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The Sensible Hearing Aid of the Future
Mike O’Leary
Brittany Gilman
Bennett Lawrence
Gregg Levante
Nick “Bob” Hamel
Brandon Cote
Today in the United States alone, an average of 1 in every 10 Americans have trouble hearing, almost 30 Million people. Everyday, we as individuals have hundreds of opportunities to damage our hearing permanently, resulting in long term hearing loss. While the average age of living increases, hearing aids are a needed product that will be demanded for many years to come.(1)
Our mission as a corporation is to ensure that you continue to live life comfortably and care-free. By offering the best hearing aid devices on today’s market while offering great value and customer assistance, we guarantee your satisfaction.
A hearing aid is a commonly used device, aiding the sector of society that is deemed hearing impaired. These simple devices work as follows:
Since their creation, hearing aids have grown in technology substantially. Today, hundreds of types and features are offered to the public.(3)
(6)
Invisi-Ear has a simple yet effective design, made from special materials that prove durable and personal, as we can personally cater to your needs.
- Strong, long lasting plastic outer shell constructed from polycarbonate plastic
- Comfortable, personalized molding to customers ear
- Smallest, most discrete hearing aid on the market
- Rechargeable, long lasting batteries versus disposable
What is Invisi-Ear?
- Various models available based on hearing ability
- Shells made from recycled plastic, and are easily recycled when disposed of
NAICS Code:
334510334510
(4)- The current size of the hearing aid market is presumed to be about 2.8 billion, and growing with each day.(2)
- By the turn of the next decade (2010), the market growth rate is expected to be around 79% annually. This shows that our market is going through a healthy growth phase.(2)
As Invisi-Ear’s target group of individuals, these will be the various groups that our firm attempts to mainly push our marketing towards:
Age: 55 or older
This is Invisi-Ear’s only targeted group in society, as more than half of this population suffer from hearing loss. Although this may seem broad, we look to market towards anyone and everyone in this age bracket.
Our Competition is honorable and very knowledgeable in the field of hearing aid devices and customer care.
These companies/corporations include but are not necessarily limited to:
- Medtronic Inc.
- St. Jude Medical Inc.
- CareStream Health
- Miracle Ear Inc.
- Gambro Health Providers(2)
Invisi-Ear holds the competitive edge in the fact that we not only does it have the most discrete and comfortable, but uses rechargeable batteries to save the costumer money in the longrun.
In order to do any necessary testing of Invisi-Ear, our firm has set-up a plan with 3 different nursing homes and/or assisted living communities in the state of Florida, an area heavily populated with retired senior citizens over the age of 55.(2)
Our Plan:
- Test a group of 150 people in each nursing home
- If the subject likes the product, offer rebate upon purchase
- Record data and determine factors for improvement
Real Estate:
$400,000
(Approx.)
Furniture/Office Supplies:
$2,000Machinery:
$20,000
Advertising:
$50,000
Salaries:
$150,000
TOTAL: $622,000
We plan to take out commercial loans to start our business. Each member will take out a loan for $110,000 which will give us a total of $660,000. The left over money will pay any bills in order to run the business.
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$ $
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1.) www.Miracle-ear.com
2.) www.Hearingreview.com
3.) www.Hearingaids101.com
4.) www.census.gov
5.) www.Nasdaq.com
6.) http://www.ndcs.org
Team 2
The Sensible Hearing Aid of the Future
Mike O’Leary
Brittany Gilman
Bennett Lawrence
Gregg Levante
Nick “Bob” Hamel
Brandon Cote
Presentation 2
Athens, Georgia
Because portions of Florida are known for there elderly population, our initial thought was to base Invisi-Ear within its state’s boundaries. However after further research, our group decided Athens Georgia would be a better base point.
