Non-profit Recording Co-op Marketing Plan

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Confidentiality Agreement The undersigned reader acknowledges that the information provided by _________________________ in this marketing plan is confidential; therefore, reader agrees not to disclose it without the express written permission of _________________________. It is acknowledged by reader that information to be furnished in this marketing plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to ________________________. Upon request, this document is to be immediately returned to _________________________. ___________________ Signature ___________________ Name (typed or printed) ___________________ Date This is a marketing plan. It does not imply an offering of securities.

Table Of Contents 1.0

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 Company Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2.0

Situation Analysis . . . . . . . . . . . 2.1 Market Summary . . . . . . . 2.1.1 Market Demographics 2.1.2 Market Needs . . . . 2.1.3 Market Trends . . . 2.1.4 Market Growth . . . 2.2 SWOT Analysis . . . . . . . . 2.2.1 Strengths . . . . . 2.2.2 Weaknesses . . . . 2.2.3 Opportunities . . . . 2.2.4 Threats . . . . . . . 2.3 Alternative Providers . . . . . 2.4 Services Offered . . . . . . . 2.5 Keys to Success . . . . . . . . 2.6 Critical Issues . . . . . . . . .

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Marketing Strategy . . . . . 3.1 Mission . . . . . . . 3.2 Marketing Objectives 3.3 Financial Objectives . 3.4 Target Markets . . . 3.5 Positioning . . . . . 3.6 Strategy Pyramid . . 3.7 Marketing Mix . . . . 3.8 Marketing Research .

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Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4.1 Break-even Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4.2 Funding Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 4.3 Expense Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

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Controls 5.1 5.2 5.3

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Gamehenge Tapers Co-op 1.0 Executive Summary Gamehenge Tapers Co-op is a not-for-profit organization that was created to serve the Boulder, Colorado tapers community. The tapers community is a hobby based community that trades live recordings for personal use, never for commercial gain. The Co-op will provide this community with the equipment needed to further the taping of shows that in effect supports the trading community as well. The Co-op sells the recording equipment at wholesale prices plus a low overhead percentage. Offering members heavily discounted rates encourages them to become more active tapers. Because the organization is a not-for-profit co-op, members are willing to volunteer their time to help the organization allowing it to become successful. The organization exists to support the trading community. The basic market need is a source of equipment and intellectual capital that supports the taping community. Because of the very nature of the movement being underground (not for legal reasons, but due to general commercial shunning of taping), a local support organization is in high demand. The recent popularity of the CD recorders (creating perfect copies of the original) has also been a factor in tapings recent increase in popularity. Membership dues and a small charge for overhead will allow the organization to cover costs associated with doing business and allow it to slowly grow over time. Gamehenge Tapers Co-op will be increasing their membership roster by at least 20% per year.

1.1 Company Summary Gamehenge Tapers Co-op is a co-operative organization designed to serve the Portland tapers community. The tapers community is a hobby based group that records and trades live concerts. All of the bands that allow live recordings are "live" or "jam" bands who incorporate improvisation into their live performances so each performance is unique. The group members trade these live performances for personal consumption, enjoying the unique attributes of each individual show. Commercial use of these shows is strictly prohibited. The organization sells a wide range of equipment for tapers. The equipment is purchased through normal wholesale distribution channels and sold directly to organizational members. Membership is required for entry to the co-op. A $40 entry fee and proof of traders status (a copy of your show list is usually sufficient) is all that is needed to become a member. Products must be purchased through the website and can be picked up from the office at certain times throughout the week. Questions regarding products can be answered via email or phone (typically voicemail with a return phone call).

2.0 Situation Analysis Gamehenge Tapers Co-op is entering their first year of operation and recognizes the need of a comprehensive marketing plan to ensure future sustainability. The Co-op provides an extensive offering of recording equipment as well as CD-RWs and media. This serves the market need of providing equipment and information for tapers.

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Gamehenge Tapers Co-op 2.1 Market Summary Gamehenge Tapers Co-op possess good information about the market and knows a great deal about the common attributes of the most prized customers. The Co-op will leverage this information to better understand who is served, their specific needs, and how The Co-op can better communicate with them.

