“Giving an extra set of hands, when you need them the
most!”
Meaghan Jordan
Professor S. Minnig
CCTP 806: Product Development in the New Digital Age
9 December 2010
1
Table of Contents
Product Description................................................................................................................. 1
Scenarios...................................................................................................................................... 1
SHARED NEEDS ......................................................................................................................................... 1
Components…………………………………………………………………………………………….............2
Technology………………………………………………………………………………………………………2
Implementation………………………………………………………………………………………………..3
MARKET DESCRIPTION ........................................................................................................... 4
Year 0 Sizing ............................................................................................................................... 5
TARGET SEGMENTS……………………………………………………………………………………………... 6-7
ENVIRONMENTAL ANALYSIS…………………………………………………………………………………………8-9
Competitor Analysis……………………………………………………………………………………10-13
Marketing Strategy……………………………………………………………………………………..14-15
Marketing & Advertising……………………………………………………………………..15-16
Sales Strategy…………………………………………………………………………………………………...17
Exit Strategy……………………………………………………………………………………………………..18
Pricing…………………………………………………………………………………………………………19-20
Financials……………………………………………………………………………………………………21-24
Conclusion………………………………………………………………………………………………………..24
Appendix A……………………………………………………………………………………………….....25-26
Work Cited…………………………………………………………………………………………………..27-28
2
I. Product Description
The Cuddles On-the-Go car seat insert is an innovative baby product designed to
calm an infant when a caregiver is not immediately available. The blanket like Cuddles is
engineered for a rear facing infant car seat, which is typically used until the child reaches
the age of 12 months. When placed in the car seat, underneath the infant, and turned on
the vibrations will soothe the agitated baby. The Cuddles On-the-Go allows for parents,
daycare workers or babysitters to have the ability of calming a newborn without all of the
accessories available in a familiar setting like a home.
Scenarios

Kristin lives in a greater metro area and spends a good amount of time in the
car with her child. She finds that when traveling in the car, the unexpected
meltdown of her infant can be difficult to control. She cannot reach back and
calm the baby, while simultaneously navigating the country like suburban
roads in a safe manner. At these moments, Kristin feels helpless and baby
remains unsettled in the car seat.

Dan lives in a major metropolis and enjoys taking his infant out for both walks
and drives. On car trips the baby can become agitated. The stop and go nature
of city traffic requires Dan’s attention, preventing him from comforting the
baby. The city walks with the baby, especially when running errands, also
prevent Dan from being able to effectively soothe the infant and manage bags,
crosswalks, etc.

Ms. Kate is a daycare teacher in the infant room of her school. With a number
of babies and only so many classroom helpers, calming unsettled babies can
be a challenge. She cannot calm all the babies, even with all of the aides.
Shared Needs
The scenarios presented above reveal the common need for caregivers to soothe
their infants in difficult situations. Each of the caregivers requires an extra set of hands to
comfort the baby, specifically when the child is in their rear facing car seat. The Cuddles
3
On-the-Go car seat insert will provide the comforting touch to the infant when the
caregiver cannot.
Components

Local Baby Boutiques: The local businesses will be the first to carry Cuddles
On-the-Go. Starting out small, the car seat insert will be sold in limited stores in
the metropolitan areas of New York, Los Angeles and Washington, DC. The
partnership with chic baby boutiques will be essential to the launch of Cuddles
On-the-Go. Their cooperation coupled with our marketing plan will ultimately
help our product become a staple in the baby market.

Online Shop (Website): The initial website designed for Cuddles On-the-Go will
feature the product and supplementary materials. This website will be launched
within the first month of products being sold in baby boutiques. The website will
allow customers to shop for the vibrating car seat insert, create a baby registry for
showers, as well as being able to leave feedback about all of the products offered.
Technology

Cuddles On-the-Go Website: The domain, www.soothingbaby.com, will be setup for the purpose of allowing customers to shop for the Cuddles On-the-Go car
seat insert. This private website will be maintained by the company from the main
offices located in Washington, DC.

Privacy: As a company, we value the privacy of our customers. We will
guarantee that any information we obtain from orders will not be sold to other
establishments and/or companies. The Soothing Baby Company will not data
mine.

Security: The Soothing Baby Website will utilize the Secure Sockets Layer
(SSL) technology to ensure our customers security.1 This will encrypt the credit
card information when it is sent over the Internet to make an online payment.
1
"Online Shopping Tips." Welcome to BBBOnline. Council of Better Business Bureau, Inc, 2003. Web. 02
Dec. 2010. <http://www.bbbonline.org/onlineshoptips/security.asp>.
