                      Product Strategy


[]   For an overview of Product Strategy, refer to page 6-1
     in the BizPlanBuilder Reference Guide.


Current Product

Proprietary information is available to investors upon
signature of a Non-Disclosure Agreement.

[]   What are the characteristics of your product or
     service?

[]   Describe how your product works or how the service is
     used.

[]   How has your product or service evolved over the past
     two years?

[Company] currently offers [x] products: [list of products
or services].

[x], our principal product, consists of [x]. Overall our
existing product line is [give status]. Development of [new
products, existing product upgrades, spin-off products] is
in progress and future products are planned.

The first product developed by [Company] is called [product
1], and was introduced in 19[xx] in order to [purpose].

Since then, we introduced [product 2] in 19[xx], and then
[brief history of your product line up to today].

Proprietary Technology

Our products are protected under the following:

[]   Patents, copyrights, trademarks, etc.

[]   Contact the U.S. Department of Commerce, Patent and
     Trademark Office, Washington, D.C. 20231 for more
     information.

[]   General Patent and Trademark Information: [703] 557-
     INFO.

[]   Status Information for a Particular Trademark: [703]
     557-5249.

[]   General Copyright Information: [202] 479-0700.

For our [x] technology/capability we have [licensing,
royalty] with [x] as follows: [give general terms of
agreements].

Return on Investment

For most customers, [product] will pay for itself in terms
of [x] within [x] months, because of [x].

[]   ROI possibilities include:
     Fewer rejects or breakdowns
     Faster turnover of inventory
     Improved efficiency
     Improved convenience
     Lower warranty costs
     Advantages of a better-quality end product
     Advantages in costs savings in other areas

Regarding cost savings, [product] will save our customers
money in terms of [x].

[]   Reduced labor costs, lowered reject rate, reduced
     downtime, lowered inventory costs, improved convenience
     and displaced employee activity.

Our customers can generate more profits in terms of [x].

[]   Heightened productivity, improved product performance,
     increased capacity and concentrating on their own
     business.

For [Company] our [product/product line] has shown, and is
showing, a positive return on the investment that has been
made. [Product/product line] has shown a [x]% ROI during the
last [period], based on net profits divided by the total
investment made.

Useful Features/Benefits

[]   How do they differ from similar products or services?

[]   What customer reactions may be anticipated due to these
     characteristics?

[]   Explain how you will satisfy customer needs and wants.

All products from [Company] have [particular characteristics
unique to your company]. The capability for [x] is a
particularly unique feature enjoyed by [Company] and our
customers.

These combined capabilities provide [specific customer
benefits]. This, in turn, can be used for [more specific
customer benefits].

[]   Benefits could include: entertainment, improved
     appearance, better health, overload reduction, stress
     relief, reduced project time.

[Product 1] provides [features] that [specific customer
benefits].

[Product 2] provides [features] that [specific customer
benefits].

In addition, [x].

[]   Why customers will buy it from you.

[]   Prove that sales will be made.

[]   Prove that you can convince people to buy.

[]   Quantify where possible.

[Product] is an extremely [x], requiring [x]. For example:
one of [Product]s features is its ability to [x]. [Product]
allows users to [x].

[x] is another powerful feature. This includes [x]. [x]
saves a tremendous amount of time when [x].

Compared to traditional [x], [product] is approximately [x].

In addition, [product] does not require [x].

[]   Describe the major unique value-added characteristic
     your product line/process provides to the customer and
     how this translates to a competitive advantage for your
     company.

The major benefits of the combination of all [Company]
products are improved [x] through [x], and [x].

Product Life Cycles

[]   Explain life cycle of product/service. Is it in the
     introduction, growth, maturity or decline stage?

[]   For increased understanding, it is recommended that you
     create a simple chart covering the life cycles of your
     products/services.

[]   Where are your products on this chart? If several
     products are in different life cycle positions,
     indicate each separately.

[]   Describe the time factors influencing your ability to
     make money, and the effects of economic cycles. Include
     contingencies.

[]   What conclusions do you draw from the life cycle
     positions? Are they up to date? Are there any early
     warnings of obsolescence?

The life cycle for [product line] can best be described as
follows: [describe life cycle position].

[Product 1], due to our recent efforts to [x], is in a
strong position. We feel that for the next [period] it will
continue to [x] and generate profits at or above expected
levels.

[Product 2] will need to be [improved/upgraded] within [x]
[months/years] in order to insure that it does not move into
its decline stage.

