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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 2.0 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 .3 .4 .4 .5 .6 .6 .6 .7 .7 .7 .7 .8 .8 .9

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 Competition . . . . . . . . . . 2.4 Services . . . . . . . . . . . . 2.5 Keys to Success . . . . . . . . 2.6 Critical Issues . . . . . . . . .

3.0

Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.1 Mission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.2 Marketing Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.3 Financial Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.4 Target Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 3.5 Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 3.6 Strategy Pyramids . . . . . . . . . . . . . . . . . . . . . . . . . . 10 3.7 Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.8 Marketing Research . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Financials, Budgets, and Forecasts 4.1 Break-even Analysis . . . 4.2 Sales Forecast . . . . . . 4.3 Expense Forecast . . . . . Controls 5.1 5.2 5.3 . . . . . . . . . . . . . . Implementation Milestones Marketing Organization . . Contingency Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 . 13 . 14 . 16 . . . . .7 1 17 18 18

4.0

5.0

Acme Insurance, Inc.
1.0 Executive Summary
By focusing on its strengths, its present client base, and new value-priced products in the next year, Acme Insurance plans to increase gross sales by 10% and profit by 15%. The Keys to Success and critical factors for the next year are, in order of importance: • Identify "Target Markets." • Begin the "Insurance Partners" program. • Provide small businesses with an affordable basic business package. Acme Insurance, Incorporated has been profitable, but recently Acme has had a declining market share and this must be addressed. Therefore our goals are: • To re-establish Acme Insurance, Inc. as the market leader in quality and value-priced insurance products in the Smalltown district. • Establish good working relationships with the present insurance markets by meeting with their decision makers and plotting a mutual plan for success. Get commitments for support and products that Acme can market in the trading area starting April 1st, 2003. • Investigate new markets that meet the marketing criteria by • committing to small rural brokerage; • providing products suitable to the economic and social climate; and • plans for the upload and download of insurance policies. • Provide sales incentives to staff to meet sales goals. • Complete inspection of all Pilot homeowners within one month before renewal date. • Formulate plans to acquire another brokerage. Acme Insurance, Inc. is dedicated to providing insurance products that provide quality protection with value pricing. Acme wishes to establish a successful partnership with the clients, staff members, and insurance companies, that respect the interests and goals of each party. Success will be measured by the clients choosing Acme because of their belief in Acme's ability to meet or exceed their expectations of price, service, and expertise. In order to implement our strategic goals, Acme will focus on developing the following tools. • Knowledgeable, friendly staff that can empathize with our consumers' needs and circumstances, especially in handling a loss. • Policies that meet or exceed the expectations of our clients, and that are affordable, available, and understandable. • Policies and endorsements delivered on time with minimal errors. • A commitment to an annual insurance review for all of our clients. A phone call is more than any direct mass marketer offers. Acme believes personal contact and service is the cornerstone of our success. Acme Insurance primarily markets and services Personal Lines Insurance. Its customers are mostly rural, lower income families or long-time resident senior citizens who demand value-priced insurance premiums in keeping with their lower and fixed incomes. Acme will also provide insurance to small business, mostly family-run seasonal operations primarily focused on the tourist trade. Acme Insurance is a privately incorporated company in thethe Smalltown district and is licensed to transact both Life and General Insurance. The shares are held equally by John Smith and Peter Smith. Acme has stressed to the insured the importance of good communication between the broker and client to insure proper coverage is in place. Acme has noticed as the clients become better informed about insurance that there has been a tremendous increase in clients wishing in-depth discussions about their policy coverage and how they can get the most value for their insurance Page 1

