picooc final deliverable rev8

PICOOC - Private and Confidential – AUGUST 2014INTERNAL DISCUSSION PURPOSES ONLY. NOT FOR CIRCULATION.

OPPORTUNITY CREATES SUCCESSA corporate development assessment of PICOOC

NEWHUADU BUSINESS SCHOOL – SUMMER 2014


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PICOOCCORPORATE DEVELOPMENT – EXPANSION ASSESSMENT

INTRODUCTION EXECUTIVE SUMMARY SECTION ONE SECTION TWO SECTION THREE

TABLE OF CONTENTS

Introduction The US Market analysis of Smart Health Technology as it relates to PICOOC

Executive summary Broad overview of current trends and our recommendations

Section one Western sources of demand for PICOOC and market analysis for entry

Section two An analysis of competitors, solutions, and best practices for PICOOC to adopt

Section three Go-to-market strategy and corporate development recommendations


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Our goal is to help PICOOC achieve long term success by successfully entering the US market and revising their corporate development plan to stay ahead of market trends.

Situation

• PICOOC, as a start-up tech company with limited infrastructure and revenue, is seeking to enter the US market and take advantage of the high amount of target consumers located there. The hurdles towards achieving this is the current lack of understanding of the US market for smart scales and wearable devices.

Team• The New Huadu Business School (NBS) internship team of Ajinkya

Patwardhan, Brandon Adsitt-Weiner, Reid Chanon, and Francis Chen have been placed at PICOOC to conduct research and develop a go-to-market plan.

Approach

• Using a combined approach of primary and secondary market research, including three weeks spent onsite at PICOOC’s headquarters, the NBS team systematically evaluated the wearables and smart scales industry, competitors, products and operations to determine a competitive positioning roadmap.


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TABLE OF CONTENTS







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Executive SummaryThe Health Tracking

Technology Industry in the US is a billion dollar industry. The

market consists of a combination of individuals trying to lose weight and individuals tracking their

exercise habits. The market is expected to grow to 8 billion

USD by 2018 . There are several large competitors that are already in the market or

planning on entry.

Our recommendation is that PICOOC should enter the US health management market

targeting persons with a high interest in weight

loss/management, particularly through potential partnerships

with the dieting industry for the existing scale product,

broadening into the wearables niches as the technology and

product is created.

The assessment will cover the following and conclude with a

go to market plan and recommendations for in house

corporate development.


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TABLE OF CONTENTS









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SEC 1. WESTERN SOURCES OF DEMAND AND MARKET ANALYSIS

Industry knowledge

Specific Analysis

Broad AnalysisWhat opportunities in

the wearable and smart scale market exist for

PICOOC?

Who are the existing and future competitors

and where are they focused?

How big is the market, who leads it, and who

are the target consumers?

Who leads the market for obesity prevention and what G&S do they

provide?

What other sources of demand can PICOOC take advantage of to launch new products

What are the most common diseases and

which can be controlled or mitigated by our

product?


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The technology wearables market can be segmented from tech wearables to health and fitness devices, and finally to the largest niche category which are health wristbands and wristwatches for health and fitness use

Mar

ket

Segm

enta

tion

The 2012 wearables market was estimated to be worth 2.5 billion USD and projected to increase up to 8 billion USD by 2018. This includes the consumer,

healthcare, and enterprise markets. Wearables or wearable computing or wearable technology includes products such as smart glasses, wristbands and watches,

shoes, and other up and coming technologies such as e-textiles.

The number of wearable health and fitness devices is projected to increase to 170 million in 5 years, with sports, fitness, and personal health based devices to number around 90 million

leaving 80 million health and medicine based devices to round out the market.

However, the largest segment of the market in 2012 was wristbands and wrist watches, with

wrist wear accounting for 850 million dollars of total revenue in 2012.


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Obesity related illnesses generate health complications that are a multibillion dollar industry to both prevent and treat. Introducing a way to mitigate health expenses and create a healthier lifestyle is PICOOC’s value add. This should be PICOOC’s target market.

Obesity-related Illness’s Health care cost

Healthcare Cost

2013 estimated healthcare cost $254 Billion2030 estimated healthcare cost $861 to $957

Billion (USD)Average annual Healthcare cost per capita

$7,990 (USD)

Preventable Illnesses make up 70% of U.S. illness cost.


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The United States spends the most in the world for healthcare costs and with per capita adjusted spending is the market with the most to offer for PICOOC


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Both adults and children are affected by obesity-related Illnesses, this provides an opportunity for PICOOC to tailor their form of health solution for both an adult consumer or a child.

