1

Executive SummaryThere is a common problem of confusing shopping lists, causing family

members to buy unnecessary grocery products, wasting money and eventually

throwing out food. Scan & Plan is a physical scanner and connected app that gives a

family the value of complete control of their dietary intake, spending analysis,

simultaneously minimizing their shopping time. The Scan & Plan is for busy health

conscious families with several children. Compared to the solutions on the market,

Scan & Plan fills the market gap with its convenience, family integration, nutritional

and financial breakdown.

The Scan & Plan’s scanner consists of a custom wireless Bluetooth scanner, an

LED light and suction cups. The Scan & Plan App is compatible with all of the family’s

smart devices. It includes the family’s shopping list and the dietary and spending

analysis from the past time period. Additional App functions are the manual item

insert, individual nutritional breakdown.

Distribution channels for the Scan & Plan include the stores Williams-Sonoma,

Kitchen Kapers, Bed Bath & Beyond, as well as the company's website. Promotion for

the product will include print advertisements, social media, trade shows and store

tours.

The initial investment for the 90-day trial period of Scan & Plan would require

$42,000, which would allow the company to evaluate the market response to the

product. Sales of the Scan & Plan will begin in the second quarter, with a quarterly

growth rate of 10% for the first year. The company will break-even in the second

quarter, after producing 2,730 total units. The initial investment required for launching

the product is $190,000 and after a full year of operation the company will reach

positive cash flow of $250,000.

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Table of Contents

Topic Page Number

Executive Summary...............................................................................................2

List of Figures........................................................................................................5

List of Tables.........................................................................................................6

Acknowledgements...............................................................................................7

Introduction............................................................................................................8

Project Team Description & Individual Pictures..........................................8

Company & Industry Background.............................................................10

Mission Statement....................................................................................11

Business Goals and Objectives................................................................11

Positioning Statement...............................................................................11

Research.............................................................................................................12

Competitive Benchmarking.......................................................................12

Customer Needs.......................................................................................14

Description of Design Concepts..........................................................................17

Scanner Concept......................................................................................17

App Concept.............................................................................................17

Technical Feasibility............................................................................................18

Scanner Solution and Descriptions...........................................................18

Scanner Features.....................................................................................20

App Solution.............................................................................................21

Technology Background...........................................................................21

App Functions Description........................................................................22

Bill of Materials.........................................................................................24

Financial Feasibility.............................................................................................26

Marketing Phase 1 & 2 Plan.....................................................................26

Distribution & Sales..................................................................................27

Scan & Plan Pricing Strategy....................................................................28

Sales Projections & Financial Assumptions..............................................29

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Financial Phase 1 Plan.............................................................................30

Financial Phase 2 Plan.............................................................................31

Cash Flow Analysis..................................................................................32

Potential Funding Sources........................................................................32

Conclusions and Recommendations...................................................................33

Summary Description...............................................................................33

Future Work..............................................................................................34

4

List of Figures

Figure Number Title Page Number

1 Current Solution - list...........................................................12

2 Current Solution – Out of Milk.............................................12

3 Amazon Dash......................................................................13

4 Market Survey.....................................................................16

5 Market Survey ....................................................................16

6 Market Survey.....................................................................16

7 CAD Potential Scanner.......................................................18

8 Reverse Engineering...........................................................19

9 Barcode Example................................................................21

10 Scan & Plan App.................................................................22

11 Nutrition Label.....................................................................22

12 Scan & Plan Website...........................................................26

13 Health Magazine.................................................................27

14 Best Buy Logo.....................................................................27

15 Cash Flow Analysis.............................................................32

5

List of Tables

Table Number Title Page Number

Table 1 Conceptual Map………………………………………………..14

Table 2 Bill of Materials....................................................................25

Acknowledgements

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• Pat J. Costa , Professor

• Nigel Corea, TA

• Other TAs

- Rachael Freedman- Alex Frankel- Emily Furiga- Stacy Sawin- Jason Kravec- Michael Meehan- Kyle Ferdinando- Stephanie Porter- Paul Miyashita- Piotr Wojnarowski- Trevor Verdonik

• Professor Huang, CSE Department

• Professor Dong, Marketing Department

• Professor Ehrig, Management Department

• Professor Dimitrova, Marketing Department

• Ann Padjen, Lawyer

• Matt S., Sales Associate at Barcode Inc.

