Product Offering Strategy
UNC Kenan-Flagler Business School
STAR Project team
April 16th, 2010
AGENDA
Executive Summary
Strategies for Reaching the Target Market Areas
The Developmentally Disabled Customers
The Elderly Customers
The Product Offerings Strategy
Current Product Offering Evaluation
Strategies for the Elderly
Strategies for the Retirement Communities
The Pricing Strategy
Pricing Strategies
Secondary data sources include interviews and focus
groups including over 30 individuals
1
Elderly Focus Group Interview - 9
2
Developmentally Disabled and Caregivers - 8
3
Existing Customer Interviews - 5
- 3 Case Managers and 2 Customers
4
Institutions
- Galloway Ridge: Doug Oliver – Assoc. Exec. Director
- Carol Woods: Ken Reeb – Director of Finance,
Nikki Bodkin – Director of Business Services
- The Cedars: Sarah Flynn – Executive Director,
Angie Wynne – Director of Home Care and Clinic
Lisa McCormick – Director of Nursing
William Anna – Director of Plan Services
5
Individual Interviews
- Jerry Passmore – Director of the Orange Country Department of Aging
- Kate Barrett – Aging Transitional Administrator
- Lori Cox – Case Manager/Clinical Social Worker Both DD and Elderly
3
Directly target consumers utilizing local support
organizations and adjust the product offering to reflect
the true value to consumers
Project Overview
• Conducted interviews and focus groups to identify product offering
and pricing strategies
• Performed secondary research to determine target market areas
Recommendation
Target Market Areas
• ARC chapters and senior centers can be utilized to increase product
awareness with caregivers and elderly by conducting information sessions
Offering
• Focus a different product offering to caregivers, elderly, and institutions
Pricing
• Increase monthly prices and charge extra for premium products
• Provide institutions with volume discounts
4
Target Market Areas
Organize discussion groups and sponsor events involving
caregivers through local support organizations
Reaching Caregivers
*All ARC chapters, senior centers and institutions we approached expressed
their willingness to support the initiatives of companies such as CMI.
6
To increase product awareness communicate directly with end
consumers utilizing local organizations which support the
developmentally disabled
Utilizing The ARC Chapter
Caregiver
Caregiver
Caregiver
Caregiver
Caregiver
Caregiver
Caregiver
Caregiver
Caregiver
Caregiver
Caregiver
Case Manager
Case Manager
Caregiver
Caregiver
Caregiver
Caregiver
Caregiver
7
North Carolina, Georgia, and Virginia have the strongest
demographics for the developmentally disabled population
Target States Evaluation
The ARC Chapters
Disabled Population
Median Income
Rank
Aggregation
Count
Rank
Count
Rank
Income
Rank
Aggregate
Overall
rank
New York *
56
1
827,717
1
$55,401
3
5
1
North Carolina
47
2
374,324
2
$46,107
5
9
2
Virginia
23
3
297,524
5
$61,044
2
10
3
Georgia
23
3
358,052
3
$50,549
4
10
4
Maryland
11
7
207,710
7
$70,005
1
15
5
Tennessee
18
5
323,913
4
$43,662
7
16
6
Kentucky
17
6
254,826
6
$41,763
8
20
7
South Carolina
3
9
203,934
8
$44,326
6
23
8
West Virginia
5
8
130,085
9
$37,870
9
28
9
(Source: U.S. Census Bureau, U.S. Census 2000 and The ARC)
8
In North Carolina, target the top five counties with high
populations of developmentally disabled
Developmentally Disabled Population Map (North Carolina)
Greensboro
10,000 ~
5,000 ~ 9,999
3,000 ~ 4,999
Raleigh
Asheville
Charlotte
Fayetteville
1,000 ~ 3,000
0 ~ 1,000
(Source: U.S. Census Bureau, 2006 American Community Survey)
9
Leverage the local ARC Chapters to expand product
awareness in these counties
The ARC Chapters in North Carolina
Greensboro
Raleigh
Asheville
Counties with The ARC chapter
Charlotte
Fayetteville
Counties without The ARC chapter
(Source: The ARC of the United States)
10
In Georgia, the majority of the developmentally disabled
population reside near Atlanta
Developmentally Disabled Population Map (Georgia)
Atlanta
10,000 ~
5,000 ~ 9,999
3,000 ~ 4,999
1,000 ~ 3,000
0 ~ 1,000
(Source: U.S. Census Bureau, 2006 American Community Survey)
11
Leverage the local ARC chapters in the surrounding
Atlanta area
The ARC Chapters in Georgia
Atlanta
Counties with The ARC chapter
Counties without The ARC chapter
(Source: The ARC of the United States)
12
The Washington DC, Richmond, and Harrisonburg triangle area
should be targeted for the developmentally disabled market
Developmentally Disabled Population Map (Virginia & D.C.)
