product offering strategy unc kenan-flagler business school star project team april 16 th, 2010
TRANSCRIPT
Product Offering Strategy
UNC Kenan-Flagler Business SchoolSTAR Project teamApril 16th, 2010
Executive Summary
Strategies for Reaching the Target Market AreasThe Developmentally Disabled CustomersThe Elderly Customers
The Product Offerings StrategyCurrent Product Offering EvaluationStrategies for the ElderlyStrategies for the Retirement Communities
The Pricing StrategyPricing Strategies
AGENDA
Secondary data sources include interviews and focus groups including over 30 individuals
3
Existing Customer Interviews - 5
Developmentally Disabled and Caregivers - 8
Elderly Focus Group Interview - 911
22
33
- 3 Case Managers and 2 Customers
Individual Interviews
Institutions44
55
- Jerry Passmore – Director of the Orange Country Department of Aging- Kate Barrett – Aging Transitional Administrator- Lori Cox – Case Manager/Clinical Social Worker Both DD and Elderly
- Galloway Ridge: Doug Oliver – Assoc. Exec. Director- Carol Woods: Ken Reeb – Director of Finance,
Nikki Bodkin – Director of Business Services- The Cedars: Sarah Flynn – Executive Director,
Angie Wynne – Director of Home Care and Clinic Lisa McCormick – Director of Nursing William Anna – Director of Plan Services
4
Directly target consumers utilizing local support organizations and adjust the product offering to reflect the true value to consumers
• Conducted interviews and focus groups to identify product offering and pricing strategies• Performed secondary research to determine target market areas
Project Overview
Target Market Areas• ARC chapters and senior centers can be utilized to increase product awareness with caregivers and elderly by conducting information sessions
Offering• Focus a different product offering to caregivers, elderly, and institutions
Pricing • Increase monthly prices and charge extra for premium products• Provide institutions with volume discounts
Recommendation
Target Market Areas
Organize discussion groups and sponsor events involving caregivers through local support organizations
Reaching Caregivers
6
*All ARC chapters, senior centers and institutions we approached expressed their willingness to support the initiatives of companies such as CMI.
To increase product awareness communicate directly with end consumers utilizing local organizations which support the developmentally disabled
Case Manager Case Manager Caregiver
Caregiver
Caregiver
Caregiver
Caregiver
Caregiver
Caregiver
Caregiver
Utilizing The ARC Chapter
Caregiver Caregiver
CaregiverCaregiver
Caregiver Caregiver
Caregiver
Caregiver
7
North Carolina, Georgia, and Virginia have the strongest demographics for the developmentally disabled population
(Source: U.S. Census Bureau, U.S. Census 2000 and The ARC)
Target States Evaluation
8
The ARC Chapters Disabled Population Median Income Rank Aggregation
Count Rank Count Rank Income Rank Aggre-gate
Overall rank
New York * 56 1 827,717 1 $55,401 3 5 1
North Carolina 47 2 374,324 2 $46,107 5 9 2
Virginia 23 3 297,524 5 $61,044 2 10 3
Georgia 23 3 358,052 3 $50,549 4 10 4
Maryland 11 7 207,710 7 $70,005 1 15 5
Tennessee 18 5 323,913 4 $43,662 7 16 6
Kentucky 17 6 254,826 6 $41,763 8 20 7
South Carolina 3 9 203,934 8 $44,326 6 23 8
West Virginia 5 8 130,085 9 $37,870 9 28 9
In North Carolina, target the top five counties with high populations of developmentally disabled
Developmentally Disabled Population Map (North Carolina)
(Source: U.S. Census Bureau, 2006 American Community Survey)
10,000 ~
5,000 ~ 9,999
3,000 ~ 4,999
1,000 ~ 3,000
0 ~ 1,000
Asheville
Charlotte
Greensboro Raleigh
Fayetteville
9
Leverage the local ARC Chapters to expand product awareness in these counties
Counties with The ARC chapter
Counties without The ARC chapter
The ARC Chapters in North Carolina
(Source: The ARC of the United States)
Charlotte
Greensboro Raleigh
Asheville
Fayetteville
10
In Georgia, the majority of the developmentally disabled population reside near Atlanta
(Source: U.S. Census Bureau, 2006 American Community Survey)
10,000 ~
5,000 ~ 9,999
3,000 ~ 4,999
1,000 ~ 3,000
0 ~ 1,000
Atlanta
Developmentally Disabled Population Map (Georgia)
11
Leverage the local ARC chapters in the surrounding Atlanta area
Counties with The ARC chapter
Counties without The ARC chapter
The ARC Chapters in Georgia
(Source: The ARC of the United States)
Atlanta
12
The Washington DC, Richmond, and Harrisonburg triangle area should be targeted for the developmentally disabled market
Developmentally Disabled Population Map (Virginia & D.C.)
