Group 1 Business Case

Suitcase Cart and Dog Communication Board

Patrick Maercklein, Paul Mahoney, Jack Stapleton

April 27, 2020

 Table of Contents

Product Innovation
Charters………………………………………………………………………………....3
Part I. Scoping Review - Suitcase
Cart………………………………………………………………....…...4-6
Part II. The Business Case - Suitcase
Cart………………………………………………………………...7-17
Suitcase Cart Product
Description/Features……………………………………………………........7
Strategic
Fit……………………………………………………………………………………....….8
Product and Competitive
Advantage…………………………………………………………....…...9
Market Assessment and
Attractiveness……………………………………………………...…..10-12
Technical
Assessment……………………………………………………………………………...13
Core
Competencies………………………………………………………………………………...13
Sustainability
Goals……………………………………………………………………………..14-15
Financial
Analysis…………………………………………………………………………….....16-19
Part III. Scoping Review - Dog Communication
Board……………………………………………..…...20-21
Part IV. The Business Case - Dog Communication
Board…………………………………………….....22-34
Dog Communication Board Product
Description/Features………………………….………..…...22
Strategic
Fit………………………………………………………………………………………...23
Product and Competitive
Advantage………………………………………………………...……..24
Market Assessment and Attractiveness………………………………………………...
…….….25-27
Technical Assessment……………………….
……………………………………………………..28
Core
Competencies………………………………………………………………………………...28
Sustainability Goals…………………………………………………………………...
……………29

2
 Financial Analysis…………………………………………………………………………....
….30-34

3
Product Innovation Charters

Suitcase Cart

Provide an innovative solution to customers’ ease of traveling through offering the

greatest efficiency and highest quality on the market. Thriving off of our values, we
will establish ourselves as the superior travel product provider which starts by
achieving a .025% market share in our first fiscal year. Through exceeding
customer expectations and building a brand name and reputation, we will achieve .
15% market share within five years.

Dog Communication Board

Our goal is to provide a method for dog owners to have a more personal
relationship with their pets through a communication board. We want to use R&D
to develop a 5 button board that has 5 different messages including “outside”
“food” “yes” and “no. We will work with a speech pathologist to develop the board
as well as the manual. We also want to use R&D to understand end user
expectations as this is very important. We want to earn at least a 20% ROI within 3
years of developing the product. (subject to change).

Mission Statement

Our mission is to enhance lives by turning your “what if’s” into reality.

Vision Statement

Our vision is to create a new era of product development through next-level

innovation, making the world a simpler, more connected place.

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 The Suitcase Cart

Part I. Scoping Review

(Q): Who cares the most about your product/service? Why? What else is like it?

(A): Travelers, specifically families or those with multiple units of luggage (winter
sports, long vacations, moving homes, etc.), are customers on the market who care
the most about the Suitcase Cart because they often struggle with moving their
belongings from destination to destination. Currently there are numerous types of
suitcases on the market, along with carts to help move suitcases (in which you
often have to pay to use). However, the Suitcase Cart provides a convenient,
foldable combination of the two.

(Q): What is different better about yours from the market’s perspective?

(A): The Suitcase Cart is different better than suitcases on the market because it
serves an additional purpose - the functionality of a cart. It specifically serves the
efficient aspect of the term “better”, as the cart allows for faster transportation of
luggage, allowing travelers to get to their destination quicker. Additionally, the
cart function allows for ease of transportation with minimal effort (effective).

(Q): How different better is yours?

(A): The Suitcase Cart is significantly different better than products that are
currently on the market, when dealing with travelers who carry more than one
bag. For users who only bring one bag, our Suitcase Cart still outperforms the
market in terms of quality but is not significantly different.

(Q): Can you quantify the market’s value?

(A): Revenue in the Luggage & Bags segment amounts to US$28,453m in 2020, the
market is expected to grow annually by 1.1%. However, the luggage category
specifically is forecasted to grow 16.8% in the next three years. Additionally, there
is a rising trend in travel frequency, where the US has experienced a 4-5% annual
increase in air ticket sales over the past three years.

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(Q): What is the basic technology?

(A): Fortunately, the Suitcase Cart only requires preexisting design and
manufacturing technology.

(Q): How much technology development is required? Who can develop it?

(A:) Not much technology development is required because of the simplicity of the
products. All of the top 10 suitcase manufacturers (by units) are located in China
so we are likely to work with them to manufacture them. As far as design, we will
have to partner with an industrial designer to determine specifications.

(Q): How long will it take to develop?

