Design of a product or service prototype (BUS CATCHER) - Essay Example

Type the company Bus Catcher This is a dissertation paper on developing a business plan for introducing a product, Bus Catcher, which will offer extra value to commuters using public transport like bus, using a combination of products and software. This dissertation is at the product/service definition, testing stage. Dissertation proposal Contents 1 Introduction……………………………………………………………….3 2 Market……………………………………………………………………..3 3 Technology………………………………………………………………...6 4 Proposed product/Service offering…………………………………………7 5 Objectives …………………………………………………………………8 6 Methodology…………………………………………………………………9 7 Timelines……………………………………………………………………10 8 Conclusion……………………………………………………………………10 Annexure…………………………………………………………………………………11 Bibliography………………………………………………………………………………12 Design of a product or service prototype (BUS CATCHER) Introduction The use of public transport for commuting in the US is still very low compared to other countries. The estimated share of public transport market share (motorized travel) is less than 4% barring exceptions like New York (9.6%) and San Francisco (5.0%), being as low as less than 1% in more than half the states. (Urban Transport Fact book, 2005). Small as this may be, the total amount of fuel saved from public transportation use currently is estimated to be equal to 1.4 billion gallons of gasoline (based on 2004 figures), In terms of total barrels of crude oil, this would be the equivalent of 33.5 million barrels of crude oil. Increase of commuting is a desirable goal and has policy support (Bailey, 2007). Apart from this reasons like congestion on the roads, savings in commuting time would be seen as the chief reasons for a commuter to prefer public transport over using own cars. Typically a product or a service that gives enhanced value for a customer would what make a customer to switch to a service or a product. There is a big opportunity here for bus operators to create this critical additional value through use of ICT to induce commuters to switch over in a big way to using public transport like buses. This proposal is about creating a viable and profitable business model built through 2 products, the “Bus Catcher” and the “Bus bug” and software, all of which will provide an enhanced service offering to commuters. The market Bailey (2004) estimates that for an US population of 7.2 million non-drivers, 50% 0f which is people above the age of 654, public transportation is the only alternative, when they are going somewhere outside their immediate neighborhood. She also observes most U.S. residents still do not have the option of using public transportation to get places. Basing her observation on the American Housing survey of 2001, she says that just half – 49 percent - of all Americans reported that they have no public transportation service. Till very recently she says that a quarter of rural counties had below average public transportation service, and 41 percent had none at all. The gap between the need and what is available is high. The demand for public transport is however growing at a tremendous pace since the mid-nineties. Reasons like surging oil price, congestion, commuting time are the reasons. Pucher (2002 says that ridership is up 25.1percent since 1995, because of the awareness among the users that use of public transport saves money. Reducing commuting is seen to be the chief consideration for people to switching over to public transport. Another study indicates that demand will come further as people move away further and further away from their work place. (Howlett, 2008). This report says that people are willing to commute for over 90 minutes each way and an estimated 3.4 million Americans already are doing this and their numbers will be growing. Americans took 10.3 billion trips on public transportation in 2007, the highest level in 50 years, representing a 2.1% increase over the previous year, according to data released by the American Public Transportation Association (APTA). It is estimated to have grown by 32% since 1995. (Green Car Congress, 2008). Though bus service, at 1% was lower than the overall increase, it had a much bigger growth in places with population less than 100,000 and more than 5% in select urban areas. Even though the budget estimated to improve public transport is 50% of what would be needed, Federal funding has been increasing annually at the rate of 2.1 % since 2001(Bailey 2007) Increasing access to employment for the urban poor would mean their need to commute to suburbs and this will have to be an important policy decision of improving public transport in the reverse direction (Wachs 2004). Innovative value additions to public transport service could further fuel growth, as has been seen in New York (combining pricing bus and underground usage) (Pucher 2002). The indications are therefore that demand for public transport is growing and innovative product inducements like Bus Catcher will further increase