4
However, if the customer does not feel this is sufficient we will also offer
payment over the phone.
Implementation Requirements

The Office Team: The team will handle the business aspect of the company, from
marketing to development to customer service. This team will work closely as a
cohesive unit to launch Cuddles On-the-Go, and then maintain the brand.

The Warehouse Team: The team will be in charge of the production and
shipping of Cuddles On-the-Go. These team members will be the backbone of
Soothing Baby, ensuring the product is created properly and delivered in an
efficient manner.

Shipping Company: Our product will be sent to boutiques in 3 major
metropolitan areas, as well as the consumers directly. The receipt of the product
in a timely manner is the number one priority of Soothing Baby. Our sales rely on
the delivery of our product, so we will be partnering with a shipping company,
like FedEx of UPS.

The Consumer Feedback: Once our product is released the word of mouth, grass
roots marketing methodology will be essential to expanding our client base.
Without this component our Cuddles On-the-Go car seat insert will not be able to
grow.
5
II. Market Description
The baby product market is one that is constantly expanding and in demand with
upwards of 4 million births annually in the United States2. The infant car seat market was
a $ 5 million dollar a year industry in 2006.3 The item on every baby registry for
expectant parents is a rear facing infant car seat. The car seat is the must have item for
both urban and suburban parents, especially since a rear facing car seat can be converted
into a stroller. With the top 9 infant seats, as rated by Consumer Reports, ranging in price
from $80.00 to $350.00, it is easy to see why the profits in this market are favorable4.
The accessories for infant car seats have also become prominent in the baby
product market. Companies produce a wide range of items, from inserts, fashionable
covers, seasonal snugglers, to mobile toys for entertainment purposes. With the average
American spending 37 hours per year in traffic, these items aid caregivers when traveling
with an infant for extended periods of time.5 The accessories, specifically for infant car
seats, are designed to help entertain and soothe the baby when riding in the car.
The car seat products created by major brands aim to help the caregiver keep the
infant calm during car trips. The most effective methods for calming an infant are
associated with touch and motion.6 However, driving and calming a baby with manual
motion cannot be done in a safe manner. The baby market lacks a product that utilizes
2
Applewhite, J. Scott. "Recession May Have Pushed U.S. Birth Rate to New Low - USATODAY.com."
News, Travel, Weather, Entertainment, Sports, Technology, U.S. & World - USATODAY.com. USA Today,
27 Aug. 2010. Web. 03 Dec. 2010. <http://www.usatoday.com/news/health/2010-08-27-birthdecline_N.htm>.
3"Market Research Analysis - Market Research Online from MarketResearch.com." Market Research
Reports - Business Market Research Reports & Industry Analysis. Market Research.com, 13 Dec. 2007.
Web. 09 Dec. 2010.
<http://www.marketresearch.com/corporate/aboutus/press.asp?view=3&article=1027&g=1>.
4 "Car Seat Guide from Consumer Reports." Consumer Reports: Expert Product Reviews and Product
Ratings from Our Test Labs. Consumers Union of US, Inc. Web. 18 October. 2010.
<http://www.consumerreports.org/cro/babies-kids/baby-toddler/car-seats/car-seat-buying-advice/car-seatgetting-started/car-seat-getting-started.htm>.
5 James, Randy. "America and Traffic Congestion: Still Stuck - TIME." Breaking News, Analysis, Politics,
Blogs, News Photos, Video, Tech Reviews - TIME.com. Time Magazine, 9 July 2009. Web. 23 Oct. 2010.
<http://www.time.com/time/nation/article/0,8599,1909417,00.html>.
6 "How to Calm Your Crying Baby | NewbornBaby.com.au." Newborn Baby | Pregnancy & Birth Advice |
NewbornBaby.com.au. Web. 15 Nov. 2010. <http://newbornbaby.com.au/newborn/care/baby-crying/calmcrying-baby/>.
6
proven techniques for calming an infant during car trips. The combination of these two
dilemmas can be the formula for first to market success with Cuddles On-the-Go.
Yr 0 Sizing
The market for Cuddles On-the-Go was determined based on the 2009 annual
birth rate in the United States. The growth rate will remain at 0%, as our product is only
for infant’s ages 0 to 12 months, when the rear facing infant car seat is used. The desired
market share was calculated based on how long each of the target markets spend in the
car. In the case of the Professional Childcare segment, the percentages are higher because
the infants remain in their car seats while in daycare, which is longer than the average car
ride of target segments 1 and 2. The market has the potential to fluctuate based on the
birthrates for the future years.
