Commercialisation Plan - Pathway Company Limited - Case Study Example

Table of Contents Table of Contents 1 Executive summary 2 Introduction 3 Concept and opportunity 3 Value proposition 4 Protecting the Pathway 100 vacuum cleaners IP address 5 The market potential 6 Analysis of potential demand 6 The cleaning services industry analysis 7 Stability of Pathway 100 robotic vacuum cleaner brand 7 Analysis of market approval 7 The product’s competitive advantage 8 Competitors’ power 8 The commercialization process 8 The applicable business model 9 Financing 9 Marketing the product 12 Conclusion 12 References: 13 Executive summary Pathway Company limited is a floor cleaning equipments provider and has been in business for the last ten years. Among the products the company provides include vacuum cleaners. For sometimes, the company has been designing a robot cleaner that is expected to be the first of its kind in the market. The cleaner is to be known as Pathway robot vacuum cleaner. The company has undertaken the necessary market research and established that there exists a substantial market for commercialization of the robot vacuum cleaner (English and Babette, 2009). As such, this report presents the complete commercialization plan for Pathway robot vacuum cleaner. Pathway robotic vacuum cleaner is a highly innovative robotic machine for cleaning the floor more efficiently and effectively while consuming less time than any other vacuum cleaner in the market and is hence a better alternative to cleaning the floor owing to its being energy efficient. As such, Saudi Arabian homes and companies stand to enjoy significant cost savings as far as labor is concerned while achieving more quality cleaning. It should be noted that the machine has been tested and proved to be safe, a proof of concept machine with high levels of success. The ability to save on labor cost since the machine just needs the operator is its point of competitive advantage. Furthermore, the machine cleans many times better than other vacuum cleaners. As such, we already perceive first mover advantage in entering the market. This is because none of our competitors have such an innovation. Financing this commercialization plan is expected to cost two million dollars in the first two years which is a substantial amount of money. Although we foresee a substantial amount of revenue for the entire implementation period, raising such an amount of money from internal sources proved difficult. This has necessitated PathwayCompany to establish a joint venture with the intention of raising the necessary capital. We also recognize the need to protect our property rights and hence we deemed it appropriate to establish a patented limited company with a purpose of protecting our intellectual property using the various IP protection methods available. In a bid to ensure that the commercialization plan succeeds, Pathway Company will recruit highly skilled employees who will entirely manage the brand from manufacturing to the time the product gets to the final consumer. After sale services will also form an integral part of our brand management (English and Babette, 2009). It is hoped that we will be able to expand to international markets by the third year since launching the robot vacuum cleaner since it is projected to perform, exemporary in the domestic market. Introduction This project was motivated by the need to develop an effective and efficient machine specializing on cleaning of different types of floors in various parts of the world. The idea originated from the fact that I had a neighbor who was allergic to dust and he had to rely on medicine since it was not easy to tell when there was dust in the house given the fact that negligible amounts of dust were enough to make him seriously sick. As such, there was need to come up with a solution that would not only sense that there was dust in the house but also that would automatically clean dust even in areas not easily reached by men. Apart from this, I had observed that most people hire maids specifically for cleaning their houses owing to the fact that there is a lot of dust in Saudi Arabia during the sunny period (English and Babette, 2009). The same applied for offices since companies have to hire people just to clean dust. I figured out that if there would be a machine to do this work, homes and companies stood to save a lot in terms of labor while maintaining cleanliness all the time. Furthermore, the solution would be of great help to people who are allergic to dust at least in their homes and their offices. Concept and opportunity Having realized a need as stated above, I set out to look for a floor cleaner with the above qualities above. However, I was surprised to find that though there existed vacuum cleaners, they all relied with human effort and they were unable to reach some corners and hence they could not offer much help to my friend with problems with dust. In addition, I realized that unmarried people or couples who do not have much money yet without much time could not rely on these cleaners since they needed employing a person to use them in cleaning the houses. As such, I decided that there was need to design a vacuum cleaner with the above qualities. Furthermore, I saw an opportunity for business since it would be popular with many households and companies who needed to save some cleaning costs while getting an efficient and effective cleaning solution for their floors. In addition, I realized that most people in Saudi Arabia live in big houses with space owing to their large