CAP Business Plan

Lycoming College
Business 441 W
Business Plan
Colton Dershem and Anh Phan

1
Table of Contents
Executive Summary....................................................................................................................................3
Company Description.................................................................................................................................5
Industry Analysis........................................................................................................................ 7
Industry Size, Growth Rate, and Sales Projections ........................................................................ 7
Industry Characteristics and Structure.......................................................................................... 9
Nature of Participants...............................................................................................................10
Key Success Factors.................................................................................................................14
Industry Trends .......................................................................................................................15
Long Term Prospects................................................................................................................16
Market Analysis ........................................................................................................................17
Market Segment.......................................................................................................................17
Target Market Size...................................................................................................................18
Buyer Behavior .......................................................................................................................19
Competition Analysis...............................................................................................................20
Estimate of Annual Sales and Market Share ................................................................................21
Marketing Plan..........................................................................................................................23
Overall Marketing Strategy .......................................................................................................23
Positioning..............................................................................................................................24
Product Attribute Map..............................................................................................................24
Pricing Strategy .......................................................................................................................25
Promotional Activities..............................................................................................................26
Annual Marketing Budget.........................................................................................................27
Management Team and Company Structure...............................................................................28
Management Team...................................................................................................................28
Skills Profile and Gaps in Management Team .............................................................................28
Ownership and Compensation ...................................................................................................29
Other Professionals ..................................................................................................................30
Organizational Chart ................................................................................................................31
Job Descriptions ......................................................................................................................32
Company Culture.....................................................................................................................33

2
Operations Plan.........................................................................................................................34
Operations Model and Procedures..............................................................................................34
Business Location....................................................................................................................35
Manufacturing.........................................................................................................................35
Distribution.............................................................................................................................36
Timeline .................................................................................................................................36
Challenges and Risks................................................................................................................36
Intellectual Property.................................................................................................................37
Financial Projections .................................................................................................................38
Statement of Sources and Uses of Funds.....................................................................................38
Assumptions Sheet...................................................................................................................39
Income Statement 2016 (First Year of Business)..........................................................................43
Income Statement 2017 (Second Year of Business)......................................................................44
Income Statement 2018 (Third Year of Business) ........................................................................45
Balance Sheets ........................................................................................................................46
Statement of Cash Flows...........................................................................................................47
Ratios.....................................................................................................................................47
Appendices................................................................................................................................48
First Screen.............................................................................................................................48
Concept Statement ...................................................................................................................57
Concept Statement Feedback.....................................................................................................58
Consumer Survey and Analysis .................................................................................................61
Company Logo........................................................................................................................65
Design....................................................................................................................................66
Website ..................................................................................................................................67
Facebook ................................................................................................................................68
Works Cited ..............................................................................................................................69

3
Executive Summary
Introduction
The growth rate in 2013 for office supplies (including paper and other products) was 4.9 percent.
The industry’s growth has been driven by younger students because of educational enrollment.
Also, the industry relies on large office buildings which use the supplies rapidly. However, there
is a gap in the market because the only current offerings for pens include writing purposes. CAP
plans on filling that gap in New York City by opening a pen company that offers flavor infused
plastic pens.
Company Description
CAP is proposing to operate a 160 square foot office in Newark, New Jersey, which is only a
small commute away from New York City. New York City is an ideal location to do business
because there is a large population of college students. The company plans on selling pens that
are infused with flavor in order to give the customer an exciting and new experience.
Industry Analysis
CAP will compete in the “Office Supplies (except Paper) Manufacturing” industry (NAICS
3339940 and SIC 3951). The industry is comprised of office machines, marking devices, art
goods, and writing instruments. The largest segment of the industry is art goods, which embodies
33 percent of industry revenue. Pen and pencils ranks second with 24 percent of revenue.
Recognized companies in the industry included 3M, BIC, and Pilot.
Market Analysis
CAP’s target market consists of college students around the ages of 18-24 in New York City who
might be stressed and nervous about their academic workloads and try to find the way to relieve
those negative emotions. However, the target market also includes non-traditional students that
may be older than 24. The following table represents CAP’s projected sales revenue and market
share for the first three years of operations.
Year Market Share Unit Sold Sales Revenue
2016 7.2% 149,000 $ 445,510
2017 10.5% 223,800 $ 669,162
2018 13.3% 292,000 $ 873,080

4
Marketing Plan
The overall goal of CAP’s marketing is to make customers aware of our product and its benefits.
CAP’s approach will be through the use of social media and point of sales advertising. The social
media platforms will include a website, Facebook, Twitter, and YouTube. Points of display
advertisements include flyers, cardboard cut outs, and free samples.
Management Team and Company Structure
CAP’s management philosophy is based on customer service and open communication. CAP
strives to show attention to the customers but also make the work environment fun at the same
time. CAP will be start as a two member team, which includes the CEO and cofounder, Colton
Dershem, and the CFO and cofounder, Anh Phan. The team plans on hiring a CMO in the third
year as market share increases.
Operations and Development Plan
CAP will operate out of a fully functioning office space that is 160 square feet. The office space
was extensively analyzed and was proven to be the best location because of the proximity to the
consumers and suppliers. CAP plans on sacrificing extra space in order to cut down expenses.
The product will be sold through campus stores in the New York City area.
Financial Projections
The business plan includes a full set of pro forma income statements, balance sheets, and a
statement of cash flows for the first three years of operations. CAP is expecting no sales revenue
for the first two months in order for the manufacture to create our product. CAP’s sales are
expected to increase 3 percent each year to match with the 3 percent annual growth of the U.S.
Office Supplies Manufacturing Industry. CAP expects a net loss of $45,861 in the first year, a
net income of $13,251 in the second year, and a net income of $54,236 for the third year.
Overall, the company will remain cash flow positive throughout its startup period.
Funding sought
The company is seeking a $50,000 investment.

5
Company Description
Introduction
CAP is proposing to manufacture and distribute toxin-free plastic pens with the plastic infused
with flavors. While offering new flavor experiences, the product is safe for customers to chew on
in order to relieve stress and negative emotions.
CAP’s cofounders are Colton Dershem and Anh Phan, who are both seniors majoring in
Business Administration at Lycoming College.
Company History
In the spring 2015 semester, Colton and Anh noticed that there were many students chewing on
their pencils and pencils in class. They then thought to themselves, “Why doesn’t a company
make a product that caters to solve this problem?” If people are already chewing on their pens
and pencils, why not make a product that can exploit the market? At this time Colton and Anh
completed a feasibility analysis, which validated the idea for the product.
In January 2016, CAP is incorporated. CAP stands for Colton & Anh Pen, Inc. The company is
headquartered in Newark, New Jersey and sells products targeted towards college students in
New York City.
Mission Statement
The mission of CAP is to provide its customers with products that are safe in a distinct
experience that previously was unknown.
Tagline
The company’s tagline, which will be important for future branding strategies, is “When you’re
stressin’ out, just chew it out.” The tagline came about when the founders, Colton and Anh, were
brainstorming benefits of the suggested product. There are multiple instances of research that
suggest chewing on things helps cognitive abilities and relieve stress1
. Therefore, this tagline
gives a brief example of what the product can do for you.
Product
The product design of CAP is strongly guided by its own target segment. The unique features
that differentiate CAP’s product are toxin-free materials and flavorful plastic. There were two
steps that CAP took to properly determine the target segment’s interests and preferences. First,
CAP distributed its concept statement to professionals, who have expertise in investing,
accounting, and advertising, to seek for advices. Secondly, CAP conducted a survey from a
sample of 30 college students at Lycoming College.
1
Smith, Andrew. "Effects of Chewing Gum on Cognitive Function, Mood and Physiology in Stressed and Non-
stressed Volunteers." Nutritional Neuroscience 13, no. 1 (February 01, 2010): 7-16.

6
Based on the results of these two steps, CAP will manufacture and distribute the product with the
following functions:
● The plastic of CAP pen is toxin-free and allows customers to chew on it to relieve stress
and nervousness without being exposed to poisonous materials.
● The plastic of CAP pen is infused with the variety of flavors to provide customers with
new experiences when they chew on their pens.
● There are variety of flavors, including coffee, fruits, and mint, that are signified by a
variety of colors. This is also for personal interests and preferences.
● Two major ink colors are black and blue.
Funding Sought
As described in detail in the business plan, CAP is seeking $50,000 in investment capital.
Legal Status and Ownership
CAP is a Limited Liability Corporation incorporated in the state of New Jersey. It is currently
owned by its founders but equity will be given up for an investment in our business. A detailed
schedule of ownership is provided in the “Management Team and Company Structure”2
section
of the plan.
2
CAP, “Management Team and Company Structure,” 2015.

7
Industry Analysis
Industry Definition
CAP is classified under “Office Supplies (except Paper) Manufacturing” industry with the
NAICS code of 339940. The associated SIC code is 3951, which represents pens and mechanical
pencils. The industry is comprised of office machines, marking devices, art goods, and writing
instruments. The largest segment of the industry is art goods, which embodies 33% of industry
revenue. Pen and pencils ranks second with 24 percent of revenue. Major products include pens,
pencils, markers, crayons, chalk, modeling clay, and staplers. Major U.S. based companies
include 3M Company, ACCO Brands, and AT Cross. Two major international brands are BIC
(France) and PILOT (Japan).
Industry Size, Growth Rate, and Sales Projections3
United States offices services & supplies market value: $billion, 2009-2013
2009 2010 2011 2012 2013
Industry Market
Value
$82.5 billion $82.9 billion $84.8 billion $86.7 billion $91.0 billion
Industry Growth
Rate
- 0.5% 2.2% 2.3% 4.9%
Source: MarketLine, Jan 31, 20154
3
, 4
"Office Services & Supplies Industry Profile: United States." MarketLine, October 1, 2014, 1-31. Accessed
January 31, 2015.

