Executive Summary: B
Selker
Industries was launched around the flagship product, the body mass calculator,
or BMC. The BMC finds a person’s body fat percentage in a manner similar
to skin-fold calipers, though with higher accuracy and consistency. By
meeting a previously unmet need with a novel technology, Selker Industries is
poised to succeed in the growing biometrics market.
The BMC
exploits a gap in the personal biometrics market by combining a high-tech
solution with a low cost technology. Representing the gold standard of
body fat measurements is the hydrostatic weighing method, which is costly and
time-consuming. Consumer targeted products rely on bioelectrical impedance
analysis or skin-fold techniques, which are low-cost alternatives but
also have low accuracy. Currently, the market is lacking a more
balanced combination of these two extremes. BMCs fulfill this need by
looking at a constant metric (local dielectric coefficients), thereby
eliminating the operator effect so that the same measurement can be reproducible
by someone completely new to the product.
As OSU IP,
the product is a well-researched tool that finds a novel use for biological
capacitance. The BMC is a hand-held device that is pressed against the skin in
three or more places and takes measurements of the dielectric capacitance at
that point on the body. These measurements are digitally put into a
formula that allows the BMC to immediately output the tester’s body fat
percentage. This invention is protected by patents owned by OSU.
Accordingly, an early step in our business plan will be to negotiate with the
OSU IP office to buy the rights to this product.
We plan to exploit our market niche by selling the product to fitness centers
in Oregon. Our defined market includes the more than 500 fitness centers
in Oregon. We anticipate 6% market penetration in our first year.
We plan to amplify sales by encouraging the fitness specialists that use the
device to also act as the middle man of distribution by selling to personal
consumers. We plan to achieve this by releasing a simplified version of
the product so that fitness services can retain their service opportunity.
As such, we have identified a safe position in the value chain. We will
control everything from the device production to the professional sales.
Our expectation is that the production and sales of the device will be a
profitable side of the industry. We also plan to boost cash flow with a
hybrid solution by wholesaling a personal consumer version that the fitness
centers can retail.
The production plan entails contracting out the manufacturing and
packaging of the device. The selection of machining services is currently
being examined to find the best value. The basics of the bill of materials
for the product include a basic circuit board with a pair of capacitors and an
integrated circuit to handle the data. These components are ubiquitous,
low-cost ingredients that will allow for low production costs and high profit
margins.
A
degree of risk is inherent in the execution of each stage of this business
plan. We can prepare for and mitigate most of these risks by scaling the
stages of the business down to a manageable level. We will start with a
focus group to test the product performance, accuracy, and reliability.
Next, we will then move to a small scale run (10 to 30 units) to test user
acceptance as well as the readiness of the commercial embodiment. If the
commercial model is popular, we can simply scale up our manufacturing contract
as sales grow. This three stage approach will keep costs down and make
the difficulties manageable until they are solved.
Company Over view:A
Product
Description
For
understanding the purpose and method of the
it is best compared to a skinfold caliper.
It takes local measurements of key parts of the body and uses these to calculate
the body fat percentage of the user. However,
instead of pinching the skin, it merely rests against the skin and takes the
measurement when the user pushes a button.
It is a cell phone sized device, which also has an output screen similar
to a cell phone.
The key component of the
The capacitor is a pair of conductors installed at a fixed width on the
edge of the hand-held device. Each conductor
has a charge opposite the other, generating an electric field. The electric field passes through the region of
skin between the conductors. The depth
of the electric field is about half of its width; the conductors are spaced roughly
two inches apart, so the field penetrates about one inch below the top layer of
skin. The electric charge is well below
what humans would notice.
The integrated circuit in the
of the electric field. The dielectric
constant is an indicator of the water content within the electric field. The water content correlates the composition
of muscle, fat, and bone in the region. Programmed
into the
outputting the correct body fat percentage based on the dielectric constant
observed.
Its early stage of development explains
its set of advantages and disadvantages.
It currently needs more testing to confirm its accuracy. According to current assessments, it offers the
optimal combination of accuracy and convenience in market that offers either
low-accuracy calipers or expensive, low-convenience hydrostatic weighing
chambers. However, it needs to be proven
and promoted to achieve market penetration.
Accordingly, its main disadvantage is that it needs to find early
adopters willing to try out such a new technology.
Marketing Plan
Initial Target Market
Health care costs are rising faster
than accounted for the growth of the United States population and the national
median income. In order to measure body
mass composition, the current market offers either inaccurate, cheap devices or
inconvenient, expensive but accurate devices.
