Executive Summary
This report provides an analysis and evaluation of the situation concerning XO Computers. Included in this analysis are marketing objectives, product adaptation, promotion mix, channels of distribution, and price determination. Although the main use of these computers was meant to be sold to schools for a low price, our company has found that these computers can be successfully sold in other markets as well. In Colombia, we can market our XO computers to both the rich and the poor. We will aim to target children of Colombian coffee farmers who strive to learn but cannot afford expensive technology. In fact, there are 618,199 households in the coffee-growing region of Colombia. In addition, there are 653,471 children aged between 5-19 years old (average of one school-aged child per household) in these areas. About 39% of the population in the coffee-growing region (made up of Caldas, Risaralda, and Quindío regions) did not finish primary school and/or secondary school. So, we believe that there is a large market that would be interested in our product. The price will be set at $250, which we believe is a reasonable price. Based on the average income of a Colombian worker, we believe that our product will be well received in the Colombian coffee regions. We believe that the adults will want to invest in their child’s future, as well as buying a well-made piece of technology for an inexpensive price. Table of Contents
Introduction 4
Part 1: Market Audit and Competitive Market Analysis
The Product 5
The Market 7
Part 2: Preliminary Marketing Plan
Marketing Objectives 9
Product Adaptation or Modification 11
Promotion Mix 13
Channels of Distribution 16
Price Determination 18
Appendix 20
References 21
Introduction
The purpose of this marketing plan is to reach out to children who work on the coffee farms. These children are no longer able to be in school due to working conditions to support their families. XO Computers would like to help these students continue their education, while still being able to help their families by working on the coffee farms. Our laptops will follow a similar design that XO Computers already has. The major adaptation that we will make is the color of the computer. While the white will remain as the primary color, the accent color will be yellow so as to not offend the market. The needs of our target market, children that work on coffee farms, are simple. Primarily, the children want to further their education and secondarily, they would like to still have fun. Our product, XO computers, addresses both of these needs. XO Computers are all about education. They promote creativity and open-mindedness, which allows a child to be more open with education. The XO Computers also have activities where the children can connect to surrounding laptops and participate in activities with other children. This not only allows a child to have fun, but to also create relationships and friendships with other children. PART I: MARKET AUDIT AND COMPETITVE MARKET ANALYSIS