Y0
Y1
Y2
Y3
Y4
Y5
Market
779,000
779,000
779,000
779,000
779,000
779,000
Growth
0%
0%
0%
0%
0%
0%
TS 1: Suburban
165,000
170,000
175,000
180,000
185,000
TS 2: Urban
115,000
120,000
125,000
130,000
135,000
TS 3: Professional
195,000
200,000
205,000
210,000
215,000
Remainder
304,000
289,000
274,000
259,000
244,000
TS 1: Suburban
15%
20%
25%
30%
35%
TS 2: Urban
10%
12%
14%
16%
18%
TS 3: Professional
20%
30%
40%
50%
60%
TS 1: Suburban
24,750
34,000
43,750
54,000
64,750
TS 2: Urban
11,500
14,400
17,500
20,800
24,300
TS 3: Professional
39,000
60,000
82,000
105,000
129,000
Total by Segment
Desired Market
Share
Expected Sales
7
Target Segments
The three target segments that will be addressed in the initial product plan are the
Suburban Caregivers, Urban Caregivers and Childcare Professionals. Each of the
intended targets will offer unique perspectives on how Cuddles On-the-Go can be used in
a variety of scenarios.
Target Segment 1: Suburban Caregivers
A caregiver defined as any individual responsible for an infant, who resides in a
suburban setting. This group spends the most amount of time in the car with an infant.
The time in the car can be short or longer trips, both can include extended periods in
traffic.
Visual Breakdown:
Type of Caregiver
Location
Need for Product
Parents, Babysitter, Grandparent
Suburban locales
Soothing baby while driving
Target Segment 2: Urban Caregivers
A caregiver defined as any individual responsible for an infant, who
resides in an urban setting. This target segment splits time between the car, public
transportation and walking. The rear facing infant car seat converts to a stroller,
which makes the urban market an ideal candidate for a non-human soothing
insert.
Visual Breakdown
Type of Caregiver
Location
Need for Product
Parents, Babysitter, Grandparent
Urban locales
Soothing baby while driving and walking
Target Segment 3: Childcare Professionals
In 2007 there were 325,289 licensed childcare facilities in the United
States. The total capacity of the licensed childcare facilities totaled 9,503,711.7
7UNITED
STATES CHILD CARE STATISTICS. Rep. UNITED STATES CHILD CARE STATISTICS.
NCCIC, Mar. 2010. Web. 22 Oct. 2010. <http://nccic.acf.hhs.gov/poptopics/statistics.pdf>.
8
Infants, age 0-1.5 years old, are taken care of in groups. If one child is agitated in
a group setting it is probable it will initiate a mass meltdown including other
children. A product, like a soothing insert for an infant car seat will allow child
care providers to calm a larger number of infants at one time.
Visual Breakdown
Type of Caregiver
Location
Need for Product
Licensed Childcare Professional
Urban and Suburban locales
Soothing baby while in a group atmosphere
9
III. Environmental Analysis
Political Environment
The backlash in the baby product community was felt in the United States
Government in the last decade. In August 2008 Congress passed the Consumer Product
Safety Improvement Act of 2008 (CPSIA), which was later signed by President Bush.8
This act tightened the safety regulations for both domestic and imported infant and
toddler products.
Monitoring the safety regulations and the laws proposed for baby products will
help Cuddles On-the-Go develop sound products. Maintaining a positive public image
will provide comfort to our consumers, as well as leverage when it comes to navigating
the political aspects of the baby product industry.
Economic Environment
The recession has had a great impact on the economy in recent years. It has been
suggested that the economic climate is responsible for the decline in the United States
birthrate. In 2009 the birthrate dropped to a low of 13.5%, which was 2.7% less than
2008.9 Cuddles On-the-Go relies on the birthrate to determine the potential sales. It will
be essential to monitor the economic climate in relation to familial growth in the coming
years.
The frugality of society during a recession can force people to eliminate luxury
items from their budgets. The pricing and demonstration of effectiveness for Cuddles Onthe-Go will cancel out the luxury aspect of the item. Keeping in mind the economic
atmosphere will aid in tracking projected sales.
8
Corley, Heather. "What Is CPSIA? - What Is The Consumer Product Safety Improvement Act?" Baby
Products at About.com - Reviews and Baby Products Buying Guides. 2010. Web. 02 Dec. 2010.
<http://babyproducts.about.com/od/recallsandsafety/f/CPSIA.htm>.