Acme Insurance, Inc.
dollar. The company's strength lies in the quality and depth of our products and staff. The offices, unlike the competition, are open six days a week. Because of Acme's larger staff, they are able to service the clients even when a client's broker is busy or out of the office on inspections. The Real Estate division, which is a separate company, helps with market value and replacement cost analysis when required. The past few years have seen tremendous upheaval in the insurance industry. The number of players has decreased in both the broker and company communities. The recession has curtailed insured from properly maintaining their homes and automobiles, and insurance fraud has become a major issue for the entire insurance industry. Brokers are concerned that in spite of commission reductions, quotas, contract cancellations, and refusal to write new auto business by some markets, they now may find themselves in competition with some of the traditional broker distribution companies that are setting up direct marketing facilities and branches. The banks now have announced they will open stand alone insurance offices to retail insurance. In spite of the above, Acme believes that the independent broker will survive. Acme is more automated than most service industries. Acme is close to the customer, regardless of some insurance companies' attempts to sever the traditional broker-client relationship. The clients, in most cases, still do not care or know which company they are placed with. They trust Acme's judgment in selecting the proper coverage and company. Based on these changes in the goals, outlook, and company culture, Acme anticipates that they will be able to make revenues of approximately $750,000 by year three of the plan and a net profit of $170,000. The company does not anticipate any cash flow problems.

Annual Sales Forecast

$3,000,000 $2,500,000 $2,000,000

Senior Citizens
$1,500,000 $1,000,000 $500,000 $0 2003 2004 2005

Lower Income Families Small Businesses

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Acme Insurance, Inc.
2.0 Situation Analysis
The original incarnation of Acme Insurance was created as a sole proprietorship in 1938. Four generations of Smiths have worked at Acme. Acme has built a loyal customer base selling primarily life and general insurance that includes auto insurance as well as packages for small businesses. The business has done well over the years, but the current principals desire to take Acme to the next level. The basic market need is a comprehensive insurance brokerage that has developed clear lines of communication with the client. With better communication, Acme will be able to offer better value to our customers by addressing their true needs. The need to establish close, effective relationships with clients is a priority at Acme and a competitive edge.

2.1 Market Summary
Having operated in the same town for over 64 years, Acme has developed good information about the common attributes of the most prized and loyal customers. This information will be leveraged to continually collect information about the customers in the "holy grail" of better serving them, meeting their specific needs, and learning the most efficient and effective means of communicating with them.

Target Markets

Senior Citizens Lower Income Families Small Businesses

Table 2.1: Target Market Forecast Target Market Forecast Potential Customers Senior Citizens Lower Income Families Small Businesses Total Growth 7% 8% 8% 7.52% 2003 8,734 8,044 1,098 17,876 2004 9,345 8,688 1,186 19,219 2005 9,999 9,383 1,281 20,663 2006 10,699 10,134 1,383 22,216 2007 11,448 10,945 1,494 23,887 CAGR 7.00% 8.00% 8.00% 7.52%

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Acme Insurance, Inc.
2.1.1 Market Demographics
The profile for Acme Insurance's customer consists of the following geographic, demographic, and behavior factors: Geographics: • The immediate geographic target is Small town, with a year-round population of 13,000, and a summer time population of 25,000. • A 100-mile geographic area is in need of our services. • The total targeted population is 17,876. Demographics: • Male and Female. For the auto insurance and life insurance products, the ratio of male to female is 54:46. For the small business products, the ration changes to 64:36 male:female. • The average age of the customer is 54 years old. • Only 37% of the customers have attended some college. • The average household income is $34,000. • The family composition of the customers is two adults, 3.1 children. • The unemployment rate is 8%. Behavior Factors: • Are a part of a close-knit community. • Most social activities are sponsored by social organizations within the community such as Kiwanis and Rotary. • Most business decisions are based on a trust relationship established by being an active member of the community.

2.1.2 Market Needs
Acme Insurance is providing their customers with a personalized, close communication advising/brokerage relationship for insurance products. Acme seeks to fulfill the following benefits that are important to their customers. • Selection- The ability to offer a wide selection of insurance products to the rural population of Smalltown. • Knowledgeable staff- This benefit is very important to the insurance brokerage business as the interaction between staff and the customer is what Acme is truly offering. • Customer service- Customer's expectations must be exceeded. If this is accomplished, word will spread fast within this small, rural, close-knit community.