The Product
“Durable, functional, energy-efficient, responsive, and fun,” (laptop.org) are all strengths that can be expected when using an XO computer. These laptops are made to withstand the harsh environments of developing countries: rain, humidity, and heat. The XO Laptop is light-weight for easy portability and durable to withstand shock. Durability is also doubled when not in use.
The software used with the XO Laptop encourages learning and growth, rather than instruction and strictness. This allows a child to explore and develop their creativity, which is so often lost once schooling has ended and life becomes a rigorous routine of work. To increase creativity, there is another benefit to using the XO Laptop: if there is more than one laptop in the area, there is an instant connectivity (shown in Figure 1). This allows users to share activities and learn together.
In an effort to remain energy-efficient, XO Laptops utilize the lowest power chip: Marvell’s Sheeva ARM chip. This chip makes it “easier and cheaper than ever to power XOs from solar cells or alternative power generators” (www.laptop.org). The weaknesses that XO Laptops encounters are very minor and almost insignificant compared to the rest of the advantages. The hardware weakness is the keyboard. The keyboard is encased in a water-proof seal which makes it great for the environment, but makes it slightly harder to type on and less responsive than your regular keyboard. The software disadvantage is even smaller than the hardware; “there is no system-wide control panel… and some applications have un-expectantly quit…, [but] the system itself has never crashed.” The XO Laptop is in its introduction phase of the product lifecycle. A product with this capacity has yet to be seen in Colombia. It will be a while before the XO Laptop reaches the maturity stage and becomes a dud, because until the students in Colombia are able to stay in school past the sixth grade, there will always be a need for these kinds of computers and technology.
(References: 2, 8)
The Market
Our market consists of young children, still in primary school, who belong to the more than 500,000 families whose parents work in the coffee fields ("The coffee people," 2010). These coffee harvesting adolescents experience many hardships and obstacles in their path to obtaining an education. Due to the volatile nature of these families’ livelihoods – coffee remains one of the few crops that continues to defy mechanized harvesting due to its structure – it must, by its very nature, demand a large amount of harvesting workers to supply the world’s requirement amount ("Coffee kids" 2012). For example, their families may migrate as the coffee season proceeds ("Coffee kids" 2012), interrupting a stable classroom life and professor-led curriculum. The XO Laptop can minimize this separation from learning by enabling the would-be student to bring the curriculum with them as they move around, instead of having a child’s education be cut off completely once they leave school.
From the country analysis done on Colombia, it is known that education for the first five years (grade 1-5) is provided to children for free. This offering means that about 90% of Colombian children are enrolled in primary school, a respectable number and one that is fit to be built upon with the entrance of XO Laptops. This high rate means that if cost were not an issue, or at least less of one, more children would be willing to continue attending school. Once free primary school ends, that statistic has been cut down to only 54% of children attending sixth through ninth grade even though education from ages five to 15 has been compulsory since 1990. Children of coffee farmers are especially at risk of dropping out of school due to the immediate needs of yielding more crops outweighing the intangible future worth of an education.
Selling what may be considered as a luxury product to someone who may earn as little as $0.04 per pound of coffee is rather daunting. Thankfully there exist a few partners in the market that could be utilized to begin distribution. Children of the Andes and their partner, Asociación Mundos Hermanos, aim to provide opportunities to children from poor families, often coffee workers themselves, in order to return to school enrollment and gain basic skills in information technology – something the XO Laptop would be perfect for ("Education in Colombia's," 2012). Coffee Kids is another project that could be used as a temporary or permanent market partner to help distribute awareness to the target market of coffee farming children ("Coffee kids" 2012).
(References: 1, 4, 11)
PART 2: PRELIMINARY MARKETING PLAN
Marketing Objectives
We intend to market the XO Laptop to the children of the coffee farms in Colombia. Our plan is to partner with an educational software company and sell the XO Laptop to the coffee-growing families in the Caldas, Risaralda, and Quindio departments so that the children can continue their education if they were to drop out of school in order to help out on the farm. As of the 2005 census, 39% of the population of those departments had not finished primary and/or secondary school.
In addition to utilizing Children of the Andes and Coffee Kids to distribute XO Laptops, we also will market to these households by training local salespeople on how to use the computers so they are able to explain how to use them to the potential customers and answer any questions. We then will establish relationships with local markets so that our salespeople can sell the laptops in their stores. In return, we will give the markets a 7% commission of all sales.
We project to penetrate 40% of the households in this region in five years. Because we are specifically targeting families whose children drop out of school in order to help out with the family business (coffee-growing), we do not expect to penetrate 100% of the market. Once we establish the XO Laptop as an educational tool in this region, we will pursue the sugar-growing region, and then into the more urban markets to reach the children who do not complete school.

