Smart Energy Solutions

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SMART

E NERGY

SOLUTION

S

Group Members

Mubashar Asad

Muhammad Ali Bhatti

Iqra Maqbool Butt

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Introduction

Smart Energy Solution has been formed with the express purpose of manufacturing the kinetic energy charger for all sorts of hand held devices in Pakistan.

SES has obtained an exclusive manufacturing contract from nPower® PEG regarding their innovative Kinetic Energy charger for hand-held electronics.

The office would be located in Lahore (on Mall Road)

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MUHAMMAD

ALI

B HATTI

Mission Statement

SES’s mission is to “offer the finest, most innovative charging device to the Pakistani market. We exist to ensure all of our customer’s expectations are exceeded by making them as mobile as ever. We aim to become the premier and most profitable charging device manufacturer by giving the consumers a ‘charging experience’ that enables them to enjoy the hi-tech gadgets to their fullest while conserving the environment too”.

Vision Statement

‘To change the way the Pakistanis view alternative energy sources by giving individuals the ability to create personal green energy.’

Goals & Objectives

Marketing Objectives: Generate a 20% increase of repeat customers each year.

Generate brand awareness through cost effective advertising.

Being trend setters as opposed to being trend followers.

Remaining the sole manufacturer of kinetic chargers and thus safeguarding our market share.

Financial Objectives: Achieve a double digit growth rate for the first five years

Reach profitability by the end of year one.

Keys to Success

Provide value to customers with the best, most innovative product.

Develop strong relationships with suppliers through timely payments and distributors through timely delivery.

Employ strict financial controls to ensure profitability.

Industry Analysis

Market Research severe energy crisis environmentalist pressure groups

Market trends and Opportunity/ Market needs Primary research Questionnaire Secondary research Websites and journals

General Market trend

IFE & EFE Analysis

Strengths Weight Rating Weighted Score

1. The first ever company to introduce and provide a charger using kinetic energy in Pakistan.

0.09 4 0.36

2. High utility of our product for our target market segment i.e. families/individuals on recreational trips.

0.1 5 0.4

3. Compliance with the RoHS and Energy Star 5.0. and certified by the (EPEAT) .

0.05 4 0.15

4. The kinetic charger being only nine inches long and weighing nine oz is highly portable.

0.06 3 0.24

5. Compatibility with all kinds of hand held/portable electronic gadgets. 0.06 4 0.3

6. High scalability both in terms of size and power. 0.02 5 0.04

7. Efficient business partner management. 0.05 2 0.2

8. Effective customer management: 0.06 4 0.24

9. Few threats of technical flaws to arise ensures ease of use. 0.02 2 0.04

10. No significant maintenance costs of our product therefore purchasing might be a one off expense.

0.05 2 0.1

11. Using muscle power or kinetic energy is by far the most reliable source than wind or solar energy.

0.07 5 0.35

12. Intellectual property rights/patents to deter potential competitors from importing our product.

0.08 5 0.4

Weaknesses Weight Rating Weighted Score

1. High price since it is imported. 0.07 4 0.28

2. Reliance on imports makes susceptible to all sorts of unforeseen events at the suppliers end.

0.07 4 0.28

3. Only charges one device at one time and the recharging speed and power generation is also less.

0.06 3 0.18

4. Only a niche market targeted thus foregoing potential revenues and profits from other segments.

0.02 4 0.08

5. Numerous other chargers using kinetic energy in the international market, monopoly can be breached.

0.03 4 0.12

6. In case of malfunction repair cost would be high since the spare parts would have to be imported.

0.02 2 0.04

7. High cost structure prohibits adoption of effective mediums of advertising.

0.02 3 0.06

Total Weighted Score 3.82

Rating Scale: 5: Outstanding; 4: Good; 3:Average;2: Below Average; 1:Poor

OpportunitiesWeight Rating Weighted

Score

1. Scope of operations can be extended all over Pakistan even by focusing on the current market segment.

0.06 1 0.06

2. Other market segments can be profitably catered for due to the increased projected usage of communication devices.

0.04 2 0.08

3. Energy crisis in Pakistan would make usage of renewable kinetic energy feasible and always in demand.

0.15 4 0.6

4. Scope to undertake manufacturing in Pakistan to increase cost competitiveness.

0.08 2 0.16

5. Product aimed at impulsive and price insensitive rich people thus profitability is secure.

0.09 2 0.18

6. Awareness amongst consumers regarding energy conservation will ensure naturally extended product and industry life cycles.

0.06 3 0.18

7. A lot of scope of diversification in the product itself. 0.06 3 0.18

ThreatsWeight Rating Weighted

Score

1. Vulnerability to changes in government regulations on international trade.

0.1 3 0.3

2. Incidence of progressive taxes that reduce the real disposable incomes of rich people, can adversely affect the demand and profits.

0.08 3 0.24

3. Volatile political and economic condition effects recreational activities thus intensifies the need to explore other market segments.