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Acme Insurance, Inc.
2.1.3 Market Trends
The past few years have seen tremendous upheaval in the insurance industry. The number of players has decreased in both the broker and company communities. The automobile product has, in the mind of the public, become unaffordable, unavailable, and impossible to understand. The recession has curtailed insured from properly maintaining their homes and automobiles, and to exacerbate the situation, many clients have turned to wood heat and started doing their own repairs and maintenance that may have increased the number and severity of claims. Insurance fraud has become a major issue for the entire insurance industry. The traditional close relationship with our companies has been strained. Brokers are concerned that in spite of commission reductions, quotas, contract cancellations, and refusal to write new auto business in some markets, they now may find themselves in competition with some of the traditional broker distribution companies that are setting up direct marketing facilities and branches. The banks, even though thwarted by the federal government in its last budget to retail insurance from their premises, will continue pressure on the government and now have announced they will open stand alone insurance offices to retail insurance. In spite of the above, Acme believes that the independent broker will survive. Acme is more automated than most service industries. Acme is closer to the customer, regardless of some insurance companies' attempts to sever the traditional broker-client relationship. The clients, in most cases, still do not care or know which company Acme places them with. They trust our judgment in selecting the proper coverage and company for them. The new federal government is close to adopting a new automobile contract that hopefully will make it affordable, understandable, and available to the clients. A profitable automobile product will entice the companies to aggressively seek new sales and more brokers will see companies offering contracts. Upload/download capabilities are in many broker's offices, including our own. This will cut costs, improve efficiency and accuracy, and help us meet the competition from banks and direct writers. Companies that truly value and trust the broker distribution system will align themselves with professional brokers and grant more underwriting authority similar to Lloyds.

Market Forecast
25,000

20,000

15,000

Senior Citizens Lower Income Families Small Businesses

10,000

5,000

0 2003 2004 2005 2006 2007

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Acme Insurance, Inc.
2.1.4 Market Growth
In 2001, the national insurance market was a $43 billion industry. Insurance sales are forecasted to grow at 6% for the next four years. Insurance is a part of life in the Canada. Some insurance is required such as automobile. Other insurance such as life and home is not required but is a very sensible way of reducing risk. Within Canada, 87% of the population have some form of insurance. Because of the large rate of adoption and its mandatory nature in some segments, the insurance industry will be a growth industry for years to come.

Target Market Growth
8.00% 6.00% 4.00% 2.00% 0.00%

2.2 SWOT Analysis
The following SWOT analysis captures the key strengths and weaknesses within the company and describes the opportunities and threats facing Acme Insurance.

2.2.1 Strengths
• Well trained staff. • In-depth knowledge of the industry. • Comprehensive customer insight.

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Acme Insurance, Inc.
2.2.2 Weaknesses
• A limited number of people inhabiting Smalltown. • The high costs of switching current insurance consumers from a competing firm to Acme. • The struggle to stay ahead on the technological adoption curve in a small, rural community.

2.2.3 Opportunities
• Participation within a growth industry. • Increased sales through an expansion of the current service offerings. • As the company continues to grow, the ability to decrease fixed costs over a growing customer base.

2.2.4 Threats
• Competition from local brokerages that respond to Acme's superior offerings. • A significant slump in the economy that will likely have a correlated effect on the industry. • A single of series of huge, unexpected, traumatic events that put significant strain on the financial health of the insurance industry as a whole.

2.3 Competition
Competition is found in five forms: local indeendent brokers, agents, mass market providers, mass merchandise programs and group plans. Local Independent Brokers • Cal Roberts, Patrick C. Johnson, Rob Champlain Strengths - Alternate markets, especially small farm mutuals, that still continue to give low prices, still continue to write wood stoves, and allow discounts and underwriting terms. • Weakness - Most are smaller, one-man operations that do not have the backup or finances to aggressively impact the marketplace. Agents (such as Co-operators) • Strengths - Large advertising budget and competitively priced products. Their commercial business is difficult to compete against in some cases because they seem to not have the same restrictions on underwriting as our markets. Also they have large capacity to write certain risks. • Weakness- One small operation that does not have the same hours as Acme's offices. Staff, because of salary, do not appear to be very knowledgeable or aggressive. Mass Market Providers • Strengths - Large advertising budget and very competitive prices. • Weakness - Not local and largely unknown to the clients at the present time. Mass merchandise programs heavily advertised over the radio such as "Gray Power." • Strengths - Price. Page 7

Acme Insurance, Inc.
• Weakness - A still untried, unknown quantity. Group Plans - Teachers, Public Employees • Strength - Group pricing. • Weakness - Very little obviously, since we insure very few of the professions.

