New Product Strategy and Tactics


I have talked a lot about developing strategy and tactics and the best process to use in past posts to this blog. I thought it might be useful for you to see some examples of plans put together by some of my students at the University of Houston. The examples that you will see are on fictitious companies that each team of students created for their class project. There were teams that developed strategies for real companies but these plans cannot be released since the information is confidential.

If your company would like to have a team of students develop a marketing strategy to achieve a specific marketing objective for your company please send me a request stating the company and a description of the marketing objective you would like addressed. You can send the request to gary@gwrresearch.com

The process used here is outlined in my new book Developing Successful Marketing Strategies available at Amazon.com, Barnes and Noble.com and other outlets.

Here is the first of a series of example projects:



AppUp designs and develops custom software solutions in the form of mobile and web applications to increase the efficiency and effectiveness of small businesses.  We plan to leverage the growing demand for mobile solutions and tap into the $25 billion app industry by offering three base apps to support fundamental and daily business tasks: scheduling, document share, and e-commerce. Our customers will have the ability to customize and tailor the software to meet their specific needs, have access to training courses and 24 hour customer support.  This customization ability, combined with outstanding customer service, will differentiate AppUp from its competitors

Our target customers are small businesses with $5-15 million in revenue, currently lacking but seeking a mobile presence.  We plan to grow the business in three phases. Phase one consists mainly of software development and attracting early adopters.  In phase two, we’ll establish market credibility and begin to expand to the greater Houston area. Phase three has rapid growth acceleration and movement to online sales.

The executive team will assume multiple roles early on, hiring additional staff as the company grows.  We will track company performance with key performance indicators, customer surveys, and data analytics.
AppUp plans to generate revenue by charging monthly subscription fees for each app. Pricing is based on the number of users, and discounts are offered for longer contracts.  We are forecasting profits beginning in year three.


MISSION STATEMENT



AppUp strives to create value for our customers by improving the efficiency & effectiveness of their business using innovative and cost effective technology solutions.


VISION STATEMENT                                                                



At AppUp, we wish to streamline processes, maximize customer value, and improve the technological approach to custom mobile business applications through:
·       Affordable solutions that bring underserved businesses to the forefront of the mobile technology age
·       A collaborative and productive environment between our customers and suppliers that fosters growth
·       A cutting edge product developed using the sincere efforts of a talented team


SITUATION ANALYSIS

The Industry



The mobile platform has been an integral part of everyday life in the modern age for some time now.  Recently though, usage of cell phones has skyrocketed, easily overtaking traditional internet-connected devices.  According to the most recent data, smart phones and tablets have outsold laptops and desktop computers by a comfortable margin and will continue to do so at an even more rapid pace in the coming years.  With such a prominent change in device usage, a change in consumer usage habits is to be expected.  According to the most available tracking data, the average person now uses mobile apps as much as he or she uses the internet on his or her phone, and, in turn, the application industry is growing exponentially.  At its current pace, the application development industry is projected to surpass $25 billion in revenue generated in 2013.  These figures include all apps developed and sold in the prominent app stores, however, the myriad of needs these apps serve clouds our analysis of AppUp’s industry focus.  AppUp is focused on, and the sector of the industry most crucial for our purposes, how employees stay connected with their company and customers.  In addition, we’re focused on employers are streamlining process to stay ahead of the technology curve and relevant in the eyes of their customers in the face of changing usage patterns.
This change in how people are accessing the internet and staying connected to their online world has driven the technology industry to reconsider how to keep the consumers best informed and in contact with the businesses that rely on those mediums.  Bearing this in mind, the application development industry has shown robust growth in supplying this easy connectivity to consumers on behalf of businesses.  The nature of the industry as a whole revolves around this idea of keeping users engaged and connected, regardless of the platform they’re using, as efficiently and conveniently as possible.  However, the app development industry is still a tough market to break into.  According to the Wall Street Journal, the general app development industry only sees 2-3% of newcomers being successful.  For this reason in particular, we at AppUp feel that our business model of marketing our products and services directly to businesses, rather than directly to the consumer, is the soundest way to tap into the meteoric growth the app development industry as a whole is experiencing.


Customer Segments



In the process of developing our product, we conducted an analysis of the customer market. We divided the market into three main segments: key customers, under-potential customers, and non-users. Once our team separated the market into these three segments, we were able to decide on the focus of our marketing strategy, as well as locate market niches that would allow for potential growth. As a start-up looking to acquire a solid client basis, we will focus a significant chunk of our resources on our key customer market.
After analyzing our product and our objectives as a company, we have decided to target small to medium sized companies. Our main customers range from the upper end of the small sized business spectrum to the lower end of the medium sized business spectrum. We believe that targeting companies with annual revenues between $5 and $15 million, we will be able to acquire a strong base of core clients. The AppUp team anticipates that our target clients are lacking a mobile presence, but have the resources, employee and customer base, and business needs that are compatible with operating their very own mobile/web application. Our customizable app templates provide solutions that are applicable over the entire industry spectrum, and provide equal benefits to both service-based and manufacturing/product-based companies.
The second customer tier in our analysis represents the under-potential customers. In the objective portion of our proposal, we note that our product offers purchasing, scheduling, and document sharing solutions. We recognize that some of our customers may not have the immediate need for all three app services. Therefore, we have the potential to expand our company through our existing clients by demonstrating the value they will recognize by subscribing to our entire suite. There are also potential clients that may feel too small or do not have the sufficient customer base to justify an app software investment. We have the potential to capture this market by providing cost-effective base model app solutions without unnecessary bells and whistles.
A nonuser market also exists that we do not plan to pursue in our marketing strategy. In the nonuser market, we include larger companies with developed application solutions, as well as companies with robust in-house IT departments capable of their own app development. A main selling point of our product is that our ready-made app templates are affordable and functional, and create great value for smaller companies that would have not otherwise pursued mobile app solutions.


