final phonebloks

PhoneBloks Prepared for: International Marketing Prepared by: Balindal Suttatanachod, Branden Maes, Katrina Kalsø, Roby Camagong, Wolfgang Feger November 27, 2013 Hangzhou - Team 9

!!!

!1

PHONEBLOKS MARKETING PLAN

Source: http://www.designacademy.nl/Portals/0/www/home/academy_news/Dave%20Hakkens%20-%20Phone%20Bloks.jpg

http://www.designacademy.nl/Portals/0/www/home/academy_news/Dave%20Hakkens%20-%20Phone%20Bloks.jpg

http://www.designacademy.nl/Portals/0/www/home/academy_news/Dave%20Hakkens%20-%20Phone%20Bloks.jpg

1.0 Executive Summary!Overview!Phonebloks is a start-up company changing the development of the entire smartphone industry by delivering a completely customizable smartphone through an open-source platform. The company believes in the idea of giving the consumers a smartphone that will outlast the intensity of the competition and the velocity of changes in technology. !Product Overview!Phonebloks is a revolutionary device employing a smart-base that is compatible with detachable bloks, allowing the user to easily upgrade hardware and attach those components that suit their lifestyle and changing daily needs. The company will launch a free collaborative innovation platform for consumers and developers to engage in creating new bloks. This is the first smartphone company that openly involves consumers in both hardware and software development. !Marketing Objectives and Goals!In the first year of market entry, an aggressive and achievable market entry strategy will be set in order to implement and track progress of the product. The plan aims to increase traffic on the innovation platform through extensive marketing efforts by Phonebloks and their partners (Motorola, Google,etc.), optimize use of budgeted funds by implementing strategic marketing efforts, and increase brand awareness through targeted advertising and social media campaigns on large platforms like Twitter and Facebook to reach a young and creative target market. !Strategies and Plan!I. Target Market!The Phonebloks smartphone will target tech-savvy consumers who are more adept to technology adoption and range from 20 to 44 years of age. This is a perfect fit for Phonebloks. !II. Distribution!Initial distribution will be implemented through internet purchases on the online Blok Store site, which is supported by a centralized delivery system. Delaying retail distribution and avoiding shelf spaces costs minimizes expenditures of the product launch. In the future, Phonebloks will implement retail distribution in cities with higher technology adoption. !!III. Promotion!Phonebloks' brand presence will be pushed through the company’s online Blok Store with direct and interactive marketing. The plan will also engage in online advertisement, public relations efforts, events and experiences. This will create brand resonance and focus on key points-of-difference and points-of-parity. !IV. Pricing!Phonebloks will sell its preassembled smartphone at different prices for different segments. Pricing will be researched through our platform in order to send the right signals in terms of perceived value in balance with production costs. !Action and Implementation!Execution will be tightly monitored to ensure the highest standards throughout the value chain. Deviations will be addressed accordingly by the Chief Marketing Officer and the Chief Executive Officer.

!2


2.0 Situation Analysis!

2.1 Market Summary

The current United States smartphone market has several key features. Firstly, the market demographics show

that smartphones are increasing their popularity among all ages. Individual needs tend to be as diverse as

the age of the consumers and their respective life-cycle stage and life stage. As a result, trends towards a

more mobile society are influencing developments in the smartphone industry. Even in this saturated market,

there remains a large opportunity for growth. Phonebloks’ highly adaptable products can adapt to trends in

the market and easily serve them.

2.1.1 Market Demographics As of 2012, the US mobile phone market is dominated by Apple (26.2%) and Samsung (31.8%). In order to 1

manage efforts accordingly, we focus on the demographics of their customers. The following data will give

insights on these two companies consumer demographics in comparison to the closest competition, as well

as a comparison between the Android and iOS (iPhone) operating systems. 2 3

!

Demographic Gen Y Gen X Boomers

Samsung! 20% 22% 26%

Apple iPhone 29% 22% 11%

LG 13% 16% 21%

Motorola 10% 11% 14%

18-24 43% 31%

25-34 40% 34%

35-44 33% 29%

45-54 27% 25%

Race/Ethnicity Android iOS (iPhone)

Black 42% 16%

Hispanic 27% 26%

!3


Source: trends.e-strategyblog.com

Therefore, our efforts should be targeted between the ages of 18 to 54, the combined percentage of mobile

phone users is between 74% and 52%. This helps identify our target age group, focusing on younger and

middle-aged consumers. In regards to ethnicity, the numbers show an even split, except for the African-