Our revenue and profit projections over the next five years are shown in Table 1. We expect to penetrate 10% of the market in the first year, and grow another 10% in the next year and again in the following year, reaching 30% market penetration by the end of year three. After the third year, we expect growth to slow down and reach 35% penetration by the end of the fourth year, and 40% penetration by the end of the fifth year. We are selling the laptops at $250 and expecting a profit of $75 per laptop. By the end of the fifth year, we should realize total revenues of $61,820,000 and $18,546,000 in profit over the five years.
(References: 3)
Product Adaptation/Modification
The XO Laptop already has many features built to withstand daily use by coffee farmers’ children and Colombia itself. As previously mentioned, it can survive in many of the ruthless environments that being owned by these coffee farming families would put them through – climates full of rain, humidity, and heat. These conditions would cripple the average first-world laptop and impair the hardware inside – it is a boon that the XO will stand up to such elements. The product’s own fact sheet provides another built-in positive factor: the laptop’s keyboard is made of a rubber membrane. This shell grants the keyboard resistance to water damage and lowers the harm done by possibly dirty hands, overall making the XO Laptop last longer in spite of the risks. This same keyboard comes in various languages and can be easily exchanged if children would like to write in an aboriginal and local language instead of the national Spanish. The second standard benefit that will directly impact usage by these children exists because the One Laptop Per Child group foresaw that not everyone has access to electricity, therefore they included some power relay options. From the product’s website we find out that power can be transmitted not only by conventional electric current, but by a small and inexpensive solar cell, batteries, a side-installed windup crank or pedal, or even by a ripcord. Earlier in this paper it was noted that the current chipset aids in powering XOs from alternative power sources. It is clear that much of the perceived modifications necessary are already available. While it seems that the One Laptop Per Child group has thought of everything, there is one aspect of the XO Laptop that must be modified if they are to be successful in Colombia: appearance. The two main colors of an XO Laptop are white and green. The color white in Colombia is a great choice; it represents the east, a “good direction, curable diseases, and is an overall advantageous color” (“International Color Guide,” 2012). However green is the exact opposite. Green is considered by some Colombian natives to represent death and is packaged with the so-called “dark” colors, and therefore is considered ugly (“International Color Guide,” 2012). A much better color to use instead of green would be to keep to the “light” theme and use yellow as it is a more upbeat and attractive shade.
(References: 6)
Promotion Mix
XO Laptops are designed to be marketed towards 80% of the world’s population that lives on approximately less than ten dollars a day. The computers are being developed as mentioned to help children who are no longer attending school. In order to target this specific market, the promotional mix is going to be much different than a typical consumer product marketed to the remaining 20% of the world.
Personal Selling
XO Laptops are targeted towards the less fortunate population of the world and personally selling them would not be the best of ideas due to the physical size and mass of the object. In replacement of personal selling, it is better off using local buzz marketing agents trained for the XO Laptop. Buzz marketing tactics have proved in the past to be successful and very efficient in spreading awareness of a product. Our plan is to train local people in different locations with giving them a XO Laptop to demo. Having a local buzz agent will give us the edge since the agent will be accustomed to the local culture, heritage, and most important of all the language. In addition to buzz marketing, we will also give local schools one XO Laptop per classroom to have as a trial. From the trial offer we can gain input, feedback, opinions, and most important of all a stir of demand from the children in the classroom. The essential idea is to personally win over classroom students who in return will influence their school to purchase the XO Laptop. Additionally, this will instill the XO Laptop brand into Colombian children, which could help to influence a purchase decision by their family later.