(Source: U.S. Census Bureau, 2006 American Community Survey)
10,000 ~
5,000 ~ 9,999
3,000 ~ 4,999
1,000 ~ 3,000
0 ~ 1,000
Washington
Richmond
Harrisonburg
13
Leverage the existing ARC chapters to increase product awareness
Counties with The ARC chapter
Counties without The ARC chapter
The ARC Chapters in Virginia Washington
Richmond
Harrisonburg
(Source: The ARC of the United States)
14
Utilize local organizations in the target areas to increase product awareness and overall sales
Recommendation for Developmentally Disabled Population
Focus on target area in each state
Utilize local organizations to communicate directly with end consumers11
22
- The ARC is the main organization, which supports the developmentally disabled - Major target cities have one or more ARC Chapters
- North Carolina: 5 major counties- Georgia: Atlanta Metropolis- Virginia: Washington DC, Richmond, Harrisonburg triangle area
15
Utilize the vast number of Senior Centers and the institutions to communicate reach out to the elderly and caregivers
Elderly
ElderlyElderly
Elderly
Utilizing Senior Centers
Elderly
Elderly
Elderly Elderly
Elderly
Elderly
16
Case Manager
Caregiver
Caregiver
Caregiver
SeniorCenter
SeniorCenter
Target New York, Georgia, and Virginia, along with North Carolina, for the elderly market
(Source: U.S. Census Bureau, U.S. Census 2000)
Target States Evaluation
17
Institutions For Elderly Elderly Population Median Income Rank Aggregation
Count Rank Count Rank Income Rank Aggre-gate
Overall rank
New York * 1,115 1 2,607,672 1 $55,401 3 5 1
Georgia 539 2 981,024 3 $50,549 4 9 2
North Carolina 516 3 1,139,052 2 $46,107 5 10 3
Virginia 498 4 940,557 4 $61,044 2 10 4
Maryland 295 8 679,565 6 $70,005 1 15 5
Tennessee 464 5 819,626 5 $43,662 7 17 6
South Carolina 357 6 596,295 7 $44,326 6 19 7
Kentucky 296 7 565,867 8 $41,763 8 23 8
West Virginia 62 9 285,067 9 $37,870 9 27 9
Target the six North Carolina counties with a high density of institutions for elderly
Institutions for Elderly density Map (NC)
(Source: U.S. Census Bureau, 2009 American Community Survey)
Asheville
Charlotte
Greensboro
RaleighBurlingtonWinston-Salem
21 ~ 623
16 ~ 20
11 ~ 15
6 ~ 10
0 ~ 5
18
In Georgia, target Atlanta and the surrounding areas which have the highest density of elderly institutions
Institutions for Elderly density Map (Georgia)
(Source: U.S. Census Bureau, 2009 American Community Survey)
Atlanta
21 ~ 623
16 ~ 20
11 ~ 15
6 ~ 10
0 ~ 5
19
In Virginia, target Washington DC, Richmond, and Virginia beach
Institutions for Elderly density map (Virginia & D.C.)
(Source: U.S. Census Bureau, 2009 American Community Survey)
Washington
Richmond
Virginia Beach
21 ~ 623
16 ~ 20
11 ~ 15
6 ~ 10
0 ~ 5
20
Utilize senior centers and institutions in the target area to increase product awareness and overall sales
Recommendation for Elderly population
Focus on target area in each state
Utilize senior centers and institutions to reach out to elderly more directly
11
22
- Senior centers are a good starting point to start reaching out to both the elderly and the caregivers - Institutions are being approached by competitors. So, winning over the institutions will be key to gaining market share.
- Target Counties with high density (> 20) of institutions and senior centers- North Carolina: 6 major cities- Georgia: Atlanta Metropolis- Virginia: Washington DC, Richmond, and Virginia Beach
21
Product Offering Strategy
Caregivers of Elderly and Disabled• Keep current product offering• Customizable sensor list is the preferred shopping experience
Elderly• Primary concerns for self are falls and access to emergency
care• Provide a product offering which includes the PERS system and
a fall sensor
Retirement Communities• Provide discount options to promote higher purchase volumes• Provide a VCM-”lite” option
23
Each of the 3 market segments should be provided customized product offerings to maximize the value from each segment
Caregivers of Elderly and Disabled• Keep current product offering• Customizable sensor list is the preferred shopping experience
Elderly• Primary concerns for self are falls and access to emergency
care• Provide a product offering which includes the PERS system and
a fall sensor
Retirement Communities• Provide discount options to promote higher purchase volumes• Provide a VCM-”lite” option
24
Each of the 3 market segments should be provided customized product offerings to maximize the value from each segment
25
The current product offering for the caregivers of the developmentally disabled and elderly is appropriately structured and should be continued going forward
Going Forward
Continue offeringproducts as lists.