Table 2.1: Target Market Forecast Target Market Forecast Potential Customers Tapers Other Total

Growth 10% 0% 10.02%

2002 200 0 200

2003 220 0 220

2004 242 0 242

2005 266 0 266

2006 293 0 293

CAGR 10.02% 0.00% 10.02%

2.1.1 Market Demographics The profile for Gamehenge Tapers Co-op's customer consists of the following geographic, demographic, and behavior factors: Geographics • The immediate geographic target is the city of Boulder with a population of 267,000. • A 35 mile area is in need of the services. • The total targeted population is 638. Demographics • • • •

Primarily male. Ages 18-40. Have attended at least some college, some have graduate degrees. Have an annual income range of $25,000-$85,000.

Behavior Factors • Maintain an extensive collection of music. • Spend on average $100 a month on taping equipment/media or commercial music. • Are often very picky regarding their music collection including: labeling, file formats, media brands, audio source (soundboard vs. microphones).

2.1.2 Market Needs Gamehenge Tapers Co-op is providing its members with a good selection of recording equipment for taping purchases. Gamehenge Tapers Co-op seeks to fulfill the following benefits that are important to its members. • Selection: A wide selection of equipment and media used in live audio taping is offered. • Accessibility: All equipment is distributed through a conveniently located Boulder office space. • Source of Intellectual Capital: Only some of the different nuances of taping are available on the Internet, therefore there is a real demand for tips on taping. By having professional tapers manning the Co-op, the Co-op becomes a clearinghouse for taping information. • Competitive Pricing: By operating the Co-op as a not-for-profit, the organization is able Page 2

Gamehenge Tapers Co-op to extend excellent pricing to its members.

2.1.3 Market Trends Taping is a trend with increasing number of bands enthusiastically supporting taping. By having a larger source of material that can be taped and traded, there has been a proliferation of the taping community. For years up until the early 90's, there were very few bands that encouraged taping. The one glaring exception is the Grateful Dead, which for decades recognized the value of allowing taping and trading of their shows. The spirit of the Dead has lived on in over 100 different bands today that encourage taping and trading. With a significant increase in the number of bands that allow taping, which in effect has increased the community of tapers, the taping community is maturing into a recognized market segment.

Market Forecast 300

250

200

Tapers

150

Other 100

50

0 2002

2003

2004

2005

2006

2.1.4 Market Growth The taping community/market has really grown in the last decade. In 1999, tapers consumed $346 million in equipment and media. As the number of bands that encourage taping continues to grow, it is forecasted that this specialty market will grow at 9% a year for the next three years. The increased allowance of taping by bands is one variable that has contributed to market growth. Another factor is the state of current technology. Computer-based CD recorders have promoted market growth by creating a new format for recording shows that is convenient and a perfect copy.

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Gamehenge Tapers Co-op

Target Market Growth

10.00%

8.00%

6.00%

4.00%

2.00%

0.00% Tapers

Other

2.2 SWOT Analysis The following SWOT analysis captures the key strengths and weaknesses within the company and describes the opportunities and threats facing Gamehenge Tapers Co-op.

2.2.1 Strengths • Solid relationships with distributors who are very supportive of the idea of a co-op and willing to support Gamehenge. • A solid base of dedicated staff who are passionate about making Gamehenge succeed. • Below-market prices for hobby tapers.

2.2.2 Weaknesses • A lack of awareness of Gamehenge by many local tapers. • By virtue of the fact that Gamehenge will never have a large revenue stream, the marketing budget will always be small. • A limited base of users because taping may never be a mainstream hobby.

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Gamehenge Tapers Co-op 2.2.3 Opportunities • Boulder, Colorado is a hot bed for good music, with a lot of music artists passing through and many music aficionados living in Boulder. • Low overhead allows the savings to be passed onto the members. • 501(c)(3) status eliminates taxes for the organization.