8
The United States office services and supplies market value had a significant growth of 4.9
percent to $91.0 billion in 2013. MarketLine reports that the compound growth rate for the
period from 2009 to 2013 was 2.5 percent, which was the moderate growth rate5
. Significant
sales increase in 2013 was the reason for the overall betterment of the industry.
Industry Sales Projections
United States offices services & supplies market value forecast: $billion, 2014-2018
2014 2015 2016 2017 2018
Industry Market
Value
$92.3
billion
$93.4
billion
$95.9
billion
$97.7
billion
$99.4 billion
Industry Growth
Rate
1.5% 1.2% 2.6% 1.9% 1.7%
According to MarketLine, from 2014 to 2018, the United States office services and supplies
market value is expected to reach $99.4 billion, which represents 9.3 percent increase since 2013.
5
, 6
January 31, 2015.

9
The compound annual growth rate for this period is expected to be 1.8 percent. This industry is
therefore stable with moderate growth rate.
Source: Hoover’s, Jan 31, 20157
.
Summary
The industry is in the matured phase of its life cycle with a steady growth rate. The U.S. “Office
Supplies Manufacturing” industry includes 919 companies with the total revenue from writing
instruments at 5.5 billion U.S. dollars in 2013. The actual growth rate in 2013 for office supplies
(including paper and other products) was 4.9 percent8
. The growth rate for this specific industry
is expected to be at 1 percent for the next four years. Two key factors that drive the demand are
educational enrollment levels and growth of small businesses and home offices. For small
businesses in the industry, specialized products and superior craftsmanship are major competitive
advantages. Businesses in this industry have many challenges because this is a highly
competitive field that requires constantly developing new product lines. Moreover, material price
fluctuations and the nature of the industry make it difficult for firms to raise the price while
maintaining competitive advantages. Firms in this industry are also facing the risk of the new
trend where technology is replacing some office supplies.
Industry Characteristics and Structure
The industry is highly concentrated with the top fifty largest firms accounting for 75 percent of
the market sales. The top five companies within the industry include 3M Company (U.S.), The
Bidvest Group LTD (South Africa), Compagnie Financiere Richemont SA (Switzerland),
Kyocera Corporation (Japan), and R.R. Donnelley & Sons Company (U.S.)9
. Demand is strongly
driven by educational enrollment levels and growth of small businesses and home offices. For
both the U.S. and international corporations, the profitability of individual companies depends on
efficient operations and effective marketing10
. Large corporations are heavily dependent on
economies of scale in order to operate effectively. Smaller operators tend to compete through
7
“Office, School & Art Supplies Manufacturing.” Hoovers. 2015. Accessed January 31, 2015.
8, 9, 10
January 31, 2015.

10
specialized products and superior craftsmanship.
Other structural characteristics for the Office Supplies (except paper) and Manufacturing
industry include the following:
● Steady growth, low barrier to entry, low brand loyalty, and easy access to suppliers and
distributor are reasons that invite many new firms to enter the industry. Therefore, the
competition and the level of rivalry are strong among firms11
.
● Companies usually outsource some or all of their manufacturing activities to foreign
firms in Asia, especially those in China, for low-cost manufacturing and raw materials
sourcing.
● The manufacturing process relies on information technology systems for operations,
supply chain management, sales, and other support functions. Technology is the key for
product development and efficiency.
Nature of Participants12
The industry has a variety of participants that are manufacturing different products. These
products are pens, pencils, markers, crayons, chalk, modeling clay, and staplers. Firms price their
products based on quality and the level of specialization. There are large multinational
corporations with thousands of employees and there are also small proprietorship firms that
produce for local demand. 3M Company, an American-based corporation, is the largest company
with annual sales of $31.8 billion and a gross profit margin of 48.31 percent in 2014. Compagnie
Financière Richemont SA is a jewelry corporation from Switzerland that produces high-end
luxury writing instruments. This company had $14.66 billion in sales and a gross profit margin
of 63.40 percent. The Bidvest Group LTD from South Africa had sales of $15.23 billion and a
gross profit margin of 23.12 percent in 2014. A profit margin for these three companies reflects
their operational structures. Bidvest Group is a wholesale corporation; therefore a gross profit
margin is around 20 percent. 3M Company is major office supplies manufacturers with 48.31
percent. The highest gross margin is Compagnie Financière Richemont SA with 63.40 percent
since the company produced luxury jewelry, and writing instruments.
Segmentation
The industry can be segmented in two ways: product category and geographic segmentation.
Writing instruments account for 9 percent of the global offices service and supplies market. The
total market value of the entire industry was $216 billion in 201313
. If paper-based products are
excluded, Art Goods accounts for 33 percent, Pen and Mechanical Pencils accounts for 24
11
January 31, 2015.
12
13
Ibid.,

11
percent, Marking Devices accounts for 16 percent, Lead Pencils accounts for 6 percent, and
Other products takes up the final 21 percent. CAP’s product is a flavorful and toxin-free pen,
which will be classified under Pen and Mechanical Pencil segment. The value of the writing
instrument segment in 2013 was $19.4 billion and as previously stated, accounts for 9 percent of
the global sales. For the United States, the total market value for writing instrument was $5.5
billion, which means the market accounts for more than 28 percent of global writing instrument
sales. On the other hand, the industry can be segmented geographically. The largest market for
the Office Supplies Manufacturing industry is the United States with the total market value of
$91 billion, which accounts for 42.1 percent of global market share14
.
Revenue by Products - US Census Bureau
.
Global office services and supplies market category segmentation: % share, by value, 2013
.
14
“Office Services & Supplies Industry Profile: United States." MarketLine, October 1, 2014, 1-31. Accessed
January 31, 2015.
15

12
United States office services and supplies market category segmentation, % share, by value,
2013
United States office services and supplies market geographically segmentation: % share, by
value, 2013
.
16
January 31, 2015.
17
Ibid.,

13
Ratios
Important numbers and ratios have been collected to further analyze the industry.
Company Benchmark Information of companies within the “Office Supplies (except Paper)
Manufacturing” industry:
Company Size All Large Medium Small
Size by Revenue Over $50M $5 - $50M Under $5M
Company Count 919 7 95 817
Net Sales 100% 100% 100% 100%
Gross Margin 57.9% 59.5% 56.5% 58.0%
Operating Income 5.7% 6.3% 5.5% 5.4%
Net Income 2.8% 2.9% 2.7% 2.6%
EBITDA to Sales 9.0% 10.1% 8.6% 8.2%
Net worth 50.9% 64.1% 45.6% 37.9%
Current Ratio 2.41 3.03 2.32 1.89
Inventory Turnover x1.68 x1.44 x1.81 x1.86
Working Capital to Sales 25.4% 34.1% 22.8% 18.3%
Account Payable to Sales 10.8% 9.1% 10.6% 13.2%
.
Most of the companies in the industry will be classified with the value under $5 million. While it
is stated that the fifty top companies holding 75 percent of the market, major competitions will
be among smaller firms at a local level. In the income statement, operating expenses are the main
concern because they account for more than 50 percent of sales value. Companies should tightly
control their operating expenses because the industry has high gross margin and moderate net
income. Moreover, the debt over asset ratio is 50 percent, indicating the large amount of liability
for the industry. For small businesses, a high debt ratio means it will be difficult to obtain credit.
The low inventory turnover means that companies tend to have a lot of inventory on hand. This
will be risky if the business needs cash and capital immediately.
18

14
Key Success Factors
The key success factors of this industry are as follows:
● Location and Income: Since buying power is sustained by low customer loyalty, low
level product differentiation, and high price sensitivity, customers can easily choose
different brands19
. Therefore, it is crucial for businesses in this industry to display their
products in the high-traffic areas, such as business districts or university campus stores in
order to make the products more appealing and convenient for customers. On the other
hand, the populations who live in these areas tend to have higher income. They will be
willing to pay more for quality products.
● New product development: As this is a highly competitive industry, companies must
constantly innovate new and interesting products to entice consumers. Although the
demand can be predicted, consumer preferences change frequently. Disappointing
product lines can cause excess inventory and reduce overall profit margin. Companies
therefore must invest into product development to differentiate and stay competitive.
● Price: High price sensitivity causes customers’ to switch to different products20
. This is
true for all companies, except companies that produce premium and luxury products in
this industry. Raising the product price could result in a substantial loss in the amount of
customers.
● Manufacturing technologies: In the industry, it is essential to be operational efficiency.
Companies rely on IT management for operations, plan and control inventory, supply
chain, and sales21
. Economies of scale ensure low production costs and reduce the
amount of excess products.
● Effective marketing and promotion strategy: As the industry is highly competitive with
many participants, an effective marketing plan to promote the product, especially at the
beginning, is crucial. If the product can create a trend, it will attract customers and
maintain brand loyalty. It will be an excellent idea to let customers test the product for
fee or a discount in the early stages.
● Quality control: For this specific industry, most companies will outsource their
productions to a third-party manufacturer. Usually, these manufacturers are located in
developing countries, such as China, India, Brazil, and Mexico. However, it is crucial for
the company to oversee and control product quality because defect products can cause
reputational damages, which will in turn reduce profit.
19
January 31, 2015.
20
Ibid,.
21

15
Industry Trends
There are several environmental and business trends influencing the development of Office and
Supplies Manufacturing industry. They are as follows:
Trends that Favor the Industry
● Innovative products can enhance brand awareness and recognition, which in turn attracts
new customers and establishes brand images.
● The Obama Administration is considering to ease the patent process, which means it is
now easier to obtain governmental protection on inventions22
.
● With the United States economy is recovering, businesses are more confident to expand,
which will result in more office supplies consumption. On the other hand, an improving
economy improves customers’ earnings and people are able spend more. U.S. personal
income, which drives the demand for office supplies, rose by 4.6 percent from December
2013 to December 201423
.
● Parents and students are willing to invest more for educational purposes. Back-to-school
items sales has a steady growth, and customers will pay substantially more compared to
the previous year24
.
● Seasonal sales influence the success of the industry. Major sales occur during the third
and the fourth quarter, which is when educational sales take place.
● Current low oil price leads to a lower plastic price. Cheaper raw materials then leads to a
cheaper finished good
Trends Working Against the Industry
● Technology is replacing some office supplies. With mobile devices and computers,
people can complete tasks without using pens, pencils, and paper25
.
● A growing concern on environmental issues requires businesses in the industry to comply
with many new regulations, as well as manufacturing environmentally friendly products.
● Customers constantly change their preferences. This leads us to believe that it will be
difficult to predict the market demand.
● The industry is dependent on raw materials, including plastic, steel, and ink. Material
price fluctuations can cause serious issues for operations26
.
22
Favole, Jared. "Obama Administration Takes Steps To Ease Patent Process." Wall Street Journal, February 20,
2014. Accessed February 13, 2015
23, 25, 26
24
Gustafson, Krystina. "Expect to Spend More on Back-to-school This Year: NRF." CNBC, July 17, 2014. Accessed
February 7, 2015.