9 Applewhite, J. Scott. "Recession May Have Pushed U.S. Birth Rate to New Low - USATODAY.com."
News, Travel, Weather, Entertainment, Sports, Technology, U.S. & World - USATODAY.com. USA Today,
27 Aug. 2010. Web. 03 Dec. 2010. <http://www.usatoday.com/news/health/2010-08-27-birthdecline_N.htm>.
10
Socialcultural Environment
A current societal debate arising in the child-rearing realm involves the
advancement in mechanical soothing techniques. The most effective method of calming a
baby is human contact and motion.10 Unfortunately, not every situation allows for a
caregiver to sooth the agitated infant. Some have suggested “…that the devices are little
more than mechanical babysitters and that their use will inhibit the natural bonding of
parent and child through physical contact. The feeling is that many parents will use the
equipment as an acceptable means to ignore their children and not give the attention and
physical contact that a developing infant needs. Without this attention, they feel that the
infant will be irreparably damaged emotionally.”11 Based on the opposition to the
technology, Cuddles On-the-Go will need to stay current with studies involving soothing
mechanisms and to social perspectives on the topic.
Technological Environment
The vibrating technology associated with soothing a baby has proven effective in
the recent years. The technology has expanded to include, chairs, swings, crib inserts, and
monitors.12 The insertion of this technology into a variety of aspects in the baby’s life is
becoming a common occurrence. The time a baby spends in a car seat has steadily
increased, which has illustrated a need for a hands free soothing device. Tracking the
different dilemmas plaguing parents with unruly infants will allow Cuddles On-the-Go to
address the potential need for developing newer products with vibration technology.
10
"How to Calm Your Crying Baby | NewbornBaby.com.au." Newborn Baby |
Pregnancy & Birth Advice | NewbornBaby.com.au. Web. 15 Nov. 2010.
<http://newbornbaby.com.au/newborn/care/baby-crying/calm-crying-baby/>.
11"Baby Equipment
Review: Vibrating Equipment Pros and Cons." Essortment Articles: Free Online
Articles on Health, Science, Education & More.. Google. Web. 09 Dec. 2010.
<http://www.essortment.com/all/babyequipment_rwcz.htm>.
12 Brand, By Diaper. Babies"R"Us - Baby Registry, Baby Gifts, Car Seats, Strollers & More. Web. 03 Dec.
2010. <http://www.babiesrus.com/shop/index.jsp?categoryId=2255957>.
11
IV. Competitor Analysis
SWOT Analysis: Cuddles On-the-Go
Strengths
- Provides the ability to calm baby in
situations where the childcare provider
cannot.
- Universal product which can be used with
any brand of infant car seat.
Weaknesses
- Being a new product presents the problem
of introducing the insert into the baby
market.
- Working through the first generation of
the product design.
- Introducing a quality product within a
reasonable price range and low production
costs.
Opportunities
- Corner a niche in the baby product market
that can eventually expand internationally.
- Build a brand that will retain customers.
Threats
- Having to maintain the product/brand once
competitors introduce similar products.
- Complying with safety regulation and the
scrutiny that goes along with the evaluation.
Weaknesses and Threats of Cuddles On-the-Go
In the last decade the baby market has exploded with new, technologically
advanced products, as well as updated models of the traditional baby items. These newer,
sleeker designs of classic baby items, like strollers or swings, have managed to do well
because they were already established within the market. The introduction of Cuddles
On-the-Go, being the first of its kind, will have to deal with the issues that come with
being a first mover in an industry. Unlike established companies like Graco or Evenflo,
Cuddles On-the-Go is a new company with an even newer product. However, the major
players in the baby market all started the same way this company is, which provides the
groundwork for a successful product.
The combination of the vibrating technology and car seat insert will have to
undergo safety and usability testing. Designing the model and ensuring its technological
abilities are effective will be a challenge. The soothing technique involving motion has
proven effective with direct human contact and vibrating swings/chairs. The success of
12
the technology in other products will be to our advantage, since we know the vibrations
do in fact calm an infant. This will minimize the possibility of the vibrating technology
not being useful in situations with an agitated infant.
The establishment and potential accomplishments in the baby market with
Cuddles On-the-Go will eventually be competing against other companies producing a
similar product. The competitors will provide the example for how we respond to the
competition. There are a number of baby companies, who all produce similar products;
the key to our longevity in the market will be to keep on the cutting edge for our car seat
inserts. This will rely on our company being proactive when it comes to technological
advancements, expansion, innovative marketing and a unique philosophy.
Direct Competitor SWOT Analysis: Childcare Provider
Strengths
- The direct human contact provides a
natural, nurturing for the child.
- The comfort given to a child will never lose
its charge or break from over use.