Non-Contact Capacitance Measurements is a low cost way to accurately
determine body composition. Concurrently, the United States is struggling with
increasing obesity. According to Johns Hopkins by the year 2015 75% of the
population will be overweight and 41% will be obese. Additionally, the federal
government guidelines suggest that the average American should participate in
150 minutes of moderate intensity activity or 75 minutes of vigorous activity
per week. In 2008 the federal report showed that 65 percent of Americans meet
these guidelines. The Non-Contact Capacitance Measuring product would allow
people to immediately and accurately measure their body composition and help
people meet their fitness needs.
Target Customers and Target Markets:
The BMC system allows athletes to have immediate results of the condition of their
bodies. For example this would allow a team trainer to measure their body
composition and create a more accurate workout program targeted to specific developmental
goals. There are three target customers for this products; medical
professionals of sports teams, personal trainers at athletic clubs and
individual athletes. In the first two target customers the specific consumers
of this product are the athletes of the team.
There are two target markets for this
technology the experienced professional and the individual athlete. Due to the
chip in this technology costing a mere $4 dollars the profit margin could be
remarkable. In line with the idea of the inventor I would sell a higher end
version to doctor’s offices, sports medicine clinics, medical trial centers and
hospitals. Then I would sell a lower end version available at local retailer
like Costco, target, athletic clubs.
Potential
Profitability:
Fitness equipment represents
a 3.9 billion dollar a year industry. Within this market there is definitely a
place for a mid price ranged method of detecting body composition. A market analysis performed by
MedicineNet.com evaluated the top 8 body fat measuring devices. They can be
broken into two categories: Cheap ($0-$50) and expensive ($50-$500). The
products that fall in the cheap category provide a ineffective and inaccurate
results.
The potential market
would be professional services such as fitness centers. After speaking with several 24 Hour Fitness
clubs, consumers have indicated that they want reliable, accurate results that
will provide quick feed back to members in a non-invasive way. Dr. Selker’s presentation of this technology
leads us to believe that the product will be able satisfy all of these
needs. Among this market the product has
strong functional advantages over competitors.
Dr. Selker believes the product can be produced at a cost per unit
analogous to the low end of the market while delivering results on the level of
the high end products. However, its
total development costs and potential revenue are yet to be determined.
Olympic
althetes
Professional
Teams
Explain market
direction
Phases: 1, 2, 3
Tam and Sam
Placement A
Value Chain
Competitor Analysis: J
Competition:
In order to measure body fat
customers have two main options; cheap, convenient and inaccurate or expensive,
time consuming, costly and accurate. Below is a table showing the current
consumer options and some of the attributes attributed with them.
|
Product |
Cost |
Accuracy |
Convenience |
|
BMI |
$0 |
Very Low |
Highest |
|
Skin Fold Caliper |
$15 |
Very Low |
Highest |
|
Body Fat Scales |
$30 - $40 |
Low |
High |
|
Hydrostatic Weighing |
$1,000 + |
High |
Very Low |
|
Total Body Protein |
$1,000 |
Medium |
Very Low |
|
Computed Tomography |
$2,000 |
High |
Very Low |
|
Dual Energy X-Ray Absorpiometry |
$1,000 - $5000 |
High |
Very Low |
|
MRI Scanner |
$5,000 ++ |
Very High |
Very Low |
The majority of these tests very
costly and require the customer to visit a specialists. In view of the current
competitors on the in the market, the product exploits a gap by offering an
unmatched optimum of both accuracy and affordability. Therefore, most sports teams like West Linn
High Schools Wrestling Team uses Skin Fold Caliper to determine approximate
body fat percentages. Ideally a wrestler maintains a body fat of 3 percent
(this is variable depending on weight classes). After speaking with Matt Kim a West Linn High
School graduate who placed as State Champion during his wrestling career. He
was greatly interested in this product and would have found it a great asset
during his wrestling days and would still be interested now as a student at
Stanford University to use during his normal workout routine.
The competitions low-accuracy devices
become even less accurate for people at extremes of the body-type distribution
curves. The key demographics, professional
and semi-professional athletes as well as obese people, stand the most to gain
from the Non-Contact Capacitance Measurements unmatched accuracy.
Industry
Analysis
For the last decade the fitness industry,
has had rapid expansion of fitness clubs throughout the United States. The
industry which is still showing positive growth will most likely reach
saturation in the coming few decades. This presents large competition for each
fitness club to attractive members, the hottest new trend that clubs are using
is the concept of “keeping it personal.”