16
Long Term Prospects
The industry will have a low demand for the next six months because the academic year will
start until August. Moreover, calendar year-end purchases from business also contribute to the
significant earnings. Although the industry growth for the U.S. market in 2014 was higher than
expected, at 4.9 percent, annual growth might not exceed 3 percent. However, college enrollment
has increased over the last ten years. A higher population of college students will be a long-term
positive trend for the industry27
. Young generations demand new and interesting products that
require companies to be innovative. The fundamental manufacturing principal that is based on
economies of scale might be changed. Instead, specialized products with superior features are
likely to benefit.
On the other hand, CAP believes that writing instruments are not expected to be replaced by
high-technological products in the near future. As CAP Consumer Survey shows that 93 percent
of students are using pens and pencils daily, there are demands for the product. Even if the
domestic market declines, corporations can move to emerging markets that are underserved28
.
According to BBC, fountain pen sales are currently increasing significantly. This is believed to
be caused by people considering fountain pens as an accessory, rather than a tool. This news
opens a totally new trend for pen manufacturers29
. For example, corporations with premium and
luxury pen products can expect to see their sales increase in the future.
27
"Enrollment." National Center for Education Statistics. 2015. Accessed March 3, 2015
28
29
Brocklehurst, Steven. "Why Are Fountain Pen Sales Rising?" BBC News Magazine, May 22, 2015. Accessed
March 7, 2015.

17
Market Analysis
Market Segment
CAP will target college students in New York City who might be stressed and nervous about
their academic workloads and try to find the way to relieve those negative emotions. With
approximately 700,000 college students, New York City has a large population of potential
customers for CAP’s product (source).
● Geographically: CAP targets New York City.
● Demographically: CAP targets the college students’ population.
● Psychographically: CAP targets college students who frequently experience stress and
negative emotions. Also, CAP targets college students that currently chew on their
writing utensil. Research shows that 45% of teenagers are nail biters and they require an
object to chew on30
. On the other hand, other research shows the correlation between
chewing gum and sustained attention31
. For instance, chewing gum will help students to
study better. Therefore, CAP offers a toxin-free pen as an option for these students to
relieve their negative emotions and stress to work more effective. In additional, with
various flavors, the product will entice students because young people are always
interested in unique and creative product.
● New York City has largest population and the highest per capita personal income in the
United States. According to the Bureau of Economic Analysis32
, New York City has
capita personal income of $121,632 in 2013, which is ranked 1st in the United States. It is
272 percent of the national average, which is $44,765. In general, New York City citizens
can afford to purchase premium and expensive products.
● New York City is the city with the largest population of college students. There are
approximately 671,743 students33
who are attending at colleges and graduate school. This
is the largest student population in the United States.
● Industry analysis. The research found no direct competitors for CAP, which means CAP
has the first mover advantage if the product is introduced to the public. Moreover, young
customers demand innovative and interesting products. There is a strong possibility that
customers will have a positive attitude towards CAP’s product.
30
Leung, Alexander. "Nailbiting." Clin Pediatr 29, no. 12 (December 1990): 690-92.
31
Smith, Andrew. "Effects of Chewing Gum on Cognitive Function, Mood and Physiology in Stressed and Non-
stressed Volunteers." Nutritional Neuroscience 13, no. 1 (February 01, 2010): 7-16.
32
"New York, New York." Bureau of Economic Analysis. November 20, 2014. Accessed March 7, 2015.
33
"New York (city), New York." United States Census Bureau. 2014. Accessed March 7, 2015.

18
Target Market Size
CAP’s target market consists of college students in New York City. Based on Census data34
,
CAP’s calculations on target market size are as follow:
Geographic: There are 8,268,999 people in New York City according to the 2013 Census data.
Demographic: Among 8,268,999 people, there are 509,763 individuals who are undergraduate
college students. Moreover, there are 161,980 individuals attending graduate and professional
schools. Therefore, the total population that can be CAP’s target market is:
509,763 + 161,980 = 671,743.
Psychographic: Although the original idea is to provide an alternative for chewing habits, CAP
does not want to limit the population within 45 percent of students who are nail biters. Instead,
CAP considers the percentage of college students who are under stress and negative emotions
frequently. According to the Anxiety and Depression Association of America35
, anxiety
disorders are one of the most common health issues with college students. They estimated that
there approximately 80 percent of college students frequently or sometimes experience daily
stress. The margin of error is +/- 3.0 percent. CAP will consider 77 percent of the population as a
target market. Therefore, the possible total target market size will be:
671,743 * 0.77 = 517,242.
Total value of the target market in dollars for the first year: As retail price for each individual
pen will be at $2.99, CAP expects students will purchase at least two pens for each semester.
There are two semesters. Therefore, the total value for the first year will be:
517,242 * 2.99 * 2 * 2 = $6,186,215.
Total value of the target market in dollars for the next three years: According to MarketLine36
,
the growth expectation for the next two years for the industry will be at 1.9 percent and 1.7
percent. However, in 2013, the growth suddenly increased to 4.9 percent. It can be explained by
the improvement of the United States economy. As the United States economy is predicted to
grow at 3 percent in 201537
, CAP believes that for the next two years, the industry growth will be
better. Second year and third year will have the growth rate at 3.0 percent. Total value in dollars
for each individual year will be:
Year 1 (2016): $6,186,215
Year 2 (2017): $6,186,215 * 1.03 = $6,371,802
Year 3 (2018): $6,371,802 * 1.03 = $6,562,956
34
"New York (city), New York." United States Census Bureau. 2014. Accessed March 7, 2015.
35
"College Student Facts." Anxiety and Depression Association of America. 2015. Accessed April 2, 2015.
36
January 31, 2015.
37
AP. "Why the US Will Power the World Economy in 2015." CNBC, December 30, 2014. Accessed February 7,
2015.

19
Buyer Behavior
The following factors could influence the customers’ behaviors and purchasing powers:
● Pen use: The basic function of CAP’s product is a writing tool. If students prefer using
technological devices, such as smart phones and laptops, to write their work and do not
want to carry a pen around, this will be a critical issue for CAP. As mentioned above,
technology advancement is a trend that requires an innovative product.
● Undifferentiated products: It is difficult for the target market to recognize the differences
between pen brands. If the pen serves solely for the purpose of writing, students can
basically purchase a random pen brand that is selling from general retailers. If CAP’s
product cannot be differentiated, the target market will not be loyal to the brand.
● Price: CAP will be classified as a premium product because it is selling at a higher price
than general pens. The target market is college students, who have less income in
comparison with those who are currently in the workforce. There is a likelihood that the
target market cannot afford to buy CAP’s products since there are many cheaper pen
brands and customers can easily switch.
● Willingness to try the product: Since CAP is a new and innovative product, it is important
to persuade the target market to try it. This is one of the most critical issues because CAP
will not be successful if the product is refused by the target market.
● Health concern: CAP’s product will be made as a toxin-free pen. This advantage might
be ignored by the target market due to the impact of price. On the other hand, if CAP
cannot persuade the target market that the product is safe for chewing, the company will
lose this point of selling.
● Chewing habits: The product can be misunderstood by the public. College students and
their parents might perceive the product as a tool that encourages the chewing habit. If
the opposition is strong, it can cause serious reputational damage to CAP.
● Flavor preferences: The flavor from CAP’s product must be appropriate with the target
market. If flavors are not interesting, the target market will not buy the product again.
● Design preferences: In CAP’s Consumer Survey38
, 40 percent of college students would
like to have better pen/pencil design. If the design is considered unfashionable or
uninteresting, CAP will not be able to attract young customers.
38
CAP, “Consumer Survey,” 2015.