0.15 4 0.6

4. Close substitutes in the form of low cost wind and solar powered chargers are internationally available hence tough global competition.

0.05 4 0.2

5. Unanticipated appreciation of the domestic currency would drastically affect profits since the import bill would increase.

0.08 4 0.32

Total Weighted Score 3.1

Rating Scale: 5: Outstanding; 4: Good; 3:Average;2: Below Average; 1:Poor

Interpretation

Since the total weighted score is above 2.75 it can be safely concluded that that the company can cope well with internal factors i.e. strengths and weaknesses.

The total weighted score is above 2.75, hence it can be deduced that the company can cope well with external challenges and factors.

Competitor’s Portfolio

Competitor Analysis No potential competitor yet yo–yo chargers and the foot embedded chargers. Thermal chargers.

Creating a sustainable Competitive Advantage. Our product and its features After sales services durability and compatibility.

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Porter’s Five Forces Model Threats to Competitive Advantage

Low Medium High

Threat of substitutes Threat of new entrants Rivalry among existing firms Bargaining power of suppliers Bargaining power of customers

Marketing Plan

QRAI

Target Market

As per the results of our survey, we discovered that amongst the travelling class the recreationalists and the business travelers are the ones who have suffered the most due to the energy crisis.

recreation37%

business30%

education13%

tourism11%

other9%

Market Segmentation & Positioning

Segmentation

We have segmented the markets on the following bases:

Geographic Segmentation Lahore

Demographic Segmentation Income

Psychographic Segmentation Recreation Activities

Behavioral segmentation User status and buyer readiness and stage

Positioning: We at SES have decided to position our product based primarily on its

functional benefits e.g. its compatibility, portability, ease of use and durability which in turn enhances the mobility of our target market i.e. the recreationalists

Product

Core ProductActual ProductAugmented Product

Product

Core Product These are going to be SES’s main benefits or core offerings of our

product. In this case our core benefits are the content itself. We are providing mobility, and at the same time conserving the non renewable energy sources as well as reducing the need to consume electricity to some extent at least.

Product Specifications OuterCasing:  Titanium 

Color:  Green,anodizedfinishSize:  9" tall, Top & Bottom Cylinders: 1'" diameter, Center Cylinder: 1.5" diameterWeight:  11oz.Energy Storage Capacity:  1000mAh lithium Polymer batteryVoltage:  5V DC, 500mA output rangeWatts:  2.5 WattsOperating Temperature: -30 C to 60 C (-22º to 140º F)

Product Actual Product

• Tangible aspects of a product, such as the brand name, features, quality level, design.

Compatibility• Charge Smart is compatible with over 3,000 hand-held electronic

devices including cell phones, Mp3 players, gaming devices, GPS, Apple devices such as iPods and iPhones, Blackberry Devices, LG Devices, Samsung Devices, Motorola Devices etc. It is compatible with 90% of chargeable hand-held devices.

Ease of use Durability and Storage Capacity Portability Environment friendly features

Augmented Product Warranty, After Sales Service and Help line.

Price

“Price is the value placed on goods and services. Price is the amount of money and / or goods needed to acquire some combination of another and its accompanying services”

Pricing Objectives: The objectives of SES for pricing its product are as

follows: Maximum Profit Oriented Maximum Market Skimming

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Pricing StructureVARIABLE COST per unit Cost

Cost of import of parts per unit 350 RSManufacturing Cost 200 RSTransportation 40 RSDuty of cost (@20%) 150 RSPackaging 25 RSPromotion 135 RSDistribution 15 RSRetailer commission (@10%) 160 RSCharity 10 RSAfter sale service 15 RSTotal cost per unit 1100 RSContribution per unit 400 RSSale price 1600 RS

Price Demand Estimation:

A market survey was conducted using a comprehensive questionnaire in order to estimate the demand for our product.

Competitor’s cost analysis: Since we are the first movers, direct competition does not exist and exclusive

manufacturing rights would also prevent competition from a firm producing a similar product. Other form of kinetic energy chargers such as yo-yo chargers, are not available in Pakistan a yet. However, the solar and thermal chargers represent a distant threat and the solar chargers are available at half the price of our product since they are not being imported, whereas thermal chargers too are not yet available in Pakistan.

Cost Estimation , Pricing method and Final Price: Since we have adopted the bottom up approach to determine the price of our product,

the costs need to be worked backwards once the reference prices have been ascertained through the survey. The cost determination as well as the final price per charger is shown in the Appendices is as follows.

Since the reference price was more than 800, we decided to adopt Price Skimming by charging a price that is double the reference price ,i.e. Rs. 1600 and worked out the costs backward after considerable research. Since ours is an imported spare parts manufactured product this price might increase or decrease subject to changes in the exchange rates and import duties.

Promotion The promotions aspect of the marketing mix covers

all types of marketing communications.SES is focusing on ‘Push Promotional Strategies by relying mostly on our sales force to create consumer demand.