2.2.4 Threats • Mail order firms that buy in bulk quantities so the prices they extend to consumers are comparable, or better than Gamehenge's pricing. • Federal regulation that significantly changes not-for-profit status requirements.

2.3 Alternative Providers Regular retail outlets are Gamehenge's competition. These take the form of mail order places, retail outlets, and e-commerce sites. These for profit competitors might offer a better selection, but, they will rarely compete on price.

2.4 Services Offered Gamehenge Tapers Co-op offers the tapers community the following products: • CD-RW (Compact Disc ReWritable) drives for computers, external units with USB, SCSI or Firewire connections. • High quality stereo microphones for audience taping. • DAT (digital audio tape) portable recorders. • CD-R (Compact Disc Recordable) media.

2.5 Keys to Success The keys to success are: • • • •

Provide a needed service/products. Serve the organizational members. Support the hobby of taping. Build a strong membership base.

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Gamehenge Tapers Co-op 2.6 Critical Issues Gamehenge Tapers Co-op is just beginning their first year of operation. Its critical issues are to continue to take a modest fiscal approach, and build membership, this is the only way the organization will succeed.

3.0 Marketing Strategy Gamehenge Tapers Co-op's marketing budget is quite limited, particularly at start up because the budget is dependant on the number of members that are signed up. The marketing strategy will employ two activities. The first is a networking campaign, the second will be the use of a website. The networking activities will be accomplished by both the officers of the organization as well as a grassroots networking scheme to try to involve all of the members. These efforts will be further defined in subsequent sections.

3.1 Mission Gamehenge Tapers Co-op' s mission is to serve the Boulder tapers community. We exist to attract and maintain members. When we adhere to this maxim, everything else will fall into place. Our services will exceed the expectations of our customers.

3.2 Marketing Objectives • Increase the membership base 5% each quarter. • Decrease customer acquisition costs by leveraging individual membership networking. • Increase visibility of the organization at various concerts.

3.3 Financial Objectives • Profitability. • A decrease of overhead costs by 5% every two quarters. • A significant increase in sales to warrant hiring a part-/full-time employee.

3.4 Target Markets Gamehenge Tapers Co-op will be addressing the tapers community in the Boulder area. The taping community is made up of individuals that legally tape live concerts. There are a handful of bands that allow taping of their live performances. Generally, record labels discourage or ban taping of live performances because they believe that it infringes on profits from record sales. Gamehenge has found that taping tends to promote the band as there is an entire community that trades these shows, attends the concerts, and buys the records after they hear live performances of the band. From a legal standpoint, the live performances are copyrighted, and it is only a few select bands that allow tapings. These bands tend to be very good live performers, with a loyal following of people that tour with them and consequently these bands tend to play entirely different set lists each night recognizing that there are people seeing several shows in a row.

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Gamehenge Tapers Co-op The bands that allow recording of live concerts are the remnants of the Grateful Dead (Phil Lesh & Friends, The Other Ones) remnants of Phish (Trey Anastatio and the Giant Country Horns), String Cheese Incident, moe., Blues Traveler, Dave Matthews Band, Medeski Martin & Wood, Tony Furtado, Bela Fleck and the Flecktones, Widespread Panic, Galactic, Government Mule, Greyboy Allstars, Karl Denson and the Tiny Universe, and many more. These bands have a loyal following; a very close knit community. This element lends itself to word of mouth promotion.

3.5 Positioning Gamehenge Tapers Co-op will position itself as a co-op whose mission is to support the local tapers/traders community in Boulder with cost plus equipment, media and information. Gamehenge will leverage its competitive edge to achieve this positioning. Gamehenge Tapers Co-op's competitive edge is its co-operative business structure. The organization is set up to solely benefit the members. The members benefit by being able to purchase equipment at drastically reduced prices compared to retail.