2.4 Services
Acme Insurance is committed to providing professional sales and service for its insurance customers. Acme has established what they consider to be an excellent reputation in our area, and are the largest multi-line insurance broker in our trading area. Acme Insurance provides home, automobile, and business insurance in the Smalltown district. Acme takes pride in knowing that for over 50 years they have helped clients to find the best coverage at the right price that suits their needs and expectations. In the event of a claim, the clients know that Acme is there to provide help and counsel to ensure a fast, speedy claim settlement. Like other independent brokers, Acme issues binders and new policies, endorsements and process renewals. Acme has stressed to the insured the importance of good communication between the broker and client to insure proper coverage is in place. Acme has noticed as the clients become better informed about insurance that there has been a tremendous increase in clients wishing in-depth discussions about their policy coverage and how they can get the most value for their insurance dollar. Acme also provides insurance services to non-clients, such as lawyers and mortgages, to ensure the mutual clients have proper coverage and binding notes in place for the purchase of homes, businesses, and automobiles.

2.5 Keys to Success
Acme believes the keys to success in a small town insurance business are: 1. 2. 3. 4. Knowledgeable, friendly staff that can empathize with our consumers needs and circumstances, especially in handling a loss. Policies that meet or exceed the expectations of the clients, and that are affordable, available, and understandable. Policies and endorsements delivered on time with minimal errors. A commitment to an annual insurance review for all of our clients. A phone call is more than any direct mass marketer offers. Acme believes personal contact and service is the cornerstone of success.

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Acme Insurance, Inc.
2.6 Critical Issues
Acme Insurance is an established, family business that is pursuing new growth strategies. The critical issues that we face are: • Pursue controlled growth that dictates that payroll expenses will never exceed sales revenue. • Constantly monitor customer satisfaction, ensuring that the growth strategy will never compromise service and satisfaction levels.

3.0 Marketing Strategy
1. 2. 3. 4. 5. Emphasize service and support. Build a partnership business based on account selling. Focus on senior, claims-free personal lines business and the profitable, well-run, small family business. Target small, non-franchise business that does not have access to group insurance plans. Investigate acquiring other brokerages in the area.

3.1 Mission
Acme Insurance's mission is to provide the finest level of insurance services. We exist to attract and maintain customers. With a strict adherence to this maxim, success will be insured. Our services will exceed the expectations of the customers.

3.2 Marketing Objectives
1. 2. 3. Increase market share by 1% per quarter. Reinforce a market image as the finest service provider in the industry. Increase the ability to forecast which prospective customers are going to have the least number of claims and convert them into long-term clients.

3.3 Financial Objectives
1. 2. 3. Increase profits by 2% a quarter. Hold customer acquisition costs steady. Decrease the costs associated with serving distant clients.

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Acme Insurance, Inc.
3.4 Target Marketing
The market consists of senior citizens, lower-income young families (many of who are on social assistance) and the small, family-run business (many of which are seasonal and based on the tourist trade). Acme is cautious about encouraging business from lower income prospects since they tend to have wood heat, homes in poor repair, and many attempt to install and repair their own plumbing, wiring, and heating systems.

3.5 Positioning
Acme Insurance is being positioned as a comprehensive, personal insurance broker serving clients through close, personal service. Acme will serve all of Smalltown, which is a widely dispersed, rural community. Acme will leverage our competitive advantages which consists of the following: • Knowledgeable industry participants- Having established the company in 1938, Acme has amassed a huge amount of industry knowledge based in empirical experience. Having significant experience provides the entire company with a vast amount of industry knowledge that Acme is able to leverage and offer as value to the clients. • Close personal customer relationships- The business model is based on the staff developing close, communicative relationships with clients. The stronger and more open the relationship is, the more value and higher level of service that can be offered. While other insurance brokerages claim to offer closer personal contact, this business philosophy has been cultured within Acme and all of its employees. Because these types of relationships are so fundamental to Acme's practices, everyone in the firm practices them, consciously and subconsciously.

