Multi-Intention Indicating Reflector Jackets
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Multi-Intention Indicating Reflector Jackets
The multi-intentional indicating reflector jacket is a lean business that is not only viable but with a high chance of success, profitability, and sustainability. The amount of capital required is about $250,000. With this amount, the business will be set, and there will be funds for covering the initial operational costs such as advertising and cost of labor and warehousing.
The business is viable as the running cost are not high, and the business is expected to breakeven within the first three months of operation. According to the budget and the analysis done, the business is supposed to have a gross profit margin of 58% within the first three years of operation. The high-profit margins are due to the low operations costs after the initial startup and the fact that the market is ready to receive the unique products of this project.
The business reaps the benefit of an unfair advantage as it satisfies the customer needs in a way that no competitor does. The product is unique, and there is no chance that the competitor will be able to copy the idea or even replicate it. With the number of cyclists and riders increasing in our country each year, coupled with the need to improve communication among the road users to reduce the number of accidents, then the business has all the chance to grow.
The project is about a new invention that involves the making of multi-intentional indicating reflector jackets. This is a totally new idea meant to improve communication between the riders and other road users on the road. The idea wants to solve to issue of road safety as the number of road accidents on our roads has increased. The conventional reflector jackets only show the location of the rider, while the most advanced ones show the direction that the rider is intending to turn. The multi-intentional indicating reflector jacket is superior as it shows more intentions of the rider in addition to showing the direction. They are able to show the intention to slow down or accelerating using the indicating lights located at the back of the rider.
The project has been inspired by the high number of rider and cyclist in the United States. According to Global No.1 Business Data Platform (2019), cycling is a popular leisure activity and means of transport. For example, the number of regular cyclers in the United States is about 12 percent of the entire population, while the total number of regular cyclists and riders stood at 47.5 million people as of 2017 (Global No.1 Business Data Platform, 2019).
Thus, there is a ready market for the jackets provided they will be of high quality, and they will meet the expectations of the customers. The profitability of the business is assured with the prerequisite analysis of the market and the factors that affect the running of the business, both internally and externally.
From the analysis done (appendix II), the amount of sales of the jacket realized is going to increase progressively from the first to the third years. The projected sales are 150,000 jackets. The target is put at that figure as the product is new, and a lot of marketing work will have to be done to let the potential customers know of the existence of a new product in the market that can satisfy their needs.
In the first three years, a target sales of 1,250,000 jackets are expected each of the jackets being sold at $15. In that period, net sales amounting to $15,000,000 is expected to have been made, representing a gross profit margin of 57.33%. This is a good and viable profit target, given the uniqueness of the product. This a sustainable sales and profit target considering the market is ready to receive the products. Thus, the only source of revenue for the business will be the sales of the multi-intentional indicating reflector jackets.
Customer value proposition canvas
The value proposition canvas ensures that the positioning of a product is around what the customer needs or wants. It ensures that there is a perfect fit between the product and the market. It allows analysis of the product of the product to show the need of the customer being solved. Through this, you analyses the value the product adds to the customer. The value proposition canvas is divided into the value map and the customer profile.
Customer value proportion canvas consists has three parts: the customer pains, the customer needs, and the gains that the customer would derive by the use of the product.
Customer pains and pain reliever
The customer pain details the pains that the customer has been experiencing to make them need the new product that is being offered in the market. In the case of the multi-intentional reflector jacket, the number of accidents involving motorists and cyclists and other road users have increase significantly. The accidents are mainly brought about by miscommunication between the rider/cyclist and the other road users. Consequently, this has led to a high number of road accidents, deaths, and disabilities among the people who are involved.
The multi-intentional indicating reflector jackets solve the customer problem by allowing effective communication among the road users. Consequently, the number of road accidents is reduced, and safety in travel and delivery of merchandise is ensured.
The job that the customer wants to be done is the movement, transportation of customers, and merchandise from one location to another until they safely get to their destination. This will be enabled if there is the effectiveness of communication on the roads among the different road users. Besides, road accident reduction in the main issue with the customer. All these problems of the customer are dealt with in using the multi-intention indicating reflector jackets.