the demand. Technology Use of IT in transportation of goods is in use for the last 20 years. Solutions of tracking, logistics, transport using GPS devices fitted vehicles is now a well accepted tool in transportation technology. Noting the tremendous strides made by this sector in developing integrated rugged and high value business solutions using mobile technology, software, GPS, Leavitt (2008) says. “The integration of GPS with mobile computers and software management systems is creating some powerful business tools that are transforming trucking” Already companies like IBM are working towards providing solutions to bus operators to enable them to offer a variety of value added services by providing advance arrival departure times, proximity of buses to users, etc using mobile/GPS based hand held devices. (Anon 2008) In its website, Netscout Systems Inc claims that (Anon 2008 ) Tri-County Metropolitan Transportation Agency (TriMet) which is a municipal corporation that provides public transportation for much of the three counties in the Portland, Oregon metropolitan area, operating a 44-mile, 64-station MAX light rail line, 92 bus lines, and service for seniors and people with disabilities, and having a fleet of more than 100 trains and 600 buses across the three counties it serves, is just doing this, that is offering a variety of value added services to its users like real time information on its services by means of GPS/mobile technology . This is very similar to the technology proposed to be used in the Bus Catcher. Bus catcher, therefore is a feasible, appropriate and relevant product from the technology angle. Proposed product/Service offering The Bus Catcher will provide be a hand held device which will provide information on demand to the commuter (customer), such as, on how long it will be before the next bus to his destination will come, availability of seats etc., to enable him to take appropriate commuting decision. This device would be user friendly, affordable; it could be exclusive device or one integrated with mobile phone. Another will be GPS device fixed on the bus giving real time information to the fleet operations and commuter on its movement status. A software developed exclusively for this will integrate these two devices and provide real time solutions to commuters and fleet operators and hence offer increased value. The service business model therefore proposed for developing the bus catcher model of business will be based on the following hypothesis: There is a huge untapped market in the public transport market wherein a solution consisting of a hand held device using mobile/GPS technology with the commuter, a GPS based device fitted on the bus with an interface of a dedicated software developed exclusively for the purpose, would give an value offering to both the commuter and bus fleet owners through which a profitable business can be built. Objectives Cagan (2002, p 8) identifies three key factors in product design that will ensure the success of the product as identifying product opportunities, action to heighten the understanding the customer needs that will be translated into attributes of the product and integration of engineering, industrial design and marketing. Cagan (p 112-118)) also defines the process of product development. First the opportunity will have to be identified. Here we need not go into details on doing this because the market opportunity has already been identified. Next the opportunity has to be clearly understood as what value offering it will give to the customer. The product will then have to be conceptualized and its parameters and attributes defined to meet the value offering. Finally it has to be realized by integrating design, engineering, manufacturing and marketing. The objectives we now define therefore as follows: 1. Primary and secondary market research to understand the market better, identify and establish the scope for usage, to establish proof of concept and define the basic attributes of the product for developing a prototype for testing. 2. Develop prototype and subsequently make a small batch production of both the devices 3. To do a full-fledged field pilot testing 4. Develop the final product integrating final features, manufacturing and marketing. 