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Business Plan for Green Tongues Summer 2011

Last reviewed: August 12, 2011 ~19 min read

Business Plan for Green Tongues

Summer 2011

Company Information

In an age where everyone is already manufacturing everything, identifying new opportunities in the marketplace has become especially challenging, but truly timely solutions are developed from time to time that seem to optimally match current and projected demand in ways that distinguish them from their competitors. This is certainly the case with solar-powered billboard technology today, particularly in areas where their deployment represents a cost-effective marketing alternative. Green Tongues is an advertising company that provides environmentally friendly advertising solutions to all those companies that value their environment and want to give back to the society in which they exist. Green Tongues envisions itself to be the premier advertising company in the near future in the entire Gulf Cooperation Council (GCC) region as consumers and businesses in this region are slowly beginning to realize the importance of environmental conservation.

Indeed, the six member states comprising the GCC (i.e., Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) are well poised to become an increasingly important consortium economically and politically in the future. For instance, Siddiqi (2006) reports that during the period 2001 to 2006, the GCC economy more than doubled in size in nominal dollar terms to about $723 billon. A study conducted by the Institute of International Finance (IIF), an association of private banks headquartered in Washington, D.C., determined that collectively, the GCC comprise the 17th biggest economy in the world, ranking just slightly below the aggregate gross domestic product (GDP) of the Russian Federation at $763 billion (Siddigi, 2006). More importantly, Siddiqi concludes that current trends indicate that the GCC will become the world's 10th largest economy by 2016.

This impressive economic performance is attributed in part to skyrocketing oil and gas prices, but there are signs that the governments of the GCC are reinvesting their profits into a wider range of industries in an effort to diversify their economies and improve their environmental sustainability practices (Siddiqi, 2006). For example, Siddiqi notes that, "There are encouraging signs that the energy-rich region is actually deploying surplus petrodollars (windfalls) to more prudent use -- unlike the spending binge of the 1970s and early 1980s" (2006, p. 410). Moreover, government investments in the private sector are expected to fuel demand for alternative marketing methods that reflect this increased focus on environmentally responsible solutions. In this regard, Siddiqi reports that Moody's Investors Services, the global credit-rating agency, noted that throughout the GCC: "A higher proportion of [oil revenues] has been saved than previously, while extra government expenditure has been focused more on capital than on current spending. Most governments are also proceeding with structural reforms aimed at boosting the private sector" (2006, p. 41).

There are already some significant trends discernible throughout the GCC as well with respect to increases in the disposable incomes being earned by a growing upper middle class. For instance, the International Monetary Fund reports that real economic growth averaged nearly 6% per year during the period from 2000 to 2005 with corresponding increases in per capita GDP (Siddiqi, 2006). Although this rate varies significantly from emirate to emirate (i.e., $12,600 in Saudi Arabia versus $51,975 in Qatar in 2006 dollars), in the aggregate, the GCC states enjoy a healthy economy with a generous social welfare system and social indicators on par with the Western world (Siddiqi, 2006). Therefore, the company's target market will consist of enterprises in the GCC region that are bored with the traditional concepts of advertising and crave a more creative and innovative approach to communicating their message to their consumers. This target market will consist of all the firms, public or private, profit or non-profit, that want to help the environment by using commercial advertising media such as solar-powered billboards. A summary of relevant economic data for the six member GCC states is provided in Table 1 and illustrated in Figure 1 below:

Table 1

Current Per Capita GDPs of GCC Member States

GCC Member State

Current Per Capita GDP (2010 est.)

Bahrain

$40,300

Kuwait

$48,900

Oman

$25,600

Qatar

$179,000

Saudi Arabia

$24,200

United Arab Emirates

$49,600

Source: CIA World Factbook, 2011

Figure 1. Current Per Capita GDPs of GCC Member States

Source: Based on tabular data in CIA World Factbook, 2011

As can be clearly discerned from Figure 1 above, all of the GCC member states have a healthy per capita GDP, but Qatar leads the group by far with an impressive per capita GDP of $179,000.

Environmental and Industry Analysis

In the dynamic marketing environment emerging in the GCC, identifying opportunities to capitalize on this enormous governmental investment in the private sector represents a timely and valuable enterprise. The use of environmentally friendly advertising platforms has become increasingly popular in recent years. For instance, an electronic billboard entirely powered by the sun and wind was installed in New York's Times Square in December 2008. According to Lloyd, "The 'eco-friendly' billboard is the first of its kind in Times Square and the eastern United States, the second in the United States and the third in the world" (2008, para. 2). The billboard was designed for Ricoh Americas' parent company Ricoh Company Ltd. Of Tokyo, and measures 47 feet (14 meters) high by 126 feet (38 meters) long; the Time Square billboard's floodlights will be powered on site by 45 solar panels and four wind turbines (see Figure 2 below) (Lloyd, 2008).