Competitors



As a company, we recognize that we are not creating a product that is attempting to tap into a blue ocean market. With that being said, we are aware that we will have competitors, some of whom already have footholds in the market. The most obvious competitors we will encounter are companies that provide similar products and services. Our team will have to be both innovative and creative to cut costs and value for ourselves and our clients. We will also have to go the extra mile to provide the absolute best customer service available, displaying to our clients that we are hands down the paramount service provider. Competition from both pre-existing and new second and third party applications is also a concern. These apps provide businesses with a specific service platform to interface with their customers and/or employees. The AppUp team will have to work hard to prove to our clients that having their own software application, tailored specifically to their needs, provides them with a more efficient, cost-effective medium to conduct their business.


Potential Disruptors

The market that we are entering is also susceptible to disruptors. AppUp offers solutions for three possible client needs. A disruptor who models their business around one individual client need, for example scheduling, and provides a base model template for that one specific necessity may enter the market. Since this potential disruptor only has one particular solution to focus on, they may cause problems in our perceived market. Market interruption may also result from potential clients moving towards an in-house approach to mobile and web application solutions. As mobile apps become more mainstream, the cost associated with smaller companies producing apps themselves may become a more widely accepted investment. AppUp must consider these disruptions in our business model now, as well as in the future.


SWOT ANALYSIS

Strengths

·        
·        
·       Upgradability
o   Our mobile and web apps are accessed through a cloud platform, which eliminates the need for companies to spend time on hardware and software updates.  The apps are maintained by our company, which eliminates significant cost and man hours of maintenance otherwise required by in-house IT departments. 
·       Accessibility for users
o   The cloud platform only needs a browser and internet connection to work, so it allows employees to access the applications regardless of where they’re located or what device they’re using, thus boosting productivity and decision-making.
·       Deployment cost savings
o   Our structure of developing a basic platform that can then be tailored to companies’ needs allows us to keep costs low by spreading development expenses across multiple clients.
o   Companies pay $50,000 on average to develop and maintain an application.  We are able to offer our customers a low monthly subscription fee, which makes it an affordable solution for customers. 
·       Ability to scale quickly
o   AppUp’s mobile applications live in a cloud.  This allows us to rapidly upgrade our software without accessing our customer’s server and scale to more users  as needed.  This prevents our customers from having to spend their IT department’s time and resources updating hardware and software to accommodate the additional users. 

Weaknesses

·        
·        
·       Integration of different software and platforms
o   A challenge for app development is the diversity in the mobile landscape and compatibility with company’s existing software.  Some companies support multiple operating systems within their organization.  Successfully building apps that integrate with multiple devices and platforms will be key to our success.   
·       Security threats
o   Offering customers their own customized mobile enterprise stores will give customers better control over who can access their apps, but there is still the risk of coders not installing the proper security and privacy protection that could comprise an organizations data. 
·       Distinguishability in the app market and changing customers app usage
o   Competing in an industry with incumbents like AT&T and Inuit can make it hard for developers to distinguish themselves.  Only 2% of the top 250 publishers in Apple App Store are newcomers and 3% in Google's Play store for Android apps, according to research firm Distimo.  50 million mobile apps are downloaded a day, while 95 percent are abandoned within a month.  It’s important to make the apps accessible and engaging so that customers continue to use our apps. 
·       The ability for sensitive data to be compromised
o   Security breaches are a huge concern as we develop these applications.  If we do not take the proper precautions to safeguard our customers data, we could leave ourselves open to litigation down the road. 

Opportunities

·        
·        
·       Growth rate of app industry
o   The mobile application industry has grown considerably in the last 5 years.  App sales rose 62% to $25 Billion in 2013.  App stores run by Apple and Google offer more than 700,000 apps each.  According to Flurry Analytics, overall app usage in 2013 posted 115% year-over-year growth.  This growth shows that there continues to be an opportunity for innovation in the app industry.
·       Growing mobile workforce
o   The rapid adoption of the smartphones and widespread usage of sophisticated mobile devices, such as tables and smartphones is driving the need for enterprise mobility.  There have become blurred lines between people checking their personal email at work and work email at home.  As this trend continues, it opens the opportunity for us to create solutions that allow customers to balance all of their productivity needs with one device. 
·       Lack of technical expertise in companies to build apps
o   Developing custom apps isn’t feasible for most small and medium business because they do not have the workforce to support the development.  Even large organizations have limited IT resources devoted to building and maintaining app stores.  
·       Capture market share of growing app development industry
o   The industry grew 62% last year, which indicates that the market is ripe with opportunity.   
·       Companies encouraging usage of private mobile devices to save on CapEx
o   Companies are shifting from issuing company owned devices. Instead, organizations are allowing users to bring their own devices to work to access corporate information, email, data, and apps. Users get to choose the device they like the most and IT doesn’t incur capital expenses for mobile hardware that depreciates and obsoletes faster than they can deploy them.