(A): We have set aside 12-18 months to research, design, and develop the product.
This time includes receiving samples and getting the products to our exact liking.
The product should be ready to be introduced to the market on January 1, 2022.

(Q): How much will it cost to develop?

(A): The total product development cost is estimated to be $343,719.00, over the
span of 18 months. The breakdown per quarter is as follows:

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The majority of the product development cost will be allocated to hiring an
industrial designer to assist with the R&D and the creation of a digital blueprint to
send to the manufacturer. This will cost about $200,000 of the total budget.

Source (Article): (Next Billion-Dollar Startups: How Two Young Entrepreneurs

Used Relentless Online Marketing To Build Away Into A $700M Luggage Brand)

https://www.forbes.com/sites/amyfeldman/2018/11/20/next-billion-dollar-startups-
how-two-young-entrepreneurs-used-relentless-online-marketing-to-build-away-into-
a-700m-luggage-brand/#4fe2171c36a2

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Part II. The Business Case

Product Description

The Suitcase Cart is just as it sounds: a combination of both a suitcase and a

trolley cart, designed to pull multiple units of luggage with ease. The product

essentially takes the form of a large luggage bag and it’s adjustable handle folds

down and outward to create additional space on wheels. Users can then load up to

three additional bags onto this cart feature, taking the effort out of moving your

belongings.

Key Features

➢ Foldable trolley cart

➢ High-performance polycarbonate with soft leather detailing
➢ Stable multi-length bar extensions with multi-stop system
➢ Innovative dual entry to the main compartment
➢ Six dual spinner wheels (four for suitcase, two for cart - hidden until cart is
folded out)
➢ Protective bumper rails
➢ Removable garment sleeve with fiberglass rod
(holds 1 suit)
➢ Water resistant

BluePrint

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Strategic Fit

In our mind, the term strategic fit means that both the competitive and

supply chain strategies for our business have the same goal. For the development

of the Suitcase Cart, much of this emphasis is placed on the partnerships with the

industrial designer and our chosen manufacturer(s). Our two core values are

quality and sustainability and we have chosen partners who have implemented

those exact values into their business processes since day one.

The initial manufacturer that we have chosen is Dongguan Xinhui Suitcase

And Bag Fittings Co., Ltd., a suitcase and leather factory founded over two

decades ago in Dongguan, China - a city famous for luggage and bags. Not only do

they have a top-grade reputation within the luggage market, but this

manufacturer’s key principle of "Quality First, Credibility First" is consistent with

our brand and what we are striving to provide to our Suitcase Cart customers. Not

to mention, they provide full-transparency within their operations, allowing regular

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partner visits and a 360 virtual tour of the facility. Finally, as for their products,

they specialize in trolley cases, an expertise that we find essential to the

production of our suitcase, specifically the cart component.

(https://xinhuiluggage.en.made-in-china.com/company-Dongguan-Xinhui-Suitcase-

And-Bag-Fittings-Co-Ltd-.html)

Additionally, we have chosen Phase One Design to be our design partner for

this project, as they specialize in industrial design, prototype development,

engineering, and product rendering. The firm is built around developing long-term

relationships and has years of experience working with other seas production

sources. Their mission to help clients grow and their reputable clientele base has

us to believe they are the best partner for this job.

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Product and Competitive Advantage

Our main competitor within the luggage market is Samsonite, who accounts

for just over 45% of the industry’s market share. In 2018 alone, they generated

about $3.79 billion in revenue globally, across their numerous product lines.

However, while they dominate the market, there is still plenty of opportunity for

competition, especially for products that are unique and offer never-before-seen

value to consumers. (https://www.statista.com/statistics/252796/total-revenue-of-

samsonite-worldwide/)

Essentially, our competitive advantage is rather obvious - our product offers

every physical function that Samsonite’s luggage is equipped with and so much

more. The Suitcase cart includes a mix of polycarbonate and leather material,

accompanied by an array of compartment options and premium features. Along

with all of this is the holy grail - the extendable handle that can turn the luxury bag

into an effort-saving luggage cart. The cart feature is designed to support up to

three additional pieces of luggage (or 150 pounds) with just the extension and

unfolding of the suitcase’s handle. On the bottom of the suitcase lies the additional

wheels for the cart, those which are hidden when not in use. Furthermore,

assembly of the entire piece takes only seconds, making it convenient for wherever

your travel takes you.