Emphasize SimplyHome’s personalized
approach.
What we learned• Caregivers prefer the ability to select an individualized set of devices and do not value the convenience of picking a bundle.• Shopping for safety devices is an emotional experience, in which a personal approach makes the buyer feel more confident in their investment.
One of the biggest concerns for caregiver families was the reluc-tant behavior of the elderly to reveal their health condition
One of the biggest concerns for caregiver families was the reluc-tant behavior of the elderly to reveal their health condition
This concern could be addressed by Virtual Care Management and Online Monitoring
This concern could be addressed by Virtual Care Management and Online Monitoring
Caregivers identified these products as having the highest value to them: (In this order)
1. Fall Sensors1. Fall Sensors 2. Stove Sensor2. Stove Sensor 3. PERS system3. PERS system
26
SimplyHome should target the caregivers of the elderly by providing a solution to the fear of falls and the concern of handling electronic appliances
Caregivers of Elderly and Disabled• Keep current product offering• Customizable sensor list is the preferred shopping experience
Elderly• Primary concerns for self are falls and access to emergency
care• Provide a product offering which includes the PERS system and
a fall sensor
Retirement Communities• Provide discount options to promote higher purchase volumes• Provide a VCM-”lite” option
27
Each of the 3 market segments should be provided customized product offerings to maximize the value from each segment
The primary concerns of the elderly:• Falls• Access to emergency services
Concerns unacknowledged by the elderly but important to caregivers:• Forgetting• Missing medication• Wandering• General health situation
28
SimplyHome should target the elderly who are buying the product for themselves by providing a solution to the fear of falls
Of the elderly, 89% are concerned about falls; one-third about forgetting; 11% about missing daily medication
29
PERS with a fall sensor would be a very attractive product offering for the elderly
PERS with a fall sensor would be a very attractive product offering for the elderly
Daily concerns of the elderly
Wandering/DailyRoutine Change
Daily Medication
Forgetting
Falling
0 1 2 3 4 5 6 7 8 9
No. of Responses
29
More than 33%of adults 65 and older fall each year in the
United States
Sources: Focus Group Interview & Center for Disease Control and Prevention
Among older adults, falls are the leading cause of
injury deaths
Caregivers of Elderly and Disabled• Keep current product offering• Customizable sensor list is the preferred shopping experience
Elderly• Primary concerns for self are falls and access to emergency
care• Provide a product offering which includes the PERS system and
a fall sensor
Retirement Communities• Provide discount options to promote higher purchase volumes• Provide a VCM-”lite” option
30
Each of the 3 market segments should be provided customized product offerings to maximize the value from each segment
Virtual Care Manager “lite”
Virtual Care Manager “lite”
Technology
Helps keep res-idents in IL
longer
Helps keep res-idents in IL
longer
External resource to people on wait-
ing list
External resource to people on wait-
ing list
Pay per room along with volume
discounts
Pay per room along with volume
discounts
Monthly pay-ments, no contract
basis
Monthly pay-ments, no contract
basis
31
When targeting institutions, technology must be carefully packaged to provide most value
Institutions withlimited long-term
care spots
Institutions withlimited long-term
care spots
Nearby naturallyoccurring
retirementcommunities
Nearby naturallyoccurring
retirementcommunities
States withpending laws thatbridge institution
& community
States withpending laws thatbridge institution
& community
NichesNiches
Age of facility: Institutions that are new, developing or well established (15+ years w/reserves)
Age of facility: Institutions that are new, developing or well established (15+ years w/reserves)
Institutions that offer single family, independent living
32
Institutions with specific attributes are more attractive potential customers
Retirement community waiting lists
Ability to track resident progress and trends
Earlier detection of disease
Evidence to support resident moves
• Reports provide pattern recognition as well as physical data
• Allows residents to remain in independent living longer
Virtual care manager “lite” should be the primary product offering for institutions
33
Institution NeedsInstitution Needs VCM “lite” benefitsVCM “lite” benefits