• Adam B., Salesperson at Bed Bath & Beyond

• Tony Sanna, Salesperson at H.H. Gregg

• Anthony, Salesperson at BestBuy

• Brian, Salesperson at Amazon

• Kathryn Bisson, Representative from Zco Corporation

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Company & Industry Background

Scan & Plan was designed by five undergraduate students enrolled in the

Integrated Business and Engineering Program at Lehigh University. The main focus of

Scan and Plan is to provide a more convenient, family integrated, and nutritionally and

financially beneficial solution for grocery shopping. No solution on the market right now

offers families the health and financial benefits or convenience that Scan and Plan

offers. Most competitors offer apps that create shopping lists, however, by using the

scanner on your phone, their solutions are time consuming and not convenient. Our

closest competitor utilizes a physical scanner with an app, however it doesn’t offer

nutritional or financial benefits. We are mindful of the difficulties incurred when a family

member shops for groceries. We understand the miscommunication and disorganization

brought by grocery shopping and we want to help alleviate the problems families

experience because of grocery shopping. We are also fully aware of the growing familial

concerns for nutrition and budgeting.

The Scan & Plan targets busy families who are nutritionally and financially

conscious. Through extensive research, we concluded that the market for Scan and

Plan spans to 12 million households in the country, which consists of parents ages 25-

55 with 2-3 children ages 6-17. Out of the 170 people in our target market who were

surveyed, 76% of them said that an app would be useful for shopping. Also, from

interviewing several parents, we learned that parents would want a solution that can

connect their family while tracking their nutrition and financial spending. From our entire

market research, we decided to create a product with a physical barcode scanner,

located in the kitchen, that would connect to an app that the entire family would have

that would track the family’s nutrition and grocery spending.

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Mission Statement

“To help the busy family maintain a healthier lifestyle, save time and money while

shopping, and seamlessly fit into the everyday kitchen routine.”

Business Goals and Objectives

To offer a simple way for families observe dietary habits and grocery spending

To simplify the grocery shopping experience

To eliminate misunderstanding and confusion with grocery shopping

To integrate with the busy family’s lifestyle

Positioning Statement

Our goal as a company is to better the lives of our customers. We strive to push

the busy health conscious family with several children to a healthy lifestyle. We want

to simplify the process of tracking dietary intake, creating a spending analysis and

minimizing the amount of time families spend shopping. Our solution easily and

conveniently fits into any kitchen and connects with any smart device, giving families

the benefit of value of complete control of their shopping and related financial and

dietary information.

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Research and Specifications

Competitive Benchmarking

The status quo is that families use the pencil

and paper solution to create their shopping list. When

someone in the family wants something from the

grocery store or when the family runs out of a product,

that person will add it to the shopping list. Whoever

goes grocery shopping will then take the list when

he/she goes shopping for the family. However, this

solution comes with many problems. First, everyone in

the house will have different handwritings so whoever

goes shopping may not be able to read the list.

Furthermore, each family member doesn’t always have the list. For example, if the

dad is out shopping and the mother writes down something on the list, the dad doesn’t

have the new list so he can’t buy that grocery item. Additionally, the items on the list

are not organized by food category, making shopping more time consuming.

After figuring out the target market and the customer

needs that our solution would have to address, we looked at

the current solutions that are on the market. We realized that

there were countless apps that are currently out there that try to

make grocery shopping a better process. However, we wanted

to look at the apps that were the most similar to our product.

The first solution that we looked at was the “Out of Milk” app. This app, which is

a free app, is for Android and IOS devices. It uses the scanner on the smartphone to

identify products and create a shopping list.  The app also uses cloud based

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Figure 2

Figure 1

technology to share information between smartphones in the same household. The

strengths of the app is that it’s family integrated because it lets family members all see

the same shopping list on every smart device in the family. It also estimates the costs

of goods, so it’s financially beneficial, and it lets the user manually add products onto

the list in case an item doesn’t have a barcode. The app, though, is not convenient

being that in order to use it, you always have to have your phone on you. If you want

to add an item to your shopping list, you have to first take out your phone then open

the app then scan the product. Besides this being a long process, your hands may be

dirty when you’re in the kitchen and you may not want to touch your phone. The app

also doesn’t offer any nutritional benefits.

The second solution that we researched was the “Grocery IQ” app. It’s also a

free app for Android and IOS devices that uses cloud based technology that allows

families to have the same information on each of their smart devices. Like the Out of

Milk app, it also utilizes the smart device scanner technology to create shopping lists.

