Scentify

For requirements of the course Written Analysis and Communication II (2011-2012)

To Prof. Rakesh Basant Prof Siddharth Mankad Ms. Vijaya Rajeshwari By Aswin Kumar Samira Jain Sanjay Malode Shiraz Jain August 6, 2012

INDIAN INSTITUTE OF MANAGEMENT, AHMEDABAD NATIONAL INSTITUTE OF DESIGN

Table of Contents
Business Model -------------------------------------------------------------------------------------2 The need-gap Analysis -----------------------------------------------------------------------------2 The Idea Generation --------------------------------------------------------------------------------3 Product -----------------------------------------------------------------------------------------------3 Value Proposition -----------------------------------------------------------------------------------5 STP ----------------------------------------------------------------------------------------------------6 Branding Strategy ------------------------------------------------------------------------------------7 Questionnaire -----------------------------------------------------------------------------------------8 Financial Analysis -----------------------------------------------------------------------------------13 Exhibits -----------------------------------------------------------------------------------------------15

Business Model
Need Gap Analysis
STP

Branding Strategy

Product

Value Proposition

The Need-Gap Analysis

The first mechanical alarm clock was introduced in 1787 by the American inventor Levi Hutchins. It had the same functionality as the modern alarm clock, that to start ringing at the prior set time to help people in waking up. From that day there has been no major functionality has been added to the alarm clock. It still irritates a person in the morning to wake her up. The person may wake but it will affect the REM cycle of the persons sleep affecting her overall day. As a group we thought that there is an opportunity in this area. Most of the people now use their mobile phone as the alarm clock. Even these alarm clocks have the same functionality as the traditional alarm clocks. Keeping these factors in mind we wanted to come up with a product that will help people get up early and easily in the morning. The application we were thinking should help a person to have a pleasant day. We thought how wonderful it will be to wake up to a coffee smell or a fragrance of her choice.
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There also exists a gap in the integration of the products in the room freshener and room disinfectant category. Right now most of the products are available either as room freshener or as disinfectant. So we wanted our product to incorporate these things too as there is a gap in this category.

The Idea Generation

Selecting an arena/Mobile Phone applications Identifying/selecting the target segment through brain storming Identifying gaps in the selected segment

Idea generation/Fragrance generating device

Product
The product will be an add-on the iPhone and Android. The product will have two parts. 1) A hardware box which contains the fragrance cartridges 2) The software app interface Both parts will be required for the product to work. The product will have both the aspects software and hardware combined. This will ensure the ease of functioning. This will also allow the product to be hardware independent. This would mean that the number of formats of phones which this product can be marketed to i.e. the market size will be high. Therefore the profits will also be higher if we could cater to sufficient number of customers. Since the number of customers will be dependent on the market size , the product and the promotional activities which we would be using, we can say that the customers as well as the market size will increase and there for the profits will also increase.
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Hardware

Software Interface
The hardware box is attached to the bottom of the phone. The fragrances are contained in modular fragrance micro-cartridges. The box can contain 3 such cartridges. The fragrance cartridge can be used for
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up to 10 sprays. The box as well as the cartridges contains RFID tags by which the different cartridges are differentiated from each other. The sensor present can also recognize and inform the fragrance levels. This will help the user in identifying when the cartridge should be refilled or replaced. The fragrances range from Arabica coffee to a scent of ocean breeze. This variety of scents will cater to a wide audience. Exotic fragrances like the smell off a new Louis Vuitton bags will also be offered. The app will integrate the hardware box to the iphone and Android as well as provide an interface to the users. The interface will provide 3 options to the user a) Reminders and Alarms- The reminders and alarms can be set to be accompanied by certain fragrances. Another option which will be available will be the just scents no sounds. The intensity of the fragrance will increase as the snooze option is used. b) Ambience - The ambiance option will lead to a slow release of the fragrance which will have a smoothening effect on everyone. The time period of fragrance release can also be controlled(eg: 20 min, 25 min etc)

c) Disinfectant- The disinfectant release will use a disinfectant micro capsule which will have a
more rapid release. This capsule will come in different fragrances.