More efficient use of long-term facilities
Resident NeedsResident Needs
34
Virtual care manager “lite” would benefit residents as well
Ability to remain in independent living longer
Feedback for caregivers
• Stove monitoring• Support for spouses with a disease• Lower expenses
• Reports to provide to children and family
VCM “lite” benefitsVCM “lite” benefits
Pricing Strategy
$0
$50
$100
$150
$200
$250
Caregivers Elderly Disabled Quietcare Gold
Pricing
Price/month
36
Value for the service varied across different customer segments but the consensus data shows that SimplyHome’s current offering is underpriced
(Quietcare Source: http://www.totalhomesecurity.com/quiet-care/)
Elderly Disabled Caregivers of Elderly
Fall Sensors
Stove Sensors
PERS
Online
Virtual Mgmt
Excited
Average
Might not buy
Good
37
All the 3 segments rated certain products to be ‘premium’ for which SimplyHome should charge a premium price
Scorecard for SimplyHome Products
Not bad
Stove
Senso
r
Fall S
ensor
Micr
owave Se
nsor
Incontinence
Senso
r
PERS Syst
em0
20
40
60
80
100
120
MaximumAverageMinimum
38
Caregivers would pay as high as $75/month for a fall sensor and $50/month for a stove sensor
Additional Sensor Values
Elderly care facilities would pay a premium over current prices
39
• $150 ~ $240
• Up to $300 would be reasonable
Price Range
CommentsThe Cedars
• $150 ~ $200
• Money saved from nurse giving medication reminders• $150 to $200/day to stay in an assisted living facility• A smaller installation fee with higher monthly fees
Price RangeGalloway
Ridge
• $70 ~ $100
• Residents here could afford up to $100/month• Up front investments are not a deterrent to them• Residents have to pay more to go to another long-term care facility ($88 vs. $283/day)
Price RangeCarol
Woods
Comments
Comments
40
Level % of Homes w/ technology
# of Homes
InstallationDiscount
Monthly Fee Discount
MonthlyRevenue
(with)
Monthly Revenue(w/out)
1 <20% <60 None None $4,200 $4,200
2 20-50% 60 – 150 $880 (20% off) None $6,300 $6,300
3 50-80% 150 – 240 $550 (50% off) 5% off $11,970 $12,600
4 >80% >240 $220 (80% off) 15% off $14,280 $16,800
Institutions prefer a particular set of payment options
Volume discounts (Sample - The Cedars, approx. 300 IL homes)
Pay-per-room with no minimum installation
Monthly fees passed on to residents with installation covered by institution11
22
33
Increase monthly subscription fee until the initial device cost is recovered
No upfront device and installation costs
41
Customers in the non-facility segments should be offered the option of increasing the monthly price to cover the high upfront costs
42
Directly target consumers utilizing local support organizations and adjust the product offering to reflect the true value to consumers
• Conducted interviews and focus groups to identify product offering and pricing strategies• Performed secondary research to determine target market areas
Project Overview
Target Market Areas• ARC chapters and senior centers can be utilized to increase product awareness with caregivers and elderly by conducting information sessions
Offering• Focus a different product offering to caregivers, elderly, and institutions
Pricing • Increase monthly prices and charge extra for premium products• Provide institutions with volume discounts
Recommendation
Next Steps
Conduct a quantitativ
e pricing and
costing analysis
Build a strategic
sales force growth strategy
43
Appendix
APPENDIX
Appendix Contents
APPENDIX45
Existing Customer Responses (Slide 46 – 49)
Existing Customer Testimonials (47)
Purchase Experience Observations (49)
Elderly Fall Sensor Focus Group Info (Slide 55)
Elderly Focus Group Response Data (Slides 56 – 59)
Willingness to Receive the Product (56) Independent Living Focus (57)
Technology Capabilities (58) Buying Preferences (59)
Costs Comparisons (Slides 60 – 61)
In-home Nursing (60) Assisted Living Nursing Care (61)
Concerns of Existing Customers (46)
General Response about products (48)
Thought about Premium products (50) Thought about product price (51-52)
Needs for new products offering (53-54)
APPENDIX
Interviews with existing customers echoed the concerns of the focus group participants
Peace of mind1
Independence2
Safety3
Convenience – easy, helpful4
Price - savings5
Feel comfortable contacting SH6
Double-checking safeguard7
APPENDIX
Similarly, safety and fear of unpredictable events are current customers’ primary drivers of seeking out SimplyHome’s technology
Before the SH system, one autistic child would run away 4-5 times a month, which was very dangerous since the child is non-verbal. Now with SimplyHome, the number of times is down to 1.