families while most cities surround the desert which causes sand and dust to crab into their houses despite their being careful to close their doors and windows. As such, there was a need to find a solution to their having to clean and sweep their floors multiple times every week which consumes a lot of time and effort. Having realized the above need and hence an opportunity for business, I shared the idea with my friends who are talented, highly skilled and creative young persons on how we can innovative a vacuum cleaner with the above qualities. We decided that ours was going to be the first robot vacuum cleaner globally. Our research centered on a vacuum cleaner that was not only going to be efficient and effective but also with other qualities that were absent in traditional vacuum cleaners as will be described below (English and Babette, M2009). After one year of attempts, we came up with a prototype and we have successfully tested it and achieved incredible results. We approached pathway vacuum cleaners who agreed to manufacture it for us with the brand name of Pathway 100 vacuum cleaner owing to our limitation in finances. However, we have undertaken to own the brand name while handling the equipment from when it is manufactured to the time it is sold to the final consumer including any aftersales service. Value proposition Pathway 100 vacuum cleaners are aimed at providing effective and efficient cleaning solution for all types of floors both for households and offices across the globe. Though there are very many floor cleaning solutions across the globe, ours is aimed at being almost 100 percent seamless as the name suggests. It is aimed at removing all the inefficiencies noted with traditional cleaners such as exposing people to health problems, overreliance on human effort, not being able to clean some areas among other weaknesses (Gronroos, 2013). These are its main competitive advantages and are hence expected to emerge a market leader within a short while. This is based on the following values that it gives the customer over traditional cleaners thus giving the customer value for money; a) The vacuum cleaner will be time saving especially for working mothers and young singles. This is because it will do all work by itself requiring no supervision and hence investing in it will mean saving on time and effort. b) The model is ideal for people with mobility issues as an alternative to expensive housekeeping services since it is possible to set it to clean as often as possible with minimum maintenance. c) The cleaner has advanced features over traditional vacuum cleaners which enables one achieve a better clean. The features will include large dust bags lasting for multiple cleaning sessions, advanced sensors detecting changes in surface while being able to transition between bare floor and carpets. d) The cleaner will have ability to detect changes between surfaces hence adjusting accordingly. For instance, it will be able to detect walls and stairs and automatically turn around accordingly. e) The cleaner will be energy saving as it will include option for automatic recharging. Furthermore, once through with cleaning, it can go back to its storage place. f) It will have ability to detect amount of dirt in different spots hence being able to clean a surface repeatedly till it is clean. g) Using it, one will be able to clean home or office even when away or when doing other work as long as there are no obstructive items. h) The cleaner will need minimal maintenance compared to other cleaners i) The cleaner will have ability to go under furniture and around corners thus leading offices and homes and offices of all dust which is good for those with health problems that emanate from dust. Protecting the Pathway 100 vacuum cleaners IP address There are various ways of protecting intellectual properties by organizations in a bid to ensure it is not stolen hence limiting the organization’s ability to generate revenue and hence profit from it. In this regard, we will use the following methods to protect the Pathway 100 vacuum cleaner’s property rights; a) Trade secret- we have deemed it important to use trade secrets in protecting this opportunity by preserving the thoughts and ideas that have been used in developing the brand. In this regard, it is possible to sue anyone who leaks the trade secret to third parties thus violating this agreement. b) Patent – using patent protection, we will have the exclusive rights ofselling the Pathway 100 vacuum cleaners for the next 25 years which we are certain that the government would be ready to grant us subject to fulfilling the required conditions given that the innovation is the first of its kind. c) Registered design –We intend to register the design of the Pathway 100 vacuum cleaner in a bid to ensure its features related to color, shape and visual appearance in a bit to protect it from being copied by our competitors. This will give us exclusive rights to the design for two five year terms. It is hoped that using the above property rights protection mechanisms including the name, design and logo through the various means outlined above, we will be able to produce the vacuum cleaner in large scale without worrying about the safety of our intellectual property. The market potential In examining the market potential for the Pathway 100 robotic vacuum cleaner, the expected potential demand has been analyzed. Our research indicates that the product has high approval ratings owing to its numerous competitive advantages over our competitors. Analysis of potential