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Business Marketing Program

Proposal for Export Marketing Group

By Ray Kronquist, President of Virtual Classrooms.

While I was recently in Russia, in Akademgorodok, the academic community where most of my Virtual Classrooms online tutors live, I came across what I feel is a great business opportunity. Here is a summary:

Proposal Summary:

I am proposing an alliance between my company, Virtual Classroom, the institutes and companies of Akademgorodok, the Economics Department of Novosibirsk State University (NSU) and U.S. business schools. Students at these U.S. business schools will take on the task of researching and developing the U.S. market for these products and services. This will provide American business school students with entrepreneurial experience that incorporates international business and cutting-edge technology and could generate income for the students before and after graduation.

Akademgorodok, established by the Russian Academy of Sciences in 1958, is located in Novosibirsk, the third largest city in Russia. A great many technically advanced products and services have been developed in the research institutes and small companies of Akademgorodok. The leaders of the institutes and companies would like very much to market these products and services in the U.S., but in most cases, they lack the marketing capability to be successful in this effort.

Proposal Details, Roles of the Participants:

I propose that each of the participants be responsible for the following:

  1. Institutes and companies of Akademgorodok: They will create and maintain web sites and product literature describing their products with specifications, advantages and prices. This material should have an English language version. They will also be responsible for answering questions from prospective U.S. customers and for delivering any supporting any orders that are placed by these customers.
  2. Economics Department of NSU: The Economics Department is the equivalent of NSU's business school. Its students are preparing for careers in business, either in large companies, small companies or as entrepreneurs. Their role will be to support the communication between customers in the U.S. and the U.S. business students and the Akademgorodok institutes and companies. If these clients are not responding properly, the NSU students will expedite their cooperation. They will also research the full list of institutes and companies to identify the most fruitful ones for our program.
  3. U.S. Business Schools: The students will be responsible for market research and a marketing/sales program to generate sales for promising products and services. The professors will collaborate with Virtual Classrooms to define the scope of each student's program and the credit he/she should obtain from its completion.
  4. Virtual Classrooms: VC will coordinate the activities of all the participants above. It has about 15 independent contractors in Akademgorodok who have worked for VC for the past year or two doing online tutoring and providing other services for K-12 and college students in the U.S. VC has close relationships with these individuals, and I spent three weeks visiting and working with them this summer. These contractors have many contacts in the institutes and in the companies we will do business with. Thus they can supply valuable background information and advice when needed. VC will sign sales representation contracts with the clients in Akademgorodok and share the commissions on sales with NSU and with the U.S. Business Schools.

Benefits to the U.S. Business Schools:

I see the following benefits:

  1. Entrepreneurial experience for the students in a real start-up environment
  2. Experience in international business
  3. Experience with high tech products
  4. Contacts for the business school with business students and professors at NSU
  5. Contacts for the business school with the institutes and companies from one of the most technologically advanced communities of Russia. Akademgorodok has the potential to become the Russian Silicon Valley or Route 128 with the marketing program we seek to establish.
  6. Some financial income from successful sales

Keys to Success:

There are two major reasons why this venture is likely to succeed:

  1. The high scientific and technological capability of the researchers and employees of the institutes and companies. There is more information on this below in Background Information.
  2. The low labor cost in the region. A technician earns about $60 per month and a college professor with a Ph.D. about $100 per month. Thus, very high quality products can be developed and produced at a very low labor cost.

Investment Required:

No investment on the part of the U.S. business school would be required to start this program, other than the time of a professor to negotiate the terms of the project and to supervise students working on it. Students would need Internet access and the capability to make phone calls from an office at the school. In the future, it may be attractive to arrange financing for one or more of the Akademgorodok ventures, but this will be down the road when much more information about the products and their sales potential will be known.

Background Information:

Here is some additional information that should help you to understand community of Akademgorodok and the opportunity it offers.

Akademgorodok was set up with a university, Novosibirsk State University (NSU) and a number of research institutes, all of which have close relationships with one or more of the academic departments in NSU. Currently there are a total of 44 institutes, some of which concentrate on pure research, and others which concentrate on applied work in science and technology. Most of the land and buildings in Akademgorodok are the property of the Siberian Branch of the Russian Academy of Science (SBRAS).

NSU is one of the most prestigious universities in Russia. Normally only 10% to 30% of the students who apply are admitted. Faculty members normally work also at one of the institutes. Students usually do their graduate theses at one of the institutes. Thus, the university and the institutes constitute a very large academic and research complex covering most fields of science and technology.

