new product development for living goods
TRANSCRIPT
WE EDUCATE COMMUNITIES
WE PROVIDE HEALTHCARE
WE EMPLOY LOCALS BUT WE NEED YOUR HELP.
IMAGINE BREATHING TOXIC FUMES JUST FOR A LITTLE LIGHT.
IMAGINE TRAVELING FOR HOURS JUST TO CHARGE YOUR PHONE.
IMAGINE TRYING TO PROVIDE FOR YOUR FAMILY ON JUST $46 PER MONTH.
100 WATTS OF POWER
INCLUDES BATTERY AND INVERTER
LASTS UP TO 12 HOURS WHEN CHARGED
POWERS ANY EFFICIENT AC/DC APPLIANCE WHAT DOES THIS MEAN FOR THEM?
AVOID USE OF TOXIC FUELS LIKE KEROSENE
NO NEED TO PURCHASE FUEL FOR LIGHTS OR PHONE
STAY HEALTHY
SAVE MONEY
CHARGE PHONES OR OTHER APPLIANCES EXTRA INCOME
NO NEED TO TRAVEL TO BUY FUEL OR USE ELECTRICITY SAVE TIME
SUNBOX SAVES MONEY, TIME AND ENERGY SO WHAT ARE THE NEXT STEPS?
EDUCATE THE MARKET Action Plan
EDUCATE THE MARKET
SOURCE DIRECTLY FROM CHINA
Action Plan
EDUCATE THE MARKET
SOURCE DIRECTLY FROM CHINA
COMMUNITY DEMONSTRATIONS
Action Plan
EDUCATE THE MARKET
SOURCE DIRECTLY FROM CHINA
COMMUNITY DEMONSTRATIONS
DOOR TO DOOR SALES AND TRIALS
Action Plan
EDUCATE THE MARKET
SOURCE DIRECTLY FROM CHINA
COMMUNITY DEMONSTRATIONS
DOOR TO DOOR SALES AND TRIALS
SERVICE EMBEDDED IN THE COMMUNITY
Action Plan
WE CAN TRANSFORM THE LIVES OF THE POOR BUT HOW CAN THEY AFFORD IT?
WITHOUT SUNBOX
LOWEST MONTHLY
HOUSEHOLD INCOME
OF INCOME SPENT ON
ENERGY AND FUEL
DISTANCE TO NEAREST
TOWN WITH ELECTRICITY
WITHOUT SUNBOX
LOWEST MONTHLY
HOUSEHOLD INCOME
OF INCOME SPENT ON
ENERGY AND FUEL
DISTANCE TO NEAREST
TOWN WITH ELECTRICITY
WITH SUNBOX
WEEKLY PAYMENT ON
INSTALLMENT PLAN
ANNUAL SAVINGS AFTER
SUNBOX IS PAID OFF
MONTHS UNTIL THE
SUNBOX IS PAID OFF
2,033 UNITS TO BREAKEVEN ESTIMATED BY THIRD YEAR.
SUSTAINABLE BUSINESS MODEL 15% MARGIN RESULTS IN VIABLE BUSINESS
TEACH THE POOR TO HELP THEMSELVES FUTURE GENERATIONS NEED NOT RELY ON AID
Long term stretch goals
MEDICS
BUSINESSES COMMUNITIES
FARMERS
HELP US BEGIN THE JOURNEY DONATE TODAY.
www.livinggoods.org/donate1
What makes us different?
• We do not treat the poor as charity cases.
• We give them the tools to build a sustainable future.
• We do not have high margins, we avoid exploitation.
• Our payment plan is based on the lowest Ugandan
household income, it is accessible to anyone.
• Our business offers local employment.
• Our ventures are self sustaining.
