Marketing Plan (Daniel Holloway)

Don’t Forget Me

Marketing PlanVersion: 1.0

Date: December 5, 2007Status: Final

Purpose

The purpose of this document is to provide a plan to identify the market and to define strategies

in marketing our product.

Market Analysis

In the year 2007, there were 652 incidents involving kids and automobiles. There were reports of

804 children involved in which there were 202 fatalities. Furthermore, there were reports of 9,100

children treated in emergency rooms due to non-traffic incidents. There are several issues contributing

to non-traffic incidents involving vehicles and children. These include children left in a vehicle’s

passenger compartment in hot weather or who lock themselves in the trunk of a vehicle, children

strangled by a vehicle’s power window or sunroof, children killed or injured as a result of a vehicle

backing up, and children killed or injured as a result of vehicle-generated carbon monoxide. Out of the

total number non-traffic fatalities in the year 2005, 23% were due to children left alone in vehicles

during hot conditions. Also, it is important to point out that the 49% of child fatalities due to being

backed over by a vehicle will diminish because of new solutions coming on line that utilize camera

Don’t Forget Me: Passenger Safety System

technology. This information was not present at the time these statistics came out; therefore, the

percentage will decrease for being backed over by a car, however, the percentage due to hyperthermia

will increase. One can see the percentages in the chart below.

(Diagram: Nontraffic noncrash fatalities)

It is life threatening when someone’s body temperatures reaches above 104°F. Also, when

someone’s body temperature reaches 106°F, brain death begins. When one’s body temperature

reaches 113°F, death is nearly certain. It does not take long for a vehicle to reach these conditions in

the summer. When the temperature outside is 80°F the temperature inside is 80°F, in 10 minutes the

temperature inside inceases to 99°F, within 20 minutes the temperature is 109°F, within 30 minutes

the temperature inside is 114°F, within 40 minutes the temperature is 118°F, within 50 minutes the

temperature is 120°F, and within 60 minutes the temperature is 123°F.

Internal temperatures above 122°F will cause rigidity in the muscles and certain, immediate death.

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(Diagram: Chart of temperature vs. time (time in minutes))

The amount of passenger vehicles produced annually is around 4.8 million and around 5 million

sold annually. The reason for more cars being sold than manufactured, is cars that were not sold in

previous years are sold in current year statistics. School buses are the largest mass transit program in

the US. There are over 440,000 school buses transporting more than 24 million children every day of

the school year. This indicates that there exists a large potential market for enhanced child safety

features. Safety is a concern in both markets including passenger car manufacturers, and bus

manufacturers. With non-traffic fatalities due to heat on the rise, we represent a new safety system to

help prevent this tragedy from occurring in vehicles. School buses and seat belts are a recent topic

under debate. While most states do not enforce school bus seat belts because of the effort involved in

maintaining them, our device will help prevent incidents involving leaving children on buses

unattended, and can be used to help keep children in their compartment.

There are a large number of new vehicles sold yearly including cars and buses. Our system

installed in a vehicle offers an enhanced safety solution for new vehicles. Furthermore, we will focus

on obtaining a car manufacturer to license our patent on our technology. In our license agreement, we

will receive royalties on the number of our systems installed in their vehicles.

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Don’t Forget Me: Passenger Safety System

Table 1-15:

Annual U.S. Motor Vehicle Production and Factory (Wholesale)Sales (Thousands

of units)

  1997 1998 1999 2000 2001 2002 2003 2004 2005

Production, total 12,131 12,003 13,025 12,774 11,425 12,280 12,087 11,960 11,947

Passenger cars 5,934 5,554 5,638 5,542 4,879 5,019 4,510 4,230 4,321

Commercial vehiclesa 6,197 6,448 7,387 7,231 6,546 7,261 7,577 7,731 7,625

Factory (wholesale) sales, total 12,223 12,112 12,127 12,527 11,108 U U U U

Passenger cars 6,070 5,677 5,428 5,504 4,884 U U U U

Commercial vehiclesa 6,153 6,435 6,699 7,022 6,224 6,964 7,143 7,467 7,767

(Table: number of vehicles produced and sold)

The two class types that capture 90% of school buses sold are Class C and Class D. Type C is

identifiable by the engine that protrudes at the front of the vehicle, ahead of the front windshield. It typ-

ically weighs 12-15 tons. The driver's seat and main student entrance door are located behind the front

axle. Type D is identifiable by a body that extends the full length of the chassis, giving it a characteris-

tic "flat-nose" design. The driver's seat and primary entrance door are forward of the front wheels, with

the engine located at either the front or rear of the vehicle.

Below, one can see two charts indicating the number class C buses manufactured, and the class D

school buses manufactured. They both show an increase over the past years. This indicates that the

market for school buses is increasing not decreasing.

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Don’t Forget Me: Passenger Safety System

Type D transit-style production saw 8,505 buses built, an increase of 789 units or 10.2

percent over a year ago.