American population. This should be further investigated in ongoing market research. Household incomes

show that while Android operations system has a relatively constant market share across all income levels,

iPhone has a great variety of users. This should enable us to take advantage of this market segment if Android

platform is adopted for our smartphone device. Lastly, the level of education shows similar developments,

which leads to similar assumptions. According to other sources, the correlation between age and smartphone

usage are confirmed. 4

2.1.2 Market Needs

The need for a customizable smartphone in the fast-changing and technology-driven smartphone industry is

becoming increasingly apparent. This section aims to identify sources which influence/generate specific

customer needs. 5

Demand Factors!The developments in the mobile phone/tablet sector have led to an increasing reliance on apps, which

exercise a huge influence on all aspects of lifestyles and behaviors. This trend has led to a “cocooning”,

which means that consumers live in their own digital world/s anywhere and anytime. The young generation 6

therefore are using mobile phones for their everyday needs (education, entertainment, communication). This

leads to a huge amount of very high demanding customers, which want to have a mobile phone which serves

the complexity of their individual lifestyle.

!!

White 26% 27%

Household Income Android iOS (iPhone)

<$30K 28% 13%

$30K-$50K 27% 23%

$50K-$75K 31% 25%

$75K+ 31% 40%

!4

Source: emarketer.com

Mobile Behavior!Deriving from the previous point it is obvious that a mobile phones need to serve various purposes. According

to EuroMonitor the most frequent activities include email and taking photos, with 48% using their smartphone

device for social media purposes, which requires various tasks from the mobile device as well. In addition, 7

gaming apps have become more and more popular using the “freemium” model, which requires certain

specifications in order to operate properly. This shows the diverse requirements that customers have in

regards to mobile phone specifications.

In conclusion, it can be said that the developments in availability and behavior have led to consumers who

are demanding more than ever before. Phonebloks, however, will be able to keep up with the ever changing

lifestyles/demands of its customers due to its adaptability and flexibility. This is was developed into the

product’s slogan: “A phone worth keeping”.

2.1.3 Market Trends

In the United States, the smartphone market has grown dramatically in the past few years. Key players in this

smartphone software market comprise of iOS (iPhone) and Android devices, which hold a market share of

approximately 60%, while Windows operating system phones have seen a drop in consumer consumption. 8

However, iPhone’s dominant position over the past several years is being threatened as an apparent lack of

innovation has affected sales, as consumer look to new devices such as Android. In addition, the market itself

still has the potential for continuous growth as demand for mobility increases. 9

Phonebloks will focus on differentiating itself from others in the market in order to appeal to the target market

effectively. In doing this, Phonebloks will allow customers the freedom to creatively customize a phone to

serve their individual needs and lifestyle. Apart from customization, Phonebloks will focus heavily on price

through minimized production costs, due to the key challenge of competing with major players such as Apple,

Android, and Windows phone in acquiring suppliers.

2.1.4 Market Growth

The U.S. smartphone market has seen a continuous growth in smartphone consumption. In terms of software,

the industry is dominated by Apple and Android platforms. In 2013, 56% of adults in the United States owned

a smartphone, with increasing ownership spread across various income segments. Android platform has a 10

larger market growth compared to Apple, which is the second fastest growing in this regard. 11

!

!5

2.2 Strengths, Weaknesses, Opportunities, and Threat Analysis

2.2.1 Strengths

1. Customer Empowerment - Phonebloks allows the consumer to interact and give feedback on the mobile phone they want through our integrated online customer platform

2. Customizable - The online platform allows the consumer to customize a smartphone to suit the highly specific demands of their lifestyle

3. Flexibility in price - The modularity of the product allows it to compete in the lower- and higher-priced smartphone segments

4. Strong partners - Strategic partnership with Motorola and Google in modular phone technology 5. Innovative Product - Creative collaboration between smartphones producers and customers allow for a

continuity of unlimited creative input 6. Green and sustainable product - The open modular platform has the ability to upgrade with biodegradable

bloks that can reduce e-waste 7. Adaptable to different customer segments and markets - Due to adaptability/customization of product not

only in regard to its features but in terms of repairability in comparison to competitors

2.2.2 Weaknesses

1. Partner-reliant business model - Product development is reliant on current partners and probability to attract new ones

2. Software compatibility - Necessity to develop cross-functional software that is compatible to modular hardware components

3. Low brand awareness - Many smart phone users are not aware of Phonebloks and its benefits due to little advertising

4. Financial and legal stability - Reliant on crowd-funding and Motorola as well as intellectual property protection hurdles with existing patents