- The comforting methods of a person are
available 24 hours a day, 7 days a week,
anytime, anywhere.
Weaknesses
- A childcare provider may not be available
every time the child needs to be soothed
(i.e.: when driving, cooking, sleeping).
- Dealing with multiple, agitated infants at
one time can pose a problem for an
individual childcare provider.
Opportunity
- Take advantage of the weaknesses posed by
having a human soothe a baby to introduce a
mechanical, mobile soothing product.
- Promote bonding with baby.
Threats
- The cost of the human to human soothing is a
considerably less financial commitment.
- Always having a childcare provider present
makes it harder to incorporate mechanical
substitutes.
Mitigation Strategy for Direct Competitor:
The childcare provider is the ideal choice for soothing a baby. The combination of
the natural motion and human contact has proven to calm an agitated infant. A person
may be free and readily available but on the occasions when they are engaged in an
activity that prevents them from calming a baby, the baby screams while the person
helplessly tries to deter the situation. Cuddles On-the-Go removes the helpless, guilty
13
feeling because the infant can be soothed while the individual continues tending to their
activity.
The Cuddles On-the-Go car seat insert provides an extra set of hands in situations
when they are needed the most. The best feature allows for this product to move from
place to place with baby and caregiver.
Indirect Competitor SWOT Analysis: Graco
Strengths:
-Graco is a well-established company,
who produce quality baby products.
- The company has expanded from
baby swings into other areas of staple
baby products.
- The designs of their products are
innovative while at the same time
meeting all safety requirements.
- Easy to use, versatile product.
Weaknesses
- Graco produces major baby items, car
seats, swings, high chairs and activity
centers, but not many accessories for
the products so it may not be able to
compete with “baby boutique”
products.
- The products are not universal. Graco
products work with Graco products.
- The SnugGlider only works for an
infant car seat, which becomes obsolete
after 12 months.
Opportunities
- Graco products are sold internationally
giving them the ability to expand smaller
products.
- The possibility of developing a diverse
line of products specifically for the
SnugGlide division of Graco.
Threats
- Decades of experience when it comes to
designing and marketing new products in
the baby market.
- The loyal customer base.
- Trying to be on cusp of cutting edge
products may compromise safety
regulations (number of recalls).
Mitigation Strategy for Indirect Competition:
The established heavy hitter in the baby market, Graco, has proven that they can
produce a wide range of baby products and sustain their business. They sell everything
from strollers to swings to portable cribs, each with a number of styles to choose from.
The mainstream and brand exclusive designs will be strength for Cuddles On-the-Go.
Our product, unlike Graco’s, will be universal, allowing the insert to be utilized by a
larger number of consumers.
The first mover advantage of Cuddles On-the-Go will make our company more
conscious of safety regulations. The production of only one design will afford us the
14
luxury of ensuring every insert produced is safe and of the highest quality. Graco and
other large companies have dealt with recalls in the past, whether or not it is because they
produce too many products in unknown, but the intimate nature of Cuddles On-the-Go
will permit us to keep a closer eye on all of the details.
15
V. Marketing Strategy
If you have a baby melting down in the car it makes the trip seem infinitely
longer. Whether in the car, walking around a city or even at home, a caregiver may
not be able to soothe a baby. The Cuddles On-the-Go vibrating insert will soothe the
baby in situations when a person in unavailable. There has been great success and
popularity with vibrating chairs and swings; now we bring you a car seat insert that
allows for hands free soothing on the go.
The Logo:
The logo for Cuddles On-the-Go is an embroidered tag that will be sewn onto the
insert and its outer cover. The colors, blue and pink, symbolize the classic colors
associated with babies. The image of the infant reaching out implies the need for a
soothing technique, which our product provides.
The Slogan:
“Giving an extra set of hands, when you need them the
most!”
The accompanying slogan “Giving an extra set of hands, when you need them the
most” conveys to service being offered to the consumer, who will be purchasing the
product.
The Packaging
The packaging will reflect the essence of the product. The box materials will be eco
friendly. The color scheme will be cool colors, comprised of hues of light green, brown
16
and pink. The design of the box will compliment the logo, ensuring the branding flows
with the product through all stages.
Marketing and Advertising Campaigns
The Cuddles On-the-Go insert is being marketed to all different types of
caregivers. The main focus of the marketing will appeal to family values and the human
connection formed between baby and provider. The need for each target segment is
essentially identical; therefore the product will be marketed in the same manner for each
segment.