Samsonite Strengths & Weaknesses

Strengths
➢ Has built an empire in the industry - they have a long history and it is the
most well-known brand in the market.
➢ Their luggage is stylish, flexible, and high quality.
➢ They are innovative (ex. Have scales in their suitcases)
➢ Numerous product lines.

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Weaknesses
➢ Do not have technology outside of their scale feature.
➢ Their product lines have grown so much that their positioning in the market
is somewhat unclear.
➢ Innovation, such as our cart feature, can pose a great threat.

Market Assessment and Attractiveness

Target Market: The Suitcase Cart was designed for upper-middle class families

and/or travelers who frequently go on vacations, business trips, etc. in groups or

with multiple luggage bags at a time.

Total Market Size & Growth: The luggage market alone is expected to generate a

revenue of $283.28 billion worldwide in 2020, with a growth rate of 16.8%

forecasted to happen over the next three years. This substantial growth is

primarily due to the skyrocketing growth of the travel and tourism industry.

Essentially, these two markets are correlated and as the travel industry continues

its rise, so will the luggage and bag industry. Additionally, the luggage market has

experienced growth as a result of increased demand for different varieties of

luggage and suitcases, such as sports luggage, convertible luggage, smart luggage,

etc. Techavio.com’s research also suggests that travelers are increasingly

preferring multipurpose luggage, a category which our Suitcase Cart falls right

into. (https://analysis.technavio.com/luggage-industry-analysis-research)

Luggage Market Value Worldwide:

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Customer Need: As noted above, the rising demand for multipurpose luggage has

grown the entire industry substantially. Consumers have begun to expect more

from their bags, especially as the population has begun to travel a lot more. Also, it

is proven that tourists prefer to travel with partners, whether it be family, friends,

etc. With that being said, it is safe to conclude that more luggage is being

transported than ever before, raising a need for our two-in-one Suitcase Cart.

Below are some interesting and notable statistics on travelers:

➢ 58% of millennials prefer to travel with friends.

➢ 80% of families take a vacation during summer.

➢ 42% of families take a spring break vacation.

➢ 68% of family travelers will embark on a summer getaway, while 45% are

making plans to travel as a family this spring.

➢ Of people who traveled in 2016, 24% were solo travelers, 47% were adults,

and 29% were adults with children.

https://blog.accessdevelopment.com/tourism-and-travel-statistics-the-ultimate-

collection

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Customer Benefits: With our Suitcase Cart, customers can enhance their traveling

experience to measures that are not even imaginable. It offers travelers the

opportunity to have their own porter right at their fingertips. There won’t be any

more struggling to move the family’s luggage across the airport or waiting at the

hotel for the next luggage cart to be available. The Suitcase Cart offers users the

greatest convenience possible so that traveling can be stress free - like it should

be.

Opportunity Window: Now, more than ever (outside of the COVID-19 pandemic),

people are traveling the world. Not only has global tourism tripled in numbers

since 2000, but the luggage market has kept consistent growth throughout this

time as well. However, while the window of opportunity is wide open for products

targeting travelers, it is only a matter of time until game-changing innovation is

introduced into the luggage industry. We have begun to see variations of “smart”

suitcases as well as very impressive designs, therefore it’s crucial to introduce our

Suitcase Cart on time in 2022, since we believe this window could start shrinking

by then.

Competition and Perceptual Map: For our competitive analysis, we have displayed

a variety of our Suitcase Cart’s competitors that currently exist in the luggage

industry, from the market leader, Samsonite, to some of the lesser-known brands

that could pose a threat to our sales As shown, we divided the market into the two

most prominent attributes for bags - quality and price, with quality taking into

account material, durability, features, and customer reviews. Essentially, the most

14
opportunity exists in the bottom right quadrant of the perceptual map, where

products would have high quality for a low price. Equipped with innovative

features and a sleek, modern design, the Suitcase Cart offers everything that the

consumers are asking for, at a lower price than most of its competitors.

Additionally, our product’s cart feature helps position our product well above the

majority of the competition in quality/features.

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Technical Assessment

The estimated budget for the development of the Suitcase Cart is

$343,719.00, where the majority of the expense is allocated to our industrial

design partner, Phase One Design. They will work to optimize our design to

produce the best suitcase that the market has ever seen. Fortunately, the technical

complexity of this project is miniscule, as extendable handles have existed for

decades and multipurpose features have been explored with luggage bags. While

the industrial designer is set to partner with us throughout the entire 18 month

development period, this initial design phase is only expected to last a fraction of

it. From there, the rest of the time will be allocated toward creating a prototype

and working with the supplier to perfect each feature of the product through trial

and error. The chart below represents the product development costs by quarter,

where cost will slowly decrease as we get closer to the final product.