demand Though there exists many types of vacuum cleaners, Pathway 100 is the first type of robotic vacuum cleaner to be produced globally and as such, we could not estimate with certainty the potential demand for the product. It is owing to this that we employed judgment in determining the relative size of the market. In this regard, we observed the general behavior of the market for traditional vacuum cleaners. In this regard, we were able to conclude that half of the households in Saudi Arabia and 80% of the offices would readily adopt our products and hence they are our potential market. Thus, our target market is the households and offices in Saudi Arabia. We were also able to establish that there would be a potential market in industries for cleaning production floors but a new version would have to be developed. In addition, we are hopeful of expanding our market to the rest of the world within the next two years. The cleaning services industry analysis According to Euromonitor (2014), Saudi Arabia’s cleaning services industry is a lucrative one. The industry for instance grew at 36% over five year’s period of 2007-12. The entire market reached SR 7.8 billion with a substantial part of this being in the floor cleaning category. The demand for cleaning services is therefore stable and strong while the only barrier to entering the industry is the high capital outlay. The industry is highly attractive with offices and households spending a lot of money for hiring cleaning services. This demand is expected to continue rising as incomes continue to rise and households and offices continue to increase. Stability of Pathway 100 robotic vacuum cleaner brand It is projected that once introduced into the market, the product will experience a growing demand owing to its unique features as discussed above. We also project that though the growth is likely to decline at the product’s maturity stage owing to competition, it will remain stable. However, owing to our first mover advantage, we will most likely stay ahead of the competition. Analysis of market approval This new technology is ideal for the Saudi Arabian market owing to its unique characteristics. First, consumers in this market would require the technology owing to the country’s weather which is usually hot and dusty as stated above. For instance, the weather in the middle Saudi Arabia is currently about 45 degrees hot which necessitates the need for everyone to want an effective and efficient vacuum cleaning solution such the Pathway 100 robotic vacuum cleaner. In addition, everyone would want sometimes to relax from the daily chores. Actually people become lazy when it comes to cleaning floors. As such, our device provides an opportunity for improved lifestyle while affording families more time for relaxing together. It is expected that Pathway 100 brand will find high levels of market approval owing to its competitive advantages compared to its competitors as discussed above. First, using it, it is possible to achieve almost a perfect cleaning since it is able to clean all areas while having detectors that detect even minute levels of dirt. Those allergic to dust will particularly love this feature which is absent in the traditional vacuum cleaners. In terms of effectiveness and efficiency, the product is well ahead of its competitors. It does not rely on human labor to give a perfect cleaning which helps in saving costs and effort. As such, it is expected that introduction of the robot vacuum cleaner will effectively overcome the shortcomings of traditional vacuum cleaners. The product’s competitive advantage In examining Pathway 100 Robotic vacuum cleaner’s advantage, a number of factors are born in mind. The product has been differentiated from its competitors based on the quality of service it offers as well as its features compared to its competitors. It is expected that its competitive strengths in terms of being able to offer quality cleaning and its reduction in costs, customers will prefer it to its substitutes and hence the company can fetch a premium price since they are able to get value for their money. Furthermore, bearing in mind that there are no similar products, there would be little switching costs associated with the product. In addition, it is expected that suppliers will have relatively low bargaining power due to the globalization of business and hence materials could be sourced from anywhere. Competitors’ power Despite there being many vacuum cleaner producers there is no perfect substitute for our Pathway 100 robotic vacuum cleaner. However, the traditional vacuum cleaning companies may still pose a great challenge to us especially by reducing their prices. However, bearing in mind the value we are providing to customers, our product will still find high acceptance levels. It should also be understood that having protected our intellectual properties as stated above, it will be hard for us to have a perfect competitor in the near future (Richard and Heather,2013). Furthermore, we will take the first mover advantage to establish client and customer brand loyalty beforecompetitors can develop new products to compete with Pathway 100 robotic vacuum cleaner. The commercialization process The associated risks The company has considered all the applicable laws, regulations and applicable standards and determined that the company is able to meet and adhere to them. However, there exists a great risk in unsettling technologicaladvancement likely to happen in the field of Robotic vacuum cleaning. These include the potential losses