Reasoning:
- Close to Florida
- One of the bigger cities in Georgia
- Leaves distribution options open
- Other areas such as pediatrics are available for marketing
Hearing Aids are among the few products that are specially made by order. In other words, they’re custom. Due to their custom make at time of demand, this means:
1.) No warehousing, only storage for parts (which happen to be extremely small)
2.) Customer orders come from audiologist offices and hospitals in some cases via e-mail
3.) Invisi-Ear special made ear-molds set-up for overnight business shipping.
Channel Type:
“C2”
Selective Market Coverage
Invisi-Ear is a medical product that is not found at your local drug store. Invisi-Ear is a valuable piece of medical technology that may only be prescribed by a physician or other medical specialist, hence making it a perfect candidate for selective market coverage.
Marketing Channel
For the reason stated in the last slide (our product is custom made), Invisi-Ear will use channel type “C2” due to the fact we do not mass-produce. Furthermore, these products will be shipped to offices and hospitals at time of purchase, not a consumer’s residence.
Hearing Aid companies most always use the U.S. Mailing System, or another private mailing company such as FedEx or DHL. Therefore this is also what we at Invisi-Ear plan to do.
This is also because we do not mass produce; As stated earlier we build upon receiving orders. It simply does not make sense to own our own fleet of transportation vehicles when our product ships to so many different places in potentially low volumes.
We at Invisi-Ear only see potential problems and/or conflicts between channel members of this business process due to time. No one likes to wait for something they’ve paid for and need.
By keeping staff on from early mornings to late nights, we do our very best with constructing these devices and shipping them out to hospitals and offices as fast as possible.
Potential Problem:
Solution:
The Sensible Hearing Aid of the Future
Mike O’Leary
Brittany Gilman
Bennett Lawrence
Gregg Levante
Nick “Bob” Hamel
Brandon Cote
Presentation 3
Step A:
Step B:
Step C:
Step D:
Step E:
Step F:
Step G:
20072007
Estimated Units Sold
100,000 units
Variable Costs (per unit) Labor: $50.00
Materials: $450.00
Worker Benefits: $5.00Total Cost of Goods Sold
Calculations Result
A (estimation)
B
50 + 450 + 5 = 455
Total Variable Cost =
$455.00
Units Sold x COGS
100,000 x $455.00
$45.5 MillionC
$300,000Admin. = $250,000 Lease = $25,000 Insurance = $25,000 $300,000
D
$458.00
Estimated Operating Costs
Average Total Cost Per Unit
E
COGS + Operating Exp. Units Sold
$45.5 Million + $300,000
100,000
Selling Price
F $1145.00
ATC per unit 1 – Mark-up
458 1 - 0.6
Gross/Net Profit Rate
Gross Profit Rate:
60%
Gross ProfitSales
69 Million114.5 Million
Net Profit Rate:
36%
Net ProfitSales
40,920,000114.5 Million
G
- Setting a price to make a target profit -
Breakeven Point in Units:
Total Fixed Costs
Unit Contribution Margin
$300,000
($1145 – $455)435
Breakeven Point in Dollars:
Breakeven point x Unit Sales Price 435 x $1145 $498,075.00
10% Growth each year2007 2008 2009 2010 2011
Sales 114,500,000.00$ 125,950,000.00$ 138,545,000.00$ 152,399,500.00$ 167,639,450.00$ Cost of goods sold: Labor $5,000,000.00 5,500,000.00$ 6,050,000.00$ 6,655,000.00$ 7,320,500.00$ Materials $40,000,000.00 44,000,000.00$ 48,400,000.00$ 53,240,000.00$ 58,564,000.00$ Benefits $500,000.00 550,000.00$ 605,000.00$ 665,500.00$ 732,050.00$ Total cost of goods sold $45,500,000.00 50,050,000.00$ 55,055,000.00$ 60,560,500.00$ 66,616,550.00$