Moreover, Grocery IQ uses your location services to find out which grocery stores are

near you and offer you coupons and promotions to these stores. The app is family

oriented because it lets everyone in your household view the same shopping list and

add items to the list. Just like the Out of Milk app, Grocery IQ is not convenient. The

app also doesn’t track your spending or your nutritional intake.

We also looked at the product,

“Amazon Dash.” This is a physical

scanner that connects to your “Amazon

Fresh” account. Once you scan an item

that you are out of, the dash puts that item on your Amazon Fresh shopping list.

Amazon then delivers all the items on the shopping list to your house. This costs $299

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Figure 3

a year to be a member of and currently only exists in a few parts of California. This is

convenient because it is a physical scanner that can be used easily at any time. This

product is also family oriented because anyone in the family can sign into the family’s

Amazon Fresh account on any device to view the shopping list. However, the Dash

doesn’t analyze your family’s spending or nutritional intake. Another downside of the

Dash is that the items that Amazon Fresh delivers to your house are 14% more

expensive than those same items would be in the average grocery store.

By looking at all

of the products out

there that attempt to

solve the grocery

shopping problems that

families deal with, we

realized that there is a

gap in the market. No

one solution in the market right now is convenient, family integrated, financially

beneficial, and nutritionally beneficial. This allows us to capitalize on the current

market gap as shown in the conceptual map.

Customer Needs

After extensive research through surveys, interviews, and visiting stores like

Best Buy, HH Gregg, Bed Bath & Beyond, and the Architectural Digest Home Design

Show, we were able to figure out that our solution would have to address the following

customer needs:

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Table 1 : Conceptual Map

Family Integrated

Nutritionally Beneficial

Financially Beneficial

Convenient

When we visited HH Gregg, we spoke to Tony Sanna, who told us, “People like

their home products to be technologically integrated.” When we were speaking to him,

he told us that the market for technologically integrated home appliances is increasing

rapidly. He said that people now want smart fridges and smart washers/dryers

because they connect to a family’s smart devices. We learned from this that families

want their home appliances to be conveniently integrated with their family members

and with their smart devices.

We also interviewed several parents. Bruce Altmark, for example, said, “My family

would really benefit from something that can help us observe our grocery spending.”

Another father, Stanley Weber, said, “I want something that can connect my family

and track our nutritional habits together.” From speaking to these parents, we

realized that our solution would also have to be financially and nutritionally beneficial.

Stanley in particular helped us realize the importance of our solution being family

integrated. If a family is going to become healthier, they will need to do so together.

Stanley said that in the past it was hard for him to be the only one dieting because his

family would eat dinners that are unhealthy, making him eat separately.

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We also conducted a survey on SurveyMonkey. Of the 170 responses we

received, 76% of the people said that an app would be useful for their shopping, as

shown in Figure 6. 98% of the people also said that they would forget to buy an item

while shopping, as shown in Figure 7. Furthermore, Figure 8 shows that 92% of

people went grocery shopping at least once a week. Being that these people shop so

often, and 98% of them forget items while shopping, we saw that grocery shopping is

a large issue for many households.

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Figures 4, 5, 6

Description of Design Concepts

Scanner Concept

A home bar code scanner connected to an app that remained in the kitchen

would provide the most convenience for our target market. Busy families found

scanning based apps like the Out of Milk to be inconvenient to take their phone out

every time they wanted to scan an item. Furthermore, the research at Architectural

Digest Home Design Show in New York City identified the wide range of kitchen styles

and the appliances in the kitchen. The design show made it clear that the scanner

had to be small to prevent additional clutter and to easily find its “place” in every

kitchen style. Next, the daily kitchen routine is busy and can lead to the scanner being

dropped, bumped, water damaged, or food damaged. The scanner must be durable

enough to sustain any kind of fall from kitchen counters and other kitchen hazards.

Lastly, the scanner had to be compatible with all smart devices. The coding language

behind iOS systems, android systems, tablets, and computers can vary. The

information the scanner reads needs to be processed by the wide range of devices so

the target market isn’t limited to people with specific smart devices.