Overall, we conclude that our products will continue to be
viable in the marketplace during the next [x] [months/years]
and that [Company]'s future planning and product-related
activities will insure a strong market presence.


Research and Development

Much of the time and effort at [Company] during the past [x]
[year/period] has been spent on research and
[product/process] development. During 19[xx] [Company] spent
approximately [x]% of sales revenues on R&D. Our plans for
19[xx] and beyond call for an [increase/decrease] in R&D
spending to [x]% of sales.

[Company] is regularly examining roles that new products
will play in the growth of the company. In order to promote
the speed and effectiveness of our future new product
development efforts, [Company] management is committed to
the following: [list your commitments].

[]   New product development commitments by management could
     include: beefing up the R&D staff, reorganizing to
     empower development team(s), placing a bigger emphasis
     on training, better market research, more formal
     product selection criteria, providing upgraded
     resources, raising quality standards.

These commitments will span over a period of [x]
[months/years] and cost in the range of $[x].

Testing

[x] products listed in the Current Product section have been
tested for ability to be manufactured and are [currently
ready, will be ready] by [x] to market.

Based on our pilot production experience with [product], the
following tasks/operations were tested to validate
feasibility of manufacturing:

Task/Operation (Sample)                       % of Time

Product technology and methods                xx%

Key parts and vendors                         xx%

Processing sequence and repeatability         xx%

Capital equipment and vendors                 xx%

Specifications and control measures           xx%

Production lead-time and volume standards     xx%

Total                                         100%

Pilot testing indicates standard unit production will be [x]
hours per [x] units. Processes have been validated to ensure
optimally cost-effective, quality output.

Final tests were successful with regard to [all, most, etc.]
evaluation criteria. Results are available if need-to-know
is indicated for proprietary information. Testing was
conducted during the period [x] through [x] using [x]
facilities.

Volume testing will be accomplished by [x].

[]   How this will be accomplished and when.

[]   Use milestone chart to indicate ramp-up tasks,
     resources, and milestones.

[]   Specify equipment, facilities, labor, etc., required in
     terms of quantity, number, and cost.

The following product/process requires additional pilot
testing prior to volume testing: [list or otherwise
indicate].

These products are expected to be ready for market over the
following [x] [month/yr] period: [x], [x], and [example;
when other products are generating sufficient cash flow to
support additional product development].

Product Selection Criteria

[]   Describe how and why your company arrives at its
     product development decisions.

[]   Factors that should be covered in your selection
     criteria include: financial benefit to company,
     relatively low investment requirements, positive return
     on investment, fit with present strategy, feasible to
     develop and produce, relatively low risk, time to see
     intended results.

Because marketing is [our single largest/a large] expense
and it is where [most/much] of our effort is applied, focus
on our customer is a very important criteria. The idea is to
keep our customers forever by continually offering them a
valuable product or service, thereby diminishing our costs
of reaching and appealing to them. Wise product selection is
therefore critical to [Company]'s success.

We at [Company] realize that the cost of development
projects is getting increasingly expensive. To assure the
best possible product decisions we have implemented the
following criteria for evaluating and selecting projects:

[]   Include any of the following criteria that apply to
     your situation, or add your own.

[]   Can you meet the needs of the customer and solve a
     specific problem?

[Company] provides products to assist customers with [x].
Our [x] products help reduce time, effort and expense by
[x]%, and easily retail for $[x] - $[x] each.

[]   Can your product be implemented using off-the-shelf
     parts?

[Company] can implement product or service using [off-the-
shelf parts].

[]   What is the size of your potential reachable market?

[Company] will investigate how many people are likely to use
or benefit from the [x] products. We use market research to
estimate the numbers of potential customers, and how many we
can reach.

[]   Do we have to comply to new laws or government
     programs?

New laws or government programs that may impact our product
are [x]. [Company] will comply with these regulations by
[x].

[]   Can we adapt to or capitalize upon needs/business
     concepts?

[]   Would it make sense to add the product to our catalog;
     to send product literature to our existing customer
     base?

[Company] will add new [product or service] to our [product
line, catalog, product literature] to address a new
opportunities in [x].

[]   Per Sun Tzu's The Art of War, as our product we must
     choose our competitors and the playing field carefully.
     Go where the competitors are not. Be first. Avoid "me
     too" products and competitors. If a similar product
     exists, can our product be superior in its
     functionality, presentation or marketing?

[]   Look at potential sales, growth, profits, and time for
     payback of development costs.