Core Competencies

This project leverages our core competencies and strengths in:

➢ Innovation
➢ Logistics & Supply Chain
➢ Marketing - Awareness, Brand Image
➢ Environmental Sustainability
➢ Quality

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 ➢ Customer Orientation

Sustainability Goals

Currently, material consumption of natural resources is increasing at a

substantial rate, especially in Southeast Asia. In fact, the global material

footprint is projected to more than double in the next forty years. Without

change, the United Nations noted that almost three planets worth of natural

resources will be needed to sustain current lifestyles as early as 2050.

These eye-opening statistics have not only increased our awareness of the

global issue regarding our planet’s limited natural resources, but they have

influenced us to make a change in the world through our Suitcase Cart

operations. As a company from one of the most developed countries, with

plans to manufacture in Southeast Asia, our routes reside in two of the most

dependent regions on natural resources. Therefore, we will pledge to

promote sustainable consumption and production patterns to create a

better future for all. We feel that in order for change to happen, it starts

with the most developed countries, and with that, we have developed a few

goals:

1) Our first goal is to choose a manufacturer whose values align with ours. For

obvious reasons, manufacturing facilities are at the forefront of pollution

and waste. With the freedom of choosing our own manufacturers, we will

find a global partner(s) that has sustainability goals in practice, even if that

17
 means a higher cost per unit. Additionally, we feel that implementing

sustainability goals into our operations could allow us to drive up our retail

selling price, ultimately evening out the greater cost per unit.

2) Second, we will strive to do the simple things at our headquarters. This

includes changing normal light bulbs to LED bulbs, implementing a

recycling initiative, and doing our best to limit any wasteful materials in our

products’ designs.

3) Finally, the third goal that we have initially set for this project is to use

recycled waste materials as the base of the product. Details will be

straightened out as we work with our industrial designer throughout the

development stage, aiming to get a sustainable, yet durable final product.

While we have recognized that some of the resources used can’t align with

this effort, we will do our best to ensure we practice sustainability as much

as possible.

Though these goals are just small steps in implementing sustainability into

our consumption and production patterns, we feel that they are a great

starting point in which we have plenty of room to progress toward

addressing environmental issues. With our efforts focused both on

ourselves, as well as our supply chain, our Suitcase Cart operations will

ensure environmental sustainability and make the world a better place than

before our business.

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Financial Analysis

Price Estimation:

Through our competitive analysis and consumer reviews, we took the price of the

Suitcase Cart into careful consideration. Based on our positioning, we priced the

product at $300.00, slightly below the average unit price of the market. This price

will not only assist us in gaining a competitive edge, but the margins are

significant enough to produce massive revenue numbers.

Sales Estimate:

The majority of our sales estimates were based on past luggage company's success

and growth rates (a .05% market share in five years). We have forecasted the

Introduction Stage of the product’s life cycle to last two years, through 2024,

where sales will then experience rapid growth the following years in the Growth

Stage. Additionally, we have taken seasonal demand into account, where Spring

and Summer months experience greater sales. Below is a sales breakdown by

quarter in terms of both revenue and units:

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Development Cost:

Assumptions:

We started finding our anticipated Product Development costs by determining our

competition's R&D as a percentage of their sales. In Samsonite's (our biggest

competitor) annual report, we found that they spent about 7% of their sales

revenue on R&D. Using this number, we came up with a calculation to determine

what our total product development cost would be from when our business efforts

start (7/1/2020) to when our product enters the market (1/1/2022). From this total

expense number ($343,719.00) we assumed that development costs would be

greatest at the beginning of our development stage so we assigned declining

percentages of the total expense to each quarter (% of Total PD column). Below is

a breakdown by quarter:

➢ Q3 (2020) - $103,115.70
➢ Q4 (2020) - $85,929.75
➢ Q1 (2021) - $68,743.80
➢ Q2 (2021) - 51,557.85
➢ Q3 (2021) - $25,778.93
➢ Q4 (2021) - $8,592.98

➢ Total: $343,719.00 in 18 months

Variable Cost:

According to the Economic Census study, the average total cost of materials for

companies in the luggage industry is $45.61. Using this number as a reference

point, we increased our beginning variable cost per unit by $5.00, taking into

consideration a smaller unit volume and additional materials for the cart feature.