Riders and cyclists are the prospective customers in this project and will reap the benefits from the product of this project. The gains that they want to have is good and effective communication with motorist, cyclist and other road users to reduce the number of road accidents and ensure there is safe delivery of merchandise. The gain creator is the multi-intentional reflector jacket. The reflector jacket will be made of carbon fiber, which is a highly reflective material when polished to increase visibility on the road. Besides, there will be an indicator that is run by software from where the intended signal is given by the rider or the cyclist to the other road users, ensuring effective communication and consequently reducing accidents on the roads.
Apart from analyzing the viability of a business using the lean canvas model, SWOT and PESTLE are two other forms of analysis that can be performed to determine the viability and the survival of the business.
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. SWOT analyses the internal factors of the business and the ability of the business to survive when it finally hits the ground. The external factors that are likely to influence a business are analyzed under PESTLE analyzing. Just kike SWOT, PESTLE is also an acronym that stands for Political, Economic, Social, Technological, Logical, and Environmental. All these are the external factors that the business will interact with and need to be addressed as they have the ability to make a business succeed or fail. The information for performing this analysis is readily available in the media. The news, online blogs, social media, and directly interacting with people will help to gather enough information for this analysis. It is only after the analysis is done that the product should be released into the market, and with certainty and the product will be a success (Dere & Bill, n.d.)
For any business idea, the main issue is getting the idea off the head and aligning them in a tangible format that one can communicate with others. In the past, the process of formulating a business plan used to be very tedious and usually took a very long time. However, the lean business canvas help to develop the possible business model, launch a product and communicate with stakeholders. The lean business canvas is a visual guide that is designed to communicate the model or idea more effectively.
The lean business canvas consists of nine blocks that are designed to suit the needs of a lean startup. We are going to use the models to evaluate whether our project is lean and viable. The lean business canvas is symmetrical. The first half analyses the product and its ability to fulfill the needs of the customers during the second half deal with the market.
The product is analyzed in the first half of the lean canvas its ability to solve the problem that the customer has. It analysis the problem, solution to the problem, the features of the product to solve the problem, and how unique it is as well as the cost structure.
The problem that exists is the increasing number of accidents due to miscommunication in our road. Consequently, the number of road accidents has risen leads to injuries and sometimes death to the people who are involved. Besides, inconveniences arise in our roads when other road users see a rider or a cyclist hesitate, and they have no idea the next move that the cyclist or the rider is about to make.
The above problem is solved by the use of a multi-intentional reflector jacket. The jacket not only improves communication effectiveness on the road, but it also increases the visibility of the rider to the other road users. The jacket users can show their intentions to the other road users effectively and conveniently.
The jacket will be made of high-quality carbon fiber material. The material is very reflective, durable, and very resistant to wear. The indicating device is very small, and there does not cause any discomfort to the cyclist or the rider.
The value that the customers of the product will derive will be the increased effectiveness of communication on the road by allowing the cyclist or the rider to show their intended move to the other road users clearly. The value proposition is achieved by the use of a unique directional indicator machine that is run by a simple software to show the intentions of the rider or the cyclist. The jacket will be of high quality to provide protection and reduce chances or the level of injuries in case of an accident. The cost of the jacket is very affordable.
The value map fits perfectly with the value proposition. The value proposition deals with the value the product adds in the life of a customer. Thus it deals with the product or the service being offered, pain relievers, the gain creator. The product being offered here is the jacket, and the service provided by the jacket is improved communication in the roads to reduce the number of accidents.
The product is unique, having no other such product in the market. Competitive advantage gives us an edge over the sellers of other products. The design of the jacket may be copied to make imitations, but the unique part of the design that indicates the intentions of the rider cannot be copied. According to Mullen (2019), real competitive advantage is that which cannot be copied or bought. Thus in the design, we are ensuring that the design cannot be copied. This gives the product an unfair advantage over the others in the market.
The product’s main customer targets are the cyclists and motorbike riders. There are road users whose means of transport does not offer enough in terms of communicating with the other road user. Besides, the jacket can be used by the road worker as it is made of highly reflective material to increase visibility. It can also be used to direct traffic and give instructions to road users.
This customer segment of cyclists and riders are the ones that need to be fulfilled, as seen in the value proposition canvas. Being involved in road accidents or being inconvenienced or inconveniencing other road users as they are unable to indicate the move they are about to make is the pain of the customer segment. This pain of the customer segment is being satisfied by the design of a multi-intentional indicating jacket that correctly serves their needs.