3.6 Strategy Pyramids
The main focus of Acme's marketing plan is the establishment of Acme Insurance as the premier, customer-centric insurance brokerage serving the Smalltown area. The marketing strategy will seek to continually develop customer awareness regarding the services offered, develop the customer base, and constantly build customer loyalty and referrals. This strategy will be implemented by communicating that Acme can better serve Smalltown's insurance needs. This message will be communicated through a variety of methods. The first method of communication is through advertisements in the Yellow Pages. A second method of communication will be the distribution of sales literature. Acme has recently produced a pamphlet titled "Insurance Partners" that stresses that a successful insurance partnership between the client, the broker, and the company is based upon a new concept. Not only do the broker and the company take responsibility for proper protection and indemnity in the event of loss, but in the 2000's, the client must also take his/her share of responsibility to insure the safety of his/her property by keeping it well maintained and using qualified professionals to update or change the heating, electrical, and plumbing systems in his home. Acme stresses that multiple claims or claims arising out of poor maintenance may adversely affect his/her insurance. In addition to the above, the brokerage uses a number of boilerplate letters on our computer system that are sent along with various types of policies explaining unique features or limitations in the contracts to avoid possible Errors and Omissions claims. They also encourage the clients to Page 10

Acme Insurance, Inc.
contact Acme about reviewing their coverages and promote other products and services Acme provides. A third method of communication will be several insurance workshops that are offered throughout the year to the Smalltown community. The purpose of the workshops is multi-fold. One aim is the education of the consumer to the different services that the insurance industry and insurance brokers offer. Primarily, the goal of the seminars is to introduce customers to Acme, the services provided, Acme's in-depth knowledge, and care for customers. Some of the seminars will be targeting seniors, others will be address a general audience.

3.7 Marketing Mix
Acme Insurance's marketing mix is comprised of the following approaches to pricing, distribution, advertising and promotion. Pricing- The customers are especially sensitive to value. Acme must ensure that our price and service are perceived to be good value to the client. Our markets must offer several payment options to our clients that are convenient to the client, not just to the company. Example - payment on insured's preferred day of month, not on the company's, and accepting payment by credit or debit card. Many insureds are on a fixed income and receive their income on a set day of each month or a paycheck on a particular day. Acme is seeing the commercial markets now moving toward basic coverage and limiting the "bells and whistles," all-risk products available to only those clients who have modern, well-managed, profitable, low-risk operations. This should help stabilize pricing and, even more important, ensure that there is an insurance market available for most risks. Continued insistence by the industry on better proactive protection, i.e. fire and burglar alarms, upgrading of buildings, etc., has started to lower loss ratios. Many of the larger insurance markets have increased minimum premiums to $1,000 for any commercial package policy. The Lloyds market should be able to accommodate these customers with a minimum premium of approximately $600. Distribution- This will occur both at Acme's offices as well as on occasion at the insured's home. Advertising and Promotion- Acme has depended in the past on a small advertisement in the local newspaper, listings in the Yellow Pages, and word of mouth. Acme must begin to investigate alternate ways to put its name in front of the public. 1. All advertising has to emphasize the differentiation points rather than just price. Acme will be developing a "Now what do I do?" message to emphasize the need for dealing with Acme's insurance professionals so that in the event a loss occurs, you know you have the proper protection. Acme must sell the company, not the product. In spite of some companies' efforts to minimize the importance of the broker, the clients still identify with the broker, not the insurance company. Acme Insurance must improve and increase contacts with the clients. All clients should be contacted before renewal to ensure covers are current and adequate. Also, new insurance should be solicited. Make contacts and support senior citizen groups and cottage associations. Identify sports and hobby groups that involve seniors and cottagers. Additionally, two other methods will be employed, distribution of printed material and the hosting of free public seminars.

2. 3. 4.

Customer Service- The reality of the insurance brokerage industry is that the service is the Page 11

Acme Insurance, Inc.
product. Insurance is a commodity-like purchase and it is the service of the broker that distinguishes providers. With this important fact recognized, Acme strives to provide the highest level of customer service.

3.8 Marketing Research
While the most recent rendition of the marketing plan was being completed, Acme conducted primary market research. The market research that Acme collected was in the form of questionnaires. Theses were given to current as well as prospective customers. The goal of the questionnaires was to collect insight and perspective from our target customers. The forms were designed by a graduate student in the statistics department. An expert was employed to ensure the validity of the forms. A total of 200 forms were handed out and 68 were returned completed. The results of the surveys were that some of the originally held assumptions were confirmed. Additionally, there were many different beliefs/ perspectives that were unexpected but observed in the surveys. Overall, the questionnaires were a valuable form of primary market research that has been instrumental in the completion of this marketing plan.