App Concept

An app that processed and compiled the received information from the scanner

would provide our target market with easy and convenient access to their grocery

information. The app should be shared amongst all family members to prevent the

occurrence of multiple shopping lists. In addition, from the market research, families

expressed a need to track nutrition and grocery spending. Parents have a lot of

responsibilities like working, driving their children around, cooking, cleaning, and many

more, which limits the time they have to monitor their family’s diets and spending. The

app should help families track their health and spending on grocery items in a 15

convenient way that does not require a significant time requirement or input from the

families.

Solution Scanner

The team proposed a bar code

scanner designed similar to Figure 7.

The dimensions are similar to that of an

iPhone being five inches in length by two

and half inches in height by half inch in

width. The front screen in Figure 7 is the compartment for the lasers required for the

device to scan bar codes with dimensions of about two and half inches in length by

one and half inches in height. The large surface area for the laser enables the bar

code to be read in a variety of orientations as advised by Tech Experts of Barcode

Inc., a manufacturer of bar code scanners. The alternative method for reading the bar

code would have been photo recognition software which is what competitors like Out

of Milk and Grocery IQ use. Although a camera would require a smaller surface area

than lasers, the recognition speed is slower and orienting the products correctly in

front of the camera would be difficult without a display. In addition, the scanner would

require a stronger processor to process the pictures causing the need for a larger

power supply and for the dimensions to increase. Thus a laser scanner was chosen

to keep the design small and easy for consumers to use.

To avoid cluttering the kitchen and fitting into the variety of kitchen layouts, the

team decided that suctions cups on the back would enable consumers to decide

where the scanner best fit into their kitchen. The conclusion was drawn from reverse

engineering the Mighty Mug and the Architectural Digest Home Design Show in New

York City. The Mighty Mug is a mug that never falls over when bumped or pushed.

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Figure 7

Since the scanner would be within a busy kitchen environment, it would be prone to

similar forces. The team reversed engineered the Mighty Mug to find a suction cup

resisted the applied forces. The team also discovered the suction cup enabled the

mug to be placed on a 90 degree plane as seen in Figure 8. However due to

modification done on the suction cup, the mug was unable to be placed on a plane

greater than 90 degrees. The ability to be placed on different angled planes became

a desired quality after the Architecture

Digest Home Design Show in New

York City. The show taught the team

that kitchen lay outs vary extremely,

thus making one universal location for

the scanner impossible. Therefore, the

suction cups ability to be placed on

different angled planes enables consumers the ability to choose the location for the

scanner. The refrigerator, flat counters, and trash cans were identified as sufficient

surfaces for suction that were common amongst all kitchens giving consumers a

variety of locations to choose from. As a result, the team concluded suction cups

provided the scanner the ability to be located in a wide range of locations within the

varying kitchen layouts and prevent the scanner from falling accidentally.

To make the scanner convenient for consumers, the information is wireless

sent to the Scan & Plan App to be processed and analyze. The team recognized the

issue with the Out of Milk app is the scanning and processing was done all on one

device such as an iPhone which is also used for several other tasks. The device to

scan products is not readily available making it inconvenient for consumers to use.

With the two separate and wirelessly connected, the scanner can remain in the

kitchen at all times ready to go with the information available on the Scan & Plan app

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Figure 8

for customers to view. By also being wireless, the additional clutter and limitation of

location that would result from having a wire is eliminated.

Scanner Features

The team realized part of the scanning process is knowing when items are

successfully scanned. Typical retail store bar code scanners beep and display the

products name that was scanned. The team originally considered a similar alert

system, but a sales associate at Best Buy informed the team that customers are

irritated by their home making increasingly more noises. Thus, a display alert system

would be used. The team decided a green LED would blink twice when a product was

scanned successfully. A LED is small enough not affect the design of the scanner and

efficient enough to alert the customer the product was scanned without irritating them.

Another key component of the scanner was battery life. Since the scanner was

to remain in the kitchen ready to go at all times and connected to Wi-Fi, the scanner

would be constantly consuming power. The team talked to a sales associate at Best

Buy about wireless connectivity learning Wi-Fi adapters were relatively small designs,

but were always connected to a larger power source. Devices such as iPhones,

though, are connected to a small power source that is recharged every few days. The

team also compared battery life to a wireless scanner with Bluetooth produced by

Coshine Group Corporation. The scanner was powered by four double A batteries

and had a battery life of 300 hours, but was only in use when users pressed the button

to activate the scanner. The team determined a sleep mode feature for the scanner

would save the necessary power to keep its small design, the scanner wireless, and

connected to Wi-Fi. The sleep mode feature would control when the scanner was on

and off through an inactive time log and a motion sensor. After a certain amount of

time of nothing being scanned, the scanner will switch into sleep mode. The green

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LED on the front of the scanner will switch to blue so users know the device is in sleep

mode. To reactivate the scanner, a motion sensor will be on the front of the scanner.