5. Economies of scale and scope - Phonebloks is a start-up company starting in a highly competitive industry which gives the company the disadvantage of economies of scale and -scope

2.2.3 Opportunities

1. Always up-to-date technology - Bloks are easily customizable and upgradable, with constant development from R&D team in collaboration with the consumer

!6

2. Attract customers with different purchasing power - Ability of the consumer to choose which features they need allows for product penetration in many income segments within the market

3. Friendly to new and upcoming technology - Modular pieces allow integration between the phone and modular technology devices, allowing hardware to be shared between devices

4. Points of difference to Apple and Samsung - Phonebloks is a white box, not only in regard to software but also hardware; flexible, sustainable, cheaper, innovative, and customer driven

5. Open-source - Open-source technology allows for a unique continuous customer interaction in product development

6. Local manufacturing and distribution tie-ups - Decreases ecological footprint through local manufacturing and exchange of hardware

7. Blok store and global delivery system - Online access to purchase and exchange bloks in the online store

2.2.4 Threats

1. No control over supplier costs - Supplier has a high power in terms of price bargaining due to high variety of modular pieces

2. Design attractiveness - Customers are holding all the power in regard to design and therefore this could be an issue whether its physical appearance is appealing to the majority of customers

3. Software mobile platform licensing - Dependence on software licensing from competitors (Android, others) 4. Threat of substitutes - The current smart devices offerings on the market are substitutes to the modular

Phonebloks device and online mobile device retailers a substitute for the online store

5. Highly competitive market - Presence of smartphone influencers such as Apple, Samsung, and HTC as well as large online retailers in the market place

6. Financial and legal risks - Security of patents and market share is highly competitive in the smartphone industry

2.3 Competition

Competition in the Industry!The smartphone industry is a highly competitive, which will require extensive product differentiation to position

our product amongst current smartphone manufacturers. Market share in the smart phone industry is led by

Apple with 40.7% of market share, followed by companies including Samsung (24.3%), HTC (7.4%), Motorola

(6.9%), LG (6.7%), and others (14%). 12

!

!7

2.3.1 Potential of new entrants into industry

Entry into the smartphone market requires large investments in technology, R&D and marketing in order to

compete with well-known established phone manufacturers such as Apple, Samsung, HTC, and Motorola

(acquired by Google). Also, it is likely that these market leading companies will make their own versions of a

modular smartphone with an online customer feedback platform. This will require the company to protect and

quickly grow the unique Phonebloks business model.

Power of Suppliers!The power of suppliers is weak as smartphone parts suppliers such as Qualcomm, Nvidia, Intel, Samsung,

Motorola, Broadcom, HiSilicon and MediaTek rely on large volume production from smartphone

manufacturers. However, the bargaining power of suppliers could also be a challenge in entering the market 13

as the company is a new smartphone producer and will most likely grow from an initial smaller production

quantity.

Power of Customers!Unlike existing smartphone manufacturers, Phonebloks does not perceive the bargaining power of customers

as a large threat, but rather as an opportunity. Phonebloks’ advantage over existing competition is due to its

customer-centric product development process and business model. Phonebloks gives customers power in

terms of buying detachable bloks instead an entire new smartphone and participating in the development.

Threat of Substitute Products!Technology-based products suffer from the ease-of-substitution threat because of the sheer number of

substitutes in the market, including tablets, smart watches, rumored computing glasses, and other

smartphones.

2.4 Product Offerings

Open-Source Platform!Never before has a phone company openly involved the customer in both hardware and software

development. Phonebloks will make this happen. We will launch a free collaborative innovation platform for

consumers as well as developers to create new hard- and software, in order to generate tailor fit solutions.

Phonebloks Smartphone!This is a revolutionary device employing a smart-base compatible with detachable bloks that allow the user to

easily modify the hardware to suit their lifestyle and changing daily needs. The bloks are secured to the base

with a few small screws, giving the customer the convenience of quickly an seamlessly upgrading the phone.

!8

The phone will be available in three models with varying storage sizes; Basic Model, Standard Model, and

Premium Model. Basic Model

The basic model will include the essential smartphone features for customers such as phone calls, data,

mms, e-mails and surfing on the internet. Standard Model

The standard model is designed for customers who like to enjoy media such as photos and music. It will

come with an upgraded camera and a larger battery and processor in order to manage more apps and store

more files. Premium Model

The premium model is designed for customers who like to take advantage of all the possibilities a smartphone

can offer such as media and storage, gaming, frequent internet surfing, and a primary device for photos. This

model will come with a big processor, larger storage, and a high quality camera.