Gross Profit 69,000,000.00$ 75,900,000.00$ 83,490,000.00$ 91,839,000.00$ 101,022,900.00$ Operating Expenses: Administration 250,000.00$ 275,000.00$ 302,500.00$ 332,750.00$ 366,025.00$ Lease/Rental Cost 25,000.00$ 25,000.00$ 25,000.00$ 25,000.00$ 25,000.00$ Insurance 25,000.00$ 27,500.00$ 30,250.00$ 33,275.00$ 36,602.00$ Total Operating expenses 300,000.00$ 327,500.00$ 357,750.00$ 391,025.00$ 427,627.00$ Net Income before taxes 68,700,000.00$ 75,572,500.00$ 83,132,250.00$ 91,447,975.00$ 100,595,273.00$ Taxes 40% 40% 40% 40% 40%Tax amount 27,480,000.00$ $30,229,000.00 $33,252,900.00 $36,579,190.00 $40,238,109.20Net income after taxes 41,220,000.00$ $45,343,500.00 $49,879,350.00 $54,868,785.00 $60,357,163.80
Gross Profit Rate 60% 60% 60% 60% 60%Net Profit 40,920,000.00$ $45,016,000.00 $49,521,600.00 $54,477,760.00 $59,929,536.80Net Profit Rate 36% 36% 36% 36% 36%
Invisi-earProjected Income Statement
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$
$
$
Pricing Strategy: Cost Plus PricingOur only pricing strategy will be basic Cost Plus Pricing. No other pricing strategy really fits our product’s special medical nature.
Channel Member Mark-ups:
Our prediction is that the offices that use our product for patients will charge somewhere in the range of a 25% mark-up on our product in order to produce profit of their own. Moreover, they will also be responsible for shipping charges, as we use postal transportation to ship.
Product Price: $1145.00
$1145 + (25%) Consumer Price: $1341.25
Business Ethics:
Because our product is already priced substantially lower than our competition, we do not run into any ethical issues when pricing Invisi-Ear. Also, hearing aids are often covered by health insurance companies.
The Sensible Hearing Aid of the Future
Mike O’Leary
Brittany Gilman
Bennett Lawrence
Gregg Levante
Nick “Bob” Hamel
Brandon Cote
Presentation 4
Invisi-Ear’s 2 main goals in it’s strive to develop its public relations include:
1. Creating Brand Awareness
2. Building goodwill between our company and the consumer
In order to assist in creating brand as well as public awareness, Invisi-Ear will use a combination of press releases as well as promoting free hearing checks to potential customers.
Our firm’s message will be to make the public aware of Invisi-Ear’s simplistic, convenient, and low-cost product. Our P.R. aspiration is to promote trust and honesty, delivering a product nothing short of perfection to the consumer.
It is imperative that our firm receive feedback from even potential consumers and/or customers. By establishing several different methods of collecting this information, our firm can better develop or even redirect itself, making any necessary changes. Without some kind of feedback from the public, Invisi-Ear could not better itself in serving the consumer.
Then, after the consumer uses the product, they will evaluate its performance and how satisfied they are with Invisi-Ear through standard business reply mail. In order to entice the customer to take part in this, we will offer an extended warranty program currently still under consideration in exchange.
Feedback:
After receiving the product from your physician, the office will be instructed to give the patient a quick, basic questionnaire as a part of the final fitting procedure/appointment.
Advertising Budget:
Invisi-Ear plans to use an estimate of 5% of its profit for advertising, although we have made that a permanent decision, meaning it is subject to change.
Net Profit:
$40,920,000.00$40,920,000.00 (5%) $2,046,000.00
Media:
In order to incorporate the media and press into the introduction of Invisi-Ear, we will air commercials from 8am – 5pm on various channels generally viewed by the elderly population. This information is easily obtainable from television stations, however our choices are not yet clear. However, as stated earlier our budget is large and adjustable.
A Press Release will also be arranged with the press in order to get the word out about Invisi-Ear’s state-of-the-art product for the large population that reads any form of newspapers.
The general theme of these commercials will be to inform the public that our hearing aids are comfortable, will not leave you embarrassed to wear them, and the difference they can make in one’s life.