Threats

·        
·        
·       Accessibility of free apps
o   90% of apps in the Apple App Store are free, so there could be push back from companies thinking they could find free versions of the apps that we provide. 
·       Large companies currently competing in this industry
o   Major companies like AT&T, Accenture, and SAP are competing in this space with strong brand loyalty.  We will have to overcome the competition in the market by differentiating ourselves to the consumer.
·       Server reliability
o   Outages do happen, despite the best plans and safeguards ranging from acts of God to human error, and many points in between. Frequent downtime could hurt our brand and cause customers to shift to a different service provider. 
·       New technology developments potentially replacing the app market
o   There’s a potential for new technology developments down the road, causing users to abandon the mobile app market as we know it.  It will be important to stay ahead of the trends to ensure that we’re able to keep up with advances in technology. 


OBJECTIVE

Our Product



We provide our clients with pre-developed base model mobile and web application templates that support three fundamental aspects of business operations. Through in-depth collaboration between the client and the AppUp team, these templates are tailored to meet the client’s exclusive business approach. The three application models offered by AppUp address popular workplace tasks that are common in both service-based and manufacturing/product-based companies. The first application solution AppUp offers is an E-Commerce based template. This model provides our clients with their very own platform to sell their goods or services to customers. The next system we aim to simplify is file access and sharing on both web and mobile devices. There are many apps on the market that address this need, but the app we create for our clients will be their own unique file sharing environment, specific to their company. Our third template provides companies with a web and mobile platform for scheduling. This application, like AppUp’s other options, offers the company its own medium for customers and/or employees to schedule appointments, meetings, reservations, etc. Our app models address operations that are common across all industries. Also, the AppUp team will work extensively with the client to customize the application to address the company’s specific desires. The capabilities and sophistication of the applications are at the discretion of the client. They can make their app as basic or as intricate as they would like. By providing our clients with their very own application, we are able to provide them with many benefits and values that are unique to their company’s business models.


Performance Targets



In order to gauge the short term performance of the company, we have set two types of performance targets: customer targets and internal targets.  Customer targets are focused on our clients, the users of our products.  Internal targets focus on revenue generated from product and service sales/subscriptions. Access to AppUp’s mobile and web applications will be provided to customers on a subscription basis and revenues will be generated by charging monthly access fees.  Membership levels will be organized into three tiers and sold to customers based on number of users.  Additional details can be found later in the Strategy section.

Customer Target



AppUp exists to increase business efficiency for our clients, therefore one of the key performance targets will be a measure of this efficiency improvement.  The primary target for our customers is a 20% increase in efficiency in the specific business task the app was purchased to enhance.  This will be measured first taking a baseline survey of the company to assess how much time they are currently spending on each task, and then comparing the time taken one year later on the same task.  For example, if one of our clients is currently spending 10 hours per week scheduling appointments for their customers, we expect this to be reduced to 8 hours per week.  


Internal Targets

 

 

Since our business depends on recurring revenue from subscriptions, keeping the customer satisfied is top priority. If our customers are pleased and gaining value from our products, we know that revenue will follow. Our initial revenue goal is to generate $250,000 after 12 months.  Revenue forecasts and pro-forma financial statements can be found in the appendix.  The first 6 months will be spent on app development, therefore no revenue is expected during this period. Customers have the option to purchase one or all of our apps, and will be charged according to one of three pricing structures, or tiers, based on the number of users. The second internal target is to find two early adopters within 6 weeks to help build the three core applications:  Purchasing, Document Share, and Scheduling. Early adopters are key to building successful software applications. They provide valuable feedback, help define required features, and will be more patient with development because they have an active role in building the features.  We will use the feedback from the early adopters to rapidly iterate on the software designs. Collaborating with these customers will make sure we are meeting their business needs and prevent wasteful re-work.  As an incentive to attract these customers, we’ll likely offer promotional discounts, such as discounted access for a period of time.  Promotions such as this will be further defined in the strategy section.