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Acme Insurance, Inc.
4.0 Financials, Budgets, and Forecasts
This section will offer a financial overview of Acme Insurance as it relates to the marketing activities. Acme will address break-even analysis, sales forecasts, expenses forecasts, and how these link to the marketing strategy.

4.1 Break-even Analysis
The break-even analysis indicates that $21,667 is needed in monthly revenue to reach the breakeven point.

Break-even Analysis
$6,000 $4,000 $2,000 $0 ($2,000) ($4,000) ($6,000) ($8,000) $0 $7,200 $14,400 $21,600 $28,800 $36,000

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 217 $21,667 $100.00 $70.00 $6,500

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Acme Insurance, Inc.
4.2 Sales Forecast
Acme wants to emphasize the benefit of dealing with professionals who live and work in the client's area. Acme knows their needs and their problems and has a local reputation to protect, unlike an out-of-town market. If the out-of-town broker fails to provide proper cover or advice, they lose one client. Acme could stand to lose many if the public perceives a professional failure on our part. This theory is validated by the masse exodus of Andersen clients after the Enron scandal and during the Justice Department's investigation. Competitive prices for our identified target markets. Discounts of up to 25% for claim-free seniors who renew their home insurance with Acme. Careful inspection and the judicious use of deductibles and warranties for insureds using wood stoves should help alleviate company concerns about solid fuel heating devices. Competitive pricing is not an important factor to attract business because competition is very limited for primary wood heat houses in our area. This may provide a chance to pick up all of the insured's business because, in many instances, they contact Acme after being told by their previous broker that, in spite of their claim-free status, the broker doesn't want their house insurance. Business partners provide us the opportunity to sell lower-priced, basic insurance coverage to our clients. Many clients have expressed interest in retaining part or all of the insurance risk, especially for burglary. They feel that if they have installed central alarms and bars, they can take the chance of self-insurance. The following table and related charts show our present sales forecast. Acme is projecting sales to grow at 10% for the coming year and to continue into 2005.

Monthly Sales Forecast
$70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Senior Citizens Lower Income Families Small Businesses

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Acme Insurance, Inc.

Table 4.2: Sales Forecast Sales Forecast Sales Senior Citizens Lower Income Families Small Businesses Total Sales Direct Cost of Sales Senior Citizens Lower Income Families Small Businesses Subtotal Cost of Sales 2003 $222,107 $237,383 $172,864 $632,354 2003 $155,475 $166,168 $121,005 $442,648 2004 $246,550 $239,009 $176,889 $662,448 2004 $172,585 $167,306 $123,822 $463,714 2005 $2,255,789 $245,443 $183,097 $2,684,329 2005 $1,579,052 $171,810 $128,168 $1,879,030

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Acme Insurance, Inc.
4.3 Expense Forecast
Marketing expenses are to be budgeted so that they are higher during the parts of the year when more insurance is sold. There is an increase in sales of personal insurance during the summer months and sometimes continuing into the fall. There is an increase in business sales during the first quarter of the year. The marketing expenses will correspond with this sales trend.

Monthly Expense Budget
$1,200 $1,000 $800

Advertisements
$600 $400 $200 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Printed Material Public Seminars

Table 4.3: Marketing Expense Budget Marketing Expense Budget Advertisements Printed Material Public Seminars Total Sales and Marketing Expenses Percent of Sales Contribution Margin Contribution Margin / Sales 2003 $6,775 $800 $810 -----------$8,385 1.33% $181,321 28.67% 2004 $7,544 $800 $900 -----------$9,244 1.40% $189,490 28.60% 2005 $8,012 $800 $940 -----------$9,752 0.36% $795,547 29.64%

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Acme Insurance, Inc.
5.0 Controls
The purpose of Acme Insurance's marketing plan is to serve as a guide for the organization. The following areas will be monitored to gauge performance: • • • • Revenue- monthly and annual. Expenses- monthly and annual. Customer satisfaction. New customers as a percent of overall revenue.

