Figure 1 Customer Benefits Package



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Clean Teeth, Incorporated has decided to enter the toothbrush market in 2008. Clean Teeth will manufacture toothbrushes with curved handles, shaped bristles, grips for comfort, and bristle indicators. These toothbrushes will be uniquely colored as well. In order to combat competition, Clean Teeth will offer high quality, low cost toothbrushes. Our customers will enjoy a broad customer benefit package and investors will benefit from Clean Teeth’s creative work force and good supplier relationships. As the founders of Clean Teeth, we have done much research and planning to ensure our future financial success. The information we’ve gathered and operational goals are discussed in more depth below.

Section one of this paper 1 discusses our customer benefits package, section 2 presents strategy development, 3 takes a look at our mission and vision statement, and part 4 talks about our satisfiers, dissatisfiers, and exciters/delighters. Section 5 presents our concept development, while part 6 and 7 respectively discuss our forecasting methods and production capacity. Finally, our paper concludes with section 8.


1. Customer Benefits Package


In order to provide customer satisfaction, Clean Teeth developed an extensive customer benefits package. Our CBP will include satisfaction, a customer service website with product information, durability, product safety, and trust. Because all of these services and qualities are included with the purchase of a Clean Teeth toothbrush, our customers will have a high level of comfort and confidence when buying one of our brushes. This broad CBP is just one of the ways we will gain customers in the toothbrush market. Figure 1.1 shows a diagram of our CBP below.

Figure 1.1 Customer Benefits Package



2. Strategy Development


Next, Clean Teeth developed a business strategy by doing some environmental scanning. During that process, we obtained the following information: Basic toothbrushes fall within a price range of $2 to $5. Many toothbrush manufacturers have well-recognized names. People of all ages use toothbrushes, and toothbrushes are made of plastic, nylon, and metal. With this information, we decided that we would focus solely on producing toothbrushes and would market them to everyone. We will overcome the brand loyalty that companies like Colgate and Oral B have by making nice looking, well-featured toothbrushes that are less expensive than those of our competitors. By focusing on both high quality and low cost, we expect to lure in a wide variety of customers who are searching for that unique combination.

3. Mission and Vision Statement


Our mission and vision statement are two other important components we focused on. Good mouth hygiene and affordability are very important at Clean Teeth. Accordingly, our mission statement is “To help people keep their teeth clean and healthy with our affordable, high quality toothbrushes.” Our vision statement states what we hope to achieve in the future. It reads, “We hope to make strides toward decreasing the occurrence of dental illness with the use of our toothbrushes.” Our goal as a business is to make a profit, but it is equally important for us to protect people’s teeth in the process.

4. Dissatisfiers, Satisfiers, and Exciters/Delighters


We next determined our dissatisfiers, satisfiers, and exciters/delighters. Our dissatisfiers are things that every normal toothbrush has such as bristles, a handle, durability, and the simple fact that it cleans your teeth. Our satisfiers are quite easy to explain given that they are the normal things that come with every toothbrush. The easy grip handle makes it easier to hold the toothbrush and makes it fit comfortably in the hand. The brush indicator lets the user know when it is a good time to change toothbrushes. When the brush indicator begins to fade, the user will know to change his or her toothbrush. Our contoured bristles help users get into hard to reach areas of their mouth. These shaped bristles help clean the teeth better than just a normal straight toothbrush would. Our exciters/delighters are things that not every toothbrush will have. The outstanding price for the amount of quality that the consumer is getting is one. By offering our toothbrushes at a lower cost than our competitors, we can attract users who ordinarily buy a more expensive toothbrush. Once customers purchase our toothbrush, they will notice the great quality that they are getting in the product. We will also excite our customers with unique color offerings. By offering many unique colors, we can attract those consumers who don’t want a boring, singly colored toothbrush.

5. Concept Development


During our concept development stage, we decided to produce a great quality toothbrush at a low cost that comes in many colors. Our consumers will be happy to purchase our product and recommend it to their friends and colleagues. We also decided that we would focus solely on toothbrushes. That way we will be able to produce the best quality toothbrush on the market and not get side tracked with trying to produce other things that may not yield as high of profits. As far as our financial outlook, we found that our fixed cost came to equal $51,500,000. That figure covers the mortgage of the factory, equipment, salaries, taxes, utilities, and insurance. By having our variable cost at $1.50 per toothbrush we can sell the toothbrush for $2.50 and make a dollar profit on each toothbrush. Through numerical analysis, we found that we will breakeven when we produce 51,500,000 toothbrushes. Therefore, we should breakeven in the second year of operation.

