5.

2 Marketing Strategy

Other coffeehouses rely almost entirely on word-of-mouth marketing to generate business. We

will engage in an ongoing aggressive marketing program that will help us establish profitability
quickly and set the stage for continual growth.

Our strategy will be to position Dark Roast Java as the "Lexus" of coffeehouses, offering a high
quality product and superb service in a superior environment.

5.2.1 Launch Marketing

Most coffeehouse chains do little or no marketing and advertising. For example, Starbucks'
philosophy is that their ubiquity in the marketplace is all they need to sustain and grow their
customer base. They spend less than 1% of gross revenues on advertising, and when they do
spend, it is usually to introduce a new product.

The retail coffee industry is a sales-oriented business with historically very little experience in
marketing and advertising. This is likely why little is done. As yet, the major players have not
been taken over by sophisticated companies like Pepsico, where marketing is viewed as essential
to gaining market share. 

An element of our differentiation from other coffeehouse chains will be our use of advertising
and marketing to gain awareness, build customer traffic and establish a strong brand image. We
intend to create immediate customer awareness and not wait for word-of-mouth. We are also
building customer traffic immediately with an aggressive Launch Marketing Plan.

Launch Marketing

Launch marketing will promote awareness, build immediate traffic and establish our brand image
via several methods:

 Public relations/publicity
 Direct mail
 Local print and broadcast media
 Design and packaging
 Community involvement
 Sampling
 Superior location
 Desirable store ambiance

Public Relations

A strong public relations/publicity program uses as its primary "hook" these three main points:

1. Dark Roast Java is Pleasantville's first true gourmet coffeehouse

2. Our unique quality products
 3. Our distinctive latte "art"

The goal of the PR/publicity is to achieve local market awareness and establish the brand on a
wider scale to set the stage for future expansion. Local market awareness is vital because more
than 50% of sales will come from people living within a 5-mile radius of the store.

National awareness will help drive the expansion by generating opportunities created by the
media buzz and familiarizing people with our brand name. It will help set the stage for future
brand identification.

Local Media

 The Pleasantville Gazette

 Pleasantville Magazine
 The Mount Hill Journal
 The Pleasantville Weekly
 Mount Hill Magazine
 Pleasantville Dining
 Pleasantville Seasons
 ABC-TV (KTBO)
 KATF radio
 KEZI radio
 KWAS radio
 KSNZ radio
 KOBR radio
 KPML radio
 KKMN radiO
 KJBU radio
 KSEC radio
 KION radio

Regional/National Print Media

 BusinessWeek
 The Ontopolis Business Journal
 Time
 Newsweek
 US News
 Entrepreneur
 Wall Street Journal
 Fortune
 Forbes
 Robb Report
 Newspapers in top 50 US markets
National Broadcast Media

 Feature programming (e.g. Oprah, Good Morning America)

 1,500 radio stations nationwide

Direct Mail

 Ongoing direct mail generated from our website data

 Visa or MasterCard local direct mail program

Website

Our website is fully e-commerce functional and could easily become a significant revenue
source.

We will eventually sell the following items online:

 Whole coffee beans, tea

 Gift baskets
 Gift items
 Furnishings

And in a first for any coffeehouse in the world, we will also sell a catalog of glass
artwork representative of our store decor. We will act as the sales agent for a number of
participating stained glass, and art glass artisans.

The website also markets Dark Roast Java with:

 A monthly newsletter
 Interesting information about the coffee industry
 A map to our store
 Store hours
 Special events
 Coffee recipes

Most of these functions are already up and running.

Trend-setters

Pleasantville and the southern part of the state are home to thousands of individuals who can be
important to the successful positioning of Dark Roast Java. One mention on a TV talk program or
in a 'lifestyle' magazine can (and has) launched many successful careers and businesses.

With literally hundreds of celebrities and wealthy business people as local residents, the word-of-
mouth recommendations from these people can drive significant business to us as well as
generate favorable publicity.
Many celebrities visit Pleasantville or have second homes here. The wife of the billionaire owner
of Nationwide Communications owns the Pleasantville newspaper. A former actor owns a local
vineyard and is a major hotel developer. Politicians and entertainers have interests in several
restaurants. Our Mount Hill location will be in a building owned by a clothing brand multi-
millionaire.

Celebrities in Pleasantville are also actively involved in the community, many supporting several
local charities. Our involvement in the community will enable us to garner exposure for Dark
Roast Java among an important group of local residents. 

Key individuals will be targeted with gift baskets from Dark Roast Java containing samples of
our products to entice them to visit Dark Roast Java and talk about us with their friends.

Design style

The interior design of Dark Roast Java is unlike any other coffeehouse chain. While there are
some upscale designs, they are all of the modern Italian or Starbucks look. Our upscale
stylized "Cote d'Azur" Mediterranean Riviera design, featuring stained glass decorations, art
glasswork, differentiates us from all others.