STRATEGY

Product



We believe our product strategy should fulfill three critical obligations: provide a needed service for a wide range of customers, offer elite customer service to our clients, and deliver our product at an affordable cost to the subscribers. The AppUp team feels that if our product strategy can meet these standards, we will be a prosperous organization.
AppUp’s executives analyzed the common needs of companies over the entire business gamut. As a company, we decided that providing web and mobile application solutions for purchasing, file sharing, and scheduling would translate across all industries. By offering multiple base model solutions, we are able to tap into several business needs. Since the customer determines the sophistication of their mobile and web solution, our customer market is not limited to a specific revenue tier. Our applications service companies in all industries, and as a result, a downturn in one particular market will not detrimentally impact our success. The AppUp team also recognized that our products’ success would be dependent not only on the size of our customer base, but also on the quality of our customer service.
The mobile and web application industry is a booming business. New companies are constantly entering the market with new products and providing solutions to customers at all industry levels. The AppUp team recognizes the importance of offering elite customer service to differentiate ourselves from our competitors. Since our income is based on client subscriptions, customer retention is of the utmost importance. First-rate customer service will not only give us an edge in obtaining new clients, it will also keep us focused on maintaining our established customer base. The AppUp team will have to constantly evaluate our products and services in order to maintain the highest level of customer satisfaction.  Another crucial aspect of consumer fulfillment is providing the customer with the most cost-effective applications to meet their business demands.
AppUp’s income is dependent on our client’s subscriptions to our application solutions. As a result, we must continuously deliver competitive subscription fees to provide our consumers with a valuable product. Our ability to service businesses across all industries, as well as at multiple revenue levels, allows us the opportunity to acquire and maintain a large customer core. The immense sales volume generated from an extensive client base will be a vital component to maintaining low subscription fees. AppUp’s ability to constantly furnish our clients with efficient, cost-effective solutions will be an integral element in determining our long term success as a company.

Price



Our pricing strategy is based on the value received from the products and services we offer.  In other words, our customers will choose to buy our products because they know the value gained will exceed the cost to purchase. Customers will be charged a monthly fee to use our mobile and web applications. This allows us to reach the target market of nanocap companies that can’t afford multi-thousand or million dollar up-front development costs, large one-time purchase prices, and multiple licenses commonly associated with other software applications.
Optimal pricing is reached when the value gained by the customer will exceed the monthly subscription fees they are paying.   For example, if our scheduling app saves 10 hours per month for 5 employees (50 man hours), and we assume a burdened hourly rate of $50/hour, the scheduling app created $2,500 in value - far less than the monthly subscription fee.
In order to encourage users to sign up, no up-front costs will be charged - we want it to be as easy as possible for customers to subscribe. We expect the application development costs to be recovered over time as subscriptions increase.


Market Positioning

Market positioning is another key consideration in our pricing strategy. Pricing too low could decrease the value perception, ranking us among the non-customizable apps offered to the general public.  We don’t foresee lower prices increasing volume. Volume will be driven by other marketing considerations, such as place and promotion, therefore, sales volume would be expected to remain flat if price decreased.  On the other hand, moderate to high prices will indicate that our products are valuable. However, given that we are a startup and haven’t established market credibility, pricing too high could drive away potential customers. As our company grows and our applications become more sophisticated, it’s likely that prices will increase over time.  We’ll make this clear to our customers up front for two reasons: One, to incentivize potential customers to lock-in prices and sign longer term contracts, and two, to manage their expectations.  We want to be honest and up front with no surprises, which could damage our brand.  


Pricing Options

Our apps are designed to increase efficiency and effectiveness for our customers; therefore it’s reasonable to assume that companies with more employees have more to gain. Pricing will be offered in multiple tiers, grouped according to the number of active user accounts. Access to the applications will require a unique account (user ID).  See Table 1 below for a summary of our pricing options. Given the modest annual revenues of the target market, and therefore small company size, it’s unlikely that many of our customers will have more than 50 active users.
Table 1: Pricing Options
Subscription Level
Total User Accounts
Monthly Subscription Fee
Tier 1
10
$250
Tier 2
25
$500
Tier 3
50+
$1,000

Contract Options

As an incentive to lock-in current prices, we’ll offer discounts to companies choosing to sign contracts.  See Table 2 below for a summary of the discounts.
Table 2: Contract Discounts
Contract Length
Discount
Month-to-month
0 %
6 Months
2 %
1 Year
5 %
3 Years
8 %
5 Years
15%

Early Adopters

As stated in the Targets section, early adopters are key to successfully building and implementing our software applications. In order to attract early adopters, we’ll offer the first 3 months for free – no subscription fees will be charged to the first 3 companies that sign up and agree to participate in the development. We expect these companies to help build the base applications, and forecast that the value gained from their collaboration will far exceed any revenues generated during that time period.


Place



AppUp will utilize our website, social media, sales team, and collaborations with small business resource centers in the community to reach our target market.
AppUp’s online website will be the primary way that customers understand our business and the products that we deliver.  We will have a user friendly, crisp site that is representative of the cutting edge apps that we will produce for our clients.  The online marketplace will eliminate the need for a physical location, minimizing our cash outlays and allowing us to offer our customers low monthly subscription fees.  We will utilize Search Engine Optimization to ensure that any midsize business looking for an app development company in the Houston area finds our company in their online searches.   
Social media will be a critical component for customers to find out about our products as well.  We will ensure that we have active Facebook, Yelp, Twitter, and Instagram accounts so consumers can find information about our products and events we host.
AppUp’s main competitors offering template app solutions are online and out of state.  Our business model allows us to capture the cost savings of not having to have a physical location, but also allows us to give superior customer service.  We offer the appeal of a Houston-based small business and providing onsite education and support.
We plan to utilize co-working space in the Houston area when collaboration is needed with our contractors or partners, but we plan to manage the business virtually.  As the business grows, we’ll evaluate the need to establish a physical location to meet the needs of our employees and customers.
Our executive staff will build strategic partnerships with the various Small Business Development organizations in the community such as SCORE, University of Houston Small Business Development Center, and the Greater Houston Partnership.  This partnership will allow us to tap into their current base of small business owners and educate them on our services.  We will send out tailored communication to their networks and offer incentives to try out our products. Our sales team will ensure that AppUp is represented and has booths at the key small business events hosted in the community, to ensure our brand is known in the Houston small business community.  