Figure 2. Artist rendering of the Ricoh billboard in Times Square located at Seventh Avenue and 42nd Street, New York City

Source: Lloyd, 2008

Clearly, major corporations such as News Corp. that currently lease thousands of billboards could help reduce their carbon footprint in major ways by switching to renewable energy sources (Sheppard, 2010). Even more fortuitously, the introduction of solar-powered billboards is especially timely given the GCC's planned railroad grid across the Arabian Peninsula that would improve the strategic export reliability of oil, gas and other resources (Shepphard, 2010). Likewise, a report from Bains (2008) notes that solar powered billboards have recently been installed in San Francisco, Africa, and Canada. According to Bains, "PG&E (Pacific Gas and Electric Company) installed the nation's first solar powered billboard at 1000 Brannan Street in San Francisco this January. Visible from I-101, the billboard, which contains 20 solar modules, can generate 3.4 kilowatts of power, more than enough to illuminate the billboard at night. The excess electricity is fed back into the grid. PG&E also changed the billboards' lights to more energy efficient LED's" (Bains, 2008, para. 2).

The billboard was installed by PG&E as part of a larger marketing campaign that was intended to promote public awareness of the company's stated commitment to adopting environmentally responsible solutions at every opportunity (Bains, 2008). According to the PG&E's senior vice president of corporate relations, "As a leader in the fight against climate change, we're always looking for new ways to educate our customers. With this solar-powered billboard -- the nation's first -- we increase the amount of clean, renewable energy we provide our customers. We also hope to capture the imagination of Americans about the actionable steps one can take to reduce their environmental impact" (quoted in Bains, 2008 at para. 3). The PG&E billboard follows the installation of two each other solar-powered billboards in Canada and South Africa (Bains, 2008). The first solar-powered billboard in the world was installed by Nedbank in South Africa in mid-2006, and this billboard actually generates enough extra energy to provide overflow power to a kitchen at a local primary school (Bains, 2008). For instance, Bains adds that, "The electricity generated by the billboard feeds more than 1,400 children each day, and saw the bank scooping South Africa's first ever outdoor Grand Prix Award at the 54th Cannes Advertising Awards" (2008, para. 4).

Although the specific technological applications used in the solar-powered billboard array described herein differs from that illustrated in Figure 1 above, the underlying concept -- using renewable energy sources -- is essentially the same. The ability to deploy solar-powered billboards in the otherwise-hostile environments that characterize much of the GCC states is therefore a viable marketing approach which is especially well situated to take advantage of this railroad grid connecting the GCC member states. This railroad grid consists of hundreds and hundreds of miles of potential billboard sites, and the ability to continually power these billboards and their projection displays using solar power makes them particularly suitable applications. According to Blanche (2011), "Middle East governments have committed more than $100 billion to railway projects in the coming years. Saudi Arabia is the driving force in the drive to build the rail network linking the six Gulf Cooperation Council countries" (p. 13). Moreover, the rail network will be highly suitable for billboard deployments based on its focus on providing light rail passenger services, with Dubai becoming the first member state to complete a metro system in September 2009 (Blanche, 2011). Forecasts indicate that these trends will continue well in the future, fueled by ongoing financial investments from the GCC member states. In this regard, Blanche reports that, "Business on the $28 billion system has already doubled amid predictions that in 10-15 years around 80% of the GCC's population will be living in cities. Taking their lead from the golden days of European railways, the six GCC states are planning ambitious rail systems to carry both passengers and freight" (2011, p. 13).

This regional network will require between $30 billion and $100 billion to complete and will ultimately include about 1,500 miles of track in a region of the world that has lacked any substantive railway transportation in the past (Blanche, 2011). Scheduled for completion by 2017, the railway system is currently planned to be extended further throughout the region in the future in order to link other major cities as well. For instance, another major associated railway project is 245-mile Haramain High-Speed Rail between the holy cities of Mecca and Medina priced at $7 billion that is intended to transport the 10 million Muslim pilgrims who complete the Hajj each year (Blanche, 2011). Scheduled for completion in 2013, this additional railway system will become part of the larger network being constructed throughout the region (Blanche, 2011).

