Marketing Fundamentals

Final Assignment -- Marketing Plan

Executive Summary:
"uNabto", a low-footprint embedded web server software developed by a Danish
corporation, Nabto ApS, for remotely monitoring and controlling internet aware devices that are
behind the NAT and firewalls, has a huge business potential in the Japanese market.
We, AIC, have signed a representative agreement 2 years ago to test-market the product in
the Japanese region for the term of 2 years, but could not yield any results. The representative
agreement was recently renewed for another year, and it is crucial that we achieve at least 1 deal with
uNabto.
This plan, therefore, focuses on how we can close at least 1 deal within the time frame
given. We have segmented the target by growth potential of internet aware devices by industries and
basing it on varying requirements from customers. The main target will be the consumer electronics
segment, medical devices segment, and the laptop PC/smart phone segment, as we see a huge
demand for uNabto in these segments.
The key elements in achieving the deal would be to receive as many inquiries as possible by
expanding the exposure of uNabto to potential customers by utilizing various means, and have the
sales force effectively follow such leads. Therefore, this marketing plan places emphases on product
strategy of combining uNabto with upcoming WiFi module, effective use of promotional activities,
including public relations and training for sales forces, aggressive pricing strategies approved by
Nabto, and potential collaborations with other WiFi module/chip vendors.
It should also be noted that we will be shifting our angle of marketing message of uNabto
from the past "low-footprint web server" to "low-footprint software solution for remotely monitoring
and controlling internet aware devices over NAT and firewalls".

Introduction:
uNabto, a low-footprint embedded server software that can be embedded to a target device
consuming only 1KB of ROM, was developed by Nabto ApS (Nabto), a Danish company founded in
2007. uNabto offers a solution enabling users to access resource limited devices behind a NAT and
firewall. The patented technology provides secure, encrypted communication to devices through
NAT and firewalls, no matter where they are and how they are connected to the internet.
The company 's vision is laid out as follows:

"Connect simple and safe

Our vision is to connect all things on the Internet simple and safe. This
vision has been materialized by creating a software plug-in for browsers that
enable them to connect to another piece of software installed on internet aware
devices. Internet aware devices are PCs and small autonomous embedded
computers that, especially in the future, will occupy most of the internet. Our
belief is, if it consumes power, it will eventually beconnected to the internet, and
thereby be a target for us.
Nabto dramatically enhances and widens the applicability of P2P
technology, setting a new paradigm for easy and hassle free set-up, easy
connection and secure data transfer between internet connected devices."

A.I. Corporation, founded in 1985, has specialized in obtaining licensing rights for quality
embedded software from overseas and sublicensing them to Japanese customers. It has constantly
posted steady revenue in the past 25 of the 26 years it was in business. The company also offers an
engineering services in response to increasing demands from Japanese customers to develop drivers
and port software to their target devices.
Two years has passed since AIC has signed a representative agreement with Nabto to market
and sublicense uNabto in the Japanese region, during which time AIC will be reviewed and evaluated
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 Marketing Fundamentals
Final Assignment -- Marketing Plan

by Nabto and decision as to whether the exclusive representative right will be granted was to be
made.
During the past 2 years, AIC could not close any deal with uNabto, and after a series of
discussions between the parties, the representative agreement for evaluation was extended for
another year. Thus, it is critical for AIC to close at least 1 deal in the coming year, before July 2013
to be precise. To date, the marketing focus was placed mainly on the low-footprint web server aspect
of uNabto, not the ability to remotely monitor and control the internet aware devices over NAT and
firewalls. Both inbound and outbound marketing strategies were deployed. AIC's main marketing
strategy will be modified to focus more on the remote maintenance/control aspects of the software,
which will be a major change in our marketing approach from the past 2 years.
In the following sections, various marketing objectives and strategies necessary to achieve
at least 1 deal within the given time frame, as well as how they will be implemented and their
performance will be measured will be discussed in detail.

Situation Analysis/SWOT Analysis:

Strength:
Low-footprint of the solution providing a huge advantage in the embedded industry where
ROM/RAM sizes are often times very limited to reduce hardware cost.
OS and CPU agnostic nature of the software provides huge business potential.
Ability to bypass both NAT and firewalls without the need to change the router settings is
another technological advantage of the product.
One-button authentication of uNabto embedded target device and the client substantially reduces
the initial setup hassle on end consumers who are often times not familiar with router and device
setups.
Core technology is based on a field proven and widely used SIP protocol, providing sound
stability in its solution, especially for bypassing NAT and firewalls.
Pricing flexibility granted by Nabto to AIC gives AIC the advantage in negotiating the deal with
potential customers.
Strong corporate brand equity AIC has built in the embedded software field over the past 26
years can be utilized to effectively market the product.
Low cost of the software if the number of target devices are high.
Recent assignment of art director exclusively responsible for brushing up marketing materials at
AIC is a plus in driving the marketing activities of uNabto going forward.
Weaknesses
Instability of the software as it is not matured enough.
Inability to bypass strictly configured firewalls.
Limited resources available at Nabto as it is at its start-up stage, often times taking days to
receive responses to simple inquiries from potential customers.
Opportunities:
Appearance of low energy, low physical size LAN modules and WiFi modules, which can
compete well against other protocols such as Bluetooth Low Energy and Zigbee.
Smart phone boom creating more needs to remotely monitor and control internet aware devices.
Threats:
Existence in Japan of advanced proprietary solutions which in essence provide similar functions
and features as uNabto, which are already widely being used in various products and fields.
Increasing competition in the field of remote management of internet aware devices.