20
Competition Analysis
Direct Competitors
There is currently no direct competitor that produces the similar product as CAP. The original
idea of creating the plastic with flavors was from the CEO of PolyFlav39
. The company is now
producing mouth guards with flavorful plastic parts. Otherwise, there is no current offering for a
pen with flavors on the market.
Indirect Competitors
There are two indirect competitors that produced products that have similar features to CAP.
ARK Company manufactures a pen for individuals with autism that is safe to chew40
. ChewStixx
creates chewable pen toppers and grips that can be placed on pen/pencils41
. However, both
companies’ products are expensive. For instance, ARK’s Tran-Quill set is priced at $39.99 and
individual pen will cost $29.99. ChewStixx offers their products, such as pencil toppers, at $6.99
on Amazon. Although ChewStixx is advertised also as pen toppers, they are only catered to
young children. Their design is therefore unsuitable to target college students. On the other hand,
both companies are poorly advertised on the internet. There are none of them to be found on
social media pages such as Facebook, Instagram, and Twitter. Searching Google only produces
few results.
Future Competitors
There will be competitors from both already established companies and new entrants. Since there
is a low barrier to entry, it is crucial for CAP Inc. to patent the product’s design and technology.
On the other hand, CAP must maintain a strong relationship with PolyFlav, the plastic supplier,
to prevent other competitors from purchase flavorful plastic. In the future, if CAP becomes a
large corporation, it is crucial to purchase the flavorful plastic technology to be independent from
the supplier since PolyFlav can possibly become CAP’s future competitor. Additionally, CAP
will have a first mover advantage when introducing the product to the market. If CAP becomes a
trend for young customers by creating a brand image that is associated with young, innovative,
and dynamic young generations, it will ensure customer loyalty. To make this happen, CAP will
spend significant on marketing and communication strategy. The average advertising budgets for
the Office and Supplies Manufacturing industry is only 2.6 percent of sales revenues. CAP plans
on spending around 15 percent of sale revenues of the first year dedicating to marketing. This
will help to ensure that the target market will be informed of our product. The following years
advertising budget will range from 5 to 8 percent.
39
"PolyFlav®: A Technology That Infuses FLAVOR into PLASTIC." Add The Flavor. 2009. Accessed January 22,
2015.
40
L, Tammy. "DnZ-VIBE Tran-Quill Pen Set and Cip-Kup." Autism Mom Blog. January 4, 2012. Accessed
February 14, 2015.
41
"Pencil Toppers." Chew Stixx Oral Motor Products. Accessed March 7, 2015.

21
Estimate of Annual Sales and Market Share
In previous calculations, it is concluded that there are 517,242 individuals in the potential target
market. Each individual will need 2 pens for each academic semester. For annual sales
estimation, CAP expects to achieve approximately 7.2 percent of the target market for the first
year in 2016. CAP main seasonal sales would happen in June, July, August, December, and
January, when students are coming back to school after vacations. In the following years, CAP’s
goal is to grow at 3 percent annual. The objective for the second and third year will be 10.5
percent and 13.3 percent, respectively.
Sales Projection
Revenue will be generated from the sales of CAP’s products to campus stores and bookstores.
There are 81 colleges and universities in New York City42
. Therefore, it is estimated that there
are 81 distribution locations for CAP’s product. The wholesale price will be $2.99/unit.
First year sales estimation is projected at 149,000 units:
517,242 * 2 (pens) * 2 (semesters) * 0.072 = 148,966 (units)
Month Retail Price Unit Sold Sales Revenue
January $ 2.99 0 -
February $ 2.99 0 -
March $ 2.99 5,700 $ 17,043
April $ 2.99 7,100 $ 21,229
May $ 2.99 7,200 $ 21,528
June $ 2.99 23,500 $ 70,265
July $ 2.99 24,500 $ 73,255
August $ 2.99 24,500 $ 73,255
September $ 2.99 7,500 $ 22,425
October $ 2.99 7,500 $ 22,425
November $ 2.99 15,000 $ 44,850
December $ 2.99 26,500 $ 79,235
Total 149,000 $ 445,510
42
"New York Colleges." Campusexplorer. 2015. Accessed February 14, 2015.

22
January, June, July, August, November and December will be the major sales months for CAP’s
product because it is the time when students return to colleges and universities. CAP expects
campus stores will order a month before students return. In this calculation, other months will
experience a decrease in sales since students have vacations in-between and they do not buy
more supplies until the next semester. According to CAP’s Consumer Survey, approximately 64
percent students said that they purchase school supplies once per a semester43
. That is the reason
for such great differences between quarters.
The first two months will be the time when products are being manufactured. According to
firms, it takes up to 15 to 20 days to finish an order. Although CAP’s manufacturer is located in
New Jersey, it will take more time for the special flavorful plastic to be delivered to the
manufacturer. Therefore, it is expected that for the period of the first two months, there will be
no sales.
The manufacturer can produce up to 10,000 units per week44
.
Three years sales and market share estimations
Year Market Share Unit Sold Sales Revenue
2016 7.2% 149,000 $ 445,510
2017 10.5% 223,800 $ 669,162
2018 13.3% 292,000 $ 873,080
In 2016, CAP expects to sell 149,000 units with the total sales revenue of $445,510. This sales
revenue accounts for 7.2 percent of the total market share.
In 2017, the company expects to sell 223,800 units with the total sales revenue of $669,162,
which represents 10.5 percent of the total market share.
In 2018, CAP expects to sell 292,000 units with the total sales revenue of $873,080, which
represents 13.3 percent of the market share.
Detailed sales projection will be explained in the Financial Income Statement section45
.
* Notice:
 Units sold and sales revenue will be round for easy preferences.
 Sales revenues in the table reflect the sales according to retain price at $2.99
43
CAP, “Consumer Survey,” 2015.
44
"Customized Promotional Ball Point Pens - Buy Customized Promotional Ball Point Pens Product on
Alibaba.com."http://www.alibaba.com/product-detail/customized-promotional-ball-point-pens_122463990.html.
45
CAP, “Financial Statement,” 2015.

23
Marketing Plan
Overall Marketing Strategy
The overall objective of CAP’s marketing strategy is to inform college students the benefits of
using CAP’s flavored pen as an alternative to relieve stress and negative emotions without
exposing them to toxic materials. Moreover, CAP expects to create a trend in which young
customers will consider CAP’s product as a unique product because it is flavorful and has an
excellent design. CAP desires to establish a strong brand image through inspiring young people
and interacting with their lifestyles. When thinking about young customers, CAP believes that
they are always moving forward and try their best to surpass any challenges. CAP’s tagline is
“When you’re stressin’ out, just chew it out,” which fits the belief. The product can represent a
tool to relieve stress and negative emotions. Without feeling nervous, these young people can
find the way to resolve their current struggles and problems. Excellent design is another point of
selling that will be tailored according to customers’ wants in the future.
CAP’s marketing campaign is based on the integrated marketing communications, which is the
combination of marketing approaches to ensure that the company's brand message is consistent
and reinforced. Promotional methods that CAP will implement include advertising, sales
promotions, public relations, direct marketing, personal selling, and social media. These methods
will be used to introduce and promote CAP as a high quality product with excellent design and
unique features. Meanwhile, the product’s price is significantly cheaper than alternative
specialized pens for people with chewing habits. This creates a price advantage when competing
against competitors.
For advertising, in-store printed advertisements will be a major promotional approach because
CAP’s product will be distributed directly to campus stores of each individual college and
university. This is important for CAP because our product is an impulse purchase and point of
sale displays could greatly increase our sales. These printed advertisements will be designed by
the design specialists that CAP outsources to.
Sales promotions will include coupons and product samples. Moreover, CAP would like to
create a product design contest for future designs because it will make the customers feel
involved, as well as gain exposure for the company. The contest will also reduce the product
design cost.
The online marketing efforts will be the combination of direct marketing, public relations,
personal selling, and social media. CAP will create an official website so that the company will
be able to have its own sales channels in the future. On the other hand, to create a trend among
young customers, CAP will utilize social media and the internet to reach out to a larger
population. Facebook, Twitter, and Pinterest will be major social networking sites of the
promotional campaign. Along with these sites, CAP intends to produce short video clips on
YouTube, as well as sponsoring vloggers for product review videos. In return, CAP hopes that
the marketing and communication efforts will ensure that the product will create a trend for
young customers.

24
Positioning
CAP asserts itself as a more exciting and safer product in comparison to the alternatives. While
using CAP’s product, the customers can relieve their negative emotions without exposure to
toxic materials or continuing bad habits, such as nail biting. Moreover, with excellent design and
a variety of flavors, customers can feel that they are unique and different.
Points of Differentiation
● CAP will feature the only pen with flavor infused plastic. There are not any direct
competitors that produce similar products.
● The product will come in a variety of flavors. To start, CAP will produce a “fruity”
product line. New flavors will be added as CAP incurs demand.
● There are variety of color choices for the product. The colors will directly correlate with
the flavor that the plastic is infused with.
● Excellent and unique design can influence the lifestyle and fashionable tastes of
customers.
● Strong emphasis on the use of toxin-free materials in order to create a product that is safe.
The plastic has been approved by FDA that it is safe to use.
● Reasonable price and strong brand image will establish a strong consumer loyalty.
Therefore, customers will return to purchase CAP’s product in the future.
Product Attribute Map
CAP’s positioning strategy and its primary point of differentiation are illustrated in the product
attribute map shown below. As shown, CAP’s product will be the product in its trade area that
ranks high on both (1) the mark in which it is tailored specifically to the needs of students to be
safe when they chew the product and (2) the extent to which it offers a high range of
convenience by adding an unique feature of flavored plastic and excellent design. Two indirect
competitors are ARK and ChewStixx. However, both of these products are expensive and poorly
advertised. ARK only offers specialized pens that can be used for students with autism. Their
design is not appealing to teenagers. Although ChewStixx produces more results online, it is
catered only to young children without excellent design. Both of these products therefore do not
have strong influence on the market.