When a user attempts to scan the barcode on a product, the motion sensor will pick

up the motion and turn the scanner back on, switching the blue LED to green. Further

tests would have to be conducted though to determine the optimal time of inactivity

until switching into sleep mode.

App Solution

An app is the best solution for displaying the data received from the scanner.

Consumers today are constantly connected through smartphones, tablets, and

computers allowing the app to be easily accessed. Based on the needs from our

target market, the team determined the app would focus on Shopping, Health, and

Budgeting.

Technology Background

Laser scanners read barcodes by emitting light at a certain frequency across

the barcode. The black bars absorb all light, while the white separation between black

bars is reflected back at the scanner. A photo diode receives the light bounced back

and from that is able to detect the separation and width of the black bars. Based on

the distances and width, a specific string of numbers called a Universal Product Code

(UPC), is created. Every product has a specific UPC associated with it, which

sometimes is located underneath the barcode as seen in Figure 9. For example, the

UPC for a Nature Valley Honey n’ Oats bar is

01600264694. Once the UPC is known the

scanner sends that number to the app to be

used to gather other product information.

19Figure 9

Shopping Section

The UPC is inputted in an online database like

UPCDatabase.com to produce a product description, in this case

Nature Valley 100% Natural Crunchy Granola Bars – Oats ‘N Honey.

With the description the app links to another database to determine

the food group it belongs to such as fruits, snacks, meats; etc. The

Nature Valley bar would be categorized as a snack. With the

description and category the app produces a simple list of product

names split into sections based on the food groups (Figure 10). The list is then

shared amongst family members to eliminate the use the creation of more than one

shopping list. When a user wishes to mark an item off the list, they touch the box

located next to the name and a check mark will be appear indicating the item is no

longer needed or wanted. For items without a barcode, users can manually input the

products name and category to add to the list. Lastly, to eliminate miscommunication

between family members, an “Out Shopping” button enables users to send a message

to everyone in their family notifying them that they are shopping. Family members can

go into the app and add desired items to the list allowing the person out shopping to

have a current list if everything their family needs.

Nutrition Section

The team found two different ways to retrieve the

nutrition facts of specific products. The first is using the

UPC in another online database like Scandit.com. The

second is using the description in a different online database

like platform.fatsecret.com. Both methods produce a

nutrition facts label like the one in Figure 11. The only

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Figure 10

Figure 11

differences is the Application Programming Interface costs that each may require.

Further analysis by a software team would be required to determine effectiveness and

speed of both methods to make a decision. The nutrition facts label would be used to

categories foods into food groups such as fruits, grains, vegetables; etc and to create

an organized chart of a family’s consumption of each food group. The chart will

display percentages of each food group for users to read more easily. Each food

group can be selected to view the specific products that lie under the category. For

individual users that desire to monitor their own health, specific products can be

moved over into an individual section for users to see their own health.

Budgeting Section

To estimate the price of a product the UPC can be used to search another

online database like Scandit.com. Once the price is retrieved the data can be

organized into charts or graphs of spending per week, bi-weekly, monthly, and

annually. The information can be viewed on the app. When talking to families, it was

determined that most financials were reviewed at home at a computer. A connected

website to the app of the spending reports would be more convenient for the

consumers.

With the data of products users consume, the team determined the data could

be sold to a third party companies to enable companies to market directly towards

individuals with coupons for certain products. The coupons would help users save

while bringing in additional revenue for Scan & Plan. Coupons would be scan able

directly from the user’s phone or printable. The potential revenue was not accounted

for though in the financials because it was dependent on creating a user database

first.