The jacket will not be complicated, and the device will be straightforward to use. However, the initial customer will be trained on the usage. Free demonstrations will be available as well as media demonstration during the advertising phase
Initially, roadshows will be organized to sensitize the public on the existence of a new product. After that, direct marketing will be applied where stores will be set up in different parts of the country. The number of riders and cyclists who reside in those regions will inform the location.
The projects affect the transport industry that endorsement by the ministry of transport will be sought. Financial institutions will also be sought to help in financing the business during the initial stage. The financing may be informed of investment or loans.
Cost structure
The cost will be involved in the initial stages of setting up the business and the subsequent purchase of tools and the raw materials. Besides, labor will be needed, and expertise in the installation of the program that will be used to indicate the intentions of the rider or the cyclist. There will also be the cost of warehousing, transport, and the initial marketing to make the customers aware of the new product that is existing in the market.
The source of revenue will be through sales of the jacks. The direct sales method will be applied as the method of generating revenues.
From the above analysis, the ideas of the business can be termed as lean and viable as it takes into consideration all the aspect and parameters of the lean business canvas. The ideas are seen to be solving the customers’ problems, and the customers are benefiting from the product.
The C level specialist contribution
Marketing and customer engagement
As the chief marketing officer, I must ensure that the product that hits the market is what the market needs and that it can satisfy the needs of the customer. Besides, being a new product, a lot of sensitization of the public is required of the people to be shown how the product will solve their problem.
The ultimate goal is to ensure a high amount of sales and that the company can breakeven within a reasonable time and ensure continued profitability. Sustainability and the ability of the business to maintain a reasonable level of profitability and reduction and management of risks is key to the business.
There are a set of actions and tactics that a business can use to build a brand and promote a product in the market. The tactics are known as the marketing mix, and they are represented by 4Ps as discussed below.
Price is the value that is put for a product. The price of the product is usually determined by considering the production costs, the purchasing power of the customers and demand. Price can be used to enhance the image of the product. In the marketing of our jacket, the price will be used to demarcate our product from the rest and reflect the extra effort that has been made to ensure a product that meets the customer needs is produced.
Product is the item that is being sold. The product is offered in the market is supposed to deliver some threshold satisfaction of need. Failure to do that, then the product is bound to fail in the market, no matter how the other elements perform.
Place refers to location from where the product is being sold. The strategic location of your products so that the customers can conveniently access them to make purchases should be the main aim of any business. More often than not, location is the primary determinant of business success.
Promotion are the activities that are which the manufacture or seller adopts to popularize the products to the target customers. Product promotion can be achieved through advertisement, word of mouth, as well as offering commissions and discounts. Directing, consumer schemes and contests all are also part of the product promotion.
The four elements of the marketing mix work together, and they influence each other. They have been critically considered in the marketing of the jacket. The jacket will be sold at a price that reflects the quality and the service being offered while the location of the stores will be strategically guided by the population of cyclists and motorists. Advertising through the media will be applied initially as well as the direct market as methods of product promotion (What is Marketing Mix? Definition of Marketing Mix, Marketing Mix Meaning, n.d)
Customer engagement is a very vital part in the growth and sustainability of a business. Customer engagement is the representation of the relationship between the brand and the customer (Lafrenière, 2019). Customer experience refers to the perceptions of all the interactions that customers have with the business. If the customer experience is favorable, then customer loyalty is born, and in between the two, we have customer engagement. Customer engagement is a combination of the customers feeling that the product or the brand delivers what they promise, the customers are proud of the product being offered, and the brand is the perfect company to the customers. A business should ensure that the values that it stands for are in line with the values of the customers.
The business idea cannot come to life if there is no financing plan and finances. For the business to start, there will have to be the starting capital, which will be determined by coming up with the cost structure. The analysis of the fixed and the variable costs that the business will undergo is usually given by the cost structure. The fixed cost is warehousing, labor, taxes, and utility. The variable costs are transport, marketing, and advertising cost, and cost of buying raw material as well as the repair and the maintenance cost. The business will start with an initial capital of $100,000, which will cater to most of the starting costs.