25
Pricing Strategy
CAP will price the produce based on cost-based pricing. This means CAP will calculate the cost
backward from the retail price. The pricing strategy is as follows:
● Cost of goods sold: CAP found a pen manufacture in New Jersey that produces pen at
$0.2 per a pen46
. However, since CAP is made with flavorful plastic, it will cost more to
produce. CAP believes that the cost to produce each individual pen will be $0.6/unit.
● Wholesale Price: Cost of goods sold is 40 percent of Wholesale Price. Therefore,
wholesale price will be $1.5/unit.
● Retail Price: Retail price is double of wholesale price. Therefore, retail price for a CAP’s
product is $2.99.
*Note: According to the Consumer Survey, approximately 87 percent of students will pay from
$1.00 to $2.99 to purchase a quality pen.
The price of CAP’s product is significantly cheaper in comparison with two indirect competitors.
ARK offers their product, which is the pen for autism children with special design and vibrate
compartment, at $29.99. ChewStixx offers their topper at $6.99 on Amazon.
CAP first and second points of differentiation, being an only producer for this type of produce in
the market, and promoting CAP as a safe, unique, and stylish products becomes significant
advantages for CAP to compete for larger market share and higher profit than the other
companies. An objective is to create a trend of using CAP’s product.
46

26
Promotional Activities
CAP will implement its marketing strategy that is based on integrated marketing communication
(IMC) as follows:
● Social Media (Awareness and Interest): CAP will establish its own social media sites on
Facebook, Twitter, and Pinterest. Moreover, CAP will have its own YouTube channel
with advertising video about how students can be benefit from using the product. Free
sample can also be given out to famous vloggers, who have large number of followers.
These communication channels will ensure that customers will be informed.
● Advertising (Awareness and Interest): Print ads will be distributed to campus stores of
colleges and universities in New York City to make students aware of the products. CAP
will also distribute flyers to the public. Later, ads can be published on college and
university newspapers/magazines.
● Sales Promotion (Interest and Desire): There are several promotional methods that CAP
will implement. At the beginning stage, CAP will give out coupon that reduces the price
of the product by $1.00 per a pen. CAP intended to budget this category $3,000 annually.
Moreover, free samples will be given to campus stores so students can go there to try the
product. CAP would give out around 1,000 products to all campus stores in New York
City. On the other hand, the design contest will attract many young customers to
participate. The reward will be $3,000 as the prize. This contest will help the company
find many innovative designs for the product. It will also make the customers feel that
they are being listened.
● Direct Marketing (Action): after the customers are interested in the product, CAP will
promote the product online and customers can directly purchase it directly from the
company. This will reduce the price that customers will have to pay for retailers. With
more customers purchase directly through online website, higher demand is expected.
However, CAP believes that this will happen later in the future.
● Personal Selling (Action): CAP will have point of sales displayed in campus stores of
largest universities and colleges in New York City. The company wants to open a
communication channel to talk and receive feedbacks directly from the target customers.
● Public relation: Since plastic pens are considered as environmental hazardous waste,
CAP will donate to environmental events and have distribute newsletters to
colleges/universities informing about these activities. If CAP becomes a trend among
young customers, CAP will contact with famous individuals in New York City to ask
them for an interview or conference.

27
Annual Marketing Budget
CAP will use around 10 percent of the first year’s sales revenue for marketing expenses. On
average, the total marketing expenses annually will be around $34,000. Following table explains
details on how the budget will be distributed:
Item Budget
Website Development47
$1,500
Cost to design print ads (6 concepts for poster and flyers)48
$1,500
Printing cost (posters, flyers, and press release)49
$3,000
Cost to promote through vloggers $5,000
Filming and editing promotional YouTube video50
$3,000
Free samples (3000 units * $0.6) $1,800
Coupons value $3,000
Design contest $3,000
Environmental donation $3,000
Facebook, Twitter, and Pinterest advertising cost $5,725
Points of sales $3,000
Total $33,525
47
"How Much Does It Cost To Build A Website In 2014?" Executionists Blog. December 04, 2014. Accessed
March 20, 2015.
48
"The Digital Arts Group: Innovative Graphics and Web Design." Print Ad Design Pricing. 2015. Accessed March
20, 2015.
49
"Bulk Posters Printing." Affordable Bulk Poster Printing. 2015. Accessed March 20, 2015.
http://www.printrunner.com/bulk-poster-printing.html.
50
"How Much a Typical Promo Video Costs?" Grumo Media. January 20, 2015. Accessed March 20, 2015.

28
Management Team and Company Structure
Management Team
Colton Dershem, Cofounder and Chief Executive Officer (CEO)
Colton is accountable for overall success and growth of the company. He is also responsible for
human resources, operations, and administrative tasks. Operations include logistics, buying
supplies, supervising production, and inventory management. Administrative tasks include
customer relations through emailing and phone calls, office cleaning, and overall organization of
the office. Furthermore, he will also be able to assist with financial aspects such as sales
projections, budgeting, and cost analysis. Colton graduated from Lycoming with an
Undergraduate degree in Business Administration with tracks in Management and Finance and a
minor in Economics.
Anh Phan, Cofounder and Chief Financial Officer
Anh is responsible for marketing and financial aspects of the company. Marketing includes
advertising, finding appropriate sales channels, public relations, social media upkeep, and overall
sales of the company. The financial aspects include sales projections, investor relations,
budgeting, and cost analysis. Anh received his Undergraduate degree from Lycoming College,
majoring in Business Administration with tracks in Finance and Marketing. He also has double
major in Corporate Communication.
Skills Profile and Gaps in Management Team
The following skill profile depicts the most important skills required at the top management team
level of the company and where the gaps occur.
Executive
Leadership
Finance Operations Marketing Accounting Administration
Colton
Dershem
X X X X
Anh
Phan
X X X X
Gap 1 O
Gap 2 O
X = Position Filled, O = Position Vacant

29
CAP has two major gaps in the management team: Accounting and Marketing. CAP will be
looking to hire a full-time Marketer that will also serve as the CMO starting the third year. CAP
is using services such as the Lycoming College Alumni Network, Monster, Indeed, and other
forms of job search engine programs to find the optimal candidate for the marketing position.
CAP plans on outsourcing the accounting duties to a local firm. The tasks that will need to be
done by this firm include bookkeeping and payroll. Before choosing a firm, CAP will research
several firms and figure out fees, specialties, certifications, and availability. Beyond these
specifications, CAP would prefer a firm that will offer auditing support and a personal
connection.
CAP requires the Marketer to have a four- year degree in Marketing from an accredited
University. CAP will also require the applicants to have work related experience in the field and
three professional references. Since CAP is looking to make this candidate the CMO, CAP
would prefer that the candidate be personable and have similar key values to the current
management team.
Until CAP hires a CMO, CAP plans on outsourcing the marketing aspect to a local marketing
firm or a well-known firm that can be found on the internet.
Ownership and Compensation
The table below shows the current ownership status and compensation level for each position.
Name Position/Affiliation Base
Compensation
Percent
Ownership
Personal
Investment
Colton Dershem Cofounder and CEO $33,000 40% $100,000
Anh Phan Cofounder and CFO $33,000 40% $100,000
N/A Angel Investor N/A 20% $50,000
Colton Dershem, as the CEO, is responsible for the company’s overall results and performance.
With that being said, he has to oversee every department to make sure each one is functioning
correctly. On the other hand, the CFO Anh Phan and our future CMO are only in charge of their
designated departments and have fewer responsibilities. However, there are not that many extra
responsibilities and the upper level management team will be continuously helping each other as
needed. This is the reasoning behind the $2,000 pay difference between the CEO and the other
members of the upper management team.
The salaries of the upper level management team are relatively low compared to the market
averages. However, the company is a startup and the upper level management team has the
potential to achieve capital gains from their ownership of the company. The cofounders have
agreed that salaries must be lower than the average in order to cut costs at the beginning. Moreo

30
Other Professionals
Attorney, Imke Ratschko, Business Attorney at the Law office of Imke Ratschko
Mrs. Ratschko specializes in small business, emerging companies, startups, and business
disputes. Mrs. Ratschko and her law firm will provide CAP with legal advice, legal documents,
negotiation, and overall compliance of laws.
Certified Public Accountant, Sadh & Associates LLC
CAP plans on outsourcing their accounting responsibilities to Sadh & Associates LLC. Sadh &
Associates LLC offers small business accounting, auditing, and tax services. Instead of going to
multiple companies, CAP chose to stick with one company for all of the accounting needs.
Liability Insurance, Hiscox
Hiscox is a company that provides liability insurance that is catered to small businesses51
. CAP is
able to tailor the insurance coverage to the risks in our specific field by having Hiscox insurance.
Also, Hiscox offers worldwide coverage. This means that CAP will be able to keep the same
insurance as the company grows and expands.
Bank, Chase
Chase has the largest bank in the United States. Chase provides personal, business, and
commercial banking. Chase also offers the possibility of gaining a loan and a line of credit for
small businesses. Chase provided $19 billion in financing to small business in the United States
in 2013. Chase also provides donations to small business development organizations in order to
help different businesses in various locations.52
Also, Chase offers ease of access to CAP’s
banking needs by providing online banking where the company will have constant access to the
accounts.
51
"Hiscox Study Reveals Signs of Growth and Innovation." GlobeNewswire, September 09, 2014.
52
Lodge, Bill. "How a Small Business Lender Saved Baton Rouge Boutique Bakery Sugarbelle." The Advocate
(blog).

31
Organizational Chart
The CFO and CMO report to the CEO
The accounting firm will report to the CFO Anh Phan
The designer will directly report to the CMO. The designer will report to the CEO until the CMO
vacancy is filled.

32
Job Descriptions
Colton Dershem - Chief Executive Officer
Skills and Qualifications:
This position requires a four year degree from an accredited University. Specifically, a
Bachelor’s Degree in Business Administration or related field is preferable. This position also
requires developed interpersonal and communication skills. The ability to think critically is also
an important skill to have.
Job Responsibilities include:
● Responsible for overall actions and performance of the company, as well as
communicating these results to the upper level management.
● Construct, implement, and reinforce policies that comply within the cofounder
guidelines.
● Provides oversight of CAP’s activities, day to day operations, and overall functionality.
● Recruit, interview, evaluate, and hire candidates to fill vacancies within the company.
● Maintain relationships and contact with suppliers and distributors.
● Maintain full availability for anything that may occur in the business.
● Supervise production in order to assure quality, production rate, and efficient distribution.
Anh Phan - Chief Financial Officer
Bachelor’s Degree in Finance, Accounting, or related fields is preferable. The position also
requires developed problem solving and foreshadowing skills. Knowing financial concepts and
ratios are also important knowledge to have.
● Direct and oversee all of the finance and accounting aspects of the company.
● Monitor financial performance and develop financial strategies by analyzing financial
documents.
● Receive financial data from the accounting firm and interpret the results to the CEO.
● Create accurate sales projections and then create budgets based on the outcome.
● Maintain a relationship with the company’s bank in order to potentially gain future loans
and lines of credit.
● Work with the company’s accounting firm to perform audits as needed.