Note: All models, even the basic phone, can be upgraded to the same premium phone if a customer decides

to individually purchase those bloks which are more advanced to integrate into the base of their phone.

Online Store (Blok Store)!

An online Blok Store will be made available where customers can build their own phone, exchange and review

bloks with other customers, and purchase accessories. In order to appeal to all budgets, three distinct models

appealing to multiple income segments will be made available during the selection process. Afterwards, the

customer will be able to make adjustments to his base-product to modify it according to his/her specific

needs. Afterwards, the total price will be displayed and the purchasing/shipping process will be conducted.

2.5 Distribution

Initial distribution methods will be through internet purchases on the Blok Store site. High-volume stores in

Austin, Texas, New York, New York, and San Francisco, California will also distribute the product in the future.

Minimizing initial retail distribution minimizes expenditures and positions the product in these cities with higher

technology adoption in our initial product launch. Consumers not living in the three core cities will be able to

purchase the product through the online Blok Store site.

!!!9

2.6 Keys to Success

The key to success is to reach the right target market with the right price and the right market strategy.

Phonebloks must ensure that the company can successful communicate brand and product benefits to

customers as well as meeting customer satisfaction through the open-source platform and online Blok Store.

This will be essential in order to gain market share in the competitive U.S. smartphone market.

2.7 Critical Issues

Phonebloks faces several critical issues at the moment. Firstly, the competitive situation in the market itself.

Although, the market is expected to keep on growing, it is always critical for a competitor to gain ground on

the established companies. Especially in the mobil phone industry. Secondly, partnerships will be the most

difficult obstacle to overcome. This depends on two factors. The first one is the acquisition of partners for the

bloks. The second one is the software itself, as Phonebloks is reliant on other software providers to share their

platform with the new entrant (Phonebloks). Even more, if this should fail the costs for the creation of a new

platform are hard to foresee. However, both of these factors could be counteracted by a strong relation to the

community.

3.0 Marketing Strategy!

3.1 Mission

Phonebloks’ mission is to build a shared open-source platform for consumers around the world to develop the

sustainable and adaptable technology devices that they need. Therefore, our mission statement aligns with

our product slogan, “A phone worth keeping.”

• Allows our customer to use their imagination

• Finds solutions that generate the biggest benefit for everyone

• Creates a platform for customer interaction with the company

• Always listening to consumer needs

• Provides long-term flexibility

• Ensures a white box corporate culture

!!

!10

3.2 Objectives

3.2.1 Marketing Objectives

For the first year of market entry, an aggressive and achievable market entry strategy will be set in order to

implement and track progress of the marketing plan.

• Increase traffic on innovation platform through extensive marketing efforts by us and our partners

(Motorola, Google) by 10-15% per quarter over the next 12-18 months

• Optimize use of budgeted funds by implementing strategic marketing efforts

• Increase brand awareness over the next 24 months through advertising

• Set up social media campaigns on large platforms like Twitter and Facebook that reach our young and

creative target market

3.2.2 Financial Objectives

In order to make the most effective financial impact, objectives include the following:

• Maintain a high volume of spending on R&D (10-15% of revenue) over the next 5-10 years

• Maximize production budget for each product to reach target pricing, while maintaining a profit

margin (according to the R&D spending), which allows us to grow over a long term period (5-10

years).

• Reach annual growth in double to triple digit number area annually for the next 5 years

Financial strategies that will help accomplish these goals will be overall cost leadership,

differentiation, and a focused implementation plan.

Overall cost leadership!

• Economies of scale due to partnership with Motorola

• New partners, acquired through innovative collaboration with customer and developers

• Strategic alliances will be created in product/service/promotional and logistic sectors

Differentiation!

• A phone worth keeping; upgradable phone that is never obsolete

• Modular hardware bloks create a truly customer centric product

• Phone for every need and budget

Focus!

• On core competencies through information from platform

!11

• Input from private and commercial partners

• Tailor-made product and marketing efforts through communication

3.3 Target Markets

In deciding the best target market, we decided to target a younger population most adept to technology

adoption as well as the older adult to middle aged population. According to initial research, percentage of

smartphone ownership in the U.S. is currently 18-24 (79%), 25-34 (81%), 35-44 (69%) as of 2013. As the 14

largest age population of smartphone adopters, we view this population as innovators. Ideals, achievement

and self-expression are the core motivations in purchasing a product. This is the perfect fit for Phonebloks.

