Scentify Iim Nid v0.5

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For requirements of the course

Written Analysis and CommunicationII (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

Scentify


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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


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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.

NeedGap

Analysis

ProductValue

Proposition

STPBrandingStrategy

Business Model


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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

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 cartridges2) 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.

Selecting an arena/Mobile Phone applications

Identifying/selecting the target segment throughbrain storming

Identifying gaps in the selected segment

Idea generation/Fragrance generating device


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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 certainfragrances. 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 asmoothening 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 amore rapid release. This capsule will come in different fragrances.

Value Proposition

ExperiencePlesent feeling throughout the day

Pontable ambience controller

Germ protection by the disinfectent

Snob value

Customer

Brand building

Customer reach

Increase in revenueIncreaced brand band association and recognition

The complementry effects will increase the salesSuppliers


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STP

The mobile market can be segmented into two

1) Smart Phones2) 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.

Segmentation

The mobile phoneuser market can besegmented based onthe type of the phoneconsumers are using

Different segmentsare iphone users,Android phone users,Windows phone usersand basic phone users

Target

iPhone users andAdroid users aretargets

More sofisticaed

Will pay premium forsnobish value

They will tinkeraround and willgenerate morerequirements

Apple user base

conain moreinnovators

Positioning

We will position thisproduct as a lifestyleproduct

This will be positionedas an integratedproduct which willenhance your homeenvironment


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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

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

Brands

Rational

Functional-Aroma

Delivery

Technology -Through aphone App

Emotional

Product Image- Have a

pleasant day

User Image -Innovator


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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 byusing 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.


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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.


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Top of Mind Benefit

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

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Pleasant Day Ambience Value Added Nothing Others

Series1

0%

5%

10%

15%

20%

25%

30%

35%

40%

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

59% of the respondents feel that the product is unique.

Relevance of the Product

77% of respondents feel that the product is relevant for their life.

Purchasing Intention

0%

5%

10%

15%

20%

25%

30%

35%

40%

Highly

Unique

Unique Biether

Unique nor

non-unique

Non-unique Totally non-

unique

Series1

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Series1


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We can see that 64% of the respondents have shown interest in buying the product.

Price Sensitivity

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

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Will

Definitely

Purchase it

May

Purchase it

May or may

not

purchase it

Will not

purchase

Will

Definitely

not

purchase

Series1

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

$ 20 $ 25 $ 30 $ 35 $ 40

Series1


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Financial Analysis

1. Assumptionsa. 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 productiona. 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 2dollars 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

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

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

. 2012 2013 2014 2015 2016 2017 2018

Selling price $30 $27.5 $25 $25 $25 $25 $25

Cartridge Price $2 $2 $2 $2 $2 $2 $2

Column1 Year 2012 2013 2014 2015 2016 2017 2018

Software $20,000

Cartridges $1,470,000 $4,648,000 $6,720,000 $6,236,160 $5,677,056 $4,633,395.0The Hardware Packet $1,260,000 $4,800,000 $8,400,000 $7,740,000 $6,900,000 $7,100,00

Cogs $2,730,000 $9,448,000 $15,120,000 $13,976,160 $12,577,056 $11,733,39


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4. Initial Cost of productionCost of Production

Software 20000

Hardware

Cartridges $3.5

The Package $18

Cost Per

Package $32

5. Financials. Years 2012 2013 2014 2015 2016 2017 2018

Sale Of Units 70000 300000 600000 645000 690000 7100

Sale Of Catridges 140000 460000 600000 900000 1200000 12000

Total Revenue $2,380,000 $8,250,000 $15,000,000 $16,125,000 $17,250,000 $17,750,0

COGS

Software $20,000

Catridges $1,470,000 $4,648,000 $6,720,000 $6,236,160 $5,677,056 $4,633,3

The Hardware Packet $1,260,000 $4,800,000 $8,400,000 $7,740,000 $6,900,000 $7,100,0

Cogs $2,730,000 $9,448,000 $15,120,000 $13,976,160 $12,577,056 $11,733,3

Advertizing Cost $750,000 $600,000 $480,000 $384,000 $307,200 $245,760 $196,6

Selling

Cost 5% of sales $119,000 $412,500 $750,000 $806,250 $862,500 $887,5

Income ($770,000) ($1,069,000) ($2,090,500) ($1,254,000) $1,035,390 $3,564,684 $4,932,496

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


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Exhibits

Exhibit 1(Concept Card)

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 Dayb. Ambiencec. Value added serviced. Nothinge. Other, Please mention

2. How much do you like the Product? Like/Dislikea. Like it very muchb. Like itc. Neither like it nor dislike itd. Dislike ite. Totally dislike it

3. What is your opinion regarding the uniqueness of the product? Unique/Non Uniquea. Highly Unique

Have you ever wondered how does it feel to wake up to a pleasant coffee smell? Or how would it feelto 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.


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b. Uniquec. Neither unique nor non-uniqued. Non-Uniquee. Totally Non-unique Reason

4. How relevant is this the product to you/your lifestyle? Why? Relevant/Non-relevanta. Highly relevantb. Relevantc. Neither Relevant nor non-relevantd. Non-relevante. Totally non-relevant

5. What will you say regarding your believability of the Product? Believe/Disbelievea. Believe it completelyb. Believe itc. Neither Believe it nor disbelieve itd. Disbelieve ite. Disbelieve it completely

6. Will you like to purchase the Product?a. Will definitely purchase itb. Might purchase itc. Might purchase it or might not purchase itd. Might not purchase ite. Will definitely not purchase it


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

$ 20 $ 25 $ 30 $ 35 $ 40

Yes

No

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