However, we have forecasted the variable cost per unit to decrease as greater unit

volume is ordered. Our assumption goes as follows:

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1-999 units = $51.61
1,000-9,999 units = $50.61
10,000-49,999 units = $47.61

(https://www.census.gov/prod/ec97/97m3169a.pdf)

Margins:

For the first 27 months (Year 3, Q1) the unit contribution margin is $248.39.

Once order sizes break 1,000 units, in Q2 of Year 2, the unit contribution margin

will increase by $1.00 to $249.39 for the next two years. In Q2 of Year 5, the order

size will exceed 10,000 units and the contribution margin per unit will be $252.39

from there on out.

For Gross Margin, we looked at the manufacturing industry provided by

Ready Ratios (https://www.readyratios.com/sec/industry/D/), where we found that

our gross margin as a percentage of sales is about 35.9%. We then applied this

percentage to our forecasted revenues to get our gross margins for each quarter.

With this information, we developed a graphs to show the change in contribution

margin and gross margin over time:

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Breakeven: Fixed costs have been forecasted to represent approximately 15% of

sales for each quarter. Below we have created graphs to present projected

revenue/sales, relative to the costs that will be incurred each quarter. Ultimately,

these findings display how long it will take the Suitcase Cart to break even in

terms of both time and units sold. As shown, breakeven is forecasted to occur is

Year 3, Q1 where 805+ units need to be sold in the quarter.

Sensitivity Analysis: Let’s be honest, forecasts are never exactly right. We have

included sensitivity analyses for both Year 5 alone, as well as the entire project

from Years 1-5. As shown, even in our estimated ‘worst case scenario’ (a 25%

unfavorable swing in our forecast), we will make profits - profits that are just

getting started. We are aiming to get this project started as fast as possible in

order to experience the large earnings sooner (market time entry).

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23
 Dog Communication Board

Part III. Scoping Review

(Q): Who cares the most about your product/service? Why? What else is like it?

(A:) Dog Owners, especially high-income owners with an extremely close

relationship with their pet. They care about our product because they are always
looking for new products for their dog, and will pay a premium for a product that
allows them to get closer to their dog. Products similar to it include a dog
communication app, which translates dogs barks to words, and a device that allows
the owner to send sound to the dog to prompt it to go in front of the camera, so the
owner can see the dog when they aren’t home.

(Q:) What is different better about yours from the market’s perspective?

(A): This product is different better than others on the market because the most
similar products on the market still essentially serve a different purpose. The dog
communication app is more of a novelty thing and less of a serious means of
communication. The device that has a sound that prompts the dog to walk in front
of a camera is more similar, as it requires the dog to react to a stimuli, but is more
simplistic and doesn’t allow the dog to communicate back. Our board will be more
effective and complex than this device.

(Q): How different better is yours?

(A): Our board is different better because it includes a manual and allows you to
teach your dog how to communicate back to you via 5 different buttons which act
as 5 different stimuli. Their dog will be able to tell them when they want to eat or
go outside through buttons as opposed to barking. The dog being able to actively
learn how to respond to their owner through stimuli is our major differentiator.

(Q): Can you quantify the value?

(A): The value is the ability to feel closer and communicate with your pet. This
value is hard to quantify because it obviously will vary depending how close the
consumer is to their pet. This product will be targeted at high-income pet owners
and will likely be comparable to high end dog toys.

(Q): What is the basic technology?

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(A): The board would have 5 buttons; “yes”, “no”, “outside”, “food”, and “love you”.
It uses stimuli to teach dogs to learn and communicate these messages.

(Q): How much technology development is required? Who can develop it?

(A): Our product development team would work with a dog trainer and speech
pathologist to optimize the board and create a manual to go along with it that is
easy to understand.

(Q): How long will it take to develop?

(A): It would take a bit of time to create the manual to make it simple for the
average person to teach their dog to use the board. The technology is already
possible as a viral video surfaced about a month ago of a dog using a home-made
board effectively. We have estimated a 2.5 year time frame for development before
the product is made available to the market.

(Q): How much will it cost to develop?

(A): We have estimated the product development cost to be $562,140.00.

(Q): Does it make sense to move forward with our product/service idea?

(A:) Yes, we believe there is a spot on the market for a product like this and there
is a realistic path to develop it. If this product is developed correctly and effectively
it will be revolutionary to the pet industry.