33
Vacant - Chief Marketing Officer (Plan on hiring for the third year)
Bachelor’s Degree in Marketing, Communications, or related fields is preferable. The position
also requires developed sales techniques and communication skills. Knowing different marketing
channels and how optimize these channels is very important skill to have.
● In charge evaluating advertising channels and utilizing the most beneficial methods.
● Responsible for creating and implementing advertisements for said channels.
● Responsible for creating and maintaining public relations.
● Constantly updating and improving the company's digital media assets.
● Locate retail locations for the product to be sold to.
● Create and maintain sales contracts, as well as building a relationship.
● Establish sales goals and quotas.
Vacant - Designer
● Create original and innovative product designs.
● Submit final designs to the CEO for approval and feedback.
● Work with the company’s business attorney, Imke Ratschko, to file legal documents
pertaining to the designs.
Company Culture
The company culture of CAP will be a mixture of a guided missile and incubator approaches.
First of all, CAP wants to focus on customer service but also be goal oriented. At the same time,
CAP wants to cater to its employees and make it a desired company to work for. This will help
reduce employee turnover and ultimately reduce costs in the long run. CAP would prefer that the
team works together to problem solve in order to be as efficient as possible. Finally, as the
number of employees increase, structure will also increase as needed.

34
Operations Plan
Operations Model and Procedures
Introduction
CAP will outsource production of flavored plastic pencils and then sell the product to local
campus stores. The operating model and procedures for the center are explained in the following
sections.
General Approach to Operations
The office of CAP will act as the headquarters for the majority of the operations pertaining to the
product. The office will be smaller than average, but will allow CAP to perform all operations
that are necessary. By choosing a smaller office, CAP will be able to save money and spend it
elsewhere as needed.
Back Stage Activities
● Staff Selection. The employees will be carefully selected as positions are available. There
will be specific processes and qualifications that the candidates must have.
● Product Design. The design of our product will be bought from a design agency for a flat
fee.
● Company Strategy. The overall strategy will be decided by the CEO and approved by the
upper level management.
● Order Fulfillment. Orders will be received by the CEO (Until the CMO position is filled)
and then communicated to the manufacturer in order to be fulfilled.
● Administrative Tasks. Administrative tasks include organization, answering phone calls
and emails, and scheduling meetings.
● Financial Activities. Financial activities include book keeping, paying bills, budgeting,
and financial projections.
● Marketing. Marketing includes creating promotional materials, creating a marketing
strategy, public relations, and checking on point of sale promotions.
Front Stage Activities
● Customer Service. All staff members will be expected to contribute to answering
customer concerns and questions through phone conversations and emails.
● Point of Sale. CAP has chosen to start sales at campus stores and expand when
opportunities are available.
● Packaging. Packaging will be designed by a design company and approved by upper
level management.
● Hours of Operation. CAP will operate from 9:00AM to 5:00PM, Monday through
Saturday. Upper level management will be on call at all times to ensure the best customer
service for the consumers.
● Digital Media. The company website and other social platforms will be updated regularly
based on a schedule.

35
Business Location
CAP is proposing to conduct business in New York City. However, CAP plans on renting an
office in Newark, New Jersey. CAP plans on renting an office at the Military Park Building,
which is located at 60 Park Place in Newark, NJ53
. The space will be 160 square feet and costs
$3520 per year, or $293.33 per month. This location is considered to be ideal for CAP for the
following reasons:
Advantages of Location
● Amenities. The office complex offers “24/7 access with an attended lobby and
complimentary on-site tenant parking.”54
● Ideal Community. The building is in the center of the Newark Business District. The
building is also two blocks from the two major transit centers, the Gateway Center and
Penn Station. These transit centers will allow CAP to easily commute to New York City.
● Proximity to Supplier. This location provides us with a short commute to our supplier,
PolyFlav. This will allow CAP to maintain contact and a relationship with the supplier.
● Proximity to Target Market. The location is roughly a 40 minute drive to where we will
be selling our products.
● Proximity to Manufacturer. The office location is relatively close to our manufacturer.
This will allow our shipping costs to stay low. This will also allow us to maintain a
relationship and oversee the manufacturing process if necessary.
● Staffing. This location is extremely close to numerous college campuses, which will
allow us to recruit for our company as it grows.
● Ability to Expand. This location gives us the ability to easily expand into new markets.
Facilities and Equipment
CAP has identified a 160 square foot office in Newark, New Jersey that the company will
conduct business from. The building offers spaces in a variety of sizes. This will allow CAP to
rent other offices in the same building as the company grows.
CAP will be required to purchase its own equipment. The equipment needed to be purchased
includes two desktop computers, one multifunctional printer, filing cabinets, two office chairs,
two desks, computer paper, ink cartridges, one conference phone, an office safe, one paper
shredder, and various office supplies. Also, CAP will have to purchase another desktop computer
and desk in the third year for the marketing professional that will be hired.
Manufacturing
CAP will outsource the manufacturing of the product to a company in New Jersey called “The
Promo Bands”55
. This company was found on Alibaba.com, a reliable website that allows buyers
to find suppliers. This company is able to create 10,000 units per week.
53
"Military Park Building." RSS. Accessed March 20, 2015. http://www.newarkofficespace.com/listings/military-
park-building/.
54
"About | Building." About « Military Park Building. 2015. http://www.mpb60.com/about.

36
CAP has looked into other manufactures in the United States, but no other manufacturers have a
product similar to what we want or a location that is close to CAP’s office.
Since CAP is outsourcing the production to a company in the United States, the company will be
able to have a quick turnover of product, comply with FDA standards, and oversee production if
necessary. However, having a manufacturer in the United States will also cost more to create.
Distribution
CAP will distribute the product to 110 campus stores in the area of New York City. CAP chose
campus stores because of their proximity and use by the target market. Having our product being
distributed through campus stores will allow it to be subjected to the target audience the most.
As CAP becomes more popular, CAP plans on expanding its business to other target markets and
also search for more distributors to carry the product in order to satisfy the customer’s needs.
Timeline
If funding is obtained, CAP will open at 60 park place in Newark, NJ on June 1st, 2015. The
following milestones have been completed and remain too completed to start operations.
Completed Milestones
May 2015 Completed feasibility analysis
Two-Member management team in place
$200,000 invested by management team
Consumer survey and concept statement completed
Milestones to Be Completed
August 2015 $50,000 invested by angel investor
File and pay for patent
Develop website and social media platforms
January 2016 Order prototype and test the product
Get FDA approval
Sign lease for the office
Purchase office supplies needed
Sign contracts with distributors
Challenges and Risks
The following challenges and risks have been considered by upper level management when
bringing MAC into operations.
● Angel Investor: Currently, CAP does not have enough capital to start operations. The
Angel Investor(s) is expected to contribute $50,000 for 20 percent ownership of the
company. CAP has contacted several investors and is in the process creating and signing
55

37
a contract with one. If an investor is not found, CAP will have to delay operations until
one is found.
● Exceeding Budgeted Costs: The initial costs have been carefully assessed, as shown in the
financial section. Exceeding the original budget would be troublesome for the company
financially.
● Safety Concerns: Our product may raise concerns to skeptical individuals based on the
safety of our product. Safety concerns could impede sale. To be proactive, CAP will post
the approvals on the packaging to prevent skepticism.
Intellectual Property
Patents: CAP will be filing a patent for the product. CAP will be using their business attorney,
Imke Ratschko, to file the patent. The overall cost for the patent and attorney costs will be
$7,50056
.
56
Quinn, Gene. "The Cost of Obtaining a Patent in the US." IPWatchdog. January 28, 2011. Accessed February 14,
2015.

38
Financial Projections
CAP predicts that the business will be self-sufficient starting the second year. The table below
shows the Sources and Uses of Funds proposed for the first year in order for MAC to break even.
Statement of Sources and Uses of Funds
Source of Funds Amount of Cash Percentage of Ownership
Colton Dershem, CEO 100,000 40%
Anh Phan, CFO 100,000 40%
Total Funds Committed 200,000
Total Funds Required 250,000
Total Funds Needed From Angel Investor 50,000 20%
Uses of Funds
Officer Compensation 80,000
Payroll Taxes 19,520
Employee Benefits 4,960
Marketing Firms Outsourcing 24,000
Office Rent 3,520
Utilities 3,120
Office Supplies 2,000
Office Equipment 3,000
Office Furniture 2,000
Travel Expenses 1,200
Marketing & Advertising 33,525
Accounting 5,000
Auditing 5,000
Patent 7,500
Attorney Fees 5,000
Other Expenses 1,500
Insurance 2,200
Cash (For working capital and future loss) 46,955
Total Required Fund 250,000

39
Assumptions Sheet
CAP financial report is dependent on important assumptions. The key underlying assumptions
are as follows:
General Assumptions:
1. The U.S. Office Supplies Manufacturing Industry is expected to sustain a steady growth
rate at 3 percent annually in 2016, 2017, and 2018.
2. CAP will create a trend among the population of college students in New York City.
There is an interest in flavored pen among young people.
3. CAP Inc. assumes that the equity capital in the amount of $250,000 consistent with the
Sources and Uses of Funds statement in this business plan is accessible.
4. No major fluctuations and changes in the current market places regarding about material
prices, production costs, and governmental policies and regulations.
Financial Statements Assumptions
Income Statements
1. Sales forecasts are based on the analysis presented in the “market analysis” section of this
business plan:
a. There is no sales revenue for the first two months because CAP expects it should
take 60 days for an entire manufacturing process, including shipment of flavored
plastic from PolyFlav to The Promo Bands in New Jersey and distribution of the
product to campus stores in New York City.
b. Sales are projected to increase by 3 percent each year to match with the 3 percent
annual growth of the U.S. Office Supplies Manufacturing Industry.
c. There are two major sales seasons. The first one is June, July, and August. The
second one is November, December, and January. These months represent the
period shortly prior to academic semester starts. These six months will account
for more than 80 percent of annual sales. The least sales months are those in
between, when only a small amount of students will purchase more for their
supply. It will account for the rest 20 percent of the annual sales.
d. On average, CAP desires to obtain at least 10 percent of the market share, which
represents approximately 206,900 in unit sales and $618,631 in sales.
e. For the first year, however, the growth rate expectation is only 7.2 percent. Since
CAP is introduced in March, the company missed the first major months to
prepare for academic semester due to the 60 days period of manufacturing.
Therefore, the product will not be immediately famous. On the other hand, this
period will help CAP to test the market before major sales season. With effective
marketing, CAP expects to have a significant increase in sales in June, July, and