Advertising
In most low economically developed countries, advertising can be a challenge. The amount of media available in developed countries makes it easier to advertise a product. In a developing country that essential variety is missing in the equation. In order to overcome this obstacle, our plan implements advertising at a local level in major cities where markets are boomed, trade routes meet, and intersections cross paths. Billboards in the native language will be needed for the heavier traffic areas and mobile vehicles e.g. tricycles, baby taxis, etc. are going to be used as a voice over mechanism by promoting the product through a microphone while travelling around a local town. The less developed population percentage of the world will see and view these ads with the price marked on. It is essential that the ads are present in the listed places because the people go to the marketplace on a constant basis for food and supplies. The more they see and know about XO computers, the better chance of grasping the attention of this niche market. Lastly we will use the airwaves as a source of media and promote our product on national television channels that will be viewable by those who own a television.
Sales Promotion As previously mentioned, in addition to mainly targeting the children of coffee farmers, we also would like to sell the XO Laptop to schools in order to instill the XO Laptop brand into the children. Thus our main sales promotion would be a discounted price when XO Laptop are bought in bulk. An average XO Laptop retails at about $250 a piece. If schools and official agencies were to buy the computer in bulk the promotion can be effective by discounting the price to $150 per computer. We would require a minimum purchase of 30 laptops to be considered “bulk.”
Direct Marketing In order to market directly to our target market our company will send out pamphlets within the mailing system that has information regarding an XO Laptop demo in their local town. The idea is to have a demo model up and running in markets. The message will encourage the reader to visit a market that is carrying an XO Laptop so the reader can tangibly experience the laptop.
Publicity
The affordable computer manufactured by XO is already well known in developed countries. They are a very popular item for people who like to donate to charity. Usually one can purchase one on Amazon.com and it gets sent to a child in need. In the less developed nations, computers are scarcer but usually somebody knows somebody with one. Therefore it is essential to create awareness of the product for the developed countries via social media. This in turn will bring forth the much needed attention required. News typically spreads quickly via social media and this will help to get the message across to families in undeveloped countries, thus creating a demand. Channels of Distribution
When considering which channels of distribution to utilize in order to achieve our sales goals, many factors have come into play. First is the method of transportation of the XO Laptop into Colombia, which should be imported through both airport terminals and waterway ports, as they represent the most popular and established modes of transportation to and from Colombia. On the domestic level, once the products are in Colombia, ground transportation should be implemented, through commercial semi-trucks and railroads, to reach the end retailers in all four regions of the country.
Due to the infrastructure of Colombia, traditional wholesale/retail shops spread out amongst the region are being replaced by large department stores and malls because of the ease of accessibility, where consumers may go to satisfy any need whether it is food, clothes, electronics, appliances, etc. With this growing trend, it is important that we distribute 200 XO Laptops evenly through at least five electronic retail stores in each of these large malls/department stores all across the coffee-growing region of Colombia.
As mentioned previously, the selling price of the computers to the end consumer will be $250. We will ship the 200 XO Laptops to each mall/department store at a total price of $28,000, or $115 per computer along with a $3000 transportation cost, allowing a retail markup of 117.39%. In terms of methods of operation for retailers, they will accept both cash and credit transactions, as most consumers are unlikely to carry over $250 cash when shopping and the growing trend of credit card use in Colombia.
Another channel of distribution that will be utilized is the internet, which may appeal to the wealthier population of Colombia. By doing so, we may cut out the middlemen and maximize our profits through each sale of an XO Laptop. The cost will also be $250 through internet purchases along with a $20 shipping fee. We will open 10 warehouses across Colombia, each with an inventory of 500 XO Laptop that will ship the product to each internet order, and re-stock any retailer when necessary.
(References: 7, 10, 12)
Price Determination
The average price of a laptop in 2011 was $456. The price of laptops has been declining in the last 24 months. XO Laptops will be distributed to Colombia with a price that will be affordable to all looking to purchase. The total price for each XO Laptop will be $250. This total price will include all import taxes and transportation costs.
Our pricing objective focuses on marketing our computer to Colombian coffee workers and their children. Because these workers have to support a family and generally don’t have large disposable incomes, we needed to price XO Laptops at a price that would yield profits, yet would be affordable to our target market. Our goal was to set the price at about $150, but due to high import taxes and other miscellaneous fees, we thought it would be better to charge the total amount of $250. This will benefit each purchaser because it will be the final cost of the product, instead of charging less and our purchasers becoming upset with additional “fees.” We determined the price of each XO Laptop based on many factors. First, we wanted to sell our products at an acceptable price so we do not exclude any potential customers by offering a product they cannot afford. The price we set is more than 40% less than the average price of a laptop in the past year (2011). Another determinate in the price of XO Laptops was done by analyzing the average wage of Colombians. The average monthly wage in Colombia is $692 (which is nearly half of the worldwide average). Therefore it would take an average Colombian worker about 11 days pay to afford an XO Laptop. We believe that Colombian workers will be interested in buying XO Laptops because they can invest in their children’s future, as well as having access to technology they could otherwise not afford. (References: 5, 9)
Appendix

Figure 1: Network Connectivity – retrieved from: http://one.laptop.org/about/hardware#features

Table 1: Penetration, Profit, and Revenue over Five Years
% Penetration # of laptops Revenue Profit
10% 61,820 $ 15,455,000.00 $ 4,636,500.00
20% 123,640 30,910,000.00 9,273,000.00
30% 185,460 46,365,000.00 13,909,500.00
35% 216,370 54,092,500.00 16,227,750.00
40% 247,280 61,820,000.00 18,546,000.00

References
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3. Departamento Administrativo Nacional de Estadistica. (2005). Censo General 2005 Nivel Nacional. Retrieved from http://www.dane.gov.co/censo/files/libroCenso2005nacional.pdf
4. Education in colombia's coffee region - children of the andes. (2012). Retrieved from http://www.childrenoftheandes.org/pages/education-in-colombias-coffee-region.html
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6. International color guide - columbia. (2012). Retrieved from http://www.office.xerox.com/small-business/tips/color-guide/columbia/enus.html
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8. One Laptop Per Child. About the Project. Retrieved from: http://one.laptop.org/about/mission

9. Peters, T. (2012, April 13). Colombia's average wage less than half global average. Retrieved from http://colombiareports.com/colombia-news/economy/23414-colombias-average-salary-lower-than-global-average.html
10. Shopping guide - bogota colombia. (2011). Retrieved from http://pages.infinit.net/colombia/bogota/shopping.html
11. The coffee people | café de colombia. (2010). Retrieved from http://www.cafedecolombia.com/particulares/en/la_tierra_del_cafe/la_gente_del_cafe
12. Truell, A., Pelton, L., & Strutton, D. (2007). Channels of distribution. Retrieved from http://www.encyclopedia.com/doc/1G2-1552100053.html