25
Part IV: The Business Case

Product Description

The Dog Communication Board is a soundboard platform that utilizes the

Pavlovian school of psychology, better known as classical conditioning, to allow

pet-lovers to communicate with their beloved animals on a much more personal

level. The product’s design is hardly complex; the Dog Communication Board

takes a rectangular shape and includes 5 different buttons. These buttons, when

pressed on, communicate messages from dog to owner. The messages are: “Yes”,

“No”, “Outside”, “Food”, and a heartwarming “Love you”. The product comes with

a training manual that provides a detailed guide of how to condition pets to

properly understand and then use the device to communicate with their owners.

Key Features

➢ 5 button soundboard containing “Yes”, “No”, “Outside”, “Food”, and “Love

you”
➢ Easy-to-understand training manual
➢ Created out of wood and recycled plastics
➢ Light and mobile
➢ Different colors and sound effects make communication fun

BluePrint

26
Strategic Fit

The Dog Communication board is a great strategic fit for us because it aligns

perfectly with our businesses mission and core values. Our company vision is to

“create a new era of product development through next-level innovation” while

being committed to improving lives and having a positive impact on the

communities we interact with. The Dog Communication board fits this vision

because it is not only a new and innovative product but also one we believe can

have a positive impact on consumers lives and make their experience with their

dog better and easier. To achieve this goal it is crucial for us to develop an

effective and understandable manual to come in addition to the board to teach

consumers how to use it.

Because the manual is such a significant piece of our product, it is pivotal

we find the right partner to help us develop it. After a bit of research we found the

perfect partner in Christina Hunger, a speech pathologist who actually developed a

similar, yet more complex, board for her dog and became a viral sensation because

of it. Christina already has experience with developing a board similar to ours so

we believe she would be a catalyst in helping develop our product. We believe she

would be excited about the opportunity, as she has information on her website on

how to create your own board, but she does not sell any product or related product

on her website. She is someone we believe fits our core values and would be a

great business partner to develop this product. We see this opportunity as a win-

27
win as she receives compensation for her viral idea, but we help get her idea to a

widespread audience, which she makes clear is important to her on her website.

Source: https://www.hungerforwords.com

Product and competitive advantage

The Dog Communication Board would be a more complex product to develop

and market as it does not have a fully defined industry and is in short trying to

create its own industry and brand. We believe it has both functional utility and

hedonic values as it teaches the dog to communicate better to their owners but

also gives the owner a feeling of closeness and an increased personal relationship

with their dog. We believe us having the ability to offer value in both of those ways

is how we create a competitive advantage.

We believe our product's value proposition balances value dog owners are

looking for and if executed correctly could create a unique position for our product

in the market. If our product is fully developed and works as intended we believe

it will be efficiently spread through social media and word-of-mouth as the dog

community is very outgoing and close and is always looking for ways to be closer

to their dogs. For these reasons it is worthwhile to develop this product and

28
attempt to leverage this competitive advantage into an advantageous market

position for our product.

Market Assessment

Customer Need:

Due to the COVID-19 crisis there is an unprecedented customer need for

dog training devices that can be used directly by the consumer at the comfort of

their own home. The coronavirus has led to an increase in dog adoptions and

fostering according to CNBC and people practicing social distancing can’t pay an

outside trainer to help potty-train and house-train their dogs. We see our device as

a catalyst in training their dog and we think our product is perfect for anyone with

a young dog as this is the easiest time for them to learn.

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https://www.cnbc.com/2020/04/11/coronavirus-increased-pet-adoptions-now-

rescuers-face-new-challenges.html

Customer Benefits:

We see the customer benefitting from our product in two main ways. First

they will gain a utilitarian value from being able to communicate better with their

dog. With our product dogs can communicate to their owners when they need to

use the restroom or eat as well as giving them yes/no responses. We hope this will

allow owners to understand their pets better and can be a valuable training tool for

both young and older dogs. We believe our product can also benefit young dogs

with potential bathroom problems as well if the owner uses our manual effectively.

The other type of value we think we bring to our customers is psychological.

We believe that our product will make dog-lovers feel better and closer to their

pets and even if it doesn’t work as effectively as we’d hope customers will still see

the value in the product. The customer simply hearing their dog “talk” with the

press of a button will be entertaining to them and provide hedonic value.

Opportunity Window:

Despite all the negatives of the COVID-19 crisis, we see it as further

evidence that there is a need for our product and it could sell effectively. Due to

coronavirus and social distancing, dog trainers can’t visit people’s houses directly

anymore and people are seeking assistance on how to train their dog on their own.

While we have recognized that the Dog Communication Board would have been the

perfect solution during this pandemic, we still see a lot of opportunity in the future.