Accordingly, Invisi-Ear will also supply audiologist and physician’s offices with pamphlets on our product. This will allow potential consumers to take important information with them, while providing everything they need to know about Invisi-Ear.
Advertising Type:
One of the only methods, or types, of advertising that will seem to work with the nature of our medical based product is comparative advertising. By comparing our strengths to our competitors weaknesses, our firm will prosper from its honesty and the image of a solid, trustworthy product.
Evaluation:
By adding certain questions into the questionnaires that Invisi-Ear will supply to the consumer and the physicians offices, our firm will ask specifically how the consumer heard of Invisi-Ear. This feedback will allow our firm to decide what is and is not working for advertising our product.
The Sensible Hearing Aid of the Future
Mike O’Leary
Brittany Gilman
Bennett Lawrence
Gregg Levante
Nick “Bob” Hamel
Brandon Cote
Presentation
5
- Overview -
The main objective of Invisi-Ear’s sales is to stimulate a trial with potential consumers. By providing vital and important information to the consumer through our various forms of advertising, we hope to attract these individuals to set-up appointments with their respected doctors for more information and fitting.
Objective:
Dr. Ben Ronald MD Audiologist - PhD.
Consumer Promotional Tools
Price Reduction:
Invisi-Ear plans to reduce our price during and just after the holiday months. Most person to person interaction/communication occurs at this time of the year due to more frequent social gathering. Also, we will run an ad campaign urging potential consumers to try a hearing aid as a New Years resolution.
Coupon Specialties:
Invisi-Ear also prepares to send postcards with a 5% discount coupon on our product to different parts of the nation different times of the year. When presented, the physicians office will be directed to send us this postcard complete with a serial number and barcode in order to provide us with feedback on the effectiveness of this strategy.
Mr. & Mrs. John Doe 123 Fake Street Athens, GA 02445
Schedule a meeting with your physician or audiologist today…if not for you, then for the benefit of your loved ones.
An Invisi-Ear Hearing Aid can improve not only your standard of living, but also your loved one’s knowing you’ll never miss a single moment.
For More Information, call Invisi-Ear @ 1-800-HEAR
You’ll Never
Miss
A
Single
Moment….
Facing Consumer Doubt:
Due to our new and upcoming nature as a business firm, it will undoubtedly be difficult to gain loyalty as well as overcome several key factors every well rounded business must. These include:
Respect and Trust from the consumer and/or customer
Proving our product to be superior in quality
A low, competitive price to compliment our fine product
Aspects of our product that our competition lacks
Problem: Solution:
Provide consumers with an excellent product and great service
Through advertising and trial, show its durability and service it comes with
Demonstrate size, charging capabilities, etc.
Invisi-Ear is priced far below it’s competition, communicated through our advertising and participating offices
Due to the nature of our product and the sales promotions we offer, it simply makes the most sense to use urgency closing. By using this sales method, our consumers are forced to purchase during a certain time period or lose a considerable discount on Invisi-Ear. Hopefully, this will cause a greater demand for our product during that time period.
Urgency Closing:
To avoid any and all post purchase cognitive dissonance, Invisi-Ear as a company has developed several strategies:
1.) Send annual reminders for follow-ups and hearing checks
2.) Send “Seasons Greetings” cards to be sincere while including all people
3.) Provide our customers with a Warranty as mentioned earlier
In order to successfully spread our product across the country, our sales team will be structured in a territorial sales force manner. Our goal is create awareness, not to be exclusive. Therefore, our salespeople will attempt to push our product to as many audiologist and physicians offices as possible.
Salary, Compensation, and Commission
Our salespeople have critical jobs that are vital to the expansion of Invisi-Ear. The following options will be given to them for wages:
Sole Commission – only receive commission
10% of original deal
8% on every unit sold from that office
Salary w/ Commission – receive wage and smaller commission
$22.00 per hour
2% on every unit sold from any office sold to