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Recommended Process Used

The team determined the most efficient way for consumers to use Scan & Plan is

to scan food products right before disposing or consuming them. By doing so, the app

compiles the information of products that are disposed creating a list of products that

need to be re-purchased and percentages of how healthy users have been. By

scanning the product before consumption, disposal, or products with no intention of

using the information provided in the shopping list and health section will be

inaccurate. Inaccurate information may lead to buying products that users already

possess, or invalid consumption information of food groups and or products. Products

should be scanned before consumption or disposal only if intended to consume or

dispose of the product within twenty four

Bill of Materials

The team called Coshine Group Co., Ltd, a bar code scanner manufacture to talk

about modifying the CT-20 Mini Portable Wireless Bluetooth Barcode Scanner. The

modifications included moving the lasers to the side, using Wi-Fi instead of Bluetooth,

removing buttons and installing a motion sensor. The company confirmed the feasibility

and gave the team a quote of $48.67. The team received an additional quote of $0.14

and $0.20 for implementing the suctions cups and LED in the scanner. The team also

called PAC Worldwide to discuss packaging costs for the specific dimensions of the

prototype scanner. The cost of packaging the scanner which was five inches in length

by two and half inches in height by half inch in width would be $2.46 through PAC

Worldwide. The total cost per unit is $51.48.

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Component Material Company Price per unit

Wireless Bluetooth Barcode Scanner

Plastic Coshine Group Co., Ltd.

$48.67

Suction cup (x2) Plastic Coshine Group Co., Ltd.

$0.14

Green LED light Plastic Coshine Group Co., Ltd.

$0.20

Packaging Cardboard PAC Worldwide $2.46

Software Development

The team talked to Zco Corporation, a software development company, to

receive a quote on app development costs. The app would require access to several

databases meaning an Application Program Interfaces (API), a type of terms of use

contract, would be implemented with the database providers. The software for the app

would also have to be compatible with several types of smart devices. For the

proposed database API’s and app development, the team received a quote of $45,000

from Zco Corporations.

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Table 2 : Bill of Materials

Financial Feasibility

Target Audience

Our target audience we found to be parents ages 25-55 with children ages 6-17.

To find this, we conducted research on Survey Money as well as real world eyeball to

eyeball communication. People in this demographic are busy, suffer from the problem

addressed, and are willing to spend money on a technologically advanced solution. In

order to first present the value of Scan & Plan to the market, we first had to organize

our strategy based on financials.

Marketing Phase 1

Scan & Plan costs around $51 to produce

resulting in a $112 wholesale price, $225

retail price, and $61 profit. To maintain this

cost we first wanted to run a 90 day “Phase

One Trial Period” to get Scan & Plan up and

running. In an effort to gain publicity in a cost

effective way, social media is the main focus. Twitter, Google AdWords, and

Facebook allows us to control our own media at around $450 for the first phase. A

website of our own (costing around $2,000 to start, $18,000 to update in the future,

and $7,000 to maintain) is the home of phase one sales. Another crucial component

of the first phase is a store tour. Our team would travel to 15 stores in 90 days and

put a face to our product at live demonstrations and launch parties. Bed Bath and

Beyond, Kitchen Kapers, and Williams-Sonoma would host us for a fee of $150/4hr

demo and we would give each store 100 units under consignment. At the end of the

trial period, the stores could give us feedback on how quickly the product moved off

24

Figure 12

the shelves allowing for adjustments in distribution. Along with

these sales, we predict 20 online sales through our website. Going

out into the stores where busy parents shop, we could communicate

with them in person and quickly make adjustments both to our engineering and

business plans.

Marketing Phase 2

The second phase of marketing promotion is under the assumption that the first 90

days was successful. We hope to invest a lot of time and money into “upping” our

current strategy and spreading Scan & Plan nationwide. Along with the continuation

of social media and store tours, we would visit two trade stores, each appealing to our

target market. The NBC Health and Wellness Expo in Washington DC is a two day

expo featuring the latest in heath related technology and products. The Dauphin

County Women’s Expo held locally in Hershey, PA appeals to everyday moms in our

target age range who would benefit from the value of Scan & Plan. Each show would

cost $6,000 to attend.

Magazines are the most costly and effective way to promote our product directly to

the client. Parenting, Health, and Working Mom are three magazines which we found

to be appropriate to advertise in. Reaching over 4.5 million readers every month, one

full page ad in each on a three month rotation would cost us $50,000 annually.