The launch of the advertising campaign associated with Cuddles On-the-Go will
coincide with the public release of the product. The first stage of the launch will include a
print campaign featured in a variety of baby and parenting magazines. The ads will be
simple, highlighting the main feature of the insert, accompanied by the logo and slogan.
The goal is to create a clean-cut advertisement that does not overwhelm the consumer but
still distinguishes itself from every other baby product on the market.
The second step in promoting the insert will be to establish partnerships with a
number of baby sponsored events and charities. Through participation in these events we
will be able to spread the word about our new, innovative product. This might include our
insert being a part of the gift bags for an event, or part of a gifting suite for a major event,
award show, and things along similar lines. The charity events will also provide us the
opportunity to sponsor a good cause while also being philanthropic. Both of these outlets
would be an excellent mode of public exposure for Cuddles On-the-Go.
The largest portion of the advertising for Cuddles On-the-Go will come from our
satisfied customers and retailers. As a company we are relying on the word of mouth
recommendations that will be passed on from one customer to another. This might
include one consumer purchasing the insert for an expectant friend or liking the product
enough to post an entry on a baby blog. The recommendation and testaments from users
of the product can be more effective and considered unbiased than literature published by
us, the makers of Cuddles On-the-Go.
17
The expansion of our advertising efforts will depend on the reception of Cuddles
On-the-Go. As we extend our product lines and sales strategies, the advertising will
evolve to accommodate them.
18
VI. Sales Strategy
In Store Sales:
The advertising campaign, market exposure and the efforts of our customers will
help our sales rise. The product will initially be sold in a select number of baby boutiques
in the New York, Washington, DC, and Los Angeles metropolitan areas. These locations
were chosen based on the consistently high annual birth rates.13
Direct from Website:
The second sales channel will be directly through our company website,
www.soothingbaby.com.
Delivery and Shipping:
The Cuddles On-the-Go will be shipped through a major company, who we will
contract with. Most likely UPS or FedEx to ensure our products reach their destinations
in a timely manner.
13
"Births, Birth Rates, and Fertility Rates 2008." Infoplease: Encyclopedia, Almanac, Atlas, Biographies,
Dictionary, Thesaurus. Free Online Reference, Research & Homework Help. — Infoplease.com. Highbeam
Research. Web. 10 Oct. 2010. <http://www.infoplease.com/ipa/A0763849.html>.
19
VII. Exit Strategy
Exit Strategy 1:
After establishing a quality product and consumer base the company will
entertain the possibility of expanding Cuddles On-the-Go to other baby
products. The other products that would be considered for the Cuddles Onthe-Go adaption are high chairs, bassinets, and floor activity sets. By
incorporating the vibrating, soothing technology into commonly used baby
products the caregivers will be able to juggle an agitated baby in any scenario.
The expansions to other products will allow for a larger share in the baby
product market.
Exit Strategy 2:
The expansion of Cuddles On-the-Go inserts product line to include a
variety of sizes that would accommodate car seats intended for toddlers. Once
the infant reaches a year old the rear facing car seat is removed and the child
is moved to a forward facing seat. When this transition occurs the Cuddles
On-the-Go vibrating insert becomes obsolete. Including a soothing insert for
toddlers in our products has the possibility to extend its presence in the
consumer’s life. The brand extension would potentially open possibilities for
products designed for older children.
Exit Strategy 3:

The success of Cuddles On-the-Go has the potential for the Soothing Baby
Company to directly partner with a car seat manufacturer to produce a line of
car seats with a built in soothing mechanism. This would phase out the
independent Cuddles On-the-Go insert by combining our technology with the
actual baby product. The Cuddles On-the-Go car seats would be able to
extend from infant all the way up to toddler age children. This plan would
create a cutting edge product while extending our brand into older age ranges.
20
VIII. Pricing
The pricing structure for Cuddles On-the-Go will be competition based. Although
our product is a first mover in the baby industry, we will look at the 2 products that we
combine to make Cuddles On-the-Go. The average eco car seat insert retails for
approximately $35.00.14 There are a variety of vibrating baby seats and swings on the
market. The prices of these products range from $30.00 to $100.00+. Taking into
consideration the retail price of the car seat insert and the median price of a baby product
with vibrating technology, we have priced Cuddles On-the-Go accordingly. The initial
retail price of Cuddles On-the-Go will be $75.00 per insert.
As the first five years elapse Cuddles On-the-Go has the potential to shift from a
competition based pricing model to a value based one. If Cuddles On-the-Go breaks into
the baby market, sales are consistent and the product is popular with consumers, this
pricing strategy could be beneficial in the long term to the company.