Adult (age 20 or above) Overweight and Obese (25 BMI ↑) Obese (30 BMI ↑)

Men & Women 154.7 million 78.4 millionMen 79.9 million 36.8 millionWomen 74.8 million 41.6 millionChildren 2 to 19 Overweight & Obese (25 BMI ↑) Obese (30 BMI ↑)Boys and Girls 23.9 million 12.7 MillionBoys 11.8 Million 6.3 MillionGirls 12.1 Million 6.4 Million


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Exercise trends for the US reflect the high rates of obesity with a very low rate of national average exercise. This provides an opportunity for PICOOC to address affected target consumers and create a technology solution that promotes a healthy lifestyle

Exercise Statistics of Americans who work out regularly 2014

Percentage of Americans

National average of Americans that exercise regularly

49.6%

U.S. adults exercise 30 minuets each day Less than 5%Exercise for at least 30 minuets or higher, 3 days week

49.6%

Exercise one or two days per week 18.5%Haven’t exercised within the last week 31.3%Americans yearly income of $90,000 that exercise 54.3%Percent of obese Americans that do not exercise 40.4%


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Many competitors offer health programs for overweight and obese Americans to establish or maintain a healthy lifestyle, but these do not provide a technical solution. PICOOC could leverage any one of the following companies’ customer base to build sales volume

U.S. Programs: U.S. News & World Report: Best Diet

Potential Advertising for PICOOC Latin:

Weight Watchers #1 Commercial Diet Website MagazineGroups

Jenny Craig #2 Commercial Diet WebsiteGroups

Biggest Loser #3 Commercial Diet WebsiteBooks

Slim Fast #4 Commercial Diet WebsiteProducts


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An underutilized yet very large demographic are people who suffer from Chronic Diseases

45% of U.S. adults have a chronic

Health condition

25% of U.S. adults have high blood

pressure11% of U.S. adults

have Diabetes7% of U.S. adults

have a heart condition

75% of health care dollars

The United states has a multitude of chronic diseases that afflict

millions

Many result from a combination of lack of exercise and poor diet


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25% of Americans Suffer from High Blood Pressure

25% of U.S. adults have high blood

pressure

Costs USA $47.5 Billion per year

CDC says “Lifestyle change are just as

important as medications

47% have condition under control


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11% of Americans have Diabetes

According to CDC “Diabetes can be treated and managed by healthful eating and regular

physical activity”.

Estimated cost in the United States is $245 Billion


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7% of Americans have a Heart Condition

Cost the United States 108.9 Billion

per year

Risk for Heart Disease Include:Diabetes

OverweightPoor Diet

Physical inactivity


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Many Chronic Disease sufferers share a lack of health habits which contribute to their diagnoses. PICOOC’s Latin offers a chance for these chronic sufferers to manage the underlying causes of their disease

Heart Condition

s

High Blood

Pressure

Diabetes

Lack of diet and exercise


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Most Chronic Disease sufferers track measurements about their bodies to both help themselves and provide more detailed information to their healthcare provider

84% of Adults with chronic conditions use a pen and paper or rely on their memory to

track their physical condition.

That is 91.7 Million Adults who track their health and could benefit from an electronic

health tracking device.


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PICOOC can currently track the following health indicators with their health monitoring device instead of having potential customers record their data on paper or mentally

PICOOC Latin FeaturesBody mass Index (BMI)Basal Metabolic Rate (BMR)Body FatMuscle MassBody WaterBone MassMoodVisceral FatActivitiesDiet Habits & AdviceExercise Advice


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PICOOC should include the following health indicators in their future products to appeal to a greater share of the market and have more versatility to the consumer

PICOOC’s potential

features for future

products

Heart Rate Monitor

Sleep Patterns

Share Data with

Healthcare provider

Blood Pressure


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There are several ways to target those who suffer from Chronic Diseases in an effort to inform them about the benefits of electronic health measuring devices


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TABLE OF CONTENTS

Introduction Our approach and defining PICCOC’s situation

Executive summary Broad overview and recommendations

Section one Western sources of demand and market analysis

Section two Competitor analysis and best practice adoption



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Industry knowledge

Specific Analysis

Broad AnalysisHow can PICOOC

learn from existing and emerging competitors?

Who are the existing and future

competitors and where are they

focused?

Why is FitBit the industry leader?

How will Apple and Google’s plans to

enter the space affect the market?

What lessons can PICOOC take from it’s

competition

What should PICOOC track internally to

improve it’s product development

process?