Marketing Planning:

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Final Assignment -- Marketing Plan

Target Market Objectives:

Number of Deals:
Close at least 1 deal with the size of at least JPY5 million with a network enabled hard
disk drive manufacturer by July 2013.
Close at least 1 deal with the size of at least JPY5 million with a network enabled air
conditioner manufacturer by July 2013.
Close at least 1 deal with the size of at least JPY5 million with a network enabled
medical device manufacturer by July 2013.

Market Segmentation (3 segments)

Secure design win in industrial and medical automation devices segment with a deal
size of at least JPY5 million by July 2013.
Secure design win in consumer and entertainment devices segment with a deal size of at
least JPY5 million by July 2013.
Secure design win in personal computer/smart phone segment with a deal size of at
least JPY5 million by July 2013.
Marketing Mix Objectives:
Product Objectives:
Take "more of the same product" approach, concentrate on uNabto only, and try to
achieve at least 3 design wins by July 2013.
Offer product variations by adding or subtracting features such as security and
workaround to strict firewall issue to provide customers with more flexibility when
considering uNabto.
Pre-embed uNabto to wired LAN modules and WiFi modules and sell both the
hardware and software to provide shorter time-to-market solutions to customers.
Offer evaluation kits to customers with limited evaluation period of 1 month to allow
customers to try out uNabto.
Accommodate new use cases required by customers in order to increase the probability
of achieving design wins.

Promotional Objectives:
Use public relations effectively to have IT news distributors cover our press releases.
Use demonstration units as part of sales promotions, preferably those products that have
actually been deployed in the foreign market to have potential customers actually see
how uNabto is being utilized in the real market.
Provide sales promotions such as sales aids and training materials to sales forces in an
effort to help them negotiate better with potential customers.
Distribute monthly email to subscribers to AIC's website and newsletters as part of
advertising efforts.
Make the best use of a unique marketing arrangements Nabto has made with the
Technology Attach to the Danish Consulate to approach "difficult" customers with
high potential for business.
Continue to participate in 2 largest trade shows in the embedded technology field and
demonstrate uNabto to increase customer awareness of the product and the brand.
Continue working on the search engine optimization to achieve 100% increase in
inquiries on uNabo.

Distribution Objectives:

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Final Assignment -- Marketing Plan

Concentrate mainly on direct channel as the business model of sublicensing uNabto

involves only B2B.
Use chip vendors who sell chips on which uNabto can be embedded to have them
distribute uNabto as part of their efforts to sell their chips.
Use agents to further reach out to potential customers.
Start selling hardware online to increase the sales of software.

Pricing Objectives:
Use prestige pricing for large customers with large budget to achieve a deal size of over
JPY10 million.
Use running royalty model instead of project buyout model for large customers with
large budget.
In contrary, use low pricing and project buyout model for small customers with small or
limited budget.
Achieve 50% gross profit margin on all deals.
Offer volume discounts and discounts based on the amount of pre-commitment and
prepaid royalty.
Apply promotional pricing and licensing model for the first 3 deals in Japan.
Provide special pricing model for customers with very limited budget by having them
obligated to pay the initial system development kit fee only when the project succeeds.

