in the industry. We have deliberately

adopted Cost leadership, one of Michael Porters three generic strategies for competitive

advantage; because we know that we have a good quality product which we can market at a

lower price than our competitors.

Marketing Mix

Now that we have decided our marketing strategy, our next step is complete our marketing

objectives for each of the marketing mix primary elements, namely Product, Price, Place and

Promotion. Our main driver here is to use market segmentation as a guiding principle.

Product

Our product is being marketed as an emission reduction technology that has been successfully

trialed infield and can be used with diesel or biodiesel, and has proved to be great alternative to

other emission products Viewed 17 October 2011<http://www.e-cofueling.com>. While this is a

good description, it lacks description of the features and benefits of the product. We have

decided thus to add the following:

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“Our customers who purchase the retrofit kit will experience increased fleet fuel economy,

horsepower and torque as well as a reduction in emissions, demonstrated as a cleaner tailpipe

exhaust. By utilising our technology they will have carbon trading credits that they can use to

offset emissions, start a green company campaign or sell as they wish for cash”

We believe the above add will best describe our product to our potential customers.

Price

Having decided to go with a market penetration strategy that involves pricing our product on the

lower end of the scale in order to gain market share, our next step is to find a manufacturer that

will assemble the units in a cost effective way. Our units will be manufactured in China. We

believe we can manufacture the units at 50% cheaper to our competitors. We have signed a 3

year manufacturing agreement with a company in China that has agreed to keep the unit price

fixed for a three year period. The import costs into Australia and Brazil of the assembled units

will be minimal because of the of the carbon tax credit tax initiative attached to the project. We

have thus set our pricing at A$499 for the cheapest unit to the A$1499 for the most expensive

unit. Our aim is to sell 500 units every month in the first six months and increase that number to

1,000 units per month from month seven to twelve. We then forecast our sales to increase by

10% year on year from year 2 of operations.

Place

We have decided on a very ambitious distribution strategy that will involve online sales, using

signing up fuel service stations and garages as dealerships on a sales commission basis. Our aim

is to make the retrofit kit as accessible as possible. We intend to pay our sales consultants a 5%

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sales commission on sale price, rising to 7.5% on a sale of 10 units or more. We believe this

strategy will motivate them to sell more units.

Promotion

Our promotion strategy is also going to be market savvy, brave and extremely ambitious. We

intend to act like a global company while thinking local. We will advertise on an easy to use

interactive website where customers can leave comments, we will advertise on face book, twitter,

MySpace or any other relevant social media. We also intend to put out billboards in our target

cities that will have localized adverts targeted at our customers. In short we want maximum

visibility for our product. We have already appointed a leading marketing, advertising and public

relations firm to lead us in this effort.

7. MARKETING TACTICS AND CONTIGENCIES

Budgets

The following is the estimate of the budget required to implement the marketing plan.

Description Cost Quantity p.a. Total

Staff expenses:

Staff overtime $ 2400.00 12 $ 28,800.00

Staff training $ 300.00 10 $ 3,000.00

Total $ 31,800.00

Admin expenses:

Printing forms $5,000.00 4 $ 20,000.00

Office expenses $ 1,000.00 12 $ 12,000.00

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Total $ 32,000.00

Marketing

expenses:

Meals & entertain. $250.00 12 $ 3,000.00

Advertising $ 1,000.00 12 $ 12,000.00

Websites, internet etc $ 500.00 12 $ 6,000.00

Trade shows $ 250.00 4 $ 1,000.00

Travel costs $ 2500.00 12 $ 30,000.00

Accommodation $ 2500.00 12 $ 30,000.00

Promotional gifts $ 3500.00 4 $ 14,000.00

Total $ 96,000.00

Total Budget $ 159,800.00

Implementation

Objective Responsibility Start date Completion date

Staff recruitment MD 01/11/11 15/12/11

Staff training Marketing Manager 20/12/11 30/12/11

PR Consultants engagement MD 15/01/12 31/01/12

Printing forms & brochures Marketing Manager 15/01/12 31/01/12

Website/viral advertising Marketing Manager 01/02/12 28/01/12

Advertising campaign 1 MD 01/03/12 30/04/12

Austrade Green Expo Team 15/04/12 22/04/12

Rio Diesel Machinery Expo Team 09/07/12 22/07/12

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Advertising Campaign 2 MD 08/06/12 23/06/12

Financial forecasts

The Profit and Loss statement below is based on E-CoFueling having two units costing

A$499.00 for the lower end unit and A$1,499.00 for the premium unit (average A$999.00 per

unit) . Our total forecasted sales units will comprise 50% of each product. Our aim is to sell 500

units every month in the first six months and increase that number to 1,000 units per month from

month seven to twelve. Forecasted units for year 1 will therefore be 9000 units. We then

forecast our sales to increase by 10% year on year from year 2 of operations. Forecasted units in

year two will therefore be 9,900 units and year three 10,890 units. It will cost us 50% of the

average unit sales price to fully manufacture the unit and another 7% combined for shipping,

customs and other import costs from China to either Australia or Brazil. The assumption is all

costs will increase year on year by 10%.