SBRAS has an exhibit displaying about 300 of the innovations, products and services that have been developed at its various institutes. Sections of this exhibit are taken to trade show from time to time. The institutes that have developed these innovations are seeking to market them within Russia and abroad. Some are products ready to be sold or licensed. Some need further development, and the institutes are seeking investors or joint venture partners to fund the development.

In addition to the innovations developed by the institutes, there are a number of software development companies in Akademgorodok who are seeking to sell their services abroad. I visited seven of these companies during my visit, and they range from start-ups with a half dozen people to the largest with 400 employees. The areas of expertise cover game developers, E-commerce, web site development, PDA software and more.

All the software companies I visited were very interested in my help in expanding their sales in the U.S. The people at the institutes are also very interested in sales of their products in the U.S.

Some of the institutes have been very successful in selling their products, such as the Institute for Catalysis. However, many institutes have not done an effective job in marketing their products.

During my visit, I met with the Chair of the Economics Department at NSU and proposed that they set up a marketing group to work with Virtual Classrooms on marketing in the U.S. the products developed by the institutes and the services of some of the local software companies. He was very favorable to the idea, and he arranged a meeting for me with three of the professors in his department that afternoon. They also liked the idea and expressed a willingness to put four graduate business students to work on the project.

I am now seeking business schools in the U.S. who are interested in collaborating with Virtual Classrooms and with the Economics Dept. at NSU in this marketing program.

I feel that business students who work on this project would learn a great deal in a real entrepreneurial environment. Also, there would be an opportunity for the students and the business school to benefit financially due to commissions on successful sales.

Details of U.S. Students Responsibilities:

  1. The students' responsibilities and goals will be determined in consultation with Virtual Classrooms and the students' professors, but in general they will be as follows. The students:
    1. Will be responsible for starting a sales/marketing program in the U.S. for one or more products/services.
    2. Will investigate the market, i.e. customers and competitors. He/she will compare the features of the Russian product with those of other competitors in the U.S. market.
    3. Determine if the Russian product/service has a reasonable chance of being competitive in this market.
    4. End the project if the conclusion is reached that the product/service can not be competitive. A report will be written, and the student will take on another product/service if time permits.
    5. Develop a sales/marketing plan if it appears that the product/service can be competitive. The plan may include some or all of the following activities:
      1. Calls to prospective customers, get requests for quotation from customers and quotes from the Russian client. Follow up to obtain orders. Follow up orders to ensure product/service is delivered on time and that customer is happy. Resolve problems in communications and make sure technical problems are resolved. Obtain follow on orders.
      2. Recruit sales representatives to represent the Russian client. Coordinate with Virtual Classrooms and the rep firm to sign representation contract. Manage the rep firm to ensure that the firm gets appropriate product documentation form the client and that the rep firm is actually promoting the product/service. Ensure that questions from the rep firm and its customers are answered by the client.
    6. If time permits, the student will prepare a long term marketing/sales plan which estimates the size of the market and the market share the client can reasonably expect to capture and how it can be captured. Some points to consider are:
      1. A careful comparison between the Russian client and its competitors in the U.S. market. What fraction of customers would choose the Russian client?
      2. How can the Russian client improve its products/services to make them more appealing? How much more of the market could result from these improvements?
      3. What promotional activities would be necessary to reach all possible customers? Consider:
        1. Direct calls to customers
        2. Sales representatives
        3. Direct mail
        4. Sales literature
        5. E-mail promotion
        6. Promotion of web sites through search engines
        7. Trade shows
        8. Travel and customer visits
        9. Internet meetings with customers and client.
      4. Is a financial investment in necessary to achieve the projected market share? If so, how can that investment be obtained?
  2. What the student will learn:
    1. How to do some market research to assess the marketability of the product.
    2. How to plan the sales of the product.
    3. Practical experience in carrying out the sales plan.
    4. Experience in international business: How a foreign product/service can have a significant advantage in performance or price and how problems in language or business cultures can be resolved to obtain sales and satisfied customers.
  3. How the student and business school can benefit financially. Commissions form the Russian client will be shared with the business school.

If this project is of interest to you, please give me a call, 408-929-9066, or send me an e-mail, with your thoughts.

Ray Kronquist, President of Virtual Classrooms

Download Proposal for Export Marketing Group (zip archive)

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