Target Markets:
Despite its still short presence in the embedded market, Nabto has successfully secured a
number of design wins in various products in various fields. Some of the large deals include: (i) a
deal with a major U.S. solar power generation inverter manufacturer, (ii) HVAC deal for large
buildings with a major global building solution company, and (iii) remote medical care deal,
specifically a pill dispenser which can be remotely monitored, configured, and controlled by doctors
and caretakers. All these deals happened outside of Japan as discussed earlier, but are in line with
Nabto's market segmentation strategy for uNabto, which is basically identical to AIC's segmentation
of uNabto's target markets with a minor deviation.
According to a research conducted by John Gantz of IDC as you can see in Exhibit A, the
number of devices that are connected to the internet will grow from the current 10 billion to 16
billion by 2015, and major growth will happen in communications, consumer & entertainment, and
industrial & medical automation segments.
Gowth in both consumer & entertainment and industrial & medical automation segments is
a huge advantage to uNabto, as most of these growth will take place on the device side, where
uNabto becomes the perfect fit.
In fact, we are already observing remote monitoring and controlling of devices in the
consumer electronics devices such as internet aware hard disk drive (HDD), for example, by using
the combination of dynamic DNS and UPnP protocols. More easily put, consumers can access files
stored in their HDD at home remotely using PCs and smart phones.
With the growing number of consumers using smart phones, we anticipate that consumer &
entertainment segment to be one of the key segments for uNabto going forward, as there can be
infinite demands to remotely monitor and control any devices at home.
We also see huge potential in industrial & medical segment as Japan is moving rapidly
toward the aging society, and we can easily anticipate increase in demands for providing remote
medical services to elderly. Instead of having elderly come to the hospitals and clinics for basic
treatments such as measuring blood pressure and blood glucose level, these can be remotely
conducted with the use of uNabto enabled devices. Pill dispenser example described above is a good
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Final Assignment -- Marketing Plan

example.
In addition to these 2 segments, we also see a huge potential in both smart phone and laptop
PC segments primarily for security reasons. As a growing number of employers now allow use of
smart phones and laptop PCs for work, there is a substantial risk of critical information leak in case
those devices are lost or stolen. By utilizing uNabto, it can for example remotely enable the GPS
unit and find out the location of the devices, or even delete the contents on the devices' HDD or flash
remotely, thereby avoiding serious information leak.
The fact that all the segments described above contain different requirements from end
consumers justifies the segmentation approach we plan to take for the next year.

Product Strategy:
We basically have no control over new product development as that is decided by Nabto at
its discretion, thus will continue to take "more of the same product" approach and concentrate on
uNabto as it is the only software product they have for now.
We, however, do have control over adding variations to the software by adding or
subtracting features or functions on uNabto. Such features include encryption, workaround to
strictly configured firewall issue, VPN, and many others. This product approach is actually very
important to potential customers as addition or subtraction of these features affect the licensing fees,
and can be used very effectively when negotiating a deal with them.
We have already pre-embedded uNabto onto wired LAN module, but we plan to pre-embed
uNabto to low energy, low physical size WiFi module by September 2012. uNabto and low energy
and small size WiFi module, we believe, will be a killer combination as we have received a number
of inquiries during the past 2 years regarding this combination. We have actually initiated this
project, but the entire cost for porting uNabto to the WiFi module will be borne by Nabto. As most
homes are now equipped with wireless LAN routers, low energy WiFi module has an advantage over
other protocols such as Bluetooth Low Energy and Zigbee which are similar in concept, but are not
as widely spread as WiFi.
We also plan to start offering evaluation kit to potential customers to do a pilot project for
the duration of 1 month. We are going to charge an evaluation fee for this, so the risk is minimized
even if the customer decided not to move on to the next step.
We also plan to accommodate as much customer requests for new use cases as possible, as
both AIC and Nabto are capable of providing professional engineering services necessary to
accommodate such requests. Compared to use cases overseas, use cases contemplated by potential
customers in Japan often times are more complicated and demanding, thus showing the ability to
meet those unique requirements is a must to achieve design wins in the Japanese market.

Promotional Strategy:
We will continue to use 4 major types of promotional strategies, including public relations,
sales promotions, advertising, and personal selling. In addition to these 4 strategies, we also plan to
utilize a unique marketing arrangements Nabto and Danish consulate have, which will be discussed
in more detail below. Our budget for promotions is limited; in fact it is decided top down at the
beginning of the fiscal year and participation in major trade shows is basically the only paid
promotional activity we take part in, thus free promotional strategies such as public relations
becomes extremely important.
We will keep issuing press releases as part of public relations in hope that press releases
containing uNabto will be covered by IT news distributors. Of planned press releases for the coming
year, the combination of uNabto with the WiFi module is one of the biggest releases, thus we have to
carefully prepare the contents and timing of the release. We have already prepared the press release
contents, had Nabto review it, and are now waiting for the porting task to complete so that we can
release it on our website.
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We also plan to actively make use of actual products deployed in the market with uNabto
embedded as demonstration units for Japanese customers. Although the solutions that uNabto offer
are quite simple, their application is difficult to understand, thus preparing a good demo for potential
customers becomes very important. Of various factors Japanese customers look for when deciding
whether to purchase a license or not, track record is one of the most important factors they seek, thus
showing the actual product with uNabto embedded as a demo has a huge impact on the probability of
winning a deal.
As part of the sales promotions, we plan to provide sales forces with more comprehensive
and easy to understand sales tools and training materials. As AIC represents over 80 software and
hardware products, it is difficult for sales forces to have full understanding of each and every product
including uNabto, thus preparing effective sales aids becomes a key in their successful negotiations
with potential customers. As part of the training, we plan to invite both sales and technical staff from
Nabto to give sales forces and engineers training sessions on uNabto. The cost will be borne by
Nabto as part of their promotional activities.
In addition to the above, we will make the best use of the special arrangement Nabto has
with Danish Consulate in Tokyo. In Denmark, a private company are allowed to hire a Technology
Attach to have him perform marketing and sales activities for that company. Nabto has hired 1
Technology Attach for promoting uNabto in Japan at their expense, and we are allowed to make the
best use of it. We can, for instance, use the conference rooms at Danish Consulate to hold a
workshop or a seminar without having to incur any expense. We can also issue news releases or
invitations to potential customers jointly from the Danish Consulate and the AIC, which will add
extra depth on the product, news releases, and invitations. We also plan to use connections that the
Consulate has with senior managements at various corporations in marketing uNabto.