Promotion



AppUp strives to create value for customers and shareholders alike.  We believe that by building a promotional strategy that keeps these two goals in mind, we can enjoy significant growth within the application development market.  Our goals dictate building a promotional strategy that centers on highlighting the price, place, and product benefits our company brings to the table.  These pillars of the AppUp promotional strategy will allow us to bring to the marketplace a fresh and competitive edge which will drive sales for years to come.  The real test, though, is determining where and how to promote our products and services so that they reach our target audience and are adopted in the marketplace.  In this vein, we have decided on a three stage process that we believe will build a significant interest in our business.


Phase I

The first step is to find early adopters.  As mentioned before, the value of finding early adopters to our products and services is incalculable in value to developing our products and building credibility in the marketplace.  Because these first users are so important to our company, the promotional strategy for these customers will be much more targeted.  By enlisting the help of data researchers, we’ll find businesses in the Houston area that are in the greatest need for a customized app.  These businesses will be narrowed to fit our nanocap size criteria, and lacking current in-house marketing or information technology department.  The capital expenditure in this stage will be minimal as the research will be contracted as one project and shouldn’t be overly demanding.  However, once these potential early adopters are identified, we will personally see to selling them on our product.  The Chief Marketing Officer, Brian Roe, along with the technical experts on our team, will be enlisted to sell our first customers on the financial and logistical benefits of our product.  Once these early adopters are enlisted, we’ll move into the second phase of our promotional strategy.


Phase II

The value of targeting customer-specific groups highlights the second step of our promotional campaign.  In this step we’ll reach out to Houston area small business groups to promote our products and services.  These groups are fairly easy to find and bring together the exact customer segment we are looking for.  By scheduling presentation times during the meetings of these groups, we can target a larger audience without spending a significant amount of money.  In fact, because our CMO will be in charge of making these presentations, the cost of contacting these potential customers is quite minimal.  Furthermore, by presenting ourselves to these companies face-to-face, we’ll build relationships with potential customers, grow our credibility and promote the goal of excellent customer service.  This step in our campaign will continue until we’ve signed up enough users to cover development costs and daily operating expenses.  After this point has been reached, AppUp will begin to branch out of the Houston area by taking our promotional campaign virtual.


Phase III

Up until this point, AppUp will be focused on face-to-face promotion to educate potential customers on the concept of our revolutionary products.  We’ll then shift our efforts to the online world in order to capture the largest audience possible.  In the initial rollout of our business, we plan on developing a well-designed and user-friendly website so that potential clients can have a place to explore our company, products and services in their own time.  The third phase of our promotional plan will utilize this website to its fullest potential.  As a technology company, it behooves us to market ourselves in a technological sense so that potential and current clients can feel comfortable with our credibility in the industry.  With this in mind, AppUp will develop an online marketing scheme to utilize the value of social media, industry-specific blogs, and online news resources so that we can expand our target audience to include those companies with technological roots.  Our marketing will be most effective by targeting these high-potential customers through a medium they’re most comfortable with – technology.  Also, this stage of our promotional campaign continues to reduce costs. We plan to hire someone, on staff, to maintain our online presence.  This person will be able to keep our customers up to date on current project statuses, advertise our business success, and promote the business. 
In summation, AppUp is a tech startup selling products and services that are fairly unique to the marketplace.  For this reason, we’ve chosen a promotional strategy that allows us to find early adopters, target the largest local audience, and then expand nationally and globally through our familiarity with the technological world.  Each phase will involve promoting our products using the ideal price & place.


TACTICS

Product



AppUp provides pre-developed base model mobile and web application templates that support three fundamental aspects of business operations.  The three templates are E-commerce, file sharing, and scheduling.  The E-commerce template provides clients a platform to sell their goods or services to customers.  The file sharing template aims to simplify file sharing access on both web and mobile devices.  The apps we create for our clients will be on their own unique file sharing environment, specific to their company. This file sharing templates also offers the ability to edit files between users simultaneously.  The scheduling template provides the company with a web and mobile platform for scheduling. This application, like AppUp’s other options, offers the company its own medium for customers and/or employees to schedule appointments, meetings, reservations, and also keep track of employees’ time sheets.  Our app models address operations that are common across all industries.  Clients have the ability to add all three templates into one app for easy access and to track everything in one place.  These templates can be tailored to meet the client’s exclusive business approach.  The AppUp team will work extensively with the client to customize the application to address the company’s specific needs. The capabilities and sophistication of the applications are at the discretion of the client. The client can design their app as basic or as intricate as they would like. By providing our clients with their very own application, we are able to provide them with numerous benefits unique to their company’s business models.


