1. TEAM 3 SLEEP COMFORT SYSTEM Nancy Kao, Diana Lindstrom, Tony Machacha, Pat O’Connor

2. 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

3. 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

4. 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

5. 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

6. 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

7. Competitive Landscape

8.  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

9. 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

10. 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

11. 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!!!!

12. 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?

13. QUESTIONS?