Segment Target Market

Geographic region United States; New York City, NY - San Francisco, CA - Austin, TX

City or metro size 500,000 upward

Density Urban

Demographic age 20-44

Family life cycle Young, single; older, married, with children; older, married, no children; older, single

Gender Male, Female

Income $30,000 and above

Occupation Professional and technical; manager; craftspeople;operatives; students

Education High school graduates, some college, college graduates

Generation Gen Y (72% ownership); Gen X (61% ownership) [Source: Derickson, E-Strategy]

Social class Upper lowers, middle class, upper middles, lower uppers, upper uppers

Psychographic Culture-oriented, technical-oriented

Personality Ambitious, creative, outgoing, self-assured

Behavioral occasions Regular

Benefits Quality, customization, renewable product life cycle, service, economy, speed

User status Potential user, first-time user, regular user

Usage rate Medium user, heavy user

Segment

!12

In the early stage of our product introduction, our primary focus will be on the higher resources/high

innovation segment. As our product evolves and develops, we ultimately are seeking complete

coverage of additional target segments, as multi-purposing and adaptation to specific needs are at

the core of our aspirations. In regards to the behavioral traits of our customers, we aim to gain market

share with opinion leaders, influencers and users to increase product awareness. A survey conducted

by GfK Roper Consulting in 2007 showed that 87% of the people under survey were likely to engage

in greener products if given an easy opportunity to do so. Now consumers have the option of having 15

a smartphone that reduces e-waste. 16

3.4. Positioning

Phonebloks is a new concept in the early stages of brand awareness. However, our company already

engaged in a thunderclap, which has led to nearly 1,000,000 supporters and a reach of over

380,000,000 people. As a result, Phonebloks has already experienced a significant push in the market

with our brand introduction. Based on this success, it is necessary to not only increase our brand

presence, but also deliver relevance to the consumer, performance of the product offering

(smartphone, bloks, online store and platform), advantages of using our product, and a brand which

creates a bond to the consumer. 17

Creating Brand Resonance!It is necessary to position the company and products accordingly, which will be accomplished

through a strong brand. This will be done by following the brand resonance pyramid. Our initial 18

focus will be on creating brand identity, by associating our product with the following attributes/

associations, which are displayed below in the mental map. This will help to generate brand salience,

leading to strong brand awareness in combination with the marketing actions we will take.

Further, we want to focus on meaning, in regards to performance and imagery. This will be

accomplished through distinct points of parity as well as points of difference, which are displayed

below. Response, which includes judgements and feelings in regard to the brand are essential to

Loyalty status Medium

Readiness stage Unaware, aware, informed, interested, desirous, intending to buy

Attitude toward product Enthusiastic, positive

Target MarketSegment

!13

generate positive and accessible reactions which will be communicated through marketing

communications in line with our mental map. Lastly, relationships will be the focal point to reap full

benefits of customer lifetime value by participation in the products development process. Hence, our

customers should live the a phone worth keeping mentality, because the phone is simply the reflection

of the people's ideas.!

Points of Parity !

• Frequently updated technology - Smartphone technology is continuously updated and products

are frequently launched to meet consumer demand

• Smartphone - Provides on-the-go access to the internet, camera, mms, sms, and media

Points of Differences!• Highly customizable - Individualized product for specific customer lifestyle needs

• Eco-friendly product - Reduction of E-waste through reusable modular pieces and up-dateable

phone base

• Customer driven innovation - Consumers and developers are a major player in the product

innovation process !!14

Exhibit 1 Mind Map

!!!!!!!!!

!However, we want to draw attention to the fact that a brand is always embedded in a very delicate

framework. Therefore, we recommend paying specific attention to “Things”, “People”, and 19

“Alliances”. The reasoning for this is that in order to succeed, the brand needs to be positioned and

aligned with people that reflect the associated values/feelings/identity of Phonebloks (Please refer to

Exhibit 1). We will also strategically position the product at green events and acquire green

endorsements/certifications from key green associations. Possible green affiliations could include

associations such as Green America.

3.5 Strategies

3.5.1 Marketing Communications

Brand presence and product communication online will be through the company Blok Store and direct and

interactive marketing over the Internet. We will also engage in online advertisement as well as public relations

efforts and events and experiences.

!15

Exhibit 2 Brand Positioning Bull’s-Eye!