Services



We offer personnel training, 24-hour support, and measurement of the app’s efficiency.  We believe that our success is derived from our clients’ success.  Therefore, we are committed in providing our clients with not only a great product, but also 100% satisfaction with customer service.
Our personnel training to both client’s employees and customers consists of an initial setup on users’ mobile devices, initial training on how to use the app, and continued training on any updates to the app.
·       Initial setup is conducted by our staff on the users’ mobile and/or desktop device.  We will make sure all the components of the app run correctly and effectively on all any software operating system (e.g. IOS, Windows, or Android).  We also provide this service should a user decide to change devices after the initial setup.
·       Initial training is conducted in a workshop format by our technical team.  We will cover all the features of the app in an easy and user-friendly manner.  We also offer this workshop for any new group of users from clients.
·       Continual training is also conducted in a workshop format should clients need to make major changes to the app.  
Our support team is available 24 hours a day to troubleshoot or help users with any technical needs.  We want to ensure that our clients’ app run efficiently 24/7.
We will also keep track of all usage data to provide clients with a measurement of the app’s performance.  We’ll monitor user feedback for feature additions / modifications.


Brand



AppUp differentiates from its competitors by offering exclusive features such as multiple services in one app, the ability to edit files between users simultaneously, and scheduling and timesheet reporting in the same platform.  The app is designed uniquely to the clients’ industry and tailored to the client’s exclusive business approach.
Our clients get additional value post app development from the extra services we provide after the app is up and running.  We develop and service our app products.  We strive to be with our clients every step of the way.  As mentioned in Service Tactic, we offer device setup, personnel training, and continual training.  We evaluate both the clients’ app and our exclusive features. 
Our brand does not stop there.  As we work with each individual industry and learn more about each industry’s needs, we will able to develop more effective features.  Our continuing development will provide additional value to our current and future clients.  


Pricing



Initial development of an app for an industry is very crucial to us.  We need the capital from this sale to recover our initial development cost.  We need these early adopters to help us understand their business and how to better tailor the app to fit their needs.  Therefore, we are offering the first three clients in any industry three months free of any subscription charges after the app is up and running. For our subscription charge, we offer three tiers depending on the volume of end users (see Pricing Strategy for more detail). In addition to subscriptions, we also encourage clients to sign contracts.  The contract will provide substantial discounts and private training to their end users.  


Incentive



By using AppUp for technology improvement, clients receive many incentives.  The most important is the time value cost.  Our app can be accessed both via mobile or desktop web, providing one source. Additional benefits include 24 hour support and training, volume discounts based on total users and contract length.  Clients pay less for each user as the number of users increase.  Clients may choose to sign a contract to receive a discount.


Communication



AppUp’s goal for communication is to get as much exposure as possible.  We want to educate the end users of the unlimited opportunities we can provide through development of an app for their companies.  For a small monthly fee, clients can have their own apps tailored to their industry and business needs. 
AppUp will utilize online media such as search engines and social media to get the most web exposure.  We will ensure that search engines such as Google, Yahoo, and Bing have AppUp listed first in their search for app development in the Houston area.  We will also maintain Facebook, Yelp, Twitter and Instagram accounts for AppUp.  We utilize all of the advertising features offered by these social media outlets to get as much exposure as possible.
AppUp will train the sales team of each base app’s features.  They will have the knowledge to set up devices and provide initial training for end users.  By having a well-trained technical sales team, we show our clients that we care for our products and clients. They will also attend and sponsor small business networking events such as Chamber of Commerce, SCORE, University of Houston Small Business Development Center, and the Greater Houston Partnership.
AppUp will also track which sources of communication delivered the clients.  We will have quarterly evaluations to evaluate which medium to focus on, and which we should eliminate.


Distribution



Since AppUp will have our own sales team, we are distributing our product through the direct channel structure.  We are working with all types of industries that have the need for mobile and web apps.  However, we will limit our clients to businesses with gross revenue above five million dollars per year.