PRO FORMa Year 1 Year 2 Year 3
UNIT SALE 900 1,350 2,700
SHIPMENTS 2.00 3.00 6.00
Revenue($) 126,000 189,000 378,000
COGS 115,740 169,290 329,940
Fixed Cost 8,640 8,640 8,640
Variable Cost 107,100 160,650 321,300
Gross Profit Margin 10,260 19,710 48,060
Gross Profit Margin Rate 8.14% 10.43% 12.71%
Operating Expenses-Shipment 2,400 3,600 7,200
Marketing Expense 27,948 27,948 27,948
SMS Campaign 2,000 2,000 2,000
Salary for Sales Reps 20,475 20,475 20,475
Advertising-Painting House 39 39 39
Demonstrations 5,434 5,434 5,434
Total Expenses 30,348 31,548 35,148
Operating Profit ($) (20,088) (11,838) 12,912
Taxes 0.00 0.00 3,873.60
Net Profit ($) -20,088.00 -11,838.00 9,038.40
Net Marketing Margin -17,688.00 -8,238.00 20,112.00
MROS -14.04% -4.36% 5.32%
MROI -63.29% -29.48% 71.96%
FINANCIALS -20% Y1 20% -20% Y2 20% -20% Y3 20%
UNIT SALE 720 900 1,080 864 1,350 1,944 1,382 2,700 4,666
SHIPMENTS 2 2 3 2 3 5 4 6 11
Revenue($) 100,800 126,000 151,200 120,960 189,000 272,160 193,536 378,000 653,184
COGS 94,320 115,740 137,160 111,456 169,290 239,976 173,098 329,940 563,894
fixed cost 8,640 8,640 8,640 8,640 8,640 8,640 8,640 8,640 8,640
variable cost 85,680 107,100 128,520 102,816 160,650 231,336 164,458 321,300 555,254
Gross Profit Margin 6,480 10,260 14,040 9,504 19,710 32,184 20,438 48,060 89,290 Gross Profit Margin
Rate 6.43% 8.14% 9.29% 7.86% 10.43% 11.83% 10.56% 12.71% 13.67%
Operating Expenses-
shipment 2,400 2,400 3,600 2,400 3,600 6,000 4,800 7,200 13,200
Marketing Expense 27,948 27,948 27,948 27,948 27,948 27,948 27,948 27,948 27,948
SM Campaign 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000
Salary for sales reps 20,475 20,475 20,475 20,475 20,475 20,475 20,475 20,475 20,475 Advertising-Painting
house 39 39 39 39 39 39 39 39 39
Demonstrations 5,434 5,434 5,434 5,434 5,434 5,434 5,434 5,434 5,434
total expenses 30,348 30,348 31,548 30,348 31,548 33,948 32,748 35,148 41,148
Operating Profit (23,868) (20,088) (17,508) (20,844) (11,838) (1,764) (12,310) 12,912 48,142
Taxes 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3,873.60 14,442.60
Net Profit -23,868.00 -20,088.00 -17,508.00 -20,844.00 -11,838.00 -1,764.00 -12,310.00 9,038.40 33,699.40
NMC -21,468.00 -17,688.00 -13,908.00 -18,444.00 -8,238.00 4,236.00 -7,510.00 20,112.00 61,342.00
MROS -21.30% -14.04% -9.20% -15.25% -4.36% 1.56% -3.88% 5.32% 9.39%
MROI -76.81% -63.29% -49.76% -65.99% -29.48% 15.16% -26.87% 71.96% 219.49%
BUDGETS
Year 1 Year 2 Year 3
Cost of Units 107,100 160,650 321,300
Shipping Costs 2,400.00 3,600.00 7,200.00
Total Variable Costs ($) 109,500 164,250 328,500
SMS Campaign 2,000 2,000 2,000
Sales Rep Salaries 20,475 20,475 20,475
Advertising on Houses 39 39 39
Public Demonstrations 5,434 5,434 5,434
Operational Costs 8,640 8,640 8,640
Total Fixed Costs ($) 36,588 36,588 36,588
Total Expenses ($) 146,088 200,838 365,088
BUDGETS explained
• Cost of Goods: 900 units imported at a rate from the manufacturer of $119 per unit.
• Shipping Costs: Rate of $1200 per container, with a capacity of 450 units per container (Protron, 2014).
• SMS Campaign: SMS will be sent at a frequency of once per month, the cost of which is estimated at $0.01 per SMS. With $2,000 budget, just under 10% of Living Goods entire customer base can be reached.
• Sales Rep Salaries: Using 117 reps at a rate of $175 per year • House Painting: Three houses painted at a cost of $13 per house. • Demonstrations: Price for transport and fuel is $29 per demonstration.
100 community members will attend the demonstration. • Operations: Rental of storage at $600 per month and utilities of $120 per
month (Numbeo, 2014).
Sales forecast
Year 1 Year 2 Year 3
UNITS SHIPMENTS UNITS SHIPMENTS UNITS SHIPMENTS
-50% 450 1 338 1 338 1
-20% 720 2 864 2 1,382 4
Goal 900 2 1,350 3 2,700 6
20% 1,080 3 1,944 5 4,666 11
50% 1,350 3 3,038 7 9,113 21
PRICe
Cost of Unit from Manufacturer $119
Shipping cost per unit $2.67
15% Margin $18.25
Total Unit Cost $139.92
Lowest Ugandan Wage $10.70 per week
Amount of income spent on energy $3.21 per week
Time to pay off item 10 months
Donation requirements
Year 1 Year 2 Year 3
Total Expenses ($) 146,088 200,838 365,088
Loss from Ugandan Campaign ($) 20,088 11,838 0
Total Donations Required 166,176 212,676 365,088
Cost Per Dollar Raised 0.06 0.06 0.06
Fundraising Expenses Required 9,971 12,761 21,905
SHEDULE
Phase 1:
5 Months
Phase 2:
3 Months
Phase 3:
6 Months
Phase 4:
10 Months
Phase 5:
1 Year.
Product
Strategy
Training of sales reps,
education of
consumers and
gauging the market.
Beta test the
market with initial
shipment through
3 key branches.
Analyze results.