Values/Personality, Character Future-looking, Customer centric, Creative,

Listens

Exceptional Properties/Visual Identity Light Blue & White, Phonebloks Logo, Slogan

Substantiators Unique design, Innovation platform, Open-source, Custom,

Eco-friendly, Core product never becomes obsolete

Brand Mantra A phone worth keeping

POP Smartphone Mobile Tech

Hi-tech

POD Customizable Idea Sharing

Pricing Strategy

3.5.2 Product!

The product itself will be delivered in three standard variations which allow our product to reach the

target consumers in varying income segments. This strategy is backed by varying models for our

customer segmentation in order to offer the right product, for the right price, for our many customers.

Following model selection, the customer can continue their purchasing process by selecting

additional bloks in order to “build” his or her product. This allows a highly personalized product

offering.

‣ Packaging!

Brand logo will be placed on the product and the packaging as well as placement throughout

the phonebloks campaign consistently. Product packaging itself will be eco-friendly,

recyclable material only to align with our eco-friendly corporate philosophy.

‣ Warranty!

Product warranty will be one year after initial purchase and will not be void if the block is sold/

transferred to another party within this the one year period.

3.5.3 Pricing!

Basic model will be priced at $100 (16GB), the standard model at $250 (16GB) and $300 (32GB),

and the premium model at $400 (32GB) and $450 (64GB). Strategically pricing the smartphone in this

Blok Store Events and Experiences

Public Relatons and Publicity

Direct and Interactive Marketing

Advertising Videos focused on benefits and flexibility of PhoneBloks

Road shows Press kits Google per-click advertising campaign to maximize reach for all Internet users

Customer service system for maintenance and repair

Presence at events relative to target market e.g. Concerts, Festivals, etc.

Featured articles in magazine and newspaper publications

Facebook and Twitter per-click advertising campaign as well as profile and hash-tags

Publications for bloggers producing new modular assemblies

Produce product testimonial videos

Focus on community relations and sustainability

Yahoo and Tumblr per-click advertising campaign to maximize reach for all users

Build an online community

Acquire celebrity endorsements

Customer updates on new products

Permission direct email marketing

!16

manner makes the mobile phone available to a broad range of income segments. The final price will

be determined by the buying decisions by the customer, who will have the opportunity to customize

the phone will optional bloks in the buying process. Since the parts can be shared among customers

at their desired price, as well as third parties can offer their products the pricing will be affected by it

as well. However, we will need to establish strong relationships with current and future partners in

order to maintain the control and stability of our pricing strategy.

3.5.2 Distribution

For our retail distribution strategy beyond initial product launch, we will further push our products into various

other retail stores once our product has gained a significant market share, therefore the customer does not

suffer from unavailability of parts in store. For customers not near a store, we will focus on offering an online

store that promises an user-friendly and convenient shopping experience, which delivers all the product

features (bloks) as well as outstanding service from product information to purchasing and shipping. The Blok

Store will embody the easy and sustainable nature of our products by not only allowing customers to

purchase new bloks, but also resell bloks they no longer need.

Distribution Differentiation!

1. Ordering ease - Blok Store will offer a 3-step intuitive process in ordering units ( Step 1 Choose a Model,

Step 2 Customize, Step 3 Checkout)

2. Delivery - All units purchased will be delivered within 48 hours

3. Installation - The unit doesn’t come with a manual, as Phonebloks is designed with bloks that consumers

can easily assemble and modify.

Model Core Features (Bloks) Price

Basic Model 3G, speaker, 6 hour battery, 16GB storage, 5 megapixel camera; blok upgradable compatability

$100 (16GB)

Standard Model 4G, wifi, speaker, 8 hour battery, bluetooth, USB, 8 megapixel camera; blok upgradable compatability

$250 (16GB) $300 (32GB)

Premium Model 4G, wifi, premium speaker, 16 hour battery, USB, 12 megapixel camera; blok upgradable compatibility

$400 (32GB) $450 (64GB)

!17

4. Customer Consulting - Every purchase comes with a client satisfaction survey for the service and the Blok

Store. After a month, the customer who purchased will get another survey through email to determine

satisfaction about the product.

5. Maintenance and Repairability - Interchangeable bloks make it easy for both parties to maintain and

repair.

6. Returns - Free returns for units with damage. All shipping costs will be covered by the company.

3.7 Marketing Research

Market research will be conducted through our customer platform which will be available for smartphone

consumers and developers as well as business partners/associates to reap the maximum benefits of

information exchange. This will transform mere ideas into reality by bringing conceptual and actual

implementation together. In addition, we will use VALE marketing research tactics to gain more information on

our customers. At the same time our research efforts will include meetings with our commercial partners to

engage in an exchange of ideas to be able to serve their needs as well.