Price Point for Customer

With the diminishing car sales in recent months, each car maker is looking for ways to gain an edge

over their competitors. Vehicle safety can give them edge. The cost compared to the average cost of a

passenger vehicle of $25,000 is minimal. The sales increase for a vehicle installed with our safety

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system out weighs the cost for them. Also, the consumer buying the vehicle from the dealership will

not be affected greatly because the cost is negligible. With car sales decreasing in recent months, our

safety system installed in a vehicle will show the consumer their dealerships are dedicated to producing

a safe vehicle that will help increase sales by gaining the consumer’s confidence.

There has been a debate recently about installing seat belts into school buses, which indicates a

more concern for safety on, buses, though buses maintain a good safety record of our school bus transit

program. Additionally, school bus manufactures may want to show a safety commitment with their

buses and may want to offer a better product. The DFM will provide bus manufacturers with a less

intrusive system, and one that requires little assistance from the bus driver. Schools buses are being

critiqued for their safety features. School bus manufacturers will gain an edge by installing the DFM,

and having a device to monitor students in a compartmentalize environment. Also, the cost compared to

the average cost of a school bus of $70,000 is minimal.

Profit

With the available passenger vehicles of 4.8 million being produced annually, there are around $1.3

billion dollars available to be made in the passenger car market. The cost to have enough systems to

cover the available vehicles will be $2.8 billion. In the licensing agreement, we will receive in

royalties $50 per system installed in vehicles. With estimates capturing around 1 % of the market

available (50,000 vehicles) for the first out year and deducting the total cost of $1,636,702, the total

profit will be $863,298. For the second out year, expecting 100,000 vehicles to have the DFM installed

and deducting the total cost of $1,124,468, the total profit will be $4,738,830. Furthermore, in the third

out year, expecting 125,000 vehicles to have the DFM installed and deducting the total cost of

$1,124,468, the total profit will be $9,864,362. The number of school buses that were manufactured has

risen to 47,915 in the year 2006 from 25,690 buses in the year 2005. This shows a 4.6 percent increase

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in buses made. A typical class C 64 passenger bus cost around $70,000. Using the year 2006 numbers,

there is $5.9 million to be made in profit the first year if the increase is the same in production, there is

$6.1 million to be made the second year. The cost to have enough systems available will be $65

million. We estimate capturing around 1 % of the market available (500 buses) for the first two years,

the total made will be $25,000 the first year. We will have $512,000 invested in hardware, personnel,

and other cost including patent processing cost of $10,000.Estimates are for the car manufacturers to

pay a $50 royalty fee and for each installation of the system. The money left over should be put back

into the system for the year. After enduring the cost of $512,000 from phase III and anticipating other

costs for the first out years, we anticipate we will still show profits close to $863,298 in the passenger

vehicle market.

The cost for Phase I includes $21,953 for hardware/software development, and $72,352 for labor

which totals $94, 305. During Phase II the hardware/software development will cost $47,371 and

$620,256 for labor. The total cost comes to $667,627 for Phase II. The Phase III hardware/software cost

will be $187,000 and labor cost will be $325,234. The total cost for the first 6 months into Phase III

will be $512,234. During Phase I, we will develop a prototype and prepare the Phase II grant proposal.

During Phase II, we will conduct extensive testing of the system and approach potential customers.

From the start of Phase III we anticipate showing a profit after the first year. The total cost for Phase I

and II will be $761,932 which the SBIR grants for Phase I and II will cover all the cost. Furthermore,

the profit after deducting the cost for Phase III the first year after the start of Phase III will be $863,298

from the car manufacturing industry. Most of this money should be put back into research and

developing new innovative enhancements to our technology so we can pursue additional patents.

Furthermore, we will show large profits the second year which could close in on $1 million. Below is a

chart showing the return on investment for the out years.

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Out Years ROI

05000000

10000000150000002000000025000000300000003500000040000000

Dolla

rsOut Year 4

Out Year 3Out Year 2Out Year 1

(Diagram: Chart showing profits over 24 month period)

Passenger

Vehicles Bus

Number of units 50,000 500

Profit ($50/unit) $2,500,000 $25,000

Total Cost $1,636,702 0

Total Net Profit $863,298 $25,000

(Diagram: Chart showing total profits for first year)

In the above chart, one can see the how much it takes to produce, how much the profit, and the

total cost for the vehicles we plan to market for the DFM. These are minimal compared to anticipated

sales with the systems installed. The average cost of a passenger vehicle is $25,000 and the average

cost of a $64,000 school bus is $70,000.

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Don’t Forget Me: Passenger Safety System

Benefits for the Customer

Advantages for Car Manufacturers

Improves car sales that have dropped in recent months.

Improves confidence in consumers that safety is a priority for their vehicles.

Reduces number of fatalities/injuries occurring in vehicles they manufacture.

Advantages for Bus Manufacturers

Improves confidence in school districts that safety is a priority for their buses.

Improves confidence in the transporting and delivery of the school’s precious cargo.

Reduces liability cases occurring from students being killed or injured.

Reduces risks from school bus driver’s negligence.

Advantages for Consumers

Reduces fatalities and injuries due to leaving children behind in vehicle.