10,000 ~
Washington
Harrisonburg
5,000 ~ 9,999
Richmond
3,000 ~ 4,999
1,000 ~ 3,000
0 ~ 1,000
(Source: U.S. Census Bureau, 2006 American Community Survey)
13
Leverage the existing ARC chapters to increase product
awareness
The ARC Chapters in Virginia
Washington
Harrisonburg
Richmond
Counties with The ARC chapter
Counties without The ARC chapter
(Source: The ARC of the United States)
14
Utilize local organizations in the target areas to increase
product awareness and overall sales
Recommendation for Developmentally Disabled Population
1
Utilize local organizations to communicate directly with end consumers
- The ARC is the main organization, which supports the developmentally disabled
- Major target cities have one or more ARC Chapters
2
Focus on target area in each state
- North Carolina: 5 major counties
- Georgia: Atlanta Metropolis
- Virginia: Washington DC, Richmond, Harrisonburg triangle area
15
Utilize the vast number of Senior Centers and the institutions
to communicate reach out to the elderly and caregivers
Utilizing Senior Centers
Elderly
Elderly
Caregiver
Elderly
Elderly
Case
Manager
Elderly
Senior
Center
Senior
Center
Caregiver
Elderly
Elderly
Caregiver
Elderly
Elderly
16
Elderly
Target New York, Georgia, and Virginia, along with North
Carolina, for the elderly market
Target States Evaluation
Institutions For Elderly
Elderly Population
Median Income
Rank Aggregation
Count
Rank
Count
Rank
Income
Rank
Aggregate
Overall
rank
1,115
1
2,607,672
1
$55,401
3
5
1
Georgia
539
2
981,024
3
$50,549
4
9
2
North Carolina
516
3
1,139,052
2
$46,107
5
10
3
Virginia
498
4
940,557
4
$61,044
2
10
4
Maryland
295
8
679,565
6
$70,005
1
15
5
Tennessee
464
5
819,626
5
$43,662
7
17
6
South Carolina
357
6
596,295
7
$44,326
6
19
7
Kentucky
296
7
565,867
8
$41,763
8
23
8
West Virginia
62
9
285,067
9
$37,870
9
27
9
New York *
(Source: U.S. Census Bureau, U.S. Census 2000)
17
Target the six North Carolina counties with a high density
of institutions for elderly
Institutions for Elderly density Map (NC)
Winston-Salem
21 ~ 623
16 ~ 20
11 ~ 15
Greensboro
Burlington
Raleigh
Asheville
Charlotte
6 ~ 10
0~5
(Source: U.S. Census Bureau, 2009 American Community Survey)
18
In Georgia, target Atlanta and the surrounding areas
which have the highest density of elderly institutions
Institutions for Elderly density Map (Georgia)
Atlanta
21 ~ 623
16 ~ 20
11 ~ 15
6 ~ 10
0~5
(Source: U.S. Census Bureau, 2009 American Community Survey)
19
In Virginia, target Washington DC, Richmond, and
Virginia beach
Institutions for Elderly density map (Virginia & D.C.)
Washington
21 ~ 623
Richmond
16 ~ 20
11 ~ 15
6 ~ 10
0~5
Virginia Beach
(Source: U.S. Census Bureau, 2009 American Community Survey)
20
Utilize senior centers and institutions in the target area
to increase product awareness and overall sales
Recommendation for Elderly population
1
Utilize senior centers and institutions to reach out to elderly more directly
- Senior centers are a good starting point to start reaching out to both the
elderly and the caregivers
- Institutions are being approached by competitors. So, winning over the
institutions will be key to gaining market share.