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

Milestones
Marketing Plan Completion

Advertising Campaign #1

Advertising Campaign #2

Public Seminar #1

Public Seminar #2

Public Seminar #3 Jan Feb Mar Apr May Jun Jul Aug Sep

Table 5.1: Milestones Milestones Milestone Marketing Plan Completion Advertising Campaign #1 Advertising Campaign #2 Public Seminar #1 Public Seminar #2 Public Seminar #3 Totals Plan Start Date 1/1/03 2/1/03 5/1/03 3/1/03 5/1/03 7/1/03 End Date 2/1/03 4/31/2003 8/1/03 4/25/03 6/30/03 9/30/03 Budget $0 $1,800 $2,250 $225 $225 $195 $4,695 Manager John Smith John Smith John Smith John Smith John Smith John Smith Department

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Acme Insurance, Inc.
5.2 Marketing Organization
John Smith is ultimately responsible for the marketing activities. John will rely on many members of the organization to achieve the marketing goals.

5.3 Contingency Planning
Difficulties and Risks • Problems generating new business. • The constant need for the highest level of training and recruitment of employees. • Significant market penetration of telephone/Internet based insurance brokers. Worst Case Risks May Include • Growth at a rate that exceeds current revenue. • Having to liquidate equipment to cover liabilities. • Significant regulatory changes in the insurance industry.

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Appendix: Acme Insurance, Inc.
Table 4.2 Sales Forecast Sales Forecast Sales Senior Citizens Lower Income Families Small Businesses Total Sales Direct Cost of Sales Senior Citizens Lower Income Families Small Businesses Subtotal Cost of Sales Plan Jan $17,652 $18,767 $15,454 $51,873 Jan $12,356 $13,137 $10,818 $36,311 Feb $12,343 $11,836 $6,765 $30,944 Feb $8,640 $8,285 $4,736 $21,661 Mar $15,456 $17,679 $9,887 $43,022 Mar $10,819 $12,375 $6,921 $30,115 Apr $16,000 $17,122 $10,008 $43,130 Apr $11,200 $11,985 $7,006 $30,191 May $18,776 $19,887 $14,099 $52,762 May $13,143 $13,921 $9,869 $36,933 Jun $20,997 $21,665 $16,775 $59,437 Jun $14,698 $15,166 $11,743 $41,606 Jul $21,554 $22,543 $17,009 $61,106 Jul $15,088 $15,780 $11,906 $42,774 Aug $20,887 $21,778 $16,886 $59,551 Aug $14,621 $15,245 $11,820 $41,686 Sep $21,667 $22,766 $17,887 $62,320 Sep $15,167 $15,936 $12,521 $43,624 Oct $23,445 $24,667 $19,876 $67,988 Oct $16,412 $17,267 $13,913 $47,592 Nov $17,665 $21,008 $14,997 $53,670 Nov $12,366 $14,706 $10,498 $37,569 Dec $15,665 $17,665 $13,221 $46,551 Dec $10,966 $12,366 $9,255 $32,586

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Appendix: Acme Insurance, Inc.
Table 4.3 Marketing Expense Budget Marketing Expense Budget Advertisements Printed Material Public Seminars Total Sales and Marketing Expenses Percent of Sales Contribution Margin Contribution Margin / Sales Jan $600 $400 $100 -----------$1,100 2.12% $14,462 27.88% Feb $450 $0 $125 -----------$575 1.86% $8,708 28.14% Mar $750 $0 $100 -----------$850 1.98% $12,057 28.02% Apr $850 $0 $125 -----------$975 2.26% $11,964 27.74% May $400 $0 $50 -----------$450 0.85% $15,379 29.15% Jun $450 $400 $65 -----------$915 1.54% $16,916 28.46% Jul $550 $0 $80 -----------$630 1.03% $17,702 28.97% Aug $600 $0 $90 -----------$690 1.16% $17,175 28.84% Sep $800 $0 $50 -----------$850 1.36% $17,846 28.64% Oct $900 $0 $25 -----------$925 1.36% $19,471 28.64% Nov $200 $0 $0 -----------$200 0.37% $15,901 29.63% Dec $225 $0 $0 -----------$225 0.48% $13,740 29.52%

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