Milestone 4

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Session 10, 23th November 2007 - Milestone 3

Planning for resources and commercialization

What resources are needed from external sources and how will these be accessed?

First of all the venture needs ongoing collaboration with a major 3G network provider. Since Tomtom has already the necessary collaborations and contracts with such partners (Vodafone) for another new service called "TomTom ONE XL HD", there might be some minor expenses to extend the use of their infrastructure by Tomtom.

The second external resources the venture needs are sales people, sales managers and some designers. The field of advertisement is new to Tomtom and they do not have any experience in it. Tomtom needs to employ managers that have experience in advertisement and they have to employ people that will go and sale the ads to big firms, like for example McDonalds, but also to smaller firms. There are four possibilities to find such people: Manpower market, head hunter, acquisition of or joint-venture with of an advertisement firm. The problem with an acquisition or joint-venture is to find a matching firm, so we propose to not spend to much time in searching such a firm and stick with finding employees on the manpower market with or without head-hunters.
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How much funding and when is required from the corporation?

- focus calculations on holland and not on Switzerland. TomTom is dutch!
- all new devices will come with our service. But the holder of the PND can activate/deactivate the service. BUT no reduction on devices
- Start to introduce the service only in Holland. If successful, expand to whole Europe. --> adapt excel sheet
- attention: only a certain party out of 5 mio devices sold in 2006 are new devices. But only new devices will come with our services. --> analsysis of sales. We used 5 mio --> WRONG.
- specify marketing costs for agressive and passive strategy seperately. Increase figures.
- define market start to summer 2008 --> adapt excel figures
- re-estime growth rates & pricing model

From the technical view, the venture isn't that new to TomTom and it doesn't cause a major investment in technical R&D and hardware acquisition. On the other hand, the marketing for this device will be quite different than for the current devices. First it will be necessary to acquire as many advertier as possible and then to sell the device to the customers. The acquiring of advertisers will be something totaly new for TomTom and we decided, that it will be essential to engage experts in this domain to achieve a satisfactory result in finding advertisers. As this market is currently growing very fast, the investment to employ this experts will be quite high. A second task this experts have to performe, is to form the marketing group of TomAd, that in the future they will be able to acquire new advertisers and keep the old ones. Once this relations are established, the TomAd marketing team will be reduced to the core members. Sortly after the start of acquiring advertisers a second part of marketing will start. The mission for this team will be to promote TomAd and to actually sell the device. Here we think, that the biggest investment has to be made in the first 3-4 years of TomAd.

All together, the investment in the venture for the first year will be (for the worst case) about CHF 13'000'000.00 and for the second about CHF 10'000'000.00 after this, we expect the marketing costs to drop drastically and TomAd will finance itself for the future. For the moment, this figures are still have to be taken with a pinch of salt, as the market analysis for advertisers isn't completed yet.

How will the product be marketed? (target customers, scale up plans, etc.)

Target customers and marketing strategy

Our target customers are enterprises of any size. In terms of marketing, there are two different strategies which will be deployed: an aggressive strategy for predefined key customers, and a passive strategy for all others. We explain now both strategies as well as the decision points in order to identify key companies.

Aggressive Strategy

The aggressive strategy is deployed by a specialized sales force. Members of the sales force contact directly the predefined key companies. A personal contact to the customer is established and TomAd will be presented to the client by our sales people. Although a standard pricing model will be in place, special contracts with key customers will be allowed. The policies for such special treatment of key customers are still to be defined.

Passive Strategy

A second marketing and sales team will deal with customers which are not among the key customers. The marketing is based on common advertisement channels such as TV, street posters, Internet and magazines. The team does not contact directly the clients, but is responsible for clients contacting us.

How to identify key customers?

Key customers are customers which are on one side well known by the public and on the other side, produce a high number of displayed advertisements on the PNDs. Further, a high number of displayed advertisement is achieved by a high number of locations, e.g. 144 McDonalds restaurants in Switzerland, or an excellent location, e.g. the restaurants of the Mövenpick Group are often accessible directly from the highway.

The key customers

A first analysis of the market (only Suisse market) yielded the following key customers: McDonalds Restaurants, Mövenpick Group, StarBucks, Migros, Coop. The list may be extended and adapted.