SECTION 2: COMPETITOR ANALYSIS AND BEST PRACTICE ADOPTION


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PICOOC should adopt industry best practices and seek to replicate the success of it’s existing and emerging competitors

Competitor Analysis

Analyze competitors products

What brands are dominant

Integrate competitors features

PICOOC’s Differentiation

Strategy

Product & brand Dominance

How Competitors are marketing there product

Goal

Reach out to consumers

AdvertisingPricingDesign

Quality customer service after sale


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PICOOC Latin has many of the same features as there competitors but they should also consider some of there competitors features to be integrated in there product.


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Brand recognition and marketing presents an opportunity and challenge for the largest players in the market as well as PICOOC

Key players

Nike (US)Jawbone (US)Fitbit (US)Adidas (GM)Withings (FR)

Name % Own

Familiar with product purchase within 12 months

Familiar with product, not interested in buying

Heard of it, don’t know much about it

Have not heard of this product

Nike Fuelband

13% 13% 11% 20% 43%

Fitbit (Zip, One, Flex)

7% 11% 11% 16% 55%

Adidas miCoach Series

6% 9% 11% 15% 59%

Jawbone UP

5% 6% 10% 13% 66%

Withings Pulse

5% 5% 6% 9% 75%

Other brand of health monitor

9% 8% 8% 14% 62%

Emerging competition

Apple (US)Google (US)


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PICOOC must isolate the features that are both affordable to implement and important to consumers and integrate them in their product when entering the wearables market in the US

Product Name Key Features Price (USD)

Withings Pulse 24/7 tracker, heart rate and blood oxygen level measurement, sleep cycle analysis, activity badge feature to promote competition in conjunction with social media, personal coaching

119.95

Jawbone UP 24/7 tracker, food and drink tracking, sleep analysis (quality x quantity), alarm, social media integration

149.99

Adidas miCoach Smart Run 3GB music storage, color touch display, heartrate monitor, GPS, miCoach app provided 100s of free training plans, audio/visual/vibration based coaching

400.00

Nike Fuelband 24/7 tracker, hourly move reminders, integration with “Nike Sessions” workout plans

99.99

Fitbit One 24/7 tracker, wake alarm, minute by minute data logging and tracking, 14 day battery life, food consumption monitoring

99.95


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PICOOC must look at the competition on the horizon and take steps to adapt by being compatible with their offering and offering some product differentiation

Apple enters

the market

PICOOC maintains a

similar design

aesthetic

Product integration with Apple products

Offer features that are

more unique

Aim to undercut their price


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The underlined market trends are ones that PICOOC has already adopted, but PICOOC needs to take steps to stay ahead of market trends they haven’t yet integrated into their products

Current market trends

• Calorie counting• Weight counting• Sleep analysis• Physical fitness• Steps tracking• 3D interfaces• Wrist wear• Social Network integration

(gamifying/progress tracking)• Flexible interface• Graph analysis• Plastic construction• Bio-monitoring• Sports Performance• Personalization• Prescriptive monitoring

Emerging Market trends

• Nutrient advice/incorporation• Circadian rhythm/sleep pattern

analysis• Mental fitness• Gait measurement• Self-documenting progress• Do-It-Yourself (choice for app

interaction)• Biometrics• Customized• Predictive


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For a startup to succeed in a market dominated by big players the requirement is differentiation of product and services offered

Differentiation

Software Customer Support


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Providing more appealing software is a key method of differentiation, this can be achieved via offering more effective technology and incentivizing use and making the app user-friendly

Software: Offering effective prescriptive analysis, gamifying the user experience and creating a user friendly integration with social media are ways to differentiate most easily achieved on the software side.

Software/App

Differentiation

Offering fitness plans

(prescriptive interaction)

Gamifying the user experience

Social media integration


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Another method of differentiating yourself in the market is to provide better customer service to expedite complaints and make the user experience more satisfactory

Providing quick answers to customer questions in a variety of formats (live, online FAQs and through email) is a good way to build customer loyalty and demonstrate high quality customer service.Customer

Service Differentiatio

n

Providing a better live chat

for support

Having quick turnaround on

customer service emails

Having an English website

paired to log data


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TABLE OF CONTENTS

Introduction Our approach and defining PICCOC’s situation

Executive summary Broad overview and recommendations

Section one Western sources of demand and market analysis

Section two Competitor analysis and best practice adoption



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SECTION 3: STRATEGY AND CORPORATE DEVELOPMENT RECOMENDATIONS

Industry knowledge

Specific Analysis

Broad AnalysisWhat should PICOOC plan for a successful US/EU market entry?

PICOC should create partnerships with

established brands to mitigate the difficulty of

market penetration

Top weight loss companies and home health providers in the

US

Top weight loss companies and home health providers in the

EU

Why not enter the market directly?