5. Develop a detailed business plan for establishing a manufacturing and marketing organisation for approaching financiers. Funding At this stage it will not be possible to attract conventional finance like loans from institutions, equity from venture funds. This can and will happen, after a detailed business plan is prepared based on the achievement of objectives mentioned above. At that point it will be a bankable project, i.e. one that can attract fund by its inherent strength. But funds for steps 1-5 of above will have to be sourced differently. The break-up of funds required for this phase is mentioned in annexure A. It is proposed that this fund is obtained through an angel investor. Reese (2007, p 102) defines an angel investor as wealthy, retired individual who is always looking for an investment opportunity. They would also be knowledgeable and hence be useful as mentors; they would also help in networking. They would be the ideal partner at the initial stage. Angel investors are not generally visible but will have to be identified through one’s own networks. In Britain there is an organisation National Business Angels Network (Stokes p 324). There are several in US (US Angel Investors). Methodology The research to establish proof of concept, attributes of product will be done based on a primary market research, collecting data from stakeholders like commuting public, fleet operators, government. Consumer’s perceptions of what they consider as value and the price they would pay for it will also be studied. A secondary market research will be done to understand the size of the market, competition and market trends. A detailed secondary research on technology status and gaps will be also done. For doing successful field pilot testing, the support of a bus operating organisation will be obtained. It is expected that this will not be a problem as the entire cost of testing including the bug cost will be budgeted in the pilot study. Timelines The timelines and the schedule of completion is as in annexure B. It is expected that it will take 8 months for the project to take off. Conclusion Increasing commuting through means of public transport is a high priority need of the country and a desired goal, from point of view of congestion, conservation, environment, safety etc. For this to happen, inducements must be made to the commuters to switch to public transport. This dissertation proposal is one that will make it happen. It is hoped that when this project fructifies, a successful business will be built and enormous social benefits will accrue to the community at large. Annexure A Budget for completion of activities to achieve objectives 1 Developing prototypes of Bus catcher and bug 10000 $ 2 Small batch production for doing pilot study 10,000 $ 3 Market survey through engaging part services of professional organisation, 5,000$ 4 Pilot testing 10,000$ 5 Misc. expenses 5,000$ Total 40,000 $ Annexure B Timeline Month- Activity 11 22 33 44 55 66 77 88 Primary and secondary market research Develop prototype, small batch production Field /pilot testing Final product Specs Make Business plan Bibliography Anon, 2008, Oregon’s TriMet Monitors Networked Transit Security and GPS Tracking Systems 2008, http://www.netscout.com/docs/success/NetScout_success_Trimet.pdf 2008, accessed 23 Jan 2009 Green Congress 2008, US Use of Public Transportation Highest in 50 Years, 12 March 2008,C, http://www.greencarcongress.com/2008/03/us-use-of-publi.html, accessed Jan 24, 2009 Anon, 2007, IBM labs unveil digital transportation solutions, http://www.twocircles.net/2007jul29/ibm_labs_unveil_digital_transportation_solutions.html, accessed 23 Jan. 09 Bailey L, Public Transportation and Petroleum Savings in the U.S.: Reducing Dependence on Oil,2007, ICF International http://www.apta.com/research/info/online/documents/apta_public_transportation_fuel_savings_final_010807.pdf, accessed 24 Jan 09 Bailey L, Aging Americans Stranded without options, Surface Transportation Policy Project April 2004, http://www.publictransportation.org/reports/asp/aging_stranded.asp, accessed 23 Jan 2009 Cagan J, Vogel C m, Creating Breakthrough Products, FT Prentice Hall, 2002 Green Congress 2008, US Use of Public Transportation Highest in 50 Years, 12 March 2008, http://www.greencarcongress.com/2008/03/us-use-of-publi.html, accessed Jan 24, 2009 Howlett D, Overberg P, Think your commute is tough? USA Today, 30/11/2004, usatoday.com, accessed 23 Jan 2009 Leavitt W, On Tracking Technology, Many uses, Fleet Owner, Dec 1, 2008 http://fleetowner.com/truck_technology/features/integrated_gps_applications_1208/, accessed 23 Jan 2009 Pucher J, Renaissance of Public Transport in the United States, Transportation Quarterly, Vol. 56, No. 1, Winter 2002 (33–49) © 2002 Eno Transportation Foundation, Inc., Washington, D.C, http://policy.rutgers.edu/faculty/pucher/TQPDF.pdf, accessed 24 Jan 2009 Reese, H, The 12 Amazing Secrets of Millionaire Inventors, John wiley &sons 2007 Stokes D, Small Business Management, Continuum 2002 Urban Transport Fact sheet, USA Public Transport Market Share 2005: Top 50 Urban Areas (By Public Transport Use), http://www.publicpurpose.com/ut-usa2005r.htm, accessed 24 January 2009 Wachs M and Taylor B M, Can transportation Strategies help meet the welfare challenges? Prepared for the Journal of American Planning Association forum on welfare reform UCTC No. 364, The University of California Transportation Center University of California at Berkeley, http://repositories.cdlib.org/cgi/viewpdf.cgi?article=1000&context=uctc&preview_mode accessed 24 Jan 2009 Debbie Howlett and Paul Overberg, USA TODAY, Think your commute is tough?, 11/30/2004, http://www.usatoday.com/news/nation/2004-11-29-commute_x.htm Read More