2
Focus on target area in each state
- Target Counties with high density (> 20) of institutions and senior centers
- North Carolina: 6 major cities
- Georgia: Atlanta Metropolis
- Virginia: Washington DC, Richmond, and Virginia Beach
21
Product Offering Strategy
Each of the 3 market segments should be provided customized
product offerings to maximize the value from each segment
Caregivers of Elderly and Disabled
• Keep current product offering
• Customizable sensor list is the preferred shopping experience
Elderly
• Primary concerns for self are falls and access to emergency care
• Provide a product offering which includes the PERS system and
a fall sensor
Retirement Communities
• Provide discount options to promote higher purchase volumes
• Provide a VCM-”lite” option
23
Each of the 3 market segments should be provided customized
product offerings to maximize the value from each segment
Caregivers of Elderly and Disabled
• Keep current product offering
• Customizable sensor list is the preferred shopping experience
Elderly
• Primary concerns for self are falls and access to emergency care
• Provide a product offering which includes the PERS system and
a fall sensor
Retirement Communities
• Provide discount options to promote higher purchase volumes
• Provide a VCM-”lite” option
24
The current product offering for the caregivers of the
developmentally disabled and elderly is appropriately
structured and should be continued going forward
What we learned
• Caregivers prefer the
ability to select an
individualized set of
devices and do not
value the convenience
of picking a bundle.
• Shopping for safety
devices is an emotional
experience, in which a
personal approach
makes the buyer feel
more confident in their
investment.
25
Going Forward
Continue offering
products as lists.
Emphasize
SimplyHome’s
personalized
approach.
SimplyHome should target the caregivers of the elderly by
providing a solution to the fear of falls and the concern of
handling electronic appliances
Caregivers identified these products as having the
highest value to them: (In this order)
1. Fall Sensors
2. Stove Sensor
3. PERS system
One of the biggest concerns for caregiver families was the
reluctant behavior of the elderly to reveal their health condition
This concern could be addressed by Virtual Care Management
and Online Monitoring
26
Each of the 3 market segments should be provided customized
product offerings to maximize the value from each segment
Caregivers of Elderly and Disabled
• Keep current product offering
• Customizable sensor list is the preferred shopping experience
Elderly
• Primary concerns for self are falls and access to emergency care
• Provide a product offering which includes the PERS system and
a fall sensor
Retirement Communities
• Provide discount options to promote higher purchase volumes
• Provide a VCM-”lite” option
27
SimplyHome should target the elderly who are buying the
product for themselves by providing a solution to the fear of
falls
The primary concerns of
the elderly:
• Falls
• Access to emergency services
Concerns unacknowledged by
the elderly but important to
caregivers:
•
•
•
•
Forgetting
Missing medication
Wandering
General health situation
28
Of the elderly, 89% are concerned about falls; one-third
about forgetting; 11% about missing daily medication
Daily concerns of the elderly
More than 33%of adults 65
and older fall each year in the
United States
Falling
Forgetting
No. of Responses Among older adults, falls are
the leading cause of
injury deaths
Daily Medication
Wandering/Daily
Routine Change
0
5
10
PERS with a fall sensor would be a very attractive product offering for
the elderly
Sources: Focus Group Interview & Center for Disease Control and Prevention
29
Each of the 3 market segments should be provided customized
product offerings to maximize the value from each segment
Caregivers of Elderly and Disabled
• Keep current product offering
• Customizable sensor list is the preferred shopping experience
Elderly
• Primary concerns for self are falls and access to emergency care
• Provide a product offering which includes the PERS system and
a fall sensor
Retirement Communities
• Provide discount options to promote higher purchase volumes
• Provide a VCM-”lite” option
30
When targeting institutions, technology must be
carefully packaged to provide most value
Monthly
payments, no
contract basis
External resource
to people on
waiting list
Virtual Care
Manager “lite”
Technology
Helps keep
residents in IL
longer
Pay per room
along with volume
discounts
31
Institutions with specific attributes are more
attractive potential customers
Institutions that offer single family, independent living
Age of facility: Institutions that are new, developing
or well established (15+ years w/reserves)
Niches
Institutions with
limited long-term
care spots
Nearby naturally
occurring
retirement
communities
States with
pending laws that
bridge institution
& community
32
Retirement
community
waiting lists
Virtual care manager “lite” should be the primary