Improves confidence of parent/caregiver for transporting and delivery of children/elderly.

Reduces the number of liability suits due to caretaker’s negligence.

Possible vehicle insurance discount for added safety features.

Marketing Strategy Advertisement

We will patent the DFM system and have the car manufacturer license the technology paying a

fee for every unit installed in a vehicle over the lifetime of the patent. In the initial phase, we will

provide an exhibit at national safety conferences such as the Lifesavers 2008 Conference (

http://www.lifesaversconference.org/). We also will provide an exhibit at safety conferences for school

transportation such as the annual conference held by National Association for Pupil Transportation

(http://www.napt.org/displaycommon.cfm?an=1&subarticlenbr=69). Also we will need to Beta test our

product and will provide it free to the Gloucester County Public Schools to Beta test our product in

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several of their buses. Furthermore, we will install free of charge our DFM system into several

passenger vehicles for further beta testing. We will recruit these Beta testers at Old Dominion

University’s daycare center. Professors will be more willing to let us demo the DFM in their vehicle.

Also, we can recruit expecting women in Lamaze classes held by hospitals. We can also find Beta

testers by going to other public services that are advocates for safety like fire stations. After Beta

testing for one year, we can use Gloucester County Public Schools and owners of the demo passenger

vehicles as advocates to help promote our product in a much larger market in the car industry.

Competition

(Diagram – Competition Matrix)

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The above competition matrix shows what is offered from the competition compared to what

the Don’t Forget Me system has to offer. The Child Presence Device utilizes pressure and distance

sensors, and has a means for alarming the caregiver. The Halo Baby Seat Safety System provides all

that the Child Presence Device has to offer plus it detects the temperature. The Baby Alert’s Child

Minder System provides all that the Child Presence Device has to offer and provides an automatic self-

test. It does not utilize temperature sensors to detect the temperature. The Volvo S80 Heartbeat Sensor

only offers the means for detecting a heartbeat. It does not have a method to differentiate between a

human heartbeat and another living animal. The VTI heartbeat sensor only offers the same as the Volvo

S80 heartbeat sensor. It uses accelerometers to detect small vibrations and utilizes software to detect

that it is a heartbeat. Our Don’t Forget Me System offers everything the competitors offer plus a light

and vibration indicator, auto temperature control, and a CO2 sensor.

The Child Presence Device, Halo Baby Seat Safety System, and Baby Alert’s Child Minder

System offer a low cost product. The Child Presence Device cost is around $35 but has not reached the

market yet. The Halo Baby Seat Safety System retail cost is $129 but one can purchase from the

Internet for $89. The Baby Alert’s Child Minder System can be purchased for $89.99. The Volvo

heartbeat sensor comes with the Volvo S80 and it adds $400 to the cost of the vehicle.

Advantages our DFM offers over other competitors is a more accurate way of detecting an

unattended child’s’ presence in a vehicle by analyzing more information and mitigating the chance of a

false alarm.

The cost of our DFM will be $50 a unit installed in the car manufacturer’s vehicles which is

minimal cost compared to the vehicle plus the accuracy is better than our competitors. With better

accuracy, the DFM minimizes chances for fatalities or people being serious injured in one of their

vehicles that can be devastating to there existence. Added safety features in buses have been

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discussions between school agencies, and bus manufactures as they are always looking for safer school

buses even though school buses are one of the safest transit programs.

Conclusion

DFM will target safety conscious car and bus manufacturers by offering a system to monitor

numerous vital conditions using sensor technology and complex software. The purpose is to reduce

fatalities and serious injuries and improve vehicle sales and due to individuals being left unattended in

the vehicle for an extended period of time. There is not a product on the market to sense all vital

conditions in order to accurately detect the presence of a child in a vehicle unattended over time. The

DFM will provide everything our competitors have plus add additional features including CO2 sensor,

light/vibe indicator, and an auto temperature control mechanism. With the DFM monitoring all of these

conditions, it will mitigate the chance of false alarms. We will patent the DFM system and have the car

manufacturer license the technology paying a fee for every unit installed in a vehicle over the lifetime

of the patent. By Beta testing in passenger vehicles owned by professors utilizing ODU’s daycare, we

will gain advocates to help our credibility. The potential for large profits exist in an industry where

safety is a priority. Furthermore, the DFM offers a better solution and the cost is minimal to the

vehicles cost.

References

Kids and Cars http://www.kidsandcars.org/

EPA Gov http://www.epa.gov/hiri/about/pdf/EHEguide_final.pdf

Thingamababy http://www.thingamababy.com/baby/2007/07/babysafety.html

Public School Buses http://www.schoolbusinfo.org/

Supt’s Memo http://www.pen.k12.va.us/VDOE/suptsmemos/2006/reg010.html

Bus Regulations http://www.pen.k12.va.us/VDOE/Finance/VAPT/regulations.htm

Temperature over time in a vehicle http://ggweather.com/heat/hot_car_00min.jpg

Children left on School Buses http://www.stnonline.com/stn/top_stories/left_behind1.htm

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