In fact, the railway system being constructed throughout the GCC rid will eventually connect to other railway projects that currently on the drawing board or already under construction (Blanche, 2011). According to Blanche, "Other states in the Middle East and North Africa have also drawn up ambitious plans for rail systems that could eventually connect with the GCC grid north through Iraq to Turkey -- although right now Iraq's stability is uncertain -- and the Mediterranean" (2011, para. 4). Additional routes are planned for the Jordan to Syria connection as well as through North Africa and Europe, with the potential to expand even further into the burgeoning Asian markets in the east (Blanche, 2011). Taken together, the market is for solar-powered billboards is exploding in the GCC and the company's primary product is well positioned to satisfy this need as described further below.

Products or Services

The company's primary product will be environmentally friendly solar-powered billboards, projections and cling advertisements that adhere to smooth glass surfaces. According to Reichert and Lambiase, "Although billboard advertising ranks behind all major media forms in terms of total advertising revenue, it is an important part of the media mix for many products. Billboard advertising is unique because it can reach a large number of viewers, and these viewers have only a few seconds to process the message" (p. 107). Despite some backlash from conservationists and others who decry the blight billboards represent in densely populated regions, billboards continue to gain in popularity among companies of all sizes and types for a number of reasons, including the following:

1. Billboards provide companies with a larger than life image.

2. Billboards can help reach a large audience of potential new customers; placed in the right location, a billboard can be seen by customers and potential prospects several times a day and reinforce a message sent using direct mail, TV advertising or other media outlets.

3. Billboard ads are, for the most part, exposed for an extended period of time. In most cases, billboard advertising space is sold on a monthly basis. Typically, billboard space is purchased space several months in advance (Ginyard, 2003, p. 120).

The company's pricing strategy for its solar-powered billboards, projections and cling advertisements will follow more of a penetration route; this is where the company's leadership team will try to penetrate the market with more competitive prices than our competitors. Lower electricity consumption which will therefore result in lower costs. The plan of the marketing department is to forward these lower costs as lower prices for consumers; basically, the corporate strategy will be to provide the same communication method at a much lower cost than traditional advertising competitors.

Marketing Research and Evaluation

The marketing research indicates that the GCC marketplace represents an exciting opportunity for deployment of the solar-powered billboards envisioned herein. One of the main advantages of competing in the billboard advertisement industry is the ability to use the medium for self-promotional purposes which will be achieved using the following:

1. Billboards

2. Cling Alls

3. Projections

4. Facebook Page

5. Newspaper Advertisements

6. Radio

This approach is currently being used by other solar-powered billboard vendors such as the one depicted in Figure 3 below.

Figure 3. Representative sample of solar-powered billboard self-promotion

Source: Bains, 2008

A representative sampling of cling advertisements in the field in provided in Figure 4 below.

Figure 4. Cling advertisements in the field

Source: http://www.matrixmediaservices.com/Images/Photos/Airport%20Window%20Cling.jpg

An evaluation of the respective strengths and benefits that are associated with each of the foregoing methods will be conducted periodically to ensure that company resources are being allocated to the major sources of customer referral as well as a cost-benefit analysis, with venues such as social networking being especially attractive because of their cost effectiveness. In fact, the integration of social networking sites such as Facebook is highly congruent with the guidance provided by Elefant (2011) who emphasizes that, "In jurisdictions with retail competition, suppliers are integrating social media campaigns with more expensive conventional advertising such as radio, television, and billboards, to attract customers. For incumbents competing with new suppliers, social media takes on a more significant role - not so much for marketing but for customer retention" (p. 2).

Placement will be as follows:

1. Billboards

2. Conventional Areas

3. Non-Conventional Areas

4. Projections

5. Retail outlet store windows

6. Cling alls

7. Vehicle windows

8. Most metal surfaces

Manufacturing and Operations Plan

The manufacturing plan for the company will focus on identifying strategic partners locally as well as in China that are capable of providing the components set forth in the company's financial plan below. The operations plan will focus on generating new clientele and monitoring the operational status of the company's deployed billboards. This will be one of the more challenging aspects of the enterprise given the hostile environmental conditions in which some of these billboards will be located. In this regard, Blanche reports that, "Building a railway network across the Arabian Peninsula is fraught with difficulties. No one has laid a railroad on the large shifting sand dunes before, so engineers need to figure out how that can be done" (2011, p. 13). A federal agency in the UAE, Union Railway, has been tasked with developing technological solutions that can facilitate the construction of the railway and its ancillary support structure in the desert setting (Blanche, 2011). The research conducted to date indicates that although the challenges are formidable, the experiences of the Australian railway system operating in similar conditions have proven valuable in guiding the way for the GCC member states (Blanche, 2011).

Management Team

1. Akshay Kothari (Finance Manager)

2. Pashmina Jham (Sales Manager)

3. Khalid Riyaz (Marketing Manager)

4. JayPatni (Operation and Purchase Manager)

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