EXECUTION

Workforce



There are four main components of the execution stage.  Each of these components, Planning Organizing, Directing and Controlling, serve to bring together one unified method of implementing each aspect of our business.  In the following we will focus upon the Workforce of AppUp, and how each of our components of execution play into keeping this very important sector of our company in the highest working order throughout our company’s development.
AppUp will initially employ an executive team including CEO, COO, CFO, CTO, and CMO. In addition to our executive team, we will employ a core developer that will oversee all the aspects of developing our core suites of applications as well as stay with us full-time through the growth of our company to see to any modifications that need to be made to the basic programming if problems are pointed out by our customers.  We will also hire two supporting developers that will assist our core developer in the first stage of our growth.  This supporting staff will be hired on a contractual basis, the term of which will last until the base platforms have been developed.  Their addition to the team will allow for the speediest development of our applications, yet, being contractual, their employment will save us money by allowing us to trim our expenditures for manpower once their purpose has been served. 
In our second stage of company growth, which embodies an expansion of our marketing to a wider clientele base, AppUp will hire the first customer service representatives.  In addition to our executive team, these employees will assist customers with technical problems and facilitate communication between customers and developers so that any issues can be promptly addressed.
The third phase of our company’s growth plan, moving outside the Houston market and becoming more reliant on web-based sales, will necessitate the addition of a training team to our workforce as well as a team of sales representatives.  Sales reps will allow our executive team to focus on running the company while still maintaining a face-to-face marketing presence.  Their pay will be commission based, so no extra capital will be needed for their employment.  However, the training team will be paid according to industry standards for salaries, and their main focus will be to help develop and execute training seminars for new customers so that every client understands how to use the apps. For each new position created, AppUp will develop job descriptions so that every employee has a clear understanding of their role within the company, eliminating ambiguity among the workforce.
The next aspect of our workforce execution focuses on organization to maximize the effectiveness of our business.  The goal is to grow the staff in accordance with our growth plan.  During the first phase, AppUp will rely heavily on the executive team to carry out marketing and sales to our early adopters.  In this stage, the other employees (software developers and programmers) will report to the Chief Technology Officer, who will oversee their work and ensure the apps being developed align with the company’s mission and vision.  In the second stage of growth, the additions of customer service representatives will be organized under our Chief Marketing Officer and will be located in our corporate headquarters.  In the final, and most dramatic of growth stages, we will install mid-level managers. Their role is to ensure even workload distribution among all employees and relieve the executive team of day-to-day operations.  By following this organizational plan, we believe AppUp can generate the most business possible with the smallest workforce needed, allowing the executive team to run the business  with a focus on the company’s mission and vision
We’ve established number of growth metrics that will allow us to ensure employees are being hired on only as needed within a specific department.  For example, we plan to add one customer service representatives for every fourth customer in order to ensure that each employee has an appropriate workload to provide exceptional customer service. The main purpose of a directing element is to ensure all employees are maximizing their job efficiency.  For that purpose, AppUp has developed job descriptions for each prospective position that will explicitly state the roles and responsibilities of each employee.  This will accomplish two goals.  First, each employee will be aware of the overall mission and vision of the company so they will not feel as if they are just a number in a faceless machine of a company.  Instead, we want each future employee to know that directions given from the executive team have purpose and align with our company’s goals so that everyone may prosper from AppUp’s success.  Second, these job descriptions will outline exactly what is expected of each employee.  This allows management to fairly evaluate the performance of each employee.
We have put together three metrics for maintaining performance standards within our workforce.  Like most companies, AppUp believes that a well incentivized employee makes for a more industrious employee, therefore, our metrics revolve around pay and the administration of bonuses for all employees.  The pay for most employees will be comparable to industry standards.  The developer and programmer positions will have base pays higher than industry averages in order to attract the best and brightest to AppUp.  Second, bonuses for every employee will be tied to customer satisfaction and quarterly work reviews.  For trainers this will translate into having an average of 95% of clients responding as being very pleased with the training provided. Customer service compensation will be tied to a similar customer satisfaction rating based on responses from a short survey offered to every caller.  For all other employees, performance metrics have been created to determine the percentage of target bonus received.  For programmers, work reviews based upon the amount of work done, the quality of work done, and the amount of problems stemming from their programming will be their guidelines.  Sales representatives will be paid and given bonuses based on the amount of business generated, in terms of new clients added, and the number of users tied to those accounts.  In this way our sales reps will have the incentive to sell our applications to larger companies and push the boundaries of our clientele base.


Cash

 

 

Planning

AppUp expects three stages for growth in the next three years, resulting in three stages of cash flow planning for the company.  The executive team, consisting of the company’s owners, is committed to investing in the company.  Therefore, during the first stage, the executive team will not receive any compensation.  As the company grows, executive salary increases to $35,000 and $55,000 for the following two years, respectively.   
AppUp will invest in upfront resources for the initial development of the basic three modules.  During the first year, AppUp will employ one core Senior Developer, two Junior Developers, and two Contract Developers.  During subsequent growth stages, the company will eliminate the Core-Senior Developer position.  Retaining the two Junior Developers ensures AppUp at least one developer onsite at the same expense of one Core-Senior Developer. 
During the second stage, AppUp establishes a 24-hours customer service team to service the increasing number of clients and end-users.  The budget for this team consists of $132,000 for six employees divided into three equal shifts.
To save money during the first two growth stages, AppUp rents server space from Rackspace.  The company plans to acquire its own servers during the final growth stage.  By renting servers, the company reduces maintenance costs and saves capital investments.  By the third stage, AppUp expects to hire three additional technicians for both server maintenance and training.  In addition, the company also expects to hire three sale representatives. 
For other office expenditures, AppUp will rent a small, 500 square-foot office in a Class B building.  This provides ample space for three workspaces for the employed developers, plus a conference room to meet with clients.  The company will buy minimal computer equipment for the developers and the executive team.
In additional to managing staff for the company, the executive team is expected to sell the products, resulting in a low advertising budget.


Organizing

The executive team needs $325,000 in order to start AppUp.  The company’s capital plan consists of owner-contributed capital and loans.  Each executive team member contributes $25,000, totaling $125,000 for the company.  The remaining $200,000 is borrowed from a bank through the SBA or Small Business Administration guaranty.  Loan terms are estimated at six percent interest rate for five years, with $3,866.56 monthly payments. 


Directing

AppUp’s executive team will assume multiple roles early on to reduce costs.  Each team member will be both a sale representative and a department manager, responsible for developing, training, accounting, and customer services.  As the company grows, middle management will be hired.


Control

AppUp’s revenue goals are $250,000, $500,000 and $1,100,000 for 2015, 2016, and 2017, respectively.  The company plans to control expenses by renting small office space, expanding only when necessary, renting servers, implementing a deferred executive compensation schedule, reducing workforce when unnecessary, and reducing advertising budget when additional staff is hired.  AppUp aims to maintain lower costs to benefit clients and end users. 