product offering for institutions
Institution Needs
VCM “lite” benefits
Ability to track
resident progress and trends
• Reports provide pattern recognition
as well as physical data
Earlier detection of disease
Evidence to support
resident moves
• Allows residents to remain in
independent living longer
More efficient use of
long-term facilities
33
Virtual care manager “lite” would benefit residents
as well
Resident Needs
VCM “lite” benefits
• Stove monitoring
• Support for spouses with a disease
• Lower expenses
Ability to remain
in independent living longer
Feedback for caregivers
• Reports to provide to children and
family
34
Pricing Strategy
Value for the service varied across different customer
segments but the consensus data shows that SimplyHome’s
current offering is underpriced
Pricing
$250
$200
$150
Price/month
$100
$50
$0
Caregivers
Elderly
Disabled
Quietcare Gold
(Quietcare Source: http://www.totalhomesecurity.com/quiet-care/)
36
All the 3 segments rated certain products to be ‘premium’ for
which SimplyHome should charge a premium price
Scorecard for SimplyHome Products
Elderly
Disabled
Caregivers of
Elderly
Fall Sensors
Excited
Stove Sensors
Good
PERS
Average
Not bad
Online
Might not buy
Virtual Mgmt
37
Caregivers would pay as high as $75/month for a fall sensor
and $50/month for a stove sensor
Additional Sensor Values
120
100
80
60
40
Maximum
20
Average
Minimum
0
38
Elderly care facilities would pay a premium over
current prices
The Cedars
Galloway
Ridge
Carol
Woods
Price Range
• $150 ~ $240
Comments
• Up to $300 would be reasonable
Price Range
• $150 ~ $200
Comments
• Money saved from nurse giving medication reminders
• $150 to $200/day to stay in an assisted living facility
• A smaller installation fee with higher monthly fees
Price Range
• $70 ~ $100
Comments
• Residents here could afford up to $100/month
• Up front investments are not a deterrent to them
• Residents have to pay more to go to another long-term care facility
($88 vs. $283/day)
39
Institutions prefer a particular set of payment
options
1
Monthly fees passed on to residents with installation covered by institution
2
Pay-per-room with no minimum installation
3
Volume discounts (Sample - The Cedars, approx. 300 IL homes)
Level
% of Homes
w/ technology
# of
Homes
Installation
Discount
Monthly Fee
Discount
Monthly
Revenue
(with)
Monthly
Revenue
(w/out)
1
<20%
<60
None
None
$4,200
$4,200
2
20-50%
60 – 150 $880 (20% off)
None
$6,300
$6,300
3
50-80%
150 – 240 $550 (50% off)
5% off
$11,970
$12,600
4
>80%
15% off
$14,280
$16,800
>240
$220 (80% off)
40
Customers in the non-facility segments should be offered
the option of increasing the monthly price to cover the
high upfront costs
Increase monthly subscription
fee until the initial device cost
is recovered
No upfront device and
installation costs
41
Directly target consumers utilizing local support
organizations and adjust the product offering to reflect
the true value to consumers
Project Overview
• Conducted interviews and focus groups to identify product offering
and pricing strategies
• Performed secondary research to determine target market areas
Recommendation
Target Market Areas
• ARC chapters and senior centers can be utilized to increase product
awareness with caregivers and elderly by conducting information sessions
Offering
• Focus a different product offering to caregivers, elderly, and institutions
Pricing
• Increase monthly prices and charge extra for premium products
• Provide institutions with volume discounts
42
Next Steps
Conduct a
quantitative pricing
and costing analysis
Build a strategic
sales force growth
strategy
43
Appendix
Appendix Contents
Existing Customer Responses (Slide 46 – 49)
Concerns of Existing Customers (46)
Existing Customer Testimonials (47)
General Response about products (48)
Purchase Experience Observations (49)
Thought about Premium products (50)
Thought about product price (51-52)
Needs for new products offering (53-54)
Elderly Fall Sensor Focus Group Info (Slide 55)
Elderly Focus Group Response Data (Slides 56 – 59)
Willingness to Receive the Product (56)
Independent Living Focus (57)
Technology Capabilities (58)
Buying Preferences (59)
Costs Comparisons (Slides 60 – 61)
Assisted Living Nursing Care (61)
In-home Nursing (60)
45
APPENDIX
Interviews with existing customers echoed the concerns of the
focus group participants
1 Peace of mind
2 Independence
3 Safety
4 Convenience – easy, helpful
5 Price - savings
6 Feel comfortable contacting SH
7 Double-checking safeguard
APPENDIX
Similarly, safety and fear of unpredictable events are
current customers’ primary drivers of seeking out
SimplyHome’s technology
Before the SH system, one autistic
child would run away 4-5 times a
month, which was very dangerous
since the child is non-verbal. Now
with SimplyHome, the number of
times is down to 1.
The mother of an elderly woman had fallen
and laid on the floor through the entire night.
The elderly woman was afraid the same thing
would happen to her.