[]   What barriers must be overcome for a potential new
     product entry?

[]   Does the existing item have an existing perceived
     value. What would cost elsewhere, or what other means
     could be used to accomplish the same task? For example,
     using BizPlanBuilder, as our product, we would ask: How
     much would it cost JIAN customers to write a business
     plan without BizPlanBuilder?

We will use outside material providers when they have [a
body of knowledge/materials] useful to expedite the
development of a [Company] product. They are selected based
upon their expertise, active participation, reputation and
success in their field, plus overall quality of their
materials. When beneficial, we seek to blend the
[materials/ideas/components] of several
[suppliers/authors/inventors] to create an optimum hybrid
product yielding the most benefits to our customers. These
3rd parties are generally compensated by [a lump sum cash
purchase/an earn-out basis/royalty].

It is our philosophy that a product must be improved by at
least [x]% every [x] months in order to maintain its
competitive position, market value and price point. We must
maintain our ability to [x] as the environment, our
customers' needs, and our capabilities change.

Planned Products

[Company] plans to continually develop new products and
enhance existing products. In response to demonstrated needs
of our market, new products or services being developed in
the near future include [x], [x], and [x].

Additional concepts/plans for follow-on [next generation]
products include [x].

[]   Discuss plans for your next generation of
     products/services.

[]   Discuss add-on services for future customer needs.

[New product 1] development [will begin/has begun] on [date]
19[xx], and will require the following resources [staffing,
materials, tooling, capital equipment, technology, new
processes]. The targeted release of [new product 1] is for
[month], [19[xx].

[New product 2] development [will begin/has begun] on [date]
19[xx], and will require the following resources [staffing,
materials, tooling, capital equipment, technology, new
processes]. The targeted release of [new product 2] is for
[month], [19[xx].

[]   If you feel it would be beneficial, add details of your
     development plans, including milestone dates, for each
     of the new products mentioned above.

Exhibits

[]   If pertinent, include drawings of the product to be
     manufactured or a detailed description of the service
     to be offered.

[]   Include tests made, the data and results, if available.

[]   Show a master Pert chart of product plans.

For additional details, the following product-related
documents are included in Supporting Documents. [List of
documents.]


Production and Delivery

[]   Description of the proposed organizational location,
     make vs. buy, facilities, and logistics.

[]   Emphasis must be on the productive use of capital,
     labor, and material resources, manufacturing processes,
     vendor relations, experience and distribution
     requirements. Statements are needed which indicate
     initial volume and expansion requirements as well as
     product/process complexity, uniqueness, and costs.

Production

The process used to produce [product] begins with [full
description].

Key factors in the [manufacturing/service delivery] process
are [x].

Raw/prefabricated materials, components, and subassemblies
required for production are [x].

[]   List and describe capital equipment, material, and
     labor requirements.

[]   Are prices negotiable?

[]   Are the above items readily available?

[]   List Quality/Technical specifications.

[]   List Inventory requirements.

[]   Identify hazardous materials or other significant
     safety factors.

Our key suppliers include: [list]

[]   Are alternate sources/materials available?

Costs

We take advantage of economies of scale by [x].

[]   Quantity discounts, package deals.

[]   Indicate resource capacity and expected utilization
     over time, any installation and maintenance costs, and
     vendor availability, if applicable.

[]   Describe the business by listing production rates,
     capacity constraints, or required quality assurance and
     safety programs.

In comparison to other companies, [Company]'s products are
[reproduced/completed] quickly and economically by [how
process/techniques accomplish this].

Comparative analysis shows these figures to be [x].

[]   Higher, lower, or in line with competitors?

This is due to the fact that [x], our overall costs will
remain [x].

[]   Are your products more efficiently produced (due to
     manufacturing costs, energy savings, leaner
     management)?

[]   Is your product of better quality?

[]   Is your quality control program more thorough?

[]   Are parts made in-house or subcontracted?

[]   What new tooling is required for production and what
     are the estimated costs?

[]   Quality Control (Investors will want to know that
     warranty costs will be identified and reasonable).

At [Company] we will [fabricate, assemble, subcontract,
etc.] the following [key parts, components, subassemblies,
etc.]:

[]   List parts, etc., with vendors, lead-time, costs, etc.

Facilities

The manufacturing facility [is/will] be located in [x].

This location [provide/will provide] needed space for
[initial/current] production and expansion to meet projected
demand over the next [periods]. Our current production
capacity, including internal and external production, is [x]
units per [week/month/year].