Additionally, it will be a priority to engage in market research with the aim to determine where our customers

conduct their information research and the product will be position accordingly in align with the five stage

model of buying. As a result, it the Phonebloks smartphone will be strategically positioned through 20

advertisement and other product awareness efforts. Phonebloks will almost determine current and future

brand and product awareness in order to position ourselves in the consumers’ during their search dynamics. 21

4.0 Controls 4.1 Implementation

Execution of the marketing plan will be tightly monitored by the marketing team to ensure best practice in

customer service, quality delivery, and customer satisfaction. Deviations or market changes will be addressed

accordingly by the Chief Marketing Officer and the Chief Executive Officer.

4.1.1 Advertising Phonebloks advertising will focus on building brand awareness and allowing people to have a visual-digital

experience with the product. This will allow potential customers to play with the product, build their own

phone, and email themselves their design to receive further information. In doing so, the goal is to help

advance the customer in the purchase decision process. These advertisements will also include short videos

!18

of conceptual user experiences. Advertising focus will be in the three core launch cities that provide a unique

demographical opportunity with a younger technologically focused population.

"Austin, Texas !Population (non-metropolitan) 842,592 people 22

Population within target market age 596,555 people 23

Population within target market income (>$30,000) 129,778 people 24

SXSW Festival (2013): “A tool for creative people and the companies they work with to develop their

careers, to bring together people from a wide area to meet and share ideas..”

Festival Highlights: SXSW Interactive, SXSW Music, SXSW Film, SXSW Eco

Registered attendees (core events) 41,700

Economic impact $218.2 million 25

Conference and Festival participants 155,000 26

SXSW Festival (2014)

2014 Ad Launch Date March 6 - 20, 2014 (14 days)

Advertisement Type Projected video or billboard

"""

!19

Exhibit 3 Advertisement Sample Austin, Texas: Ad projection

""""

""""""

!20

Exhibit 4 Advertisement Sample Location Austin, Texas"

San Francisco, California !Population (non-metropolitan) 825,863 people 27

Population within target market age 714,1371 people 28

Population within target market income (>$30,000) 770,103 people 29

Launch Date " (Spring 2014)"

Transit Interactive Portal: Customers will be able

to engage in product discovery at one of several

interactive advertisement boards in San

Francisco central business district and bus

stops. The San Francisco metro system sees

much of its traffic at a street level, placing

interactive advertisements at bus stops will

provide a fun and interactive learning experience

for our potential customers.

"New York, New York!Population (non-metropolitan) 8.3 million people 30

Population within target market age 5.53 million people 31

Population within target market income (>$30,000) 6.81 million people 32

"Transit Interactive Portal: New York has a highly

transitory population with traffic consisting mostly of

subway transportation. Ad placement in the New York

subway system will provide an eye-catching digital

experience, where the customer can learn and build

their own Phonebloks smartphone.

"

!21

Exhibit 5 Advertisement Sample San Francisco: Transit Interactive Portal

Exhibit 6 Advertisement Sample New York City: Interactive Digital Portal

4.3 Contingency Planning

The marketing team will monitor developments in the internal and external forces to take proper action to maintain the brand image and product’s success in the market.

Difficulties and Risks

• An entry into a very competitive market • Adopting a product and service mix that will require highly specialized experts • Brand awareness is one of the toughest challenges • Relationship building with key suppliers and distributors • Partnering up with big brands

Worst-case Scenarios

• Low visits in the Blok Store site • Below expectations units sold • Below expectations revenues • Poor expense management • Brand and product confusion in the market • Legal risks and patent infringements

Risk Control Management

Risk control management is implemented in our marketing plan, however some risks cannot be foreseen and therefore flexibility will be required to effectively address unforeseen issues.

4.4 Marketing Implementation Timeline

Key Actions Q1 Q2 Q3 Q4

Partnerships/Procurement

Active Active Active Active

Beta Testing Active Active

Product Launch Active

Advertising Active Active Active Active

!22

Research Cited

!23

" Ong, J. (2013, February). Apple passes Samsung to become top US mobile phone vendor with record 34% market share: Report. In TNW. 1

Retrieved December 6, 2013, from http://thenextweb.com/apple/2013/02/01/apple-passes-samsung-to-become-top-us-smartphone-vendor-with-34-market-share-report/#!o1Nmu

" Derickson, . (2013, January 2). Smart Phone Ownership By Generation [INFOGRAPHIC]. In E-Strategy Trends. Retrieved December 6, 2013, 2

from http://trends.e-strategyblog.com/2013/01/02/smart-phone-ownership-by-generation-infographic/6939

