Study Group 30 – CVP Presentation

Andrey Tyschenko David Michaelson Dimitar Spasov Gladys Chong Hareesh Veldandi

Potential Market:

Introduction

Methodology:

• Primary market research: interviews, customer home visit, field visit, and surveys

• Secondary market research to assess the market size

• In-depth competition research• Analysis and recommendations

• Market research for East Anglia Domestic Heating

• Develop marketing strategy• Advise on Eco-logs positioning• Recommend pricing strategy• Suggest competition strategy

CVP Objectives:

GreenBurn Eco-logs:

• Green biomass fuel • Used in fireplaces, stoves and boilers• Long lasting and energy efficient• Compete with traditional firewood logs

Potential Market:

Key Takeaways

Key Messages:

• Target middle-income households• Reduce single order price by 30%• Reduce bulk order price by at least 50%

(achieve operationally efficiency) • Achieve brand recognition and establish

distribution network

• Market size: 10K tonnes in East Anglia annually

• Equivalent market potential: £0.49 - £1.34 M annually

• Strong competition by other green logs and substitutes

• Lack of awareness of eco-logs in general• Low marketing activity by DurrantTobin

Key Findings:

Who are Eco-log Potential Consumers?

Households

Pubs, Hotels,

Clinics, etc.

Large commercial

s and Estates

Municipal & community

heating facilities

Power generation utilities

Fireplaces• Small consumption• Leisure and decoration• Spot heating

Log stoves

and boilers

• Medium Consumption• Secondary Heating

Wood pellet stoves

and boilers

• Large consumption• Fuel must be compatible

with automatic handling• Expensive and space

consuming installation

Wood chip stoves and boilers

• Large consumption• Fuel must be compatible with automatic

handling• Expensive and space consuming

installation• Not Cost Effective for Non-Industrials

Primary Target Market Segment

Secondary Target Market Segment

What do current customers say?

Continue to use?

Value for money?

Recommend?Happy?

Current usage: Usage level / price threshold:

What do potential customers say?Current appliances:

Criteria to switch to Eco-logs:

What do heating appliance suppliers think?

Our appliances use these fuels:

Potential green customers profile:

Wood supplier expert opinion:

• 80% use wood logs for secondary heating

• No customers use logs for primary heating

• Wood logs are lifestyle• Peak of sales in October and Jan-

March• High customer loyalty• Customers live in villages

• High-income people may not value Eco-logs

• Eco-logs may not be lifestyle• Target audience could be

middle income households

SWOT Analysis of DurrantTobin

Strengths Long burn time Carbon neutral Storage friendly High energy content Low ash residue No wax – appeals to green

minded

Weakness

Non-competitive pricing No distribution Unfamiliar/unnatural look and

odour No easy-light function No individual packaging

Threats

Strong competing products and substitutes

Limited market potential Unstable raw material costs and

availability

Opportunities First mover advantage Establishing a strong “truly

green” brand Partnering with stove suppliers Building winning distribution

network Selling to green communities

Potential Market Size Estimation for Eco-logs

Domestic heating expenditure

UK solid fuel – £291M

UK wood fuel – £73M

East Anglia wood fuel –

£2.7M

East Anglia wood logs –

£0.9M

Household heating expenditure

UK solid fuel – £211M

UK wood fuel – £52.7M

East Anglia wood fuel –

£1.95M

East Anglia wood logs –

£0.65M

Energy consumption

UK wood fuel – 1.45M tonnes

East Anglia wood fuel – 53K

tonnes

East Anglia GreenBurn Eco-

logs - 10K tonnes

East Anglia GreenBurn Eco-

logs – 8M

# of houses with solid fuel heating

appliances

UK homes – 22M

UK solid fuel heated homes -

332K

East Anglia solid fuel

heated homes -12.2K

East Anglia GreenBurn Eco-

logs: 3M

Competition Analysis: Direct Competitors

Indiv. Pack.

