The revenue forecast for the new fiscal year has been set at $13,700,000 for the Cogeneration Division. Actual revenues for the first four months are $2,173,000. If the current trend is projected for the entire fiscal year, it results in year-end sales of $6,520,000. Current 1-5 MW cogeneration projects and other prospects were reviewed to determine which of them have a high probability of being awarded to the Company. Entering the highly probable local university small cogeneration project into the mix raises the forecast to $8,600,000, which is still very much short of the budgeted revenues. Cogeneration produces two energy outputs from a single fuel source, usually more environmentally friendly natural gas. This generates both electricity and heat for buildings and factories.
The historical focus on sales has been almost solely wrapped around cogeneration. There has been only limited effort to develop other revenue sources such as Controls, HVAC, and PLC programming. If cogeneration sales stumble, as they did this year, the division cannot absorb the fixed costs from the maintenance contracts and the low revenue non-cogeneration projects.
Effective today, a marketing program will be launched that will expand the focus to other product/service areas within the capability of the engineering division, and take advantage of the market conditions tempered by the recent record-setting power outages to reintroduce cogeneration as the answer to the security of electric supply. The recommended sales tactics are as follows:
1. The VIP of engineering is to meet with the other division managers on a weekly basis to review the possibility of joint bids on projects.
2. The engineering Project Estimators will meet with their counterparts in the two other divisions to make sure that they are not missing out on any opportunities.
3. Personally contact friendly architects and engineers, who could be valid intermediaries on imminent projects. Promote and maintain a relationship.
4. Re-establish contact with all the recent customers who have decided to place their cogeneration projects on hold due to the cost of gas. They may have changed their mind as a result of the negative publicity from the recent blackout. Stress that factor to them when contacting them again.
5. The local area was hurt the most by the power outage. The Manager of Engineering will put together a list of all the feasibility studies and contacts that the Company has made in the state, and contact them again to gauge renewed interest in alternative power.
6. A recent article in Energy User News indicates that two states are leaders in promoting, and subsidizing on-site power. As an example distribution charges for gas are reduced by 60% for on-site power plants. The Manager of Engineering will re-establish contact with all the potential customers in the two states who have dealt with the Company in the past.
7. Produce and post a YouTube video that stresses the electric supply security issue. Accompany this with permission based e-mailing program to all potential customers to bring their attention to the video, which will also be posted on the Company’s website. The e-mailing should particularly target the states that favor alternative energy.
8. Enhance the attractiveness of the cogeneration option by partnering with third-party electric suppliers in supplying back-up-power on a month-to- month basis. This will allow the Company to reduce the cost of equipment by eliminating up to $140,000 in costs on a 1.0 MW project. Redo some feasibility studies with this saving in mind.
Marketing is all about being at the right time, at the right place, with the right product, and putting an appropriate marketing mix in place to take advantage of the right conditions. This appears to be a very opportune time to promote sustainable energy. The Company must do something now to improve the revenue and profit outlook for the new fiscal year and beyond. The sales action plan gets the engineering division moving in the right direction, and stresses the Engineering Manager’s accountability for the achievement of revenue and profit goals.
The impact of this eight-pronged sales program should have immediate and long-term effects on the revenues of the engineering division. In the short term the division must quickly diversify to more non-cogeneration projects; in the long term, the more aggressive approach to the cogeneration market place will bring more quality leads that will enable the division to achieve annual sales of $14.0 million + in the next two years. This will be further elaborated in a formal marketing plan