40
August, to compensate for the previous months. Sales revenue therefore will be
approximately $446,000
f. The sales projection for the following years will be based on the industry annual
growth rate at 3 percent. Sales in 2017 and 2018 will be approximately $670,000
and $807,000, respectively.
2. Whole sales price will be at $1.5/ unit. Since CAP distributed directly to campus stores in
New York City, CAP receive cash on hand. This sales price will therefore be used in
accounting format to calculate revenues.
3. Cost of Goods Sold (COGS): 40 percent of net sales.
4. Discounts and promotions are already included in the Marketing budget. Refer to the
Annual Marketing Budget in the “Marketing Plan” section for further information.
5. CAP assumes that there are no returned goods because of the product nature.
6. Officer’s compensation based on “Ownership and Compensation” table shown in the
“Management Team” section of this business plan.
a. For the first year, however, to keep the cost down, CEO and CFO agree to lower
the compensation to the average disposable income after tax in Newark, New
Jersey, at $35,000. For the second year and the third year, both will raise their
salary to $40,000 as the company will earn more revenue.
b. At the beginning, there are three vacant positions, which are CMO, designer, and
accountant.
i. For the CMO position, CAP intends to outsource to the marketing firm for
the first two years. The cost for the outsourcing will be $24,000 a year. In
the third year, as the company has already obtained a fair market share,
CAP can afford to find a CMO, who is willing to contribute, with the
salary at $40,000 annually. Also, after the third year, CAP intends to keep
purchasing some advertising packages from the marketing firm that
worked for the company.57
ii. The designer position is not necessary as CAP will organize a design
contest with the reward of $3,000 for the winner. Professionals will edit
these designs to ensure the overall quality.
iii. CAP will outsource accounting to an accounting firm in Newark. There is
no information about cost for an accounting firm in Newark to provide
bookkeeping, payroll, and taxes service. However, a website provides a
service for $65/ month. As a small business, CAP assumes that it will cost
$100/month, which adds up to $1,200 a year for accounting.58
c. Payroll tax is 6.2 percent of total wages, salaries, and compensation.
d. Benefits are figured at 24.4 percent of wages, salaries, and compensation.
57
Heiler, Chris. "How Much Will It Cost to Hire a Marketing Agency?" Landscape Leadership (blog), July 11,
2013.
58
"America's Premier Remote Bookkeepers." How RemoteBooksOnline Works. Accessed April 10, 2015.
http://www.remotebooksonline.com/rbo/how-it-works.html.

41
e. Attorney fees will be budgeted at $5,000/ year. CAP executives will meet up with
the attorney twice.59
f. Patent fee includes filling application and attorney fee, which is estimated at
$7,500. The fee will be paid in the first year only.60
g. Office rent expense for a 160 square-foot office is $22/ SF/ year. The monthly
expense will be $300. Annually expense is $3,600. The office will be located in
Newark, New Jersey.61
h. Utilities expense includes electricity, telephone, gas, water, and internet. On
average, monthly utilities expenses will be $260 in Newark.62
i. Annual insurance policy will be $2,500. The policy will cover building,
properties, and business liabilities, especially product liability. CAP assumes that
insurance policy expected to increase by 25 percent a year as CAP expands.63
j. Marketing expenses based on annual marketing budget in “Marketing Plan”
section of this business plan:
i. In the first year, marketing expenses will account for more than 15 percent
of net sales because the product is newly introduced to the market and
needs advancing promotional campaign.
ii. For the next two years, CAP can reduce marketing expanse to 8 and then 5
percent since the company no longer need to sponsor for vloggers.64
iii. Marketing expenses will be higher during the peak months (June, July,
August, November, December, and January). Other month the expense
will be significant reduced.
iv. Discounting and free sample cost will be based on the cost of goods sold.
k. Office supplies are going to be purchase at the beginning of the year. For the first
year, office supplies will include furniture and equipment, such as laptops and
printer. For the next two years, the company estimates that it will cost around
$2,000/year. Moreover, these expenses will increase by 50 percent the following
years as the company grows.
l. CAP proposes to have $1,200 as a travel budget because it is necessary to move
back and forth into New York City for business and promotional activities.
m. Auditing cost will range between $5,000 and $20,000 a year. As a small business,
CAP expects to pay $5,000 for auditing a year.
59
Shulga, Arina. “How Much Should a Startup Pay in Legal Fees?” LexisNexis Legal Newsroom. 2014. Accessed
April 5, 2015.
60
Quinn, Gene. "The Cost of Obtaining a Patent in the US." IPWatchdog. January 28, 2011. Accessed February 14,
2015.
61
"Military Park Building." RSS. Accessed March 20, 2015. http://www.newarkofficespace.com/listings/military-
park-building/.
62
"Cost of Living in Newark, NJ, United States.” Numbeo. 2014. Accessed April 3, 2015.
63
"Business Insurance Cost." Trusted Choice. 2015. Accessed April 3, 2015.
https://www.trustedchoice.com/business-insurance/compare-coverage/cost/.
64
Heiler, Chris. "How Much Will It Cost to Hire a Marketing Agency?" Landscape Leadership (blog), July 11,
2013.

42
n. U.S. inflation rate is assumed at 1 percent currently. All expenses are subject to
this inflation rate.
Balance Sheet
7. There are no liabilities associated with CAP because CAP will seek for capital from angel
investors. Campus stores and retailers will make payments directly to CAP. The company
accepts no credit.
8. Currently, the website will be for marketing purpose only. Therefore, no online sales will
be made, and CAP will hold no inventory. Orders will be delivered directly from
manufacturers to retailers and campus stores.
9. It assumed that there are no fixed assets currently because CAP will have no valuable
fixed asset besides furniture and office equipment.

43
Income Statement 2016 (First Year of Business)
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
Units Sold - - 5,700 7,100 7,200 23,500 24,500 24,500 7,500 7,500 15,000 26,500 149,000
Gross Sales - - 8,550 10,650 10,800 35,250 36,750 36,750 11,250 11,250 22,500 39,750 223,500
(Cost of Goods Sold) - - 3,420 4,260 4,320 14,100 14,700 14,700 4,500 4,500 9,000 15,900 89,400
Gross Profit - - 5,130 6,390 6,480 21,150 22,050 22,050 6,750 6,750 13,500 23,850 134,100
Expenses
Officer Compensation 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 66,000
Payroll Taxes 341 341 341 341 341 341 341 341 341 341 341 341 4,092
Employee Benefits 1,342 1,342 1,342 1,342 1,342 1,342 1,342 1,342 1,342 1,342 1,342 1,342 16,104
Marketing Firm Outsourcing 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000
Office Rent 293 293 293 293 293 293 293 293 293 293 293 293 3,520
Utilities Expenses 260 260 260 260 260 260 260 260 260 260 260 260 3,120
Office Supplies Expenses 4,000 182 182 182 182 182 182 182 182 182 182 182 6,000
Travel Expenses 100 100 100 100 100 100 100 100 100 100 100 100 1,200
Marketing & Advertising 1,676 335 335 335 335 10,058 5,029 3,353 671 671 5,699 5,029 33,525
Accounting 100 100 100 100 100 100 100 100 100 100 100 100 1,200
Audit Service 5,000 5,000
Attorney Fees 2,500 2,500 5,000
Patent 7,500 7,500
Other Expenses 125 125 125 125 125 125 125 125 125 125 125 125 1,500
Insurance 183 183 183 183 183 183 183 183 183 183 183 183 2,200
Total Expenses 25,921 10,762 10,762 10,762 10,762 22,984 15,455 13,779 11,097 11,097 16,126 20,455 179,961
Net Income (25,921) (10,762) (5,632) (4,372) (4,282) (1,834) 6,595 8,271 (4,347) (4,347) (2,626) 3,395 (45,861)

44
Income Statement 2017 (Second Year of Business)
Units Sold 31,332 4,476 4,476 4,476 4,476 29,094 44,760 29,094 11,190 11,190 23,380 26,856 223,800
Gross Sales 46,998 6,714 6,714 6,714 6,714 43,641 67,140 43,641 16,785 16,785 33,570 40,284 335,700
(Cost of Goods Sold) 18,799 2,686 2,686 2,686 2,686 17,456 26,856 17,456 6,714 6,714 13,428 16,114 134,280
-
Gross Profit 28,199 4,028 4,028 4,028 4,028 26,185 40,284 26,185 10,071 10,071 20,142 24,170 201,420
Expenses
Payroll Taxes 413 413 413 413 413 413 413 413 413 413 413 413 4,960
Marketing Firm Outsourcing 2,020 2,020 2,020 2,020 2,020 2,020 2,020 2,020 2,020 2,020 2,020 2,020 24,240
Office Rent 296 296 296 296 296 296 296 296 296 296 296 296 3,555
Office Supplies Expenses 168 168 168 168 168 168 168 168 168 168 168 168 2,020
Travel Expenses 101 101 101 101 101 101 101 101 101 101 101 101 1,212
Accounting 101 101 101 101 101 101 101 101 101 101 101 101 1,212
Audit Service 5,050 5,050
Attorney Fees 2,525 2,525 5,050
Other Administrative Expenses 126 126 126 126 126 126 126 126 126 126 126 126 1,515
Insurance 183 183 183 183 183 183 183 183 183 183 183 183 2,778
Total Expenses 19,624 12,692 12,692 12,353 12,353 21,320 17,099 15,404 12,692 12,692 17,099 22,149 188,169
Net Income 8,574 (8,663) (8,663) (8,324) (8,324) 4,865 23,185 10,780 (2,621) (2,621) 3,043 2,021 13,251