47
APPENDIX
Existing customers find the SH System very useful and mostly
not intrusive
All respondents found
the system useful
Majority found the system
not intrusive, except for a
small percentage of mentally
disabled customers
APPENDIX
SimplyHome existing Customers also prefer buying
services through individual lists instead of bundles
Lists
Bundles
49
APPENDIX
SimplyHome customers value premium features highly
Online
Monitoring
Stove
Sensor
Valuable,
Necessary
Features
Medication
Dispensers
Bed/Chair
Pressure pads
APPENDIX
Some customers are not price-sensitive because
they do not pay for the services directly
Technology is either
privately funded or paid for by other entities
 CommuniCare
 Counties
 ARC
 Medicare
APPENDIX
Some customers find the initial cost too high
One customer found the initial equipment somewhat pricey
although the monthly payments are not bad at all.
APPENDIX
SH can provide more value to existing customers by
developing new products and addressing complaints
Unmet
Needs
• Sleep apnea suction sensor
Complaints
• Turn-around time when equipment malfunctions
• Lag time of 3-4 minutes after sensor goes off
• Depending on location, sometimes can’t hear notifications
Suggestions
• Change website to reflect not only elderly but also
developmentally disabled customers
• Try to find a way to work with Medicaid/Medicare
• Specifically target the MRDD population, especially since there
aren’t a lot of resources available to them
APPENDIX
Common developmental disabilities that have been served by
SimplyHome technology
1 Bipolar disorder
2 Defiant personality disorder
3 Developmental-cognitive disorders
4 Schizophrenia
5 Cerebral palsy
6 Autism
7 Other mental disorders
APPENDIX
The elderly should be approached with a product offering
which includes the PERS system and fall sensor when they are
making purchasing decisions for themselves
The PERS system
and pendant
answer the
concerns of falls
and accessibility
to emergency
services.
Elderly making
their own
purchasing
decisions are
typically living
independently
and don’t see
the extra value
of the additional
sensors for
themselves.
The Focus Group
participants
were excited
about the
opportunity of a
fall sensor.
55
If SH comes out
with a fall
sensor, it can
charge a
premium
monthly fee, as
the product is
highly valued by
the potential
customers.
APPENDIX
Only 11% of the elderly said they would be offended if
their caregivers gifted this product to them
How many of you would be offended if your loved ones gifted you
with product/technology such as SimplyHome's?
(Source: Focus Group with elderly with 9 participants)
56
APPENDIX
78% of the elderly chose living independently at home as
their primary option
How important is it for you that you live independently
(without moving to an assisted living facility or a senior living facility or a home)?
(Source: Focus Group with elderly with 9 participants)
57
APPENDIX
Everyone claimed that they were quite comfortable
using technology
How many of you say you are not comfortable with technology/few basic devices?
(Source: Focus Group with elderly with 9 participants)
58
APPENDIX
A majority of the elderly expect their caregivers to buy
this product for them
How many of you would buy the products such SH's by yourself
and how many of you expect your loved ones will buy these products for you?
(Source: Focus Group with elderly with 9 participants)
59
APPENDIX
High Cost of substitutes like private nurse care and nursing
homes help SimplyHome offer its services at a higher price
Substitutes
Private Nurses
Elderly Care
Institutions
Cost
@$20/month it comes
up to $175,000/year
$5000-$8000/month
Disadvantages
Skeptical about trust
and the fit issue
Guilt of not being able
to take care of them
60
APPENDIX
Assisted living facilities indicated the value of the product
which included a VCM-”lite” option was between $150-3000
Cost of Nursing care for 2~24 hours/day
No of Care Hours/day
Day
2
$40
4
$80
8
$160
Cost per
$960
$1,920
Month $480
(@20/hr)
$29,200 $58,400
Year $14,600
$120
$240
Day $60
Cost for
Private Cost per
$3,600 $7,200
Nursing (@30/hr) Month $720
$43,800 $87,600
Care at
Year $21,900
Home
$160
$320
Day $80
$4,800 $9,600
Cost per
(@40/hr) Month $960
$58,400 $116,800
Year $29,200
61
12
16
20
24
$240
$320
$400
$480
$2,880
$3,840
$4,800
$5,760
$87,600
$116,800 $146,000 $175,200
$360
$480
$600
$10,800
$14,400
$18,000 $21,600
$720
$131,400 $175,200 $219,000 $262,800
$480
$640
$800
$960
$14,400
$19,200
$24,000 $28,800
$175,200 $233,600 $292,000 $350,400
APPENDIX