Distribution Strategy:
We will keep concentrating mainly on direct channel since the business model of
sublicensing uNabto does not involve B2C.
However, we have found, through our own route, other low energy, small size WiFi chip
vendors with whom we plan to start negotiations on potential collaboration in selling uNabto
together with their chips. This type of distribution strategy is very effective in our industry as
interests of both parties perfectly match: The chip vendors want to sell more of their chips, and we
want to sell uNabto software. Once we reach agreement to collaborate, we can have them distribute
uNabto with their chips without them adding any margin on the sales price of uNabto as they will be
satisfied with the revenue from the sales of their chips.
We also plan to launch a website for selling the hardware (mainly WiFi modules and
evaluation modules) online with the help of the art director recently appointed for our marketing
activities.

Pricing Strategy:
There is no fixed pricing on uNabto. We decide the pricing that we deem is appropriate for
a certain potential customer after having meetings with them, and propose the indicative quotation to
Nabto for their approval. Our target is to achieve 50% split on software license fees so that our gross
profit margin will be 50%.
Because there is no fixed pricing on uNabto, we have ample flexibility when negotiating the
price with customers. The basic rule is, we charge more for large customers with large budgets, and
less for small customers with small budgets. We also use different license model approaches as part
of the pricing strategy. We aim to achieve running royalty model for large customers so that we will
get every penny for every units sold with uNabto embedded, whereas for small customers we provide
a project buyout model for a fixed and often times relatively cheaper pricing in order to win a
business.
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Final Assignment -- Marketing Plan

We are currently at a stage where we are in serious need to close 1 deal to show our
capability to Nabto to market uNabto in the Japanese market. To facilitate this, we were granted to
give special discounts for the first 3 deals in Japan. With this, we can provide extremely aggressive
pricing model to customers.
We also offer volume discounts and discounts based on prepaid royalties and pre-
commitments. We further offer customers with very limited budget to allow post-payment of the
initial system development license fee only if the project succeeds, since this initial fee is often seen
as a huge barrier by customers as it will be reflected heavily in the cost of their final products at early
stages of their project when the number of units sold are low.

Implementation Plan and Measurement:

I personally will be in charge of and responsible for implementing the above marketing plan
as the marketing manager at AIC for uNabto. I will be assisted by marketing professionals from
Nabto, the art director who has recently been appointed to brush up marketing materials, and the VP
of Sales Promotions. Further, as Nabto was discovered by the CEO himself, he is willing to put a
substantial amount of his resources into this project, which is a huge advantage in implementing the
above marketing plan especially for a private company of our size. With these facts, the
organizational feasibility of the marketing plan is justified.
The term of this marketing project will be 1 year from now as discussed earlier, since the
representative agreement for evaluation purpose was recently extended for 1 year and we consider it
as the deadline for achieving results.
The budget for participating in 2 trade shows described above has already been approved by
the managements, and all other marketing plans involves no cost as they either do not incur extra
cost or the cost is borne by Nabto. The feasibility of this marketing plan is financially justified by
these facts.
The effectiveness of this marketing plan will be evaluated mainly based on an increase in
the number of inquiries we receive, which is targeted at 100%. It will also be evaluated based on the
number of deals closed in the next year, the minimum of which is set at 1, but given the
circumstances, the real target should be set for 3 deals.
The number of inquiries will be monitored and reviewed on a weekly basis and if we see
negative trends, adjustments will have to be made by analyzing various factors such as page views
on our website, the number of deals lost after initiating negotiations with potential customers, and
number of customer visits our sales forces made on a weekly basis.
ROI on the investment on 2 trade shows should be measured by number of business cards
we managed to exchange during the exhibitions. We have gathered approximately 50 business cards
last year, and we are targeting for 100 for the next year.

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Final Assignment -- Marketing Plan

Exhibit A

number of devices (in billions)

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