45
Income Statement 2018 (Third Year of Business)
Units Sold 40,880 5,840 5,840 5,840 5,840 37,960 58,400 37,960 14,600 14,600 29,200 35,040 292,000
Gross Sales 61,320 8,760 8,760 8,760 8,760 56,940 87,600 56,940 21,900 21,900 43,800 52,560 438,000
(Cost of Goods Sold) 24,528 3,504 3,504 3,504 3,504 22,776 35,040 22,776 8,760 8,760 17,520 21,024 175,200
Gross Profit 36,792 5,256 5,256 5,256 5,256 34,164 52,560 34,164 13,140 13,140 26,280 31,536 262,800
Expenses
Payroll Taxes 620 620 620 620 620 620 620 620 620 620 620 620 7,440
Marketing Firm Outsourcing 202 202 202 202 202 202 202 202 202 202 202 202 2,424
Office Rent 299 299 299 299 299 299 299 299 299 299 299 299 3,591
Office Supplies Expenses 255 255 255 255 255 255 255 255 255 255 255 255 3,060
Travel Expenses 102 102 102 102 102 102 102 102 102 102 102 102 1,224
Accounting 102 102 102 102 102 102 102 102 102 102 102 102 1,224
Audit service 5,101 5,101
Attorney Fees 2,550 2,550 5,101
Other Administrative Expenses 128 128 128 128 128 128 128 128 128 128 128 128 1,530
Insurance 292 292 292 292 292 292 292 292 292 292 292 292 3,507
Total Expenses 20,540 15,143 15,143 14,924 14,924 21,635 17,990 16,895 15,143 15,143 17,990 23,091 208,564
Net Income 16,252 (9,887) (9,887) (9,668) (9,668) 12,529 34,570 17,269 (2,003) (2,003) 8,290 8,445 54,236

45
Balance Sheets
January 1,
2016
Start of
Business
December 31,
2016
End of
First Year
December 31,
2017
End of
Second Year
December 31,
2018
End of
Third Year
Assets
Current Assets
Cash and Equivalents 250,000 204,139 217,390 271,627
Other Current Assets - - - -
Total Current Assets 250,000 204,139 217,390 271,627
Fixed Assets - - - -
Total Fixed Assets - - - -
Total Assets 250,000 204,139 217,390 271,627
Liabilities and Equity
Shareholders' Equity - - - -
Contributed Capital 250,000 250,000 204,139 217,390
Retained Earnings (45,861) 13,251 54,236
Total Shareholders' Equity 250,000 204,139 217,390 271,627
-
Total Liabilities and
Shareholders' Equity
250,000 204,139 217,390 271,627

47
Statement of Cash Flows
December 31,
2016
December 31,
2017
December 31,
2018
Cash Balance at the Beginning of the
Year 250,000 204,139 217,390
Cash Flow from Operating Activities
Net Income (Loss) (45,861) 13,251 54,236
Total Adjustments 204,139 217,390 271,627
Cash Flow from Investing Activities
Subtractions
Purchase of Office Equipment 0 0 0
Purchase of Office Furniture 0 0 0
Purchase of Patent 0 0 0
0 0 0
Cash Flow from Financing Activities
Additions 0 0 0
Subtractions 0 0 0
Cash Balance at End of Year 204,139 217,390 271,627
Ratios
2016 2017 2018
Profit Margin -20.52 % 3.95 % 12.38 %

48
Appendices
First Screen
Part 1: Strength of the Business Idea
For each item, circle the most appropriate answer and make note of the (-1), (0), or (+1) score.
Low Potential (-1) Moderate Potential (0) High Potential (+1)
1. Extent to which the idea:
● Takes advantage of an
environmental trend
● Solves a problem
● Addresses and unfilled
gap in the
marketplace
Weak Moderate Strong
2. Timeliness of entry to market Not timely Moderately timely Very timely
3. Extent to which the idea
“adds value” for its buyer or
end user
Low Medium High
4. Extent to which the customer
is satisfied by competing
products that are already
available
Very satisfied Moderately satisfied Not very satisfied or
ambivalent
5. Degree to which the idea
requires customers to change
their basic practices or
behaviors
Substantial
changes
required
Moderate changes
required
Small to no changes
required
1. Pens have been around for over two decades, the first was the fountain pen and then the
ballpoint pen, which was created around 1938. However, since the ballpoint pen, pens
have only been updated as needed and we think that it is time for an innovation. Our
product is a flavored pen, which has not yet been created. We think that our product can
fill the gap in the market because 45% of teenagers are nail biters and our product can
provide a temporary solution for them that is much more hygienic.
Pesic, Peter. "The Man Who Changed the Way We Write." The Wall Street Journal (New York),
August 17, 2012.
Romanowski, Perry. "Ballpoint Pen & Its Inks." PaintIndia, July 2008, 160-63.
Leung, Alexander. "Nailbiting." Clin Pediatr 29, no. 12 (December 1990): 690-92.
2. Pen sales are currently expected to increase 4.9% into an $8.5 billion industry this year.
The rise is supposed to continue for at least five years, which leads us to believe this is a
moderately good time to enter the market.

49
Drozdiak, Natalia. "Pencil Makers Go Back to Drawing Board." Wall Street Journal (New
York), October 15, 2014.
3. Our product will add a great deal of value to our target market. The target market will be
students that chew on the bland tasting pens that they already have. Our product will be
flavorful and FDA approved, which will be attractive for mothers to buy for their
children. The pen will be a substitute for other pens that may have toxins within the
plastic. Also, research has shown that chewing gum is beneficial to alertness and
sustained attention. We believe that these benefits can be transferable into our product
because it is almost the same process.
Smith, Andrew. "Effects of Chewing Gum on Cognitive Function, Mood and Physiology in
Stressed and Non-stressed Volunteers." Nutritional Neuroscience 13, no. 1 (February 01,
2010): 7-16.
"PolyFlav®: A Technology That Infuses FLAVOR into PLASTIC." Add The Flavor. 2009.
Accessed January 22, 2015.
Esposito, Frank. "Entrepreneur Develops Taste for Plastics." Plastics News 21, no. 10 (May 11,
2009): 4.
4. In the current market, there is a huge selection of products within our category. However,
there is no producer for our particular idea. ARK Company provides a quite similar
product with a chewable pen tip for students with autism. However, the price of this
product is set quite high at $39.99. Also, the pen tips are not flavorful like our product
will be. Since there are a few companies providing a similar service, we believe that our
customers are only moderately satisfied with their current offerings.
Razzi, Elizabeth. "The Write Stuff." Kiplinger's Personal Finance, May 1, 2003, 105-08.
L, Tammy. "DnZ-VIBE Tran-Quill Pen Set and Cip-Kup." Autism Mom Blog. January 4, 2012.
Accessed February 14, 2015.
5. Our product will also require little to no change in customer behavior. The pen will have
a similar design to what is currently offered and will be used in the same fashion. Also,
any changes that we would make to the overall design would create additional ease for
the user.
Part 2: Industry-Related Issues
Low Potential (-1) Moderate Potential (0) High Potential (+1)
1. Number of
competitors
Many Few None
2. Stage of industry life
cycle
Maturity phase or
decline phase
Growth phase Emergence phase
3. Growth rate of
industry
Little or no growth Moderate growth Strong growth
4. Importance of “Ambivalent’ “Would like to have” “Must have”

50
industry’s products
and/or services to
customers
5. Industry operating
margins
Low Moderate High
1. The industry is a highly competitive field with a wide variety of the U.S. and
international brands. With low barriers to entry, it is therefore easier for new competitors
to enter the market. MarketLine Industry Profile reports that since the industry has a
steady growth, it causes the rivalry to increase as well. Furthermore, low brand loyalty
and easy access to suppliers and distributors are reasons for the likelihood of new
entrants. On the other hand, with the fifty largest firms hold 75% of the market sales, it
will be challenging to compete both against large corporations as well as many smaller
firms in the industry.
"Office, School & Art Supplies Manufacturing." Hoovers, 2015. Accessed January 31, 2015.
"Office Services & Supplies Industry Profile: United States." MarketLine, October 1, 2014, 1-31.
2. The pen industry is currently in its maturity phase since it has been around a long time
and technology is replacing the products. Even though the market is in its maturity, small
businesses in this industry are able compete through specialized products and superior
craftsmanship. This leads us to believe that if we can improve the design of the product to
fit the market trends and needs, we will be able to produce the sales that are needed.
Chemin, Anne. "Handwriting vs Typing: Is the Pen Still Mightier than the Keyboard?" The
Guardian, December 16, 2014. Accessed February 8, 2015.
3. MarketLine Industry Profile reported that the actual growth of the industry in 2013 was
nearly 5%. MarketLine also reported that the U.S. market uses 42.1% of global office
services and supplies market value. Pen and Pencil Manufacturing accounted for 24% of
total revenue. In the short term, CNBC forecasted that the U.S. economy is expected to
grow at 3% in 2015. In the long term, it is predicted that from 2014 to 2018, the industry
growth is expected to maintain at 2% annually. Therefore, our products will have a steady
growth for at least the next four years.
"Office Services & Supplies Industry Profile: United States." MarketLine, October 1, 2014, 1-31.
AP. "Why the US Will Power the World Economy in 2015." CNBC, December 30, 2014.
Accessed February 7, 2015.

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