Revenues and Pricing
Y0
Y1
Y2
Y3
Y4
Y5
779,000
779,000
779,000
779,000
779,000
779,000
Target Segments
TS 1
Unit Price
Revenue TS 1
24,750
$75.00
$1,856,250
34,000
$75.00
$2,550,000
43,750
$75.00
$3,281,250
54,000
$75.00
$4,050,000
64,750
$75.00
$4,856,250
TS 2
Unit Price
Revenue TS 2
11,500
$75.00
$862,500
14,400
$75.00
$1,080,000
17,500
$75.00
$1,312,500
20,800
$75.00
$1,560,000
24,300
$75.00
$1,822,500
TS 3
Unit Price
Revenue TS 3
39,000
$75.00
$2,925,000
60,000
$75.00
$4,500,000
82,000
$75.00
$6,150,000
105,000
$75.00
$7,875,000
129,000
$75.00
$9,675,000
Total Revenue
$5,643,750
$8,130,000
$10,743,750
$13,484,000
$16,353,750
Market
Based on the 5-year projections for Cuddles On-the-Go we will have total revenue
of $16,353,750. These figures are calculated on the competition based pricing strategy.
14
"UPPABaby Infant SnugSeat Insert - Babyearth.com." Baby Products - Baby Bedding - Strollers. Baby
Earth. Web. 30 Nov. 2010. <http://www.babyearth.com/uppababy-infant-snugseat-insert.html>.
21
After the first 5 years, switching to a value based pricing strategy will increase the total
revenue accrued.
22
IX. Financials
Income Summary
Initial
Investment
Revenue
Cost of Goods
Sold
Gross Margin
Depreciation
SG&A
Operating Profit
Profit Before
Tax
Taxes
Profit
Y0
($1,500,000)
($1,500,000)
Y1
Y2
Y3
Y4
Y5
$5,643,750
(3,010,000)
$8,130,000
(4,336,000)
$10,743,750
(5,730,000)
$13,485,000
(7,192,000)
$16,353,750
(8,722,000)
$2,633,750
(300,000)
(2,116,406)
217,344
$217,344
$3,794,000
(300,000)
(3,048,750)
445,250
$445,250
$5,013,750
(300,000)
(4,028,906)
684,844
$684,844
$6,293,000
(300,000)
(5,058,875)
936,125
$936,125
$7,631,750
(300,000)
(6,132,656)
1,199,094
$1,999,094
($13,041)
$204,303
($26,715)
$418,535
($41,091)
$643,753
($56,168)
$879,958
($71,946)
$1,127,148
The initial investment for Cuddles On-the-Go will be $1,500,000. This figure
accounts for all of the expected expenses the company will incur between Year 0 and
Year 1.
23
Itemized Expenses:
Main Offices Georgetown
 $5,200/mth mortgage
 Utilities/Supplies: $500.00/mth
 Building up keep: $100.00/mth
 Furniture: $20,000
 Office Equipment: $15,000
Warehouse
 Sterling, VA
 2,800 Square Feet
$7.28 nnn

$22,000 for warehouse space
 Equipment: $50,000
 Furniture: $10,000
 Shipping: $10,000
Materials: $40.00/insert
 Eco Friendly Polyester
 Eco Friendly Cotton
 Vibrating Technology
Cost Breakdown
Initial
Investment
Unit Cost
Units Sold
Cost of
Goods Sold
Y0
$1,500,000
Y1
Y2
Y3
Y4
Y5
$40.00
75,250
$3,010,000
$40.00
108,400
$4,336,000
$40.00
143,250
$5,730,000
$40.00
179,800
$7,192,000
$40.00
218,050
$8,722,000
Marketing/Advertising
 $100,000/yr
Salaries: $600,000/yr
 CEO
 Assistant
 Ad/Marketing
 Accounting
 Design
 Warehouse
Website: $30,000-$40,00015
At the conclusion of the first year of business we will have made over $200,00 in
profits. In the subsequent years the profits will continue to rise steadily. The financial
15
Professional Web Design, Seattle Web Design, and Boston Web Design.
"Http://www.outofwebsite.com/web-design-tips/tips/archives/planning-budget.html." Seattle Web Design
and Boston Web Design. Web. 05 Dec. 2010. <http://www.outofwebsite.com/web-designtips/tips/archives/planning-budget.html>.
24
breakdown of the market, revenue and pricing, and costs of production indicate a Net
Present Value (NPV) of $1,237,389. The positive NPV conveys that investing in Cuddles
On-the-Go will be a profitable venture with an Internal Rate of Return (IRR) of 25%.