Operating Procedures



In order for AppUp to maintain a strong presence in the mobile and web application industry, we must create and implement effective operating procedures. These procedures will provide our team with the necessary means and methods to set ourselves apart from the competition. Also, properly implementing effective operating processes will allow our company to continuously improve and provide value to our customers, our collaborators, and our company. We must analyze our operating approach from four key perspectives: planning, organizing, directing, and controlling.
First, our executive team must develop organized, advantageous methods for planning our business operations. We will implement best practices, procedures, and guidelines for ourselves and our employees to utilize throughout all stages of business. These procedures will assure that the AppUp team is providing the utmost in quality and customer service. The use of these standards will also assist in maintaining a proficient, active work force. In addition, we will conduct employee and client surveys to ensure our procedures are meeting the needs of both groups.
Our firm will maintain an organized and efficient company structure. The organization of this structure will evolve as our firm progresses. Each member of our executive team will head the department of their respected expertise. In order to maintain coordination and reduce uncertainties in responsibility, we will provide occupation flowcharts. These flowcharts will allow our employees to recognize their role in the broader picture, as well as provide them with a career path reference.
The AppUp executive team must constantly evaluate company procedures and confirm they are aligned with the overall goals and direction of the company. Primarily, our goals must be well defined and realistic. We will hold weekly progress meetings for each ongoing project to ensure our methods are meeting the needs of the client as well as the project team. Also, the executive team will hold monthly management meetings to confirm our company is moving in the right direction in each aspect of our business.
Our company must also maintain controlled work processes and systems. We will develop and continuously refine our self-evaluation metrics to ensure our work processes continue to provide value to our customers, our collaborators, and our company. The team will conduct internal audits throughout each project, as well as a more detailed audit at the end of the project to recognize improvements and lessons learned. These developments will result in a more effective and efficient product delivery. We will also conduct employee and client surveys to gain knowledge and insight about potential enhancements at each stage of the project.


Assets



AppUp will utilize its website, application solutions, and online servers to deliver a cutting edge product to the customer.  We plan on hosting our products with Shopify, which will allow us to increase the functionality of our site as we expand our services across the US and abroad.  Our server will be hosted by Rackspace – a cloud-based server solution. They have a four-tier pricing structure that will allow us to scale as our business grows. 
We will not have a physical location in the beginning.  We plan on utilizing co-working space during startup to develop our website, applications, and online server with our collaborators.  Once the framework is built, we will utilize the co-working space as needed.  Most of our employees will work remotely, which will enable us to keep overhead low.  As the business grows, we will evaluate securing a physical location. 
Our Chief Technology Officer will monitor our assets daily to ensure that they are meeting our customer’s needs.  We will generate weekly reports to ensure that our server capacity, applications, and websites are running efficiently. 
During the development phase, our products will be required to go through various test phases to work out any issues prior to release.  The developers will be required to warrant their work for one year after final version of our app is complete.  We will keep key personnel on board to maintain the apps.  Copyrights of graphics, source code, and computer programs will be owned by AppUp.  Developers will agree to our terms prior to working for us. 
AppUp will control the number of users that access our applications by issuing unique user IDs to each user at each company.  We will perform periodic active log-in checks and ensure that our applications can only be used on one device at a time.  These controls will ensure that companies are not duplicating user IDs amongst their employees.  It will also help us to proactively upsell to our customers when it is time to increase their offerings. 



Appendices

Financial Proformas

REFERENCES

International Data Corporation: http://www.idc.com/getdoc.jsp?containerId=prUS24314413
Forbes: http://www.forbes.com/sites/louiscolumbus/2013/09/12/idc-87-of-connected-devices-by-2017-will-be-tablets-and-smartphones/
Gartner: http://www.gartner.com/newsroom/id/2592315
The Manager’s View (www.gwrresearch.com) by Gary Randazzo
The Mighty Middle (www.economist.com) Print Edition
The Lean Startup By Eric Ries
The Marketing Plan Handbook by Alexander Chernev
Khalaf, Simon. "Flurry Blog." Mobile Use Grows 115% in 2013, Propelled by Messaging Apps. N.p., 13 Jan. 2014. Web. 02 Apr. 2014.
Lessin, Jessica, and Spencer Ante. "Apps Rocket Toward $25 Billion in Sales." AllThingsD. N.p., 4 Mar. 2014. Web. 02 Apr. 2014.
"What’s Happening Right Now with Mobile Enterprise Application Development." VentureBeat. Klockwork, 4 Nov. 2013. Web. 02 Apr. 2014.
Brodkin, John. "How Mobile Technology Created a Workforce That Never Stops Working." Ars Technica. N.p., 14 Aug. 2013. Web. 02 Apr. 2014.
Gordan, Mary Ellen. "Flurry Blog." The History of App Pricing, And Why Most Apps Are Free. N.p., 18 July 2013. Web. 02 Apr. 2014.
The Managers View: 10 Considerations for Pricing a Product or Service by Gary Randazzo
The Managers View: What Role Does Pricing Play in Strategic Marketing? by Gary Randazzo
http://sixteenventures.com/sell-itself


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