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 It’s clear that social distancing could be encouraged for a while longer,

ultimately forcing the remote-working community to grow. We see this as an

opportunity to make the Dog Communicator Board the perfect training device to

use for remote workers who are always around their pets, kids, and so much more.

Once it hits the market, one thing is for sure - there won’t be any more boredom

during a future pandemic. Additionally, COVID-19 has rapidly increased pet

adoption and fostering rates, giving us yet more opportunity in the market. With all

this being said, we are looking to take advantage of this new era as soon as

possible. While we have recognized that this pandemic will likely pass by the time

our product enters the market, we will be able to take advantage of future

pandemics, a greater pet market, a growing industry, and the overall consumer

need for new technology.

https://www.latimes.com/california/story/2020-04-02/requests-to-foster-and-adopt-

pets-surge-as-coronavirus-keeps-us-at-home

Competition

Our research indicates that our product will be the first of its kind to hit the

market. However, while the Dog Communication Board is categorically unique and

unprecedented in its level of sophistication for this particular market, there is still

existing competition in the industry that must be considered. The alternative

products that may be considered include dog shock collars, dog treat training

pouches, and clicker training kits. Thus, the primary competitors to be accounted

for include: DogRook, the maker of Amazon’s best selling bark shock collar, Paw

Lifestyles, the maker of Amazon’s best selling dog treat training pouch, and

EcoCity, the maker of Amazon’s best selling clicker training kit. Below is a

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perceptual map of the competitive landscape of the market. The perceptual map is

divided into two attributes: price and value, where value includes quality, features,

and training caliber. As the perceptual map displays, DogRook’s product is the

most similar to the Dog Communication Board; therefore, we consider DogRook to

be our main competitor.

DogRook’s Strengths and Weaknesses

Strengths

● Has established itself as a leader in the Dog training equipment market

● Proven to be effective
● Affordable price for a reliable product
● Free Shipping
● User manual included
● Includes a warranty that extends for two full years

Weaknesses
● Batteries required
● Innovation, such as the Dog Communication Board, can pose an existential
threat

Perceptual Map

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Technical assessment

The Dog Communication board is our more complex project, so it would take

more time to develop to ensure it is effective and technically sound. Dog’s have a

history of responding to stimuli in the form of sound and changing their behavior

due to their reaction to these stimuli. The most famous example of this is Pavlov’s

experiment where he conditioned dogs to become hungry in reaction to the sound

of a bell. Our product takes this idea a step further and has the dogs press the

buttons themselves in order to communicate how they feel.

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 One of the biggest obstacles we will face in developing it is creating our

training manual to be effective and easy to understand. In order to do this we

would work with a speech pathologist who loves and understands dogs in order to

ensure we cover all bases to make the manual tailored to both dogs and their

owners. It would likely take some time to develop with them which is why the

research and development of this product will take longer than the suitcase cart.

Our goal for this manual would be to avoid complexity and try to simplify the

training process as much as possible. This development would be worthwhile as we

believe we could offer a unique product to our customers that could help bond

them with their pet as well as expedite the training process.

Core competencies

This project leverages our core competencies and strengths in:

➢ Innovation
➢ Forward Thinking
➢ Brand Reputation
➢ Value
➢ Managing Change
➢ Building Relationships

Sustainability goals

Our dog communication board would be a high-end device for pet owners,

and these pet owners would likely be environmentally conscious and care a lot

about animals and their surrounding environment. The board itself would be

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relatively cheap to develop, so we will make the board using only recycled

materials, and we would also make our manual out of solely recycled paper. This

relates to the 12th U.N. goal for sustainability called “Responsible Consumption

and Production” which emphasizes reusing paper, plastic, glass, and metal. Our

target market would really appreciate this effort as environmental sustainability

and wildlife protection are likely issues that matter a lot to them, and we gain

customer trust by displaying that our institution is doing our part to help improve

these issues. We would place a graphic on both our product and our manual

stating “made of 99% recycled materials” so our customers are clear about our

commitment to this issue and how we are being environmentally responsible and

transparent. Our product fits this U.N. goal because the purpose of our product is

to bring people closer to their beloved animals, and we would be hypocritical if we

were damaging the planet for all animals while developing it. We believe members

of our target market would be even more likely to purchase our product with the

knowledge of our sustainable use of materials.

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Financial analysis

Price Estimation:

We priced the Dog Communication Board at $80, giving it a premium positioning

within the pet product industry. Because of the extensive R&D involved, we found

$80 to be the optimal price point to get returns on our investment, while reflecting

the value of our product. This price point will remain constant throughout both the

introduction and growth stages of the product’s life cycle.