Easy Start

Wax Free Made in UK

Competition Analysis: Direct Competitors

LEAF LOG

DTDuraflame

Blazers

AGI

Competition Analysis: Substitutes

Green Burn Eco Logs

Hardwood

Electricity

Mains Gas

AvailabilityLifestyleConsistencyEase of Use

Cheap & mobile appliances

Primary and secondary

Easy and clean to use

Cheapest energy

Primary application

Easy and clean to use

Lifestyle and heritage

Primary and secondary

Relatively green

EL’ reflects the target price for DT Eco Logs, according to the pricing strategy presented further on

price per kwh

Key research conclusions about Eco-logs

• Customers value the care-about-nature feeling with using Eco-logs

Appealing to customers’ green

concerns

• All one-time triers notice long burning time, which positively distinguishes Eco-logs from woodLong lasting burning

• Customers also value convenient storage, less weight, less ash, less pollution in a burning appliance, etc.

Great usability

• Eco-logs are not price effective compared to their competitorsNot price effective

• Eco-logs are not associated with lifestyle, tradition or leisure

Not a life-style product

Target Customers for Eco-logs

• Appeal to “green concerns”

• Value cost efficiency and usability

• Not sensitive to prestige

• Not highly concerned about visual look and fuel

Middle-income households :

• Wood logs are a true “life style” product

• Eco-logs are not ‘life style’

• Money saving argument is not very appealing

High-income households :

• Biomass fuel heating

is not popular • High costs for heating

appliances and fuel

Low-income households:

Target middle income households using wood log heating appliances

Product Positioning and Branding

Eco-friendly fuel, greener than alternatives

Saving moneyConvenience and

ease of use

The truly green, long-lasting fuel

• Truly Green• Convenient

• Create Eco-logs logo

• Hire a professional design team to aid branding

Brand Associations

Visual Implementation

• Natural colors: green (leaves) and brown (trees)

• Natural materials: recycled paper, biodegradable wrap

Packaging

© Starbucks Corporation. Images used as examples of visual style for packaging

Visual Branding: Product Design

Today’s product shape:

Recommended shape:vertically bisected

cylinders

Eco-logs should convey an image

of:

• Maintains association with nature

• Increases the surface and burn area of the product

• Makes Eco-logs easier to carry and load into a fire

• Is a more familiar shape for consumers

Advantages :

Pricing Strategy

GBEL High

energy density

Seasoned hardwood

price

Blazers price (best

green)

GBEL

BLZ

W

4 eco-logsin one box

£3.99

160 eco logsin boxes

£79.99

Be the cheapest green product for the heat delivered

Price sensitive Customer

s

No unique feature

320 eco logsin boxes

£139.99

Promotion & Sales Strategy

Media Content

Google Search Google search optimization and context advertisement (Google. AdWords)

Local magazines;Magazines/web sites about heating appliances

• Advertisement (1 whole page or last cover)• PR articles (story or interview about the innovative

green fuel for households)

Direct Marketing: delivery of printed material

Delivery of printed materials (leaflets) about Eco-logs among households

Social Media Campaign Use Facebook to reach green communities and individuals

Sales Channels:

Product Website Create a sophisticated product website featuring on-line ordering

Sales as response to advertisement Active direct sales Sales through heating

appliance suppliers

Distribution and Delivery

Divide target market (East Anglia) into areas

Establishdelivery hubsfor eacharea

Dispatch orders through hubs

Find a partner in each area and maintain inventory on site

Partner works as a dealer, receives orders and makes shipments

Partner receives commission

Partner with stove sellers to achieve highest product availability

Each hub has inventory & delivers

NFK

SFK

CAM

PET

Conclusions

• Establish partnership with fireplaces/ stove suppliers for co-marketing and distribution

• Reduce price by 30% and at least 50% (single and bulk orders respectively)

• Build delivery network and use partners as delivery hubs

Sales

Marketing• Target middle income households• Build a strong “Truly Green” brand• Support branding with consistent

visuals, product design and packaging• Launch a massive marketing

campaign to achieve brand recognition

1. Examine ways for cutting cost to meet price reduction target2. Work on reshaping the product3. Hire a professional design team to develop all visuals4. Enhance website to reflect marketing strategy and add on-line ordering

system5. Start reaching out to potential partners

NEXT STEPS