Profit and Loss Statement

P&L Statement Year 1,2011, ($) Year 2,2011, ($) Year 3,2011, ($)

Units sold 9,000 9,900 10,890

Avg. sell price A$999.00 A$1,099.00 A$1,209.00

Sales A$8,991,000 A$10,880,100 A$13,166,010

Less cost of sales A$ 4,495,500 A$5,440,050 A$6,583,005

Less Duty &Customs A$ 629,370 A$761,607 A$921,620

Gross Profit A$ 3,866,130 A$ 4,678,443 A$5,661,385

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Less Total Expenses

Staff salaries A$1,200,000 A$1,320,000 A$1,452,000

Marketing costs A$ 159,800 A$175,780 A$193,358

Office rentals A$ 144,000 A$158,400 A$174,240

Sales commission A$ 674,325 A$741,758 A$815,933

Security A$ 120,000 A$132,000 A$145,200

Loan repayments A$ 480,000 A$480,000 A$528,000

Transportation A$ 120,000 A$132,000 A$145,200

Other expenses A$ 100,000 A$110,000 A$121,000

Total Expenses A$ 2,998,125 A$3,249,938 A$3,574,931

Net Profit A$ 868,005 A$1,428,505 A$2,086,454

Contingencies

We believe that we have completed a proper market research and our plan will work accordingly.

We have however factored in a contingency plan as a backup. Our plan may however not work

because of the following factors:

Failure by our suppliers to deliver on time

Possible cancellation of manufacturing contract by our Chinese supplier

Possible exchange rate differences may impact on final customer sales price

Our competitors may react to our strategy and start a price war

We have developed some mitigating factors in case any of the above contingencies do happen.

We are currently looking for an alternative supplier in India. We will also be taking a hedge on

our foreign currency transactions and we are keeping most of our plans under wraps to keep

them away from our competitors.

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8. CONCLUSION AND RECOMMENDATIONS

This report has found that E-CoFueling has a viable proposition to develop and market its retrofit

unit and we are confident of gaining a 10% market share in both our target markets.

Our recommendation is that this plan should be accepted and executed as soon as possible,

bearing in mind the implementation due dates.

There is very limited analysis and application in this assignment you have merely gone through the sections in a very simple manner the sequence and linking of these lacks depth and does not comprehensively justify the strategies that you have chosen.

LIST OF REFERENCES

Pride et al 2007, Marketing: core concepts and applications Wiley, Milton Qld

Viewed 28 July 2011 <www.e-cofueling.com>

Viewed 3 August 2011<www.globalsecurity.org>

Viewed 4 August 2011<www.biodiesel.com>

Viewed 25 August 2011, < www.worldenergyoutlook.org>

Viewed 26 August 2011<www.greencarcongress.com/2011/05/iveco-trakker-bi-fuel-ethanol-diesel-truck-for-brazil.html

Viewed 15 October 2011<http://www.marketing-made-simple.com/articles/marketing-plan.htm#axzz1Zth6lnsS>

Viewed 19 September 2011<http://cleanflexsystems.com/>

Viewed 19 September 2011< http://www.ethanoltoday.com/index.php?option=com_content&task=view&id=5&fid=70&Itemid=6>

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Viewed 17 October 2011<http://h2booster.com/Diesel-Emissions-Retrofit-Kits_c5.htm>

Viewed 17 October 2011<http://www.lgfocus.aus.net/index.php?view=editions/2008/april/fuel.php>

Viewed 18 October 2011<http://vator.tv/company/terra-fuel-technologies>

Viewed 15 October 2011 <http://www.youtube.com/watch?v=I2afzQTU_2Y&feature=mfu_in_order&list=UL>

Viewed 15 October 2011<http://www.abs.gov.au/ausstats/abs@.nsf/mf/9309.0>

Viewed 17 October 2011<http://www.bbc.co.uk/news/world-asia-pacific-15269033>