Gift Items

We carry a wide variety of quality gift items, including gift baskets. Gift basket business could
eventually grow to be substantial. However, since it is difficult to project at this time we have not
included it in the financial computations. We also offer sales of stained glass and glass artwork
by the artisans who produced our decor furnishings.

Community Involvement

We will make ourselves an integral part of the local and world community. This will generate
goodwill, create opportunities to forge important contacts with key people and live up to our
company Mission Statement.

Some of these community involvement goals include:

 Take an active role in the Chamber of Commerce

 Supply complementary product to local charities for fund-raising activities
 Sponsor local sports teams
 Create and sponsor a Pleasantville to La Pine cross-mountain foot race following the
old Stone Canyon stage route
 Purchase fair trade coffee whenever possible
 Support Fair Trade, organic, sustainable farming

Location
The location of the first Dark Roast Java in Pleasantville is a prototype of future sites. Our second
site on busy Shoreline Road in Mount Hill will feature our flagship store. It will be located just
off the Oak Patch Road and Highway 66 exit, across from the Mount Hill Inn and The Junction
Restaurant. It is by far the best location in Mount Hill—one of America's most affluent cities.

We will build Dark Roast Java coffeehouses in the best locations possible, as this is the key
element in a successful operation.

Site selection criteria include:

 High traffic location

 Small or mid-size affluent market
 Year-round tourist activity
 Nearby (within 5 miles) student population
 Outside dining

Other sites that meet these criteria include Newburg, Springfield, Bayview, Shorewood, Orchard
Valley, Beachey Head, and Capital City.

Exceptions will be made for some sites if they are deemed to be potentially very profitable.

Sites in other states might include Utah, New Mexico, Oregon, Washington, Montana, Idaho,
Colorado, etc. Plans are to locate Dark Roast Java coffeehouses in the Western states for
efficiency of supply and management.

Outside Dining

The coffeehouse/cafe experience is indelibly linked to its European origins, where al fresco
dining is a way of life. Americans have embraced sidewalk dining. It is one of the fastest growing
additions to the American dining scene.

Sidewalk dining also provides an excellent way for prospective customers to see and "check out"
the coffeehouse for the first time.

Sampling

We will engage in several sampling activities to introduce potential customers (and current
customers) to Dark Roast Java's range of drink options.

 Samples will be distributed at the coffeehouse

 Samples will be given to passers-by on the street
 Discount coupons will be distributed on the street, via direct mail and at special events
 Complementary coffee will be served at charitable and civic events
 Free coffee service will be provided to the Chamber of Commerce, a radio station, the
newspaper and at select government offices (e.g. the Planning and Zoning Department)
Portable Kiosk

Within 6 to 8 months we will create a portable Dark Roast Java kiosk to sell and market our
products at special events and community activities. Pleasantville has more than 130 such events
every year. It will be an excellent way to publicize Dark Roast Java coffee.

The kiosk will be highly visible and fun. It will also potentially be very profitable, although it's
hard to determine how profitable with any accuracy until the local response is measured. We
believe it could generate $75,000 - $100,000 annual revenue.

Pre-paid, re-loadable, frequency and discount cards

We will promote our program of gift cards and customer frequency cards to drive business and
stimulate cash flow. Industry records indicate that 25% - 40% of all gift card amounts go unused.
Also, gift cards have proven to be a popular holiday item accounting for more than 5% of total
sales during December.

Pre-paid and re-loadable cards have also proven to be very popular with the major chain
coffeehouses, again accounting for a significant percentage of sales. These cards promote
customer loyalty as well.

Frequency cards rewarding the repeat customer with a free drink after a specified number of
visits are popular and proven methods to forge customer loyalty.

Discount cards are used to build goodwill among specific groups such as the Chamber of
Commerce members and college students.

By tying in with our computerized sales and inventory system we will be able to track usage and
allocate the expense to marketing.

The Future

The number of Dark Roast Java locations could easily reach 20 - 25 within five years. While the
financials in this Business Plan only address the Pleasantville location, we can extrapolate from
the store's performance (which will be carefully monitored and tracked) to get a general idea of
the chain's projected profitability.

With ten coffeehouses the gross revenues, when fully realized, would be more than $10 million
using the third year performance figures. Even factoring in the cost of additional staff and other
resources, a 10-store chain would likely generate a minimum of $1 million in profits annually,
while building significant valuation. A 25-store chain would easily top $2.5 million in annual
profits.

Dark Roast Java's start-up, implementation and operation in Pleasantville will be the "blueprint"
for future efficient expansion. Our new Mount Hill location will incorporate the knowledge we
gain with our first store as well as new creative ideas, and become our "flagship" operation.
Sources:  SRDS, Interep Radio, Scarborough Market Data Survey.