Methods for creating relationships with

international partners


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PICOOC should plan to partner up with either weight management companies or home health care companies for successful US Market Entry

• PICOOC has an excellent product, but needs to partner in order to help penetrate the US market successfully.

• “82 percent of executives believe that alliances will be a prime vehicle for future growth” (Kalmbach and Roussel, 1999)

• PICOOC lacks the brand recognition and funding of its competitors• PICOOC should partner with firms that specialize in weight management and

home health care.


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PICOOC should form a partnership in order to gain a competitive advantage. Partnering with a company either to accentuate DTC sales, or to create a complimentary product are both strategies required for market entry

• 50 percent of firms involved in alliances market their goods internationally versus 30 percent of non-allied participants” (Cooper and Lybrand Study, 1997)

• Partnering with large firms will allow PICOOC to obtain new technologies needed to compete with the large players in the US Market

• Since PICOOC is a smaller firm, having financial assistance in an overseas market will allow the company to absorb losses easier in case of bad sales

• Partnering gives PICOOC an advantage against other foreign competitors and allows the firm to even out the playing field against domestic competitors.

Easier to Market Products

Obtain New Technology

Reduce Financial Risk

Gives Competitive Advantage

Benefits of Partnership


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3% market share and 1.8 billion in revenue• The company offers meetings where people can receive

professional advice and tips on how to lose weight as well as twenty four hour access to mobile and network devices.

0.7% market share and $400 million revenue• A company that purely focuses on food, food packages and

meal plans that help promote weight loss.

0.7% market share and $400 million revenue • Medifast weight loss program requires that clients to follow

established meal plans and diets.

PICOOC should partner with one of these top weight loss companies


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PICOOC should partner with one of these top home health care providers

4.85 % market share• Number one leader in providing home health care services

4.76 % market share• Provide home health and hospice services to more than 350,000

patients from more than 420 community locations nationwide

2.10% market share• One of the top home health care companies


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The following companies are not the market leaders but might be more prone to partnering with PICOOC

RANKTOP 20 HOME HEALTH CARE COMPANIES NATIONAL

MARKET SHARE

1 AMEDISYS 4.85%2 GENTIVA 4.76%3 LHC GROUP 2.10%4 ALMOST FAMILY 1.88%

5 VISITING NURSE SERVICE OF NEW YORK 1.10%

6 KINDRED 1.03%7 CHE TRINITY HEALTH 0.98%8 INTERIM 0.94%9 BAYADA 0.79%10 ACCENTCARE 0.78%11 ENCOMPASS 0.73%12 NURSE ON CALL 0.67%13 CARESOUTH 0.51%14 MSA 0.51%15 HCR-MANORCARE 0.45%16 BROOKDALE SENIOR LIVING 0.44%17 INTREPID 0.43%18 CATHOLIC HEALTH INITIATIVES 0.38%19 SUTTER HEALTH 0.36%20 ADVANCED HOME CARE 0.34%


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There are several methods available for PICOOC to partner and gain access to international markets

• Partner with a weight loss company

• Sell to Fitness Clubs/ Gym Chains

• Used by Home Health Providers

• Sell in Specialized Stores

• Have an affiliate program

• Partner with Amazon

• Sell at a discounted rate to members or as a supplement of a weight loss program

• Make it an official product of a fitness clubs or gym chains

• Make it the official product of home health chains

• Target consumers more likely to purchase the product

• Offer commission to affiliates that help sell the scale and spread popularity

• Sell products online to reduce costs


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Partnering is a cheaper and easier way to enter the US market compared to buying a company or building one.

Cost

No cost to build overseas facilities

No cost to buy out large companies

Shared costs and risks

Less overseas staff required

Complexity

Shared infrastructure

Brand image already established

Joint marketing efforts easier

Supply chain easier to manage

Local support easier to set up


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The roadmap for development would begin with PICOOC preparing its products for US markets, finding and negotiating partnerships and then entering into the US market

2014 2015 2016 Future

US Product preparation

Partner Negotiation Market Entry

• Converting to American units• Establishing English support• Translating APP to English• Preparing for Android market

• Finding the right partner company

• Negotiating terms• Combining resources• Joint marketing


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NewHuadu Business School

Mrs. Tina Zhou, IMBA AdministratorTelephoneEmail

Delivery Team

Ajinkya PatwardhanThe University of Houston, Bauer College of [email protected] Adsitt-WeinerState University of New York at [email protected] ChenUC [email protected] ChanonTexas Tech [email protected]

Consulting Manager

SP Bourgeois, Daedalus Advisory Services+1 917 719 6371 [email protected]

CONTACT INFORMATION

picooc final deliverable rev8

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