6. Forecasting


Clean Teeth decided it was best to forecast using the financial statements of the established oral care company Colgate. This decision was based primarily on the fact that Colgate is one of the only oral care companies that distributes their own products. Figure 6.1 shows the continuous growth of Colgate from the year 2005 to 2007, which provides a strong foundation for Clean Teeth to gather information to form their initial operational goals.

Figure 6.1 Colgate’s Total Revenue


Using Linear Regression and the data provided in Figure 6.1, we produced a five-year forecasting model, which is shown in Figure 6.2. After analyzing both figures, we decided to further analyze Colgate, as it seemed almost impossible for a new company to sell almost $12 billion dollars worth of toothbrushes, even after five years. After more research, we discovered that only 38% of Colgate’s total revenue is actually comprised of oral care products. Therefore, after test marketing, we concluded that Clean Teeth could capture about 1% of Colgate’s oral care market. 1% of Colgate’s market would equate to approximately 50.6 million toothbrushes produced in our first year of production and 53.7 million toothbrushes in our second year. These are more reasonable quantities for a new company like ours to produce.


Figure 6.2 Colgate’s Five Year Total Revenue Forecast


To further validate the solidity of Clean Teeth, we decided to perform an accuracy check. The purpose of an accuracy check is to compare the forecasted revenue to the actual revenue to see how the company would perform at that level of operation, essentially checking to see if error exists. Table 6.3 shows that Clean Teeth would perform well with normal operations, should that particular scenario occur. There are three commonly used ratios to check forecast accuracy: Mean Average Deviation (MAD), Mean Absolute Percentage Error (MAPE), and Traffic Signal (TS). For our purposes, we decided to use Traffic Signal because it exposes bias. Our TS was computed to be 5. From our positive tracking signal, we concluded that the total revenue for Clean Teeth was not over-forecasted.


Table 6.3 Clean Teeth, Inc. Accuracy Check


Year

Forecast Revenue

Actual Revenue

Absolute Deviation

1

$50,567

$50,567

$0

2

$53,708

$53,909

$201

3

$56,850

$57,522

$672

4

$59,992

$60,005

$13

5

$63,133

$64,285

$1,152

Lastly, Clean Teeth decided to not utilize seasonal forecasting. The number of toothbrushes people buy does not change with a particular season so seasonal forecasting is not applicable to our operations.

7. Production Capacity


Clean Teeth will produce millions of toothbrushes each year. Therefore, it was imperative to discover the proper amount of capacity needed to operate at that level. After analyzing our configuration, we determined that Clean Teeth could produce about 22 million toothbrushes per year. However, since we are a new company, we decided to only use 91.8% of our production capacity. This additional capacity can be used for unexpected or sudden growth in demand for our toothbrushes.

If sales are as forecasted, Clean Teeth will need to add approximately 1.4 million additional units per year to keep up with sales. If the additional production capacity is added, it will allow Clean Teeth to produce 27.2 million toothbrushes by the end of its fifth year of operation, meaning it will still be able to keep the production capacity at 91.8% with reserves for unexpected or sudden growth. Therefore, Clean Teeth has enough production capacity to safely handle any situation in present and future situations.



Clean Teeth decided to use multifactor productivity (MFP) as an input-output measurement tool. We determined through research that we could successfully sell each toothbrush at a cost of $2.50 to consumer with a production cost of $1.50: $1.00 for Labor Costs and $.0.50 for Material Costs. See Figure 7.1

Figure 7.1 Multifactor Productivity (Inputs and Outputs)





8. Conclusion


With Clean Teeth’s broad CBP, long list of satisfying and exciting product qualities, and extensive amount of analysis and planning, we are sure that our toothbrushes will be very successful. We have developed a product that will satisfy our customers because of its high quality and low price and keep our investors happy with its limitless profitability. Clean Teeth is definitely going to be a major player in the toothbrush market.



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