3.6 Strategy Pyramid The single objective is to position Gamehenge as an invaluable resource organization for the local taper/trader community. The marketing strategy will seek to first create customer awareness regarding the services/products offered and then develop the member base. The message that Gamehenge will seek to communicate is that Gamehenge provides invaluable support for members of the organization in regards to information and equipment for taping live concerts. The message will be communicated in various ways. The first is through a networking campaign accomplished by the different officers of the organization. Since the officers are all avid tapers, they will network with the close knit taping community at all of the events. A second type of networking that will be employed is a networking campaign on behalf of the individual members. A comprehensive pamphlet will be handed out and explained to new members. The pamphlet will detail how each member can make a contribution to the organization by bringing new members in. This effort will be explained as not only helping the organization as a whole but also helping each individual member with the lure of lower prices as the organization grows. The pamphlet will detail simple steps that members can do when they run into tapers that are not a part of the organization. The last way that the message will be communicated is through the website. The website will be a comprehensive source of information about Gamehenge, its members, and the services/products that Gamehenge offers.

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Gamehenge Tapers Co-op 3.7 Marketing Mix Gamehenge Tapers Co-op's marketing mix consists of the following approaches to pricing, distribution, advertising and promotion, and customer service. • Pricing: The pricing scheme will be product cost plus variable overhead costs associated with each sale. • Distribution: All products are available from Gamehenge's store. • Advertising and Promotion: The most effective activities will be networking and a website. • Customer Service: Customer service will be of a high level. This takes into account the fact that all of the customers are owners of the co-op, so there is a natural incentive to treat them properly.

3.8 Marketing Research To aid in market research, Al conducted several focus groups. The goal of the focus groups was to determine if Gamehenge did indeed provide a market need for Boulder tapers and traders. Al held two focus groups with seven people each. The people were taping acquaintances that he had met over the years. The focus groups explored numerous ideas regarding the Gamehenge business model, including how much people would be willing to spend to become members, what products should be offered, what their consumption schedules are, and other details. The results of the focus groups were quite illuminating and offered a lot of information that shaped both the business as well as the marketing plan.

4.0 Financials This section will offer a financial overview of Gamehenge Tapers Co-op as it relates to the marketing activities. Gamehenge will address break-even analysis, sales forecasts, and expenses forecasts.

4.1 Break-even Analysis The break-even analysis indicates that $347 is needed in monthly sales to break even.

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Gamehenge Tapers Co-op

Break-even Analysis $2,500 $2,000 $1,500 $1,000 $500 $0 ($500) $0

$500

$1,000

$1,500

$2,000

$2,500

Monthly break-even point Break-even point = where line intersects with 0

Table 4.1: Break-even Analysis Break-even Analysis: Monthly Units Break-even Monthly Sales Break-even Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost

1 $347

$250.00 $20.00 $319

4.2 Funding Forecast The first month will be used to set up the office and website. The office will be in a small space with low rental costs. The website will be designed to provide general information to the public and detailed product information regarding the products offered. Members will only be able to purchase products via the website and picked up from the office at certain times. Month two will see an increase in sales and membership. The following months will see both membership as well as sales activity.

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Gamehenge Tapers Co-op

Monthly Funding Forecast $5,000 $4,500 $4,000 $3,500 $3,000 $2,500

Equipment sales

$2,000

Membership income

$1,500 $1,000 $500 $0 Jan Feb Mar

Apr May Jun

Jul

Aug Sep Oct Nov Dec

Table 4.2: Funding Forecast Funding Forecast Funding Equipment sales Membership income Total Funding

2002 $37,294 $3,760 $41,054

2003 $41,545 $2,500 $44,045

2004 $42,154 $2,800 $44,954

Direct Cost of Funding Equipment sales Membership income Subtotal Cost of Funding

2002 $33,565 $0 $33,565

2003 $37,391 $0 $37,391

2004 $37,939 $0 $37,939

4.3 Expense Forecast The marketing expenses will be budgeted so that they are fairly consistent through the year. The website will have a steady fee per month for the hosting fees. The networking expenses will be ramped up in the beginning to raise visibility as a start up, but will be fairly even the rest of the year.