in jobs for those doing the cleaning jobs currently. This is because companies and households will prefer the robotic vacuum cleaner as opposed to hiring workers since this is less expensive. However, owing to the relative advantages associated with the product as explained above, it is expected that this threat will not hinder our success in the market. We also intend to meet all applicable environmental standards in manufacturing the product. Thus, we will employ sustainable materials that are both water and energy efficient hence helping protect the environment. The applicable business model Owing to limitations in financial resources, we have partnered with Pathway Company limited to produce the robotic vacuum cleaners for us. However, we are to undertake the entire marketing process to the final consumer including the after sale service. This was preferred since it gives the opportunity to know and understand the market before we can start producing on our own subject to the availability of funds. In this regard, a patented company has been formed for the purpose of ensuring development of the brand. There is a huge potential for the product which the company is mandated to harness while protecting our intellectual property. We also need to recruit an experienced professional team which will establish and manage the business owing to our shortcomings in this area. Financing This section provides details regarding the financial cost of starting up the business as well as projected income statement, sales forecast and a breakeven analysis Funding It has been stated that the marketing project will cost us $1 million which will be provided by the partners. However, the company undertaking the manufacturing project is expected to pump in $500,000 into the project (Singh, 2003). The above amount also includes the money that has been spent so far on product development and IP registration bearing in mind it is the only asset we have. In this regard, we have agreed that the manufacturing company be allotted 25% of the company’s shares while we retain the rest. Sales forecast In our initial years of operation, we will only operate in Saudi Arabia before expanding our operations elsewhere. In this regard, the projected sales for the first year are presented in the graph below. As the graph indicates, we project that we will sell 2300 units during the first one year at a cost of $2000 per unit. Resulting from the estimates, our income statement has been projected as shown below. It is based on $800 manufacturing cost per unit while the rest will cover variable overheads and fixed costs and a 30% profit margin (Aaron, 2011). It should however be noted that the figures are largely underestimated given the lucrative nature of the market. However, as our marketing gains momentum, we expect the figure to improve in the subsequent years. This is because of the value of the product hence word of mouth marketing efforts by our customers as well as our marketing efforts. This explains the huge difference between the 2015 and 2016 figures. Projected income statement for Pathway 100 robotic vacuum cleaner For the periods ending 31st December 2015 2016 $ $ Projected sales in units 2300 5000 Price per unit $2,000 $2,000 Sales revenue $4,600,000 $10,000,000 Cost of sales $1,840,000 $4,000,000 Gross profit $2,760,000 $6,000,000 Other expenses $1,380,000 $3,000,000 Net profit before tax $1,380,000 $3,000,000 Projected corporate tax $276,000 $600,000 Net profit after tax $1,104,000 $2,400,000 Marketing the product The following marketing strategy has been proposed for the product Product – the product to be marketed in the Pathway 100 robotic vacuum cleaners which are aimed at providing a more efficient, effective and cheap solution for cleaning floors. Pricing- as stated above, the product will be sold at $2,000 per unit. In this regard, premium pricing has been adopted since the product gives value for money to the customer. Placement strategy – we aim at appointing 10 distributors across Saudi Arabia who will eventually distribute the products to major retail stores across Australia. They will also manage the brand (Singh, 2003). Promotion strategy- We intend to employ television, radio, internet, newspaper and the word of mouth in an aggressive advertising company to make the product known in the market. It is hoped that by adopting the above marketing strategy, we will establish a considerable market share within the first few years of operation. Conclusion This paper has laid down the commercialization plan for Pathway 100 robotic vacuum cleaner. It is hoped that the product will give customer value for their money by providing a cheap, effective and efficient floor cleaning solution across Saudi Arabia and the rest of the world. At first, we aim at marketing the product in Saudi Arabia before venturing in the markets outside Australia. The product has been proven to have great competitive advantages which will make it popular in the market. This coupled with anelaborate marketing strategy will enable us succeed in the market. References: English, J& Babette, M2009, Discovering new business opportunities, Allen& Unwin. Gronroos, C2013, The marketing mix model, European Journal of marketing, vol.23, no. 1, pp.52-55. Aaron, R2011, Marketing in the modern day competitive environment, London, Rutledge. Singh, M2003, Marketing mix of 4Ps competitive advantage, Journal of Business Administration, vol. 7 no, 1, pp. 116-123. Richard, F&, Heather, C2013, International marketing: An Asia-Pacific perspective, Pearson. Read More