The source of revenue for the business will be the direct sales of the multi-intentional indicating reflector jacket. The expected sales for the first year of operation are expected to be 150,000 pieces, which are supposed to generate a revenue amount equal to $2.25 million. With this amount of revenue, the business is expected to break even within the first year of operation.
Breakeven is the point in the operation of a business at which business revenue generated amounts to the costs incurred in running the business. At breakeven, the business has not made any loss or profit as the revenue generated has just covered the costs used in operating the business. It gives the quantity of a product that should be sold to cover the costs. It is given by the formula:
Break even quantity = = = 25,000 pieces.
Thus the business will need to sell 25,000 pieces to cover. By using the average number of sales per month, the business is supposed to breakeven in the third month of operation.
A total of $250,000 will be required to cover the fixed as well as the variable cost in starting the business. The starting capital will be obtained from a bank in the form of a loan. We will forward the business proposal to the banks, which will analyze the viability of the business. The loan given will be used for the initial startup and should be paid within the first year of operation. The loan will be used to procure the operation space, buying the jacket making machine and the raw material as well as pay the administrative and the labor costs.
Appendix I: Primary and Secondary market research
- Regular cyclists and riders stood at 47.5 million people as of 2017 (Fuller, 2018).
- The number of cyclists and riders are increasing at a rate of 12% per years.
- The majority cycling age is between 18-24 years
- Estimate size of the USA bicycle market is $6.2 billion.
- USA bicycle sales stands at 17.4 million units.
- Bicycle imports to the USA stands at $480 million in 2014
- Number of participants in cycling is 47.54 million
- Customer preference: a jacket that is multi –purpose i.e. has the ability to reflect, protect from cold, protect from injuries and give the necessary communication on the road.
- Competitors: the main competitors in the sale of reflector jackets is Alibaba, with each jacket retailing at $8-$13.the jacket has only the reflecting ability.
- Key partner will be the National Transport and Safety authority to help in Promoting the Jacket as a part of the road safety campaign.
- Channel: product will be sold by direct selling
Source: Global No.1 Business Data Platform (2019
Appendix II: Finances and Financing
The cost price of a quality reflective jacket is between $10 and $13 per piece (
Initial starting costs = $100,000
Cost of one roll of reflective material (200 square metres) is $3.5
Cost of the multi-intention indicating software is 5$ per piece.
Average size of material required per jacket is 4 square metres
Cost of labor is $1,500 per month.
Warehousing $70
Taxes and utility bills $50
Transport costs $60
We expect to make sales of about 150,000 pieces in the first year, 500,000 pieces the second year and 600, 000 pieces in the third year.
Total pieces expected to be sold in the for first 3 years= 1,250,000
Total material used in the first 3 years= =2,500 rolls
Cost of the reflector material for 3 years = 2,500×3.5 = $8,000
Cost of the reflective software for 3 years = 1,250,000×5= $6,250,000
Labor cost for 3 years = 1,500x12x3= $54,000
Warehousing for 3 years = 70x12x3 = $2,520
Taxes and bills for 3 years = 50x12x3= $1,000
Transport cost for 3 years = 60x12x3=$2,160
Management costs = 250x12x3 = $9,000
Total cost incurred after 3 years= $6,326,680
Total expected sales = 1,250,000×15= $18,750,000
Gross profit margin = = = 57.33%
Break even analysis
Break even quantity = = = 25,000 pieces.
Profit and loss (Income) statement for year 1
References
Dere, & BillT. (n.d.). SWOT Analysis: – How to Develop a Strategy For Success. Retrieved from https://www.mindtools.com/pages/article/newTMC_05.htm.
Global No.1 Business Data Platform. (2019). Retrieved from https://www.statista.com/.
Lafrenière, D. (2019). Why Is Customer Experience so Important? Delivering Fantastic Customer Experience, 5–14. doi: 10.4324/9780429328091-2
Lopez-Jornet, P., Zavattaro, E., Mozaffari, H. R., Ramezani, M., & Sadeghi, M. (2019). Evaluation of the Salivary Level of Cortisol in Patients with Oral Lichen Planus: A Meta-Analysis. Medicina, 55(5), 213. doi: 10.3390/medicina55050213
What is Marketing Mix? Definition of Marketing Mix, Marketing Mix Meaning. (n.d.). Retrieved from https://economictimes.indiatimes.com/definition/marketing-mix.