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Gamehenge Tapers Co-op

Monthly Expense Budget $180 $160 $140 $120 $100

Networking

$80

Website

$60 $40 $20 $0 Jan Feb Mar

Apr May Jun

Jul

Aug Sep Oct Nov Dec

Table 4.3: Marketing Expense Budget Marketing Expense Budget Networking Website Total Funding and Marketing Expenses Percent of Funding Contribution Margin Contribution Margin / Funding

2002 $1,350 $600 -----------$1,950 4.75% $5,539 13.49%

2003 $1,200 $600 -----------$1,800 4.09% $4,855 11.02%

2004 $1,200 $600 -----------$1,800 4.00% $5,215 11.60%

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Gamehenge Tapers Co-op 5.0 Controls The purpose of Gamehenge's marketing plan is to serve as a guide for the organization. The following areas will be monitored to gauge performance: • Sales: monthly and annual. • Expenses: monthly and annual. • Increases in membership.

5.1 Implementation The following milestones identify the key marketing programs. It is important to accomplish each one on time, and on budget.

Milestones

Marketing plan completion

Website development

Networking campaign

Jan

Feb

Mar

Table 5.1: Milestones Milestones Milestone Marketing plan completion Website development Networking campaign Totals

Plan Start Date 1/1/02 1/1/02 1/1/02

End Date 2/1/02 2/1/02 ongoing

Budget $0 $0 $1,350 $1,350

Manager Al

Department IT

everyone

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Gamehenge Tapers Co-op 5.2 Marketing Organization Al Truistic is primarily responsible for the marketing activities. Al will receive help for the creation and maintenance of the website.

5.3 Contingency Planning Difficulties and Risks • Problems generating visibility on a limited marketing budget. • Inability to have competitive prices if a bulk buyer is able to get better deals from wholesalers than Gamehenge can. Worst Case Risks May Include • Determining that the business cannot survive solely on membership fees. • Having to liquidate inventory to cover liabilities.

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Appendix: Gamehenge Tapers Co-op Table 4.2 Funding Forecast Funding Forecast Funding Equipment sales Membership income Total Funding Direct Cost of Funding Equipment sales Membership income Subtotal Cost of Funding

Plan Jan $0 $160 $160

Feb $1,545 $360 $1,905

Mar $2,587 $400 $2,987

Apr $3,654 $480 $4,134

May $3,878 $400 $4,278

Jun $4,578 $200 $4,778

Jul $3,254 $360 $3,614

Aug $4,578 $200 $4,778

Sep $2,587 $360 $2,947

Oct $3,124 $280 $3,404

Nov $3,385 $200 $3,585

Dec $4,124 $360 $4,484

Jan $0 $0 $0

Feb $1,391 $0 $1,391

Mar $2,328 $0 $2,328

Apr $3,289 $0 $3,289

May $3,490 $0 $3,490

Jun $4,120 $0 $4,120

Jul $2,929 $0 $2,929

Aug $4,120 $0 $4,120

Sep $2,328 $0 $2,328

Oct $2,812 $0 $2,812

Nov $3,047 $0 $3,047

Dec $3,712 $0 $3,712

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Appendix: Gamehenge Tapers Co-op Table 4.3 Marketing Expense Budget Marketing Expense Budget Networking Website Total Funding and Marketing Expenses Percent of Funding Contribution Margin Contribution Margin / Funding

Jan $125 $50 -----------$175 109.38% ($15) -9.38%

Feb $125 $50 -----------$175 9.19% $340 17.82%

Mar $125 $50 -----------$175 5.86% $484 16.19%

Apr $100 $50 -----------$150 3.63% $695 16.82%

May $100 $50 -----------$150 3.51% $638 14.91%

Jun $125 $50 -----------$175 3.66% $483 10.10%

Jul $125 $50 -----------$175 4.84% $510 14.12%

Aug $125 $50 -----------$175 3.66% $483 10.10%

Sep $100 $50 -----------$150 5.09% $469 15.90%

Oct $100 $50 -----------$150 4.41% $442 13.00%

Nov $100 $50 -----------$150 4.18% $389 10.84%

Dec $100 $50 -----------$150 3.35% $622 13.88%

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