Distribution and Sales

Once proven successful, we wanted to imagine what a

successful year could look like. Revisiting the three stores

where demonstrations and consignment were held (Bed Bath

25

Figure 13

Figure 14

and Beyond, Kitchen Kapers, and Williams Sonoma) our distribution would first

prioritize with them. Next, we would add more technology based retailers such as

Best Buy, Sky Mall, and H.H. Gregg. We wanted to keep our numbers within reason

as not to get ahead of ourselves. Through financial analysis, we predict 108 units to

be sold per store (over 300 locations) starting in Q2. Website sales are also predicted

to increase to 650 in Q2 with an increase of 10% each quarter. These numbers

provide great confidence in our product and we believe that our marketing strategy will

enable sales to reach their full potential.

Business Model Overview

The business model created for Scan & Plan is divided into two parts: phase 1

and phase 2. Phase 1 is also known as a test run. This period is the first 90 days of

business operations for Scan & Plan. During this time, the product and app are still

being developed and only very low production occurs. Phase 2 follows directly after

Phase 1. This is what the first year of operations could look like for Scan & Plan,

given a successful Phase 1. Phase 1 is the most important period of this business

model because without success during this time, the company cannot continue

production.

Scan & Plan Pricing Strategy

The cost of goods sold, including materials, manufacturing, and shipping is $51.47

per unit. We will be selling the Scan & Plan at a wholesale price of $112.50 to

retailers. We made the assumptions that retailers will mark up 100% leading to a final

retail price of $225.00 per unit. Scan & Plan will also be sold online on the company

website at the same price that the Scan & Plan is sold at retail locations for $225.

This results in a gross profit of $61.03 per unit sold. On our website, we will profit

26

$173.53 because there will be no retail commission. We could not base our price on

current solutions on the market because none of our competition sells a physical

product as we do. However, we settled on this price because we wanted to keep our

product affordable, but also profit off of the value that we provide our customers. Scan

& Plan is a one-time buy for our customers and life-changing product. After some

surveying, we found that families were willing to pay at least $225 for more order and

piece-of-mind in their lives.

Sales Projections and Assumptions

There were multiple assumptions that the team had to make when determining the

financial model for Scan & Plan. The first assumption was that retail stores will end up

marking the product up 100% from the wholesale price. Also we believe that in the

first quarter of sales following our trial period we can reach only .005% of our

extremely large target market of 12 million households for retails sales. This results in

the sale of approximately 650 units.

Another assumption we made is that the three retailers, Bed Bath & Beyond,

Williams Sonoma and Kitchen Kapers, will agree to consignment. We believed it to be

very likely that these stores would agree to consignment because of the success that

Coffee Joulies had with consignment with Kitchen Kapers. The next financial

assumption the team made was that our Phase 1 would be successful and the

retailers with which we have consignment with in those first 90 days will begin selling

our product directly following this period.

The team also assumed that an additional 50% of retail sales would also be

sold on the company’s website. The use of magazine ads, social media and pamphlet

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ads will heavily promote the team's website, resulting in a large amount of purchases

online. The community we are selling to consists of families and mothers who will

most likely try to persuade their friends to purchase our once they discover its

usefulness. This type of advertising and our presence in only three retailers will lead

to higher website sales than normal; 50% of sales was estimated to reflect that. This

adds a total of 650 additional units to our sales estimates in the second quarter

bringing the total units sold to 1,300.

Phase 1 Plan

Phase 1 is the first 90 days of operation for Scan & Plan. It is also known as the

“proof of concept” period because it is when we our first able to place our product out

in the market and see the response. During this time, we will have consignment with

three stores: Bed Bath & Beyond, Williams Sonoma and Kitchen Kapers. We will

place some of our products on their shelves at no cost to them at various locations

and as our product sells we will continue to replace them in stores. Consignment

means that retailers will display our product at no risk to them. Once the retailer

makes a sale, they will pay as back the wholesale selling price of $112.50 and we will

profit $61.03. We expect to sell a total of 300 units, 100 at each of three stores,

through consignment. Also during this period we will sell 20 units through our website.

The costs for the first 90 days are broken down into development, production,

marketing & support and ramp up. 48% of the Phase 1 costs are development costs

with most of this going towards designing and launching the Scan & Plan smartphone

app. The production, marketing & support and ramp-up costs make up 39%, 8% and

5%, respectively, of the Phase 1 costs. The required initial investment for operations

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in the first 90 days is $42,000. The cost to acquire a customer in Phase 1 is $10 and

from each of these customers we gain $68.

