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TEAM 3 SLEEP COMFORT SYSTEM Nancy Kao, Diana Lindstrom, Tony Machacha, Pat O’Connor
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Introduction A 2002 National Sleep Foundation poll found that 74% of American adults are having difficulty sleeping a few nights a week or more 39% get less than seven hours of sleep each weeknight More than one in three (37%) are so sleepy during the day that it interferes with daily activities
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Advantages Offered No mold and mildew issues like water-based competitors Leakage is not a problem like water-based systems Possible Energy-Star Saver Tax rebate for consumers Sleep and health benefits Through temperature regulation Possible cost savings Versus running heat or AC through house or room all night
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Preliminary Analysis Industry Poised for entry – few competitors Those that exist aren’t well marketed Very few use air as the cooling agent Very few offer temperature regulation Heating/cooling within half a degree Reduces humidity Nothing is described as eco-friendly Only need 1,000 BTU
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Preliminary Analysis Channel Available online for purchase “Great” websites like chilitechnology.com and drinights.com Heating (electric) blankets/mattress pads are available through retailers Customer In US, most are directed to individuals Marketed to those who need a cooler or warmer bed In China, heating/cooling blankets are used in hospitals
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Preliminary Analysis Segments Middle to Upper Income Classes Prices range from $50-$500+ Luxury item Possible latent need Women Menopausal Purchasing Power Medical Conditions Sleep disorders, fevers
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Competitive Landscape
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Bargaining power of buyers High - buyers will look for low/reasonable cost Somewhat market dependent Threat of substitute products High – other products offer cooling/heating features in different forms (i.e. air conditioner, fan, electric blanket, etc) Few use air cooling and offer temperature regulation Bargaining power of suppliers High – few 1,000 BTU AC unit (inelastic price) Low – many blanket manufacturers Threat of new entrants Low - need FDA approval on health benefits and passing testing Outsourcing issues because AC unit of this size is hard to find Rivalry Moderate – currently no products offer the same value however the concept could be easily imitated
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Business Model Market Choice Retail (in-store locations) Replacement product (electric blanket, AC, heat, etc) Sleeping comfort, eco-friendliness, long term cost savings Online through retailer websites Bed Bath & Beyond, Macy’s, Target Marketing Online ads, print ads, eventually TV spots Strategically placed on specific websites and in magazines
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Keys to Success Product form and function must earn its place in people’s sleeping places Finding the ideal entry market Hospital, hotel, sleep centers…? Finding the ideal first customer Initial pricing must be accurate Est. starting price at $500, decrease to $100 over time Est. profit margin of $250/unit initially
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Major Hurdles Marketing a new-to-market product involves encouraging a change in customer behavior Educating potential users about product’s benefits and use will be a challenge Gap in the cooling unit sizes available Current AC unit five times more powerful than specs. Smaller AC units actually get costlier below 5000 BTU Alternative cooling units too small and scaling these up makes them very costly and prone to higher rates of failure Need to be bridged cost effectively Appearance!!!!
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Viability Positives Appealing value proposition To date, there’s an unfilled market gap Prototype has been invented, tested and validated by the inventors It works! Inventors experienced in high-volume manufacturing Know how to drive down costs Uncertainty Too many bells and whistles for the average consumer?
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QUESTIONS?
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