tomkrug3-6

PRICING

Before [I/we] set the price for The GDKss614's, [I/we]

determined on a unit basis what my costs were going to be.

[I/we] then determined what the market price was for obsolete

systems. At this price it was determined that for all but the

lowest sales projections, this [Product/Service] would turn a

profit at this price. However, since our complex systems offer

additional features, we felt that we could price it approximately

50% above obsolete systems and strive to bring manufacturing

costs down to lowest levels.

To test this price, we called on large users

of timing sensors. We first questioned them about the

desirability of our extra features and then asked them

directly if this price would be acceptable if such a product

were available. We found that 75% of those polled would be

interested in this product.

We have determined that the wholesale price is \$160.00 per unit.

This will equal a margin of 67%.

Our unit cost has been figured at \$53 each, before

production line.

Before [I/we] set the price for our [service], [I/we]

forecast what our fixed monthly costs were going to be.

[I/we] then determined what the market rate for comparable

services were. At this rate it was determined that for all

but the lowest billing projections, this [Service] would turn

a profit at this rate(20 unit sales monthly in each of ten states).

approx. 200 per month (see page 17-18)

However, since our service is unique and demands a higher level of expertise,

we felt that we could bill above other comparable rates by offering instant mobile installations.

SPECIFIC MARKETS

We intend to market our products through all the

normal channels available to hard goods. These include

retail, wholesale, and OEM. To penetrate the auto aftermarket

efficiently and swiftly, we intend to initially use commission

sales representatives strategically located throughout the USA,

then direct them to local distributors.

We also will start a national advertising campaign targeting

the end user in various national publications and on national

TV commercials after we exploit the Internet.

Our sales representatives will be chosen based on their

own experience in the marketplace. It is our intention to hire

the best and the brightest among those currently available.

Our marketing tests included many sales tactics we initially would like to use.

We intend to canvas this market very aggressively through the use of:

1. Telemarket sales to Business using delivery drivers

2. Auto Accessory Stores

3. Advertisements in Local\National magazines.

4. Radio advertisements on weekends and P1 type stations

5. Internet and Fax Polling and related classified ads.

6. Mail Order

7. Goverment Contracts

8. Multi-level marketing

9. Legislation

As we are offering a unique service, informing the public of our capabilities

is of utmost importance.

Growth Strategy

After having successfully introduced the GDK line into

the American market, our expansion will be in two separate areas.

Increasing sales in the USA and entering various foreign markets.

After we have reached our Second year sales goals, we

intend to offer our sales reps the opportunity to sell our products

exclusively by joining our company. We expect that a small

percentage will desire to remain independent and these will have

to be replaced with our own sales force. We intend to develop

further sales reps from within by hiring and training them in our

own sales methods. We will increase national advertising and

begin targeting smaller accounts and specialty outlets.

Additionally, we will conduct in house seminars for various OEM's

demonstrating how the inclusion of Timing sensors into their own

products will boosts the value of their products.

After having successfully completed this entry phase into this

market in the geographical area we have chosen, we will then expand

our market by doing the following:

1. Expand telemarketing

2. Increase number of direct sales reps.

3. Expand into neighboring cities.

4. Offer franchises

5. Offer to distributors/suppliers

Most suppliers want new accounts. A prime source for finding

suppliers is the Thomas Register, which lists manufacturers by

categories and geographic area. Most libraries have a directory

of manufacturers listed by state. If you know the product line of

a manufacturer, a letter or phone call to the company will get

you the local distributor-wholesaler. In some lines, trade shows

are good sources of getting suppliers and looking over competing

products.

Market Size and Share

The American market for Home Security is estimated at \$4 Billion

annual sales based on data furnished by Dunn & Bradstreet. We estimate

that we can achieve 30% market share within 3 years. Marketing data for

other markets ;Business surpasses the automobile industry.

Other Markets

Automobile and Business uses for timing sensors is the largest

potential for GDK electronics then Corporate transactions.

TARGETING NEW MARKETS

To continue our growth, we will be using the following

methods to expand our markets and to increase our new areas of doing business:

o Customer contact - find out their needs

o Customer referrals

o Adding complementary [Product/Service]s with purchase

o Trade shows

o World Trade Center "Network"

o U.S. Government trade leads

o State Government trade leads

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