TEAM 3SLEEP COMFORT SYSTEM

Nancy Kao, Diana Lindstrom, Tony Machacha, Pat O’Connor

Introduction

A 2002 National Sleep Foundation poll found that 74% of American adults are having difficulty sleeping a few nights a week or more

39% get less than seven hours of sleep each weeknight

More than one in three (37%) are so sleepy during the day that it interferes with daily activities

Advantages Offered

No mold and mildew issues like water-based competitors

Leakage is not a problem like water-based systems

Possible Energy-Star Saver Tax rebate for consumers

Sleep and health benefits Through temperature regulation

Possible cost savings Versus running heat or AC through house or room

all night

Preliminary Analysis

Industry Poised for entry – few competitors

Those that exist aren’t well marketed Very few use air as the cooling agent Very few offer temperature regulation

Heating/cooling within half a degree Reduces humidity

Nothing is described as eco-friendly Only need 1,000 BTU

Preliminary Analysis

Channel Available online for purchase

“Great” websites like chilitechnology.com and drinights.com

Heating (electric) blankets/mattress pads are available through retailers

Customer In US, most are directed to individuals Marketed to those who need a cooler or

warmer bed In China, heating/cooling blankets are used

in hospitals

Preliminary Analysis

Segments Middle to Upper Income Classes

Prices range from $50-$500+ Luxury item Possible latent need

Women Menopausal Purchasing Power

Medical Conditions Sleep disorders, fevers

Competitive Landscape

Competitive Landscape

Bargaining power of buyers High - buyers will look for low/reasonable cost Somewhat market dependent

Threat of substitute products High – other products offer cooling/heating features in different

forms (i.e. air conditioner, fan, electric blanket, etc) Few use air cooling and offer temperature regulation

Bargaining power of suppliers High – few 1,000 BTU AC unit (inelastic price) Low – many blanket manufacturers

Threat of new entrants Low - need FDA approval on health benefits and passing testing Outsourcing issues because AC unit of this size is hard to find

Rivalry Moderate – currently no products offer the same value however the

concept could be easily imitated

Business Model

Market Choice Retail (in-store locations)

Replacement product (electric blanket, AC, heat, etc)

Sleeping comfort, eco-friendliness, long term cost savings

Online through retailer websites Bed Bath & Beyond, Macy’s, Target

Marketing Online ads, print ads, eventually TV spots

Strategically placed on specific websites and in magazines

Keys to Success

Product form and function must earn its place in people’s sleeping places

Finding the ideal entry market Hospital, hotel, sleep centers…?

Finding the ideal first customer Initial pricing must be accurate

Est. starting price at $500, decrease to $100 over time

Est. profit margin of $250/unit initially

Major Hurdles

Marketing a new-to-market product involves encouraging a change in customer behavior Educating potential users about product’s benefits and

use will be a challenge Gap in the cooling unit sizes available

Current AC unit five times more powerful than specs. Smaller AC units actually get costlier below 5000 BTU Alternative cooling units too small and scaling these

up makes them very costly and prone to higher rates of failure

Need to be bridged cost effectively Appearance!!!!

Viability

Positives Appealing value proposition

To date, there’s an unfilled market gap Prototype has been invented, tested and validated

by the inventors It works!

Inventors experienced in high-volume manufacturing Know how to drive down costs

Uncertainty Too many bells and whistles for the average

consumer?

QUESTIONS?