The target customers expect much more than the basic work out equipment
and seek gyms that offer personal trainers, sports performance training,
nutrition counseling, small group/personal classes, and individual/partner
specific weightless workouts. Club Sport’s personal trainer Wolfgang Rudolf,
who has a BA in Physical Education found this technology to be a huge assets
for his clients. He would utilize this technology during his training sessions
to track the progress of his clients. He also thought that depending on the
price of the product, it would be great for his summer basketball academy
athletes to purchase and use to track their progress during the season.
Professional Sports teams like the
Portland Trail Blazers train in Tualatin, Oregon several times a week with
extremely specific work outs. NBA sports teams spend large amounts of time and money
to insure they have the best methods for their team’s health and wellness. For
example this year The Blazers even followed the advice of Dr. Charles Czeisler of
Harvard Medical School and Division of Sleep Medicine who recommended that the
team stay on Portland time instead adjusting to the different time zones that
they frequently travel to. (We left a message for the Blazers sports medicine
contact, unfortunately we have not yet heard back from them.) I think that the BMC would be a great device for their team to use during training.
Price A
One unit
price
Primary Market
Secondary Market
Message N
“Change your Reality”
Logo
Picture of product
Promotion and Measurement J:
Operation Plan
Business Model: J
Patents/Licensing: C
Discuss patents
IP coverage
Working with OSU
Appendix: Facts and Assumptions
Facts
·
Component Chips $4.00(when you buy 2)
·
Low Frequency
·
Measures Capacitance
·
Resolution 1:16,000,000 resolution
·
Fat has a dielectric 1/100 of muscle
·
Body weight is not an accurate
measurement of body composition
Assumptions
- More accurate
than competitors. - People
want to know their Body Composition. - It would
be inexpensive. - 1 months
to prototype. - 18 months
to market. - That
connecting wires to the circuit board will provide you with the same
information as the final device. - People
would buy this instead of calipers. - That the
prototype works. - That this
device would not be just another fitness gadget. - That the
correlated data would be track-able over a short period of time. - That
water vs not water is enough of a comparison to make on the human body. - The
circuit board will be made cost effective and work right the first
time(developed by John’s researchers).
·
Target
Market is large enough.
·
Joe Heidegger would pay up to $40
dollars for this device.
·
That the device actually can gather
data.
·
That the data can extrapolated to
provide user friendly important information.
·
That
this is completely safe for humans.
·
That
John’s theory’s are correct.
Process Description: N
Facility Location A
Offiice:
2500 Willamette Falls Drive, West Linn, Oregon
Triple Net Rent $500/month
Equipment A
Office Supplies
Computer and printer
Software for design
Suppliers
Portland area: Mega Tech
Packaging Company
People
The team behind this startup is
inventor Dr. John Selker, Ph.D. Physics; and students Cory Donahue, Mech.
E.; Nick Papke, Mech. E.; Andrea McHugh, Microbiology; Brian Maloney,
Bio. E.; and Joseph Imatani, Finance. Each member brings a
complementary set of skills and strengths that have coalesced in working
through the steps of forming the business plan. Accordingly, every
indication is that the team could continue to effectively steer the newly
formed company through its early growth stages and beyond.
The five of us are prepared to shoulder the bulk of the
work load in starting and operating the entire company. We will be the sales force for the
starting point and early growth stages of the business. We will distribute responsibilities between
cold-calling and field salespeople and assign sub-regions to different team
members. The inventor plans to not be
involved in the company but is disposed to mentor and guide the team during the
launching phase of the business.
Timeline
Attached
Finance Plan
Offer : N
Intended Funding and Sources
N
COGS: A
Pro
Forma Cash Flow: J
ROI
Risks B
Break even
Valuation Calculation
Exit Strategy A
In five
years we will sell and cash out
Future
A
Future
and Conclusion:
Overall the market seems to be
lacking a product that could compete against the Non-Contact Capacitance
Measurement device. If this product can be manufactured for around $20 per
unit, it should be able to successfully compete with other devices. The profit margin per unit could potentially
be as high as over 400%. According to the inventor it would take 6 months to
develop a prototype to demonstrate and approximately 18 months to get to market.
References:
1.
Centers for Medicare and Medicaid Services,
Office of the Actuary.
2.
http://www.cdc.gov/nchs/products/pubs/pubd/hestats/obese03_04/obese_fig1.gif)
3.
Club
Sport – Tualatin, Oregon
4.
24
Hour Fitness
5.
Matt
Kim - Wrestler
6.
Portland
Trail Blazers
7.
Dr.
David and Donna Campbell
8.
Johns
Hopkins Website
9.
Joe
Heidgger – Body Builder
10.
Federal Government Health Website
11.
Mintel Library Database
12.
BA 468 Power Point Presentations