Phase 2 Plan

In Phase 2 of our plan, we will see what the first year could look like. This phase

assumes a successful Phase 1 and large production and distribution through the

website and retail will occur. The first quarter of normal sales will begin in the second

quarter of the first year. One half of the sales will occur through retail and the other on

our website. The sales in the second quarter will be 1,300 units, reaching .01% of our

target audience, and this will grow at a rate of 10% per quarter. Therefore, sales in

Q3 will be 1,430 and 1,570 in Q4 of year one. The cost breakdown for Phase 2 is

40% development costs, 36% ramp up costs and 24% marketing & support costs. An

important development cost to note is $25,000 for app development, in addition to the

$20,000 originally put towards the app in Phase 1. For ramp up costs, $45,000 will be

invested in market introduction, or store demonstrations/displays, at Bed Bath &

Beyond, Williams Sonoma and Kitchen Kapers. In terms of important yearly support

costs, $9,000 will go towards app maintenance and $7,000 for website maintenance.

The cost to acquire a customer in Phase 2 is still $10, but the value we gain from each

customer jumps to $117.

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Cash Flow Analysis and Required Initial Investment

Given the year described in Phase 2, the cash flow will mirror the graph

pictured below. The required initial is $190,000 and we will break even in the third

quarter or operations.

Potential Funding Sources

The team requires an initial investment of $190,000 for a realistic first year of

operations as described in Phase 2. However, to get Scan & Plan developed and out

on the market during Phase 1, $42,000 is required. This $42,000 is very important

because without a strong first 90 days of proving our concept success in the future will

be highly unlikely. The team will focus mainly on raising money through private

investment. It is very likely for us to receive private funding because our initial

investment is relatively conservative. However, if the initial investment cannot be

reached only through these means the team will turn to loans from a local bank.

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Figure 15

Conclusion and Recommendations

Summary Description

After thorough market research, including surveys and one-on one

conversations with families we found a large market gap for a product that would help

simplify the regular shopping experience, eliminating confusion, disorganization and

misunderstanding. We then identified the four core customer needs: convenience and

family integration within the solution as well as a spending analysis and nutrition

breakdown. With those requirements in mind, we created Scan & Plan, a physical

scanner and smartphone App that gives its users an easy way to create a grocery list

s hop with it and track the related financial and dietary intake.

The main component of the Scan & Plan’s scanner is custom wireless

Bluetooth scanner, which allows for its compatibility with all of the family’s smart

devices. The changing LED light lets the user see when the scanner is ON or in sleep

mode. Suction cups are used to mount the scanner to any surface in a family’s

kitchen, allowing our product to seamlessly fit into any household. The App includes

the family’s shopping list and the dietary and spending analysis from the past time

period. To further simplify the shopping process there are functions such as the

manual item insert button, individual nutritional breakdown and an optional notification

sent to the family, when someone is shopping, in the case that there is a last minute

addition to the list.

The team plans to reach our target audience through means of promotion such

as social media, including Twitter, a Facebook page and Google Adwords, as well as

print advertisements in magazine like Working Mom, Parenting and Health.

Additionally, we will be present at trade shows and provide store tours to spread the

word about our product. The team will be selling the Scan & Plan through Williams-

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Sonoma, Kitchen Kapers, Bed Bath & Beyond, Best Buy, SkyMall and H.H.Gregg for a

price of $225.00. We will also sell it directly on the Scan & Plan online website

The initial investment for the 90-day trial period of Scan & Plan would require

$42,000, which would allow the company to evaluate the market response to the

product. Sales of the Scan & Plan will begin in the second quarter, with a quarterly

growth rate of 10% for the first year. The company will break-even in the second

quarter, after producing 2,730 total units. The initial investment required for launching

the product is $190,000 and after a full year of operation the company will reach

positive cash flow of $250,000.

Future Work

Once the company receives its initial investment it can start the production for

the test trail, which would include 300 units for consignment in Bed Bath & Beyond,

Kitchen Kapers and Williams-Sonoma, as well as 20 for the Scan & Plan website.

Social media promotion would take into effect right away, as well as customer

surveying and independent validation on means of improving the product.

Once production and sales have begun, the team can look at way of expanding

the distribution and presence of the product, as well as making modifications based on

feedback. The target market can be broadened to all families that are health and

financially conscious, or for individuals that already lead specific diets, for example

gluten free or vegetarian. In order to best reach these new customers, Scan & Plan

would expand to stores such Whole Foods Market, and require advertisements in new

magazines, that were not included in the original plan.

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