If successful,
import more
shipments and
expand to more
Ugandan
branches.
Initial installment
plans now fully paid
off. Penetrate all
branches with
SunBox. Keep on top
of shipments.
Reassess and
consider product
line expansion.
Donation
Strategy
Establish event
connections and
begin donation drive
to sponsor initial
investment.
Drive donations
with emphasis on
initial reactions to
SunBox in Uganda.
Publicize initial
success to garner
further donations.
Seek press
release.
Use stories of
success to boost
Living Goods’
consulting branch
for other NGOs.
Refresh donation
drive with new
product lines
COMPETITORS Competitor Company Details Living Goods’ New Product Differentiation
Barefoot Power
http://barefootpowerugand
a.com
Wide range of solar lighting products.
Micro-entrepreneurship program.
Living Goods’ solar system can supply energy to
a range of appliances, not just lighting.
Customers can earn revenue from Living Goods’
solar system.
IndiGo
http://www.azuri-
technologies.com/indigo
Modular solar system.
Installment plans.
Scratch card activated power.
Customers ultimately pay $135 for a 3W
system worth $70.
Living Goods system offers 100W at better value.
IndiGo profit margin is 48% per unit. Living
Goods will not exploit the impoverished in this
way.
Solar Now
http://solarnow.eu/index.ph
p
Solar solutions for entrepreneurs and
small businesses.
Initial down payment is over$100, too
high for individuals in rural areas.
100W system costs over $700.
Products only sold in retailers.
Living Goods offer a much lower down payment
on a system which will not only cost less, but will
also produce more power than Solar Now’s
solutions.
Living Goods’ rural distribution networks brings
solar to communities.
Angaza Designs
http://www.angazadesign.
com
Cellular PAYG system for rural areas.
Only supply solar lighting and phone
chargers.
Living Goods’ solar system can supply energy to
a range of appliances, not just lighting.
TARGET MARKETS
Product Strategy Donation Strategy
• Families within rural communities. • Small businesses run by individuals. • Schools and clinics in rural areas. • Local landlords in off the grid
townships.
• Philanthropic individuals or foundations.
• Businesses based in San Francisco who can benefit from affiliation with a social enterprise.
SUPPLIERS LOGISTICS AND DISTRIBUTION
Supplier Logistics Distribution
Shenzhen Lonfours • In China • $119 per unit
Protron Shipping • Sea freight • Ground transport • Customs and fees • $1200 per 20ft container • 450 units per container
Door to Door Reps • Embedded in rural
communities • 24hr customer service
TECH SPECS PRODUCT
Company Name: Shenzhen Lonfours
Product Category: Solar Home Kits
Product Name: Mini Home Solar Power System
Model: LSF-MSP80
Solar Panel: 100 Watts
Battery: 12V 100AH
Controller/Inverter Output: AC 110V/220V * 4, DC 12V *1
Load Power: 100 Watts
CORRECTIVE ACTIONS Problem Solutions Effectiveness
Products are stolen before
payment is fulfilled.
Assess the cost and frequency of theft and
consider installing tracker chips in units.
Measure if the solution is viable based on
ongoing costs. Monitor recoverability of
stolen units with tracker chips installed.
Products are broken beyond
repair before payment is
fulfilled.
Replace the customer’s broken unit with a
new unit. Send the broken units back to
China under manufacturer warranty.
Assess whether the shipping costs of
returning units to the manufacturer is more
or less costly than recycling the broken
units.
Customers fail to pay back
installment plan on time.
Train sales reps to better assess customers’
financial stability before selling. Recover
product from customer or consider
extending repayment window by decreasing
monthly repayments.
Monitor customer response and ability to
pay.
Products broken, lost or
stolen during shipping.
Report the problem and recover costs via
insurance covered by shipping agency.
Track frequency of problem and willingness
of shipping agency to cover costs.
Customers do not see a need
for the product.
Educate customers on the long term
benefits of the product or extend free trials.
Monitor costs of free trail and uptake of
product following trials.
Competition releases a
similar product.
Compare value propositions, assess threat
and consider alternate marketing.
Track loss of customers to competitors and
ensure high rates of customer satisfaction.
Not enough donations are
received to cover the initial
investment.
Consider extending donation drive period
and evaluating where costs can be cut.
Evaluate ongoing financial situation until
test launch becomes viable.
CONTINGENCY plan and EXIT strategy
Contingency Plan Exit Strategy
Tipping Point Over 900 Year 1 Less than 450 in Year 1
Stage 1 Accelerate penetration of SunBox
into the rest of Uganda and Kenya.
Cease importation of further units.
Stage 2 When market saturation peaks,
consider importation of low power
appliances which can be run off
SunBox power.
Sell off remaining SunBoxes at
discount price.
branches
Marketing objectives
• Sell 900 solar systems by the end of the first year.
• Educate 10% of current consumers to the benefits of the
solar product within the first year.
• Aim to break even by the end of the third year.
• Increase donations by 6% within first year.