1 Charmed Technology Case Presentation Charmed Technology Case Presentation March 9, 2005 Jennifer...

/ 1Charmed Technology Case Presentation

Charmed Technology Case Presentation

March 9, 2005

Jennifer LoveConstance Chow

Jackie FisherTodd Nguyen


Agenda

Main Issues

Recommendations based on Main Issue

How Recommendation was derived

Action plan for Launch

Expected Results


Problem: Whether or not to mainstream launch the CharmIT device

Key Issues : Is the CharmIT wearable computer is ready for mainstream release

Is the mainstream market ready for the CharmIT device

If launched, how should the wearable computer be positioned, priced and promoted

How should the company’s internal resources be allocated to ensure the greatest possible success for the CharmIT device


Recommendations: Focus on product improvement and build credibility

Expand Marketing and Sales team while reallocating Engineering staff

Two Phase Product Launch— 1st Generation limited launch targeted at Lead Users— 2nd Generation mainstream launch targeted at New Economy Workers

Position technology as a “Lifestyle Enhancing Device” and capitalize on Buzz marketing through unorthodox promotional events (ex: fashion shows)

Launch 2nd Generation in approximately 1 year— Create bundled CharmIT packages— Retail bundle for $2,500


Interim Objective:

Use 1st Generation to improve technology, educate consumer and build credibility for the technology

Benefits:

• Shortened Product Development Phase leading to a significantly improved product

• Provides time to expansion of application software

• Provides time for expansion of support networks

• Allows for reallocation of scarce resources

Risks:

• May forfeit first mover advantage

• Product development make take longer

• Required Support networks will still have limited availability


Final ObjectiveLaunch 2nd Generation CharmIT as Windows Based, Lifestyle Enhancing Device for the New Economy Workers within 12 month period

Benefits:

• Leverage existing base of users and application programs

• Use of established and highly recognized software increases credibility of the technology and potential adaptation rate

Rejected Alternative: Use of Nanix O/S and Applications

• Limited because device will only work with other Charmed devices

• No established user base of Nanix system (would have to create from scratch)

• Early adopters do not prefer the Nanix system


Launch 2nd Generation CharmIT as Windows Based, Lifestyle Enhancing Device for the New Economy Workers within 12 month period

Benefits:

• Already positioned as a fashionable, trendy device in consumers minds

• Guerrilla and Buzz marketing for product have been successful in the past

• Unique point of differentiation – speaks to emotional instead of logical

• Easily relatable for consumer as a device which adds value through “enhancement”

Rejected Alternative: Launched solely as a high technology oriented device

• Public adaptation curve would be greater

• Harder to educated consumer as they have to establish their own meaning/value for the product

Final Objective



Benefits:• Disposable income to purchase the product

• More tolerant of ‘bugs’ in device

• Willing to provide valuable customer feedback to Charmed

Rejected Alternative 1: Focus on Gamers• Too much of a niche market to start and not trendy enough to stimulate critical mass

purchasing

Rejected Alternative 2: Focus on Wall Street People• Will not tolerate any bugs in systems

Rejected Alternative 3: Focus on University Students• No disposable income for such purchase

• May not be able to completely replace a PC at this time in development



Benefits:

• Provides time to alleviate product bugs and improve product offerings

• Opportunity for customer feedback

• Allows Re-engineering of technology and packaging based on feedback – increases likelihood of adoption

• Allows more time for the expansion of support networks

Rejected Alternative: Immediate Mainstream Launch

• Serious issues concerns about bugs and limited application offerings

• Very little promotion on the product currently

• Environment is not ready to support a wireless device (very few blue tooth enabled devices)


Implementation

Short Term (next 3 months)

• Continue sale of 1st generation device and encourage customer feedback

• Restructure internal resources around product and application development

• Discontinue all investment in Nanix

Medium Term (3- 12 months)

• Hire Marketing VP and Sales Director

• Test Windows compatible applications on system

• Invest in ensuring product’s wireless connectivity is functional

• Create partnership strategies with 3rd party peripheral device suppliers for an “all-in-one” product offering


Implementation

One Year and Beyond

• Launch sleek and trendy bluetooth enabled 2nd generation device targeting “new economy” workers

• Expand current promotions to include fashion as well as mainstream magazine. Use unorthodox promotional strategies that highlight product design and functionality ex: fashion shows

• Distribute via web and high-end electronic/computer stores

• Monitor sales and continue to improve functionality of product

• Launch “new and improved versions” annually and expand target segment to include “Wall Street” and “Gamers” segment


2nd Generation Device Upon Launch

Product

• Bundled product that includes all required (one stop shopping)

• Peripherals purchased in bulk from supplier at a discounted price and bundled with CharmIT device to be sold to consumer

• Small and Sleek and new age design

• Wireless connectivity and Bluetooth technology are standard features

• Product is highly compatible with Windows and most mainstream applications

Price

• Retail price including peripherals should be $2,500

• Competitive with other manufactures who create specialized products

• Positions product as a premium while managing consumer price/value expectations

Jennifer Love

wouldn't this occure with oringal stratigic negotiations which take place duing the 3-12 mos phase



Promotion

• Promote as a fashionable device that enhances ones overall lifestyle

• Focus promotion on popular mainstream and fashion magazines ex: Times and G.Q.

Distribution

• Discontinue 5 purchase unit minimum

• Continue to leverage the website and expand sales to high-end retail electronic and computer stores

Jennifer Love

wouldn't this occure with oringal stratigic negotiations which take place duing the 3-12 mos phase



Market Position

• Sell a fashionable and technologically credible product that lives up to the performance claims stated by the organization i.e. enhances users lives

Sales Volume

• Expected that 4,800 units will be sold at a retail value of $2,500

• Expected volumes are lower than projected due to micro segmentation

Revenue

• Revenue potential is expected to be $12 million in first year of launch


Financial Projections

2001 2002 2001 2002 2001 2002Price/Unit 2,500$ 2,500$ 2,500$ 2,500$ 2,500$ 2,500$ Projected Demand (units) 3000 9170 2000 4800 1000 1800Projected CharmIT revenue (million) 7.50$ 22.93$ 5.00$ 12.00$ 2.50$ 4.50$

Cost/Unit (first 300 sold) 1,900$ 1,900$ 1,900$ Projected Cost/Unit (after 300) 1,400$ 1,300$ 1,400$ 1,300$ 1,400$ 1,300$ Project Manufacturing Costs (million) 4.35$ 12$ 2.95$ 6$ 1.55$ 2$ Projected Net Revenue (million) 3.15$ 11.00$ 2.05$ 5.76$ 0.95$ 2.16$

Gross Profit (first 300 units) 24%Gross Profit (subsequent units) 44% 48%

Worst CaseExpected CaseBest Case

1 Charmed Technology Case Presentation Charmed Technology Case Presentation March 9, 2005 Jennifer...

Documents

Transcript of 1 Charmed Technology Case Presentation Charmed Technology Case Presentation March 9, 2005 Jennifer...