Value Proposition

Customer

Experience Plesent feeling throughout the day Pontable ambience controller Germ protection by the disinfectent Snob value

Suppliers

Brand building Customer reach Increase in revenue Increaced brand band association and recognition The complementry effects will increase the sales

STP
Segmentation The mobile phone user market can be segmented based on the type of the phone consumers are using Different segments are iphone users, Android phone users, Windows phone users and basic phone users Target iPhone users and Adroid users are targets More sofisticaed Will pay premium for snobish value They will tinker around and will generate more requirements Apple user base conain more innovators Positioning We will position this product as a lifestyle product This will be positioned as an integrated product which will enhance your home environment

The mobile market can be segmented into two 1) Smart Phones 2) Non-Smart phones This segmentation is based on the phones data transfer characteristics. We choose the smart phone segment and targeted its market. The smart phone is chosen due to two reasons. The smart phone users are sophisticated and will be willing to pay for premium products. The product which we sell is an experience product. So the product users need to be sophisticated. This will also mean that the users will be willing to buy products for the experience. Another reason for going for smart phone segment is the technical aspect. It will be very easy to develop the product in smart phones. Both Android and iPhone have good development support and so the development process is not complex. The time taken for development will also be less so, the time to market will also be less. The changes and bug fixing will also be less for the users of smart phone.

The users will also tinker around with the app and we will get more requirements which all will be taken in and used later for improving on the product and for future betterment of the product after the financial. So we would be able to work out a strategy for applying in a patent. The smart phone users are also more innovators and will try out new products. So therefore we can expect more number of early users to take up the producer immediately after the launch which will enable us to go for a good market size. We will position the product was a lifestyle product and as an integrated product which will tear the market apart and form a niche for itself. This ensures proper sales in the beginning. Since we are appealing to the emotional side of the user we can ask for a high price.

Branding Strategy

Brands

Rational

Emotional

FunctionalAroma Delivery

Technology Through a phone App

Product Image - Have a pleasant day

User Image Innovator

The brand for any product is made of two characteristics. One of them is the rational part and the other is emotional part. Of these two the emotional part plays a very important factor. This is because if we give more importance on the rational part then any of the competitors can come up with a better product in terms of the technology and can win over the customers by rationalizing the other product. So the importance should be given to the emotional part of the branding. These
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deals with how we are going to position our product as and what image this product will have. Also the branding strategy depends on the kind of the users who are using our product. In line with this branding strategy we will communicate two things with our customers. The first is the technology part and the second is the emotional benefits that they will be receiving by using the product. Our advertisements will talk about the technology that we will be using to deliver the promise. The promise that we are making to our customer is that they can have a pleasant day by using this product. We will explain that they can have this by waking up to a pleasant aroma. This in turn is done by the mobile app and a modular device which fits into the mobile phone. We will also portray the group of people who are using this product as successful people. Apart from being the alarm we will also communicate this device being a ambience creator and disinfectant. This will be also be present in our communication but these two things will be showed as added features or as value add features of our product. But the main differentiator of our product is going to be its use as an alarm clock.

Questionnaire
To gauge the response of the people in the targeted segment we conducted a survey of 53 respondents. We first showed them a concept card which was followed by questions. The concept card had the details about the product and the questions that followed were aimed at gauging the purchase intent of the respondents. The concept card which was used is given in exhibit 1.

Target Group Profiling

Age Mix of the target group

Majority of the respondents belong to the 20-30 year age group.

Gender Mix

0.7 implies 70% of the mix. Appropriate gender mix was ensured.

Top of Mind Benefit

45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Pleasant Day Ambience Value Added Nothing Others Series1

40% of the respondents stated that this product will help them in having a pleasant day. This was followed by the ambience and the values add the product will give. Likeability of the Product
40% 35% 30% 25% 20% 15% 10% 5% 0% Like it very much Like it Niether Like nor dislike Dislike it Totally Dislike Series1

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Around 57% of the respondents either like it very much or like it. Uniqueness of the Product
40% 35% 30% 25% 20% 15% 10% 5% 0% Highly Unique Unique Biether Non-unique Totally nonUnique nor unique non-unique Series1

59% of the respondents feel that the product is unique. Relevance of the Product
45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

Series1

77% of respondents feel that the product is relevant for their life. Purchasing Intention
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50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Will May May or may Definitely Purchase it not Purchase it purchase it Will not purchase Will Definitely not purchase

Series1

We can see that 64% of the respondents have shown interest in buying the product. Price Sensitivity
45% 40% 35% 30% 25% 20% 15% 10% 5% 0% $ 20 $ 25 $ 30 $ 35 $ 40 Series1

More than 75% of the respondents are not ready to purchase it if it is priced above $ 30. So we have decided to price it at $ 28 or below.