47
The mother of an elderly woman had fallen and laid on the floor through the entire night. The elderly woman was afraid the same thing would happen to her.
APPENDIX
Existing customers find the SH System very useful and mostly not intrusive
All respondents found the system useful Majority found the system
not intrusive, except for a small percentage of mentally
disabled customers
APPENDIX
SimplyHome existing Customers also prefer buying services through individual lists instead of bundles
Lists Bundles
More customizable
More personal
Promotes awareness of all
products
Convenient
Price-savings
49
APPENDIX
SimplyHome customers value premium features highly
OnlineMonitoring
StoveSensor
MedicationDispensers
Bed/ChairPressure pads
Valuable,NecessaryFeatures
APPENDIX
Some customers are not price-sensitive because they do not pay for the services directly
Technology is either privately funded or paid for by other entities
CommuniCare
Counties
ARC
Medicare
APPENDIX
Some customers find the initial cost too high
One customer found the initial equipment somewhat pricey although the monthly payments are not bad at all.
APPENDIX
SH can provide more value to existing customers by developing new products and addressing complaints
UnmetNeeds
Complaints
Suggestions
• Sleep apnea suction sensor
• Turn-around time when equipment malfunctions• Lag time of 3-4 minutes after sensor goes off• Depending on location, sometimes can’t hear notifications
• Change website to reflect not only elderly but also developmentally disabled customers• Try to find a way to work with Medicaid/Medicare• Specifically target the MRDD population, especially since there aren’t a lot of resources available to them
APPENDIX
Common developmental disabilities that have been served by SimplyHome technology
Bipolar disorder1
Defiant personality disorder2
Developmental-cognitive disorders3
Schizophrenia4
Cerebral palsy5
Autism6
Other mental disorders7
APPENDIX
The elderly should be approached with a product offering which includes the PERS system and fall sensor when they are making purchasing decisions for themselves
The PERS system and pendant answer the
concerns of falls and accessibility
to emergency services.
Elderly making their own
purchasing decisions are typically living independently and don’t see
the extra value of the additional
sensors for themselves.
The Focus Group participants were excited
about the opportunity of a
fall sensor.
If SH comes out with a fall
sensor, it can charge a premium
monthly fee, as the product is
highly valued by the potential customers.
55
APPENDIX
Only 11% of the elderly said they would be offended if their caregivers gifted this product to them
56
(Source: Focus Group with elderly with 9 participants)
How many of you would be offended if your loved ones gifted you with product/technology such as SimplyHome's?
APPENDIX
78% of the elderly chose living independently at home as their primary option
57
(Source: Focus Group with elderly with 9 participants)
How important is it for you that you live independently (without moving to an assisted living facility or a senior living facility or a home)?
APPENDIX
Everyone claimed that they were quite comfortable using technology
58
(Source: Focus Group with elderly with 9 participants)
How many of you say you are not comfortable with technology/few basic devices?
APPENDIX
A majority of the elderly expect their caregivers to buy this product for them
59
(Source: Focus Group with elderly with 9 participants)
How many of you would buy the products such SH's by yourself and how many of you expect your loved ones will buy these products for you?
APPENDIX
High Cost of substitutes like private nurse care and nursing homes help SimplyHome offer its services at a higher price
Substitutes Private Nurses Elderly Care Institutions
Cost @$20/month it comes up to $175,000/year
$5000-$8000/month
Disadvantages Skeptical about trust and the fit issue
Guilt of not being able to take care of them
60
APPENDIX
Assisted living facilities indicated the value of the product which included a VCM-”lite” option was between $150-3000
No of Care Hours/day 2 4 8 12 16 20 24
Cost for Private Nursing Care at Home
Cost per (@20/hr)
Day $40 $80 $160 $240 $320 $400 $480
Month $480 $960 $1,920 $2,880 $3,840 $4,800 $5,760
Year $14,600$29,200 $58,400 $87,600 $116,800 $146,000 $175,200
Cost per (@30/hr)
Day $60 $120 $240 $360 $480 $600 $720
Month $720$3,600 $7,200 $10,800 $14,400 $18,000 $21,600
Year $21,900$43,800 $87,600 $131,400 $175,200 $219,000 $262,800
Cost per (@40/hr)
Day $80 $160 $320 $480 $640 $800 $960
Month $960$4,800 $9,600 $14,400 $19,200 $24,000 $28,800
Year $29,200$58,400 $116,800 $175,200 $233,600 $292,000 $350,400
61
Cost of Nursing care for 2~24 hours/day