Due to anticipated increases in demand up to [x] units per
[week/month/year], additional facilities will be needed by
[month], 19[xx]. Selection of the future site includes the
following considerations:

[]   Room and cost for expansion

[]   Land and construction costs

[]   Transportation cost and route access common carrier,
     company owned, pooling agreement with [x] freight
     forwarders

[]   Risks and insurance

[]   Packaging and material costs and availability
     (suppliers?)

[]   Labor pool availability, skills, costs

[]   Local ordinances, licensing, and permit requirements

[]   Government assistance (roads, training, exemptions,
     etc.)

[]   Government restrictions and requirements (OSHA, NLRB,
     etc.)

[]   Community attitudes toward business and manufacturing

[]   Continued operating costs (utilities, communications,
     etc.)

The acquisition cost for land and improvements is $[x] which
will be allocated in [x] increments over a period of [x]
years. [Company] already owns/has access to/requires [x].

Within our facility, an efficient production process hinges
on proper layout of [x].

[]   It may be helpful to include a layout of proposed plant
     and manufacturing flow chart in Supporting Documents.

Equipment will be deployed as follows:

[]   List equipment, number, capacity, space requirements
     cost, etc.

[]   Provide rough illustrations of equipment layout and
     process flow diagrams.

This equipment is used in the processes as described and
configured above to ensure yield, lead-time, and costs are
sufficient to provide projected gross margin.

Additional questions:

[]   Where will distribution centers be located?

[]   What packaging and handling equipment will be used and
     who will supply it?

[]   What special equipment, if any, will be needed? i.e.,
     trucks, tractors, etc.

[]   Will warehouses be used? If so, where and what size?
     What inventory levels will be carried? Equipment?
     Labor? Competition?

Staff

Line employees include [x]. Staff employees include [x].

[]   List current and required number of people and their
     skills.

[]   How and when will they be trained?

[]   Who will hire and manage them?

[]   Discuss procedures and measures of effectiveness and
     productivity.

To protect proprietary interests and information, the
following policies will be enforced (work with attorney to
develop this section).

[]   See also EmployeeManualMaker described in the back of
     the BizPlanBuilder Reference Guide.

Packaging and Transportation

These last steps in the manufacturing process are important
in establishing the desired image to the consumer. Of the
standard packaging treatments available, the best choice for
[Company]'s needs is [custom boxes, bubble pack, shrink
wrap, poly bags]. And, since this is a readily available
process, considerable savings can be made.

[Type of packaging] is more widely used, but in order to
convey a unique selling image/position we [are
considering/will begin/have begun] using [another type].

Our competitors use [type of packaging] as well, but by
using distinctive graphics, [photos included in Supporting
Documents] our unique identity will be maintained.

Product Fulfillment

Product fulfillment is an important part of customer
satisfaction. [Company] utilizes [our x group/an external
resource named x] to monitor and manage the delivery,
billing, repair, warranty and repair of our products to
ensure customer satisfaction and repeat sales.

To improve on operating efficiencies, we plan to use [x]
fulfillment company. Their facility is "state of the art"
and their customer record is excellent. We can avoid hiring
more employees, expanding our telephone and computer systems
as well as save on shipping costs.

During the past [x] [months/years] this [group/vendor] has
demonstrated outstanding abilities to [x]. Their capacity is
expected to be sufficient to handle our fulfillment needs
for the next [x] years.

Transportation will be [truck/train/air cargo].

[]   How does your product ultimately reach your customer?

[]   How many steps are involved?

[]   Which is the weakest link, and how will you address
     that?

[]   If using your own fleets, will the vehicles receive
     same graphics quality as the product itself?

[]   Is this the same method your competitors use?

Comparative costs show that [x].

[]   How do your packaging and transportation costs look in
     comparison to the competition?

Shipping Terms

Since 19[xx] [Company] has managed its shipping department
as a profit center. [Company] products are shipped to our
[distributors/end-users] via [F.O.B./F.O.B Delivered/F.O.B.
Buyers Factory/Other]. We use the following as our primary
carriers:

     Ground: [x]

     Second Day: [x]

     Overnight: [x]

During the last [period] we have taken advantage of several
discount programs, including [x] to lower our average
shipping cost by [x] %. Future volume increases will allow
us to take advantage of the following discounts, [list
potential discounts], thus further lowering our average
shipping cost.

Other unique services provided by our shipping department
include: [List services.]
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