Advertising Print media /Online magazines

Website Development

Marketing Force

Word of Mouth Marketing

Awareness Building through Public Relations strategy

Placement

Place in the marketing mix, is not just about the physical location or distribution points for products. Place (or placement) decisions are those associated with channels of distribution that serve as the means for getting the product to the target customers. The distribution system performs transactional, logistical and facilitating functions.

We would be placing our office or outlet on the Mall Road in the Alfalah Building. Our office would serve as the show room for our product, as well as to carry out the operations of the business. We will also rent a warehouse as a temporary storage facility near Alfalah Building, with success in the business; we would rent a separate storage facility in the future).

Distribution

Direct Personal selling:

The representatives of our marketing force would not only place brochures and fliers at the designated travel agencies, they would also contact retailers in big departmental stores such as Hyperstar, Alfateh etc. where travelling gear is available and where our target market is likely to shop for their trips. Those representatives will take orders as well as deliver the product directly to the potential customers. We would of course pay the fore mentioned companies a pre- decided @ 10% of the selling price i.e. 1600 for stocking our product.

In the second year of operation company’s expanded marketing force will also visit all the mobile, digital cameras etc selling markets such as Hafiz Centre on Main Boulevard, Hall Road Market on Main Mall Road and Abid Market on Mazzang Road and distribute our fliers/ brochures as well as take orders and deliver the product.

Since we are going to develop a website for our company, we also intend to provide mail order services for the convenience of consumers.

Distribution

As we are targeting travelers (recreational, tourists & business persons), SES Inc product will also be available at the retail shops of Highways and Motorways at a pre decided commission of @ 10% of the selling price i.e. 1600 . We at SES are going to employ the following distribution channels.

IMPORT SPARE PARTS

People

Internal SES’s staff need to focus customers , when having a

physical presence in the outlet, or when answering phones or dealing with customer from the office. The staff needs to understand and respond to customer expectation.

External  Customer judge product and service quality on four

dimension tangibles, responsiveness, assurance, empathy.

Physical evidence

The physical appearance of the Smart Charger is for the customer to know how the product is going to benefit them and how they are going to use it to get that benefit.

The product’s packaging and than its structure will also give them tangible experience to our product.

The availability of our product at various places and our office is also the biggest physical evidence for the customers.

Process

Customer satisfaction is one of the most important roles of marketing. Survey needs to be carried out to see how and how far customer are travelling to get those facilities, to determine the catchment area.

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MUBASHAR

ASAD

Review and Control

Controls

The following areas will be monitored to gauge

performance

Revenue: monthly and annual.

Expenses: monthly and annual.

Repeat business.

Customer satisfaction

Departmental Hierarchy

Since our business is in the initiation stage so at this point we are not hiring a lot of staff, the three of us partners would be handling the key business functions of SES. But with the success of the business we would increase the staff members.

Finance Department (Muhammad Ali Bhatti) Financial database and Import officer Accountant

Human Resource Department

Operations Department

Marketing Department (Iqra Maqbool Butt) Advertising Manager Public Relations Manager Computer worker

(Mubashar Asad)

Contingency Plan Difficulties and risks faced by SES:

Future regulatory challenges such as unprecedented increase in the import duty.

Depreciation of Pakistani Rupee in terms of U.S. Dollar that would make the imports expensive.

Delay in the shipment and arrival of the parts.

Worst case risks that all businesses face may include: Determining that the business cannot support itself on an

ongoing basis.

Have to liquidate equipment to cover liabilities.

SES intends to maintain a strict check on profitability by keeping the marketing, personnel and operations budget under tight scrutiny.

Moreover, SES seeks to maintain sufficiently high amount of stock to cope with a unexpected shortage or delay.

The storage of the stock would not be an additional burden since the outlet at Mall Road is serving the purpose of an office, showroom as well as storage area at present, so a separate warehouse need not be rented for that.

A far as the risk of liquidation is concerned, SES intends to keep a strict check on the payment period and credit sales to avoid the likelihood of bad debts and hence liquidity problems.

Product Mechanism

Industrial designer has designed a way hikers can charge their gadgets with a more reliable source of renewable energy i.e. kinetic energy. The charger is designed to harvest the vibrating shock forces which are put into action when an object is in a state of motion. It would work even if placed in a moving car or through the forces concentrated at the knee during the heel strike phase of walking.

The device embodies the concept of a linear inertial generator that employs Michael Faraday’s law of induction.

This charger has a simple mechanism: a high grade neodymium magnet (NdFeB) is suspended within a magnetic field that is produced by two repelling magnets at the opposing ends of the generator module. When the generator module is subjected to a shock force the NdFeB magnet ‘bounces’ within a tube.

Product Mechanism

A current is induced within a compact coil of cooper wire positioned around the tube, thus creating electrical energy.

Kinetic Energy Generation: Output varies widely by user, activity, and the device being charged. For example

1 minute of walking provides approximately 1 minute of listening time on an iPod Nano 

26 minutes of walking provides approximately 13 minutes of talk time on an iPhone 3

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