Sales Estimations:

Our analysis of the pet industry indicates that the market for training-specific pet

products will have reached around $3.2 billion by the year 2024. However, it is

important to remember that this projection is for the pet industry as a whole, while

our product is designed for dogs in particular. Looking at this particular segment

of the market, the market value for training-specific dog products is projected to

be around $2.75 billion by 2024. Furthermore, our analysis suggests it is best to

operate under the assumption that we capture .27% of this market segment by

year 7. A quarterly breakdown of both sales revenue and unit sales can be seen

below.

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Development Cost

Assumptions:

We started finding our anticipated Product Development costs by determining our

competition's R&D as a percentage of their sales. Because we had difficulties

finding competitor's R&D costs as a percentage of their revenue, we looked at

Texas Instruments' annual report and assumed that our numbers would be similar,

given the technology that our product requires. This R&D percentage for TI

equated to 10% and we added an extra 2% for safety measures, given that our

product requires dog training insights as well. We then came up with a calculation

(above) to determine what our total product development cost would be from when

our business efforts start (7/1/2020) to when our product enters the market

(1/1/2023). From this total expense number ($562,140.00) we assumed that

development costs would be greatest at the beginning of our development stage so

we assigned declining percentages of the total expense to each quarter (% of Total

PD column). Results from the quarterly breakdown can be found below:

➢ Q3 (2020) - $98,374.50

➢ Q4 (2020) - $84,321.00

➢ Q1 (2021) - $70,267.50

➢ Q2 (2021) - $70,267.50

➢ Q3 (2021) - $56,214.00

➢ Q4 (2021) - $56,214.00

➢ Q1 (2022) - $42,160.50

➢ Q2 (2022) - $42,160.50

➢ Q3 (2022) - $28,107.00

➢ Q4 (2022) - $14,053.50

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 ➢ Total: $562,140.00 in 30 months

Variable Cost:

In order to assume the variable cost for our Dog Communication Board, we

researched the manufacturing prices for the materials that our product is made of.

We learned that push buttons cost about $1.16 per unit, of which we would need

five for each individual Dog Communication Board. Furthermore, we learned that

the board frames in which the buttons are implanted cost about $.92 per unit and

then next we estimated direct labor and packaging to equate to $4.00, and finally

the manual printout will cost around $.10 per copy. In total, that brings the

variable cost of the Dog Communication Board to be $10.82. However, we have

assumed that our variable cost per unit will start at a higher rate to account for

inventory holding costs, given that the minimum order quantity from most

potential suppliers is 1,000 - therefore,

the original variable cost estimate is

$17.82. This cost does decrease once

orders of 1,000 units can occur more

frequently, reaching the projected

variable cost of $10.82 in year 5.

Margins:

In PetSmart and Petco's annual report, we

found that they experienced gross margin

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percentages of 31.3% and 33.6%. Using these numbers, we averaged the two to

create our gross margin percentage as 32.45%.

(https://www.fool.com/investing/general/2006/06/26/a-closer-look-at-petsmart-and-

petco.aspx). As for our contribution margins, the CM per unit will be $62.18 for the

first two years, $65.18 for the following 7 quarters (until Year 4, Q4), and then

$69.18 for the remaining time - given that variable costs per unit will decrease as

order size and production increase. Below are graphs to reflect the changes in

both margins over time.

Breakeven:

Fixed costs have been forecasted to represent approximately 22% of our sales.

Below we have created graphs to present projected revenue/sales, relative to the

costs that will be incurred each quarter. Ultimately, these findings display how

long it will take the Dog Communication Board to break even in terms of both time

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and units sold. As shown, breakeven is forecasted to occur is Year 5, Q1 where

2530+ units need to be sold in the quarter.

Sensitivity analysis: Below we have included sensitivity analyses for both Year 7

alone, as well as the entire project from Years 1-7. As shown, there are two

possible scenarios that produce unfavorable financial results, given that the ‘worst

case scenario’ presents itself: selling price and market entry time. For selling

price, our sensitivity analysis essentially just shows that our unit selling price

should not be 25% cheaper ($60), which is a factor that we took into consideration

when pricing the Dog Communication Board at $80. As for market entry, this

analysis shows that we would have yet to break even if we are to be delayed by

25%. However, this does not take into consideration future sales, that would result

in profits just later down the road. Through this analysis, we have realized that

market entry should be our main priority and it could lead to massive profits if we

are able to enter early.

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