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Financial Analysis
1. Assumptions a. Since this is a high technology product we are expecting the sales to grow fast. b. The number of units which will be sold is assumed to be 70,000 in year one, 300,000 in year two and so on. This is assumed based on comparison between the sales of related products in the same domain.

2. Cost of production a. The cost of producing cartridges will be $3.5 per unit for the first year and it will come down by 20% every year due to economies of scale. b. The cost of producing the initial packaging will be $18 this will come down by 2 dollars every year due to economies of scale c. The software will cost $20,000 to develop. d. The sale is calculated for 6 years till 2018

Column1

Year

2012 $20,000

2013

2014

2015

2016

2017

2018

Software Cartridges The Hardware Packet Cogs

$1,470,000 $4,648,000 $6,720,000 $6,236,160 $5,677,056 $4,633,395.00 $1,260,000 $4,800,000 $8,400,000 $7,740,000 $6,900,000 $7,100,000 $2,730,000 $9,448,000 $15,120,000 $13,976,160 $12,577,056 $11,733,395

e. The software will not require any other price for development later.

3. Initial selling price is $30 but this is reduced over time

. Selling price Cartridge Price

2012 $30 $2

2013 $27.5 $2

2014 $25 $2

2015 $25 $2

2016 $25 $2

2017 $25 $2

2018 $25 $2

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4. Initial Cost of production

Cost of Production Software 20000 Hardware Cartridges $3.5 The Package $18 Cost Per Package $32

5. Financials
. Years 2012 2013 70000 140000 2014 300000 460000 2015 600000 600000 2016 645000 900000 2017 690000 1200000 2018 710000 1200000 $17,750,000

Sale Of Units Sale Of Catridges

Total Revenue $2,380,000 $8,250,000 COGS Software $20,000 Catridges $1,470,000 $4,648,000 The Hardware Packet $1,260,000 $4,800,000 Cogs $2,730,000 $9,448,000 Advertizing Cost $750,000 $600,000 $480,000 Selling Cost 5% of sales $119,000 $412,500 Income ($770,000) ($1,069,000) ($2,090,500)

$15,000,000 $16,125,000 $17,250,000

$6,720,000 $6,236,160 $5,677,056 $8,400,000 $7,740,000 $6,900,000 $15,120,000 $13,976,160 $12,577,056 $384,000 $307,200 $245,760 $750,000 ($1,254,000) $806,250 $1,035,390

$4,633,395 $7,100,000 $11,733,395 $196,608

$862,500 $887,500 $3,564,684 $4,932,496.00

6. Assuming discount rate of 8% a. NPV= $1,747,869

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Exhibits
Exhibit 1(Concept Card)
Have you ever wondered how does it feel to wake up to a pleasant coffee smell? Or how would it feel to wake up to your favorite breakfast smell? If so we bring you Smart sense, device which will help you have a pleasant day by waking you pleasantly. Smart sense is a modular device which will fit into your mobile phone and has mobile app which will release the scent in calibrated manner. This will help you in getting up and have a pleasant day. This device will also be used as an ambience creator in the room and also as disinfectant which will be used for hygienic purposes.

Exhibit 2(Questionnaire for consumer study) 1. What is the first benefit that comes to your mind when you think of this product? a. Pleasant Day b. Ambience c. Value added service d. Nothing e. Other, Please mention

2. How much do you like the Product? Like/Dislike a. Like it very much b. Like it c. Neither like it nor dislike it d. Dislike it e. Totally dislike it

3. What is your opinion regarding the uniqueness of the product? Unique/Non Unique a. Highly Unique
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b. Unique c. Neither unique nor non-unique d. Non-Unique e. Totally Non-unique Reason

4. How relevant is this the product to you/your lifestyle? Why? Relevant/Non-relevant a. Highly relevant b. Relevant c. Neither Relevant nor non-relevant d. Non-relevant e. Totally non-relevant

5. What will you say regarding your believability of the Product? Believe/Disbelieve a. Believe it completely b. Believe it c. Neither Believe it nor disbelieve it d. Disbelieve it e. Disbelieve it completely

6. Will you like to purchase the Product? a. Will definitely purchase it b. Might purchase it c. Might purchase it or might not purchase it d. Might not purchase it e. Will definitely not purchase it

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7. Will you like to avail this service if it is available in

$ 20 Yes No

$ 25

$ 30

$ 35

$ 40

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