" eMarketer. (2013, June 2). NEWSLETTER SIGNUP US Smartphone OS Race Still Close, as Men, Younger Users Favor Android Read more at 3

http://www.emarketer.com/Article/US-Smartphone-OS-Race-Still-Close-Men-Younger-Users-Favor-Andro. In eMarketer. Retrieved December 6, 2013, from http://www.emarketer.com/Article/US-Smartphone-OS-Race-Still-Close-Men-Younger-Users-Favor-Android/1009961

" Derickson, . (2013, January 2). Smart Phone Ownership By Generation [INFOGRAPHIC]. In E-Strategy Trends. Retrieved December 6, 2013, 4

from http://trends.e-strategyblog.com/2013/01/02/smart-phone-ownership-by-generation-infographic/6939







" Singh, S. (2013, August 19). Smartphone Market Share By Country - Q2 2013: Android Leads, IPhone Slips, Windows Phone Inconsistent. In 8

Tech-Thoughts. Retrieved December 1, 2013, from http://www.tech-thoughts.net/2013/08/smartphone-market-share-trends-by-country-q2-2013.html#.UqUy_5Gracd



" Smith, A. (2013, June 5). Smartphone Ownership - 2013 Update. In PewResearch. Retrieved December 4, 2013, from http://10

pewinternet.org/Reports/2013?Smartphone-Ownership-2013.aspx



" comScore. (2013, October 4). comScore Reports August 2013 U.S. Smartphone Subscriber Market Share. In comScore. Retrieved 12

December 2, 2013, from http://www.comscore.com/Insights/Press_Releases/2013/10/comScore_Reports_August_2013_US_Smartphone_Subscriber_Market_Share

" Chan, J., Chen, Z., Cormane, I., Her, N., & Thomas, R. (2006, May 12). Cell Phone Industry Analysis. In Sacramento State University. 13

Retrieved December 6, 2013, from www.csus.edu/indiv/h/hattonl/industryanalysis.doc



" Kotler, P., & Keller, K. L. (2012). Marketing Management (14th ed.). Upper Saddle, NJ: Pearson Education, Inc.15







" City-Data. (2013). Austin, Texas. In City-Data. Retrieved December 2, 2013, from http://www.city-data.com/city/Austin-Texas.html22

" U.S. Department of Commerce. (2013). Austin (city), Texas. In United States Census Bureau. Retrieved December 2, 2013, from http://23

quickfacts.census.gov/qfd/states/48/4805000.html

" City-Data. (2013). Austin, Texas. In City-Data. Retrieved December 2, 2013, from http://www.city-data.com/city/Austin-Texas.html24

" Whitington, C. (2013, September 18). SXSW 2013 Economic Impact Report. In SXSW Music Film and Interactive. Retrieved December 1, 25

2013, from http://sxsw.com/music-film-interactive-sxswedu/news/2013/sxsw-2013-economic-impact-report

" Derczo, E. (2013, September 18). 2013 South by Southwest City of Austin Economic Impact Analysis. In SXSW Music Film and Interactive. 26

Retrieved December 1, 2013, from http://sxsw.com/sites/default/files/attachments/2013%20SXSW%20Economic%20Impact%20Analysis.pdf

" U.S. Department of Commerce. (2013). San Francisco - 2013 Update. In United States Census Bureau. Retrieved December 4, 2013, from 27

http://quickfacts.census.gov/qfd/states/06/06075.html

" Bay Area Census. (2013). San Francisco City and County. In Bay Area Census. Retrieved December 2, 2013, from http://28

www.bayareacensus.ca.gov/counties/SanFranciscoCounty.htm

" Bay Area Census. (2013). San Francisco City and County. In Bay Area Census. Retrieved December 2, 2013, from http://29

www.bayareacensus.ca.gov/counties/SanFranciscoCounty.htm

" U.S. Department of Commerce. (2013). New York (city), New York. In United Stats Census Bureau. Retrieved December 2, 2013, from http://30


" U.S. Department of Commerce. (2013). New York (city), New York. In United Stats Census Bureau. Retrieved December 2, 2013, from http://31


" City-Data. (2013). Manhattan, New York (NY) income map, earnings map, and wages data Read more: http://www.city-data.com/income/32

income-Manhattan-New-York.html#ixzz2mwTZuy43. In City-Data. Retrieved December 2, 2013, from http://www.city-data.com/income/income-Manhattan-New-York.html

!24