SG&A % of Gross Revenue Calculations:
The calculation of the Sale, General and Administration percentage of Gross
Revenue for Cuddles On-the-Go was determined on the basis of SG&A figures from
Graco and Fisher Price. Each of these long established companies annually dominates
within the baby product market. The SG&A % for Graco in the last 12 months was
28.4%.16 The posted SG&A % for Fisher Price in 2009 was 46.6%. Averaging these two
statistics determined the 38% SGA of Gross Revenue for Cuddles On-the-Go.
Tax Rate Calculation:
The calculation of the tax rate for Cuddles On-the-Go was the median of the tax
rates in the 3 locations where the product will be sold. These tax rates were from the
states of California and New York, as well as the District of Columbia. The tax rate is 6%
for Cuddles On-the-Go.
Sensitivity Analysis
Scenario 1:
The annual birthrate in the United States has been slowly declining. In 2009 the
birthrate dropped by 2.7%.17 One explanation for this decline is the economy but another
is the shrinking size of families, which had peaked with the baby boomers. The birthrate
dictates the projected amount of units of Cuddles On-the-Go. If the birthrate were to drop
dramatically our sales would also be affected. However, the human race will never stop
reproducing at a rate that could lethally harm the overall success of Cuddles On-the-Go.
16GRACO
INC (NYSE:GGG ) | Ratios and Returns. Rep. Forbes, 2010. Web. 30 Nov. 2010.
<http://finapps.forbes.com/finapps/jsp/finance/compinfo/Ratios.jsp?tkr=ggg>.
17 Applewhite, J. Scott. "Recession May Have Pushed U.S. Birth Rate to New Low - USATODAY.com."
News, Travel, Weather, Entertainment, Sports, Technology, U.S. & World - USATODAY.com. USA Today,
27 Aug. 2010. Web. 03 Dec. 2010. <http://www.usatoday.com/news/health/2010-08-27-birthdecline_N.htm>.
25
Scenario 2:
The number of children per household is also a factor when considering the
outlook of Cuddles On-the-Go. The number of second, third, etc children born in each
year may also alter the projected sales of the infant car seat insert. If a particular year had
more multiple children than first children, a family may not be purchasing a new Cuddles
On-the-Go because one is already owned from a previous child in the familial birth order.
The multi-child births per year, although a factor to be considered, will not ultimately
deter our financial stability.
Scenario 3:
The Cuddles On-the-Go is a first mover in the vibrating, soothing insert for a car
seat market. If and when other competitors enter the market, the prominent stake the
company has in the market could be in jeopardy. Tracking the competition will ensure we
are aware of any major changes in the market. However, if Cuddles On-the-Go builds and
maintains a loyal consumer base, the competition will not be detrimental to our overall
financial plan.
X. Conclusion
Everyone has been in a situation with an agitated infant and not enough hands to
effectively sooth the baby. We, at Soothing Baby, want to help caregivers in those
moments. Help us, help everyone stay calm.
26
Appendix A
Corporate Office:
1662 33RD ST NW
Washington, DC 20007
Listing #: DC7394663
Sale Price: $1,200,000
$5,153 Mortgage
Status: ACTIVE Listing
Type: Commercial
Year Built: 1926
County: WASHINGTON
Lot Size Sq. Ft: 2220
Lot Size: 0.04 acres
(http://commercialdivision.lnfre.com/PropertyDetails.aspx?MlsCompanyID=2&MlsNumbe
r=DC7394663)
Remarks
Renovated in 2008. Brazilian hardwoods on main and upper level, stone tiles on lower
level.Fireplace on main level, half bath on lowere level and upper level. Excellent condition.
Semi-detached building with street access via private covered alley to rear garden and lower level
entry. Vacant and available for immediate occupancy.
Additional Details
Levels:
3
Exterior:
Brick
Parking:
Off Site Parking
Ownership:
Fee Simple
Flooring:
Wood
Roofing:
Composite, Shingle-Asphalt
Lot Square Footage:
1750
Utilities
Heating
Forced Air
Cooling
Central A/C
Water
Public
Sewer
Public Sewer
27
Water Heater
Warehouse and Production Space:
Flex Warehouse
2,800 Square Feet
$7.28 nnn
Address:
22580 Glenn Drive, Units 150 & 160
Sterling, VA 20164
Fact Sheet:
Units may be leased separately or together
Delivered as warm lit shell with bath
Features include:
Additional 700 sf of mezzanine space in each unit
Dock Loading
http://www.cgr-inc.com/listings/listing.php?file=Glenn_Drive_22580_150_160_Lse.htm
28
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30