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iCut

Tayseer Bharucha, Dan Gutierrez, Ankush Verma, Sadiq Khurshid, and MattOchwat

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Index

1) Executive Summary

2) Marketing situation

3) SWOT

4) Objectives and Issues

5) Marketing Strategy

6) Action Programs

7) Budget

8) Controls

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Executive Summary

Apple Co. has recently been innovating its designs and applications fortheir products. Like many of its competitors, Apple is coming out with a newapplication called iCut. Its a new innovative application like none other that is

interactive with its user. The defining feature that makes this application unique isthat it allows users to select a hairstyle of their choosing on their phone. Onceselected you are able to enjoy the convenience of having your haircut athome. Apple is a company more than just about its products, theyre aboutmaking their products innovative and user friendly. Apple wants to branch outsideof its already existing market and attract new users to become apart of this newinnovative experience. The target market for our product would be males,specifically from ages sixteen and above. There is no competition in the marketfor iCut. In order to make this a one of a kind app that no other competitors cancompete with, we would be safeguarded by our app connectivity and periodicallyrelease updates to innovate our product and make sure its of high quality and

reliable to its users. Its very pertinent to Apple that each unit will be free of anypossible defects or imperfections. These quality control measures would allowus to build up our goodwill and customer satisfaction.

Based upon geographical research, it is difficult for some users to find aconveniently located barbershop in their area. In addition, surveys show that waittimes for haircuts are on average of 20 to 30 minutes. By having the capability ofgetting a haircut with a touch on your screen, it allows users to not only have theluxury of staying at home but also saving time and money. We would introducethis app through penetration pricing and by setting a low initial entry price thatwould attract new customers. The beginning entry price for iCut would be 249.00dollars. The strategy works on the expectation that customers will begin

purchasing this new app for having the convenience of getting a haircut at home.We are aiming for 50,000 units, but hope to achieve at least 30,000 units. Oncesales have begun to increase and the product has become popular, we canconsider raising our profit margins and outsource our product to other parts of theglobe where Apples products are easily accessible.

Marketing Situation

Apple Co. has recently been innovating its designs and applications fortheir products. Like many of its competitors, Apple is coming out with a newapplication called iCut. Its a new innovative application like none other that isinteractive with its user. The defining feature that makes this application unique isthat it allows users to select a hairstyle of their choosing on their phone. Onceselected you are able to enjoy the convenience of having your haircut athome. Apple is a company more than just about its products, theyre aboutmaking their products innovative and user friendly. Apple wants to branch outsideof its already existing market and attract new users to become apart of this newinnovative experience. The target market for our product would be males,

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specifically from ages sixteen and above. There is no competition in the marketfor iCut. In order to make this a one of a kind app that no other competitors cancompete with, we would be safeguarded by our app connectivity and periodicallyrelease updates to innovate our product and make sure its of high quality andreliable to its users. Based upon geographical research it is difficult for some

users to find a conveniently located barbershop in their area. In addition, surveysshow that wait times for haircuts are on average of 20 to 30 minutes. By havingthe capability of getting a haircut with a touch on your screen, it allows users tonot only have the luxury of staying at home but also saving time and money. Wewould introduce this app through penetration pricing and by setting a low initialentry price that would attract new customers. The strategy works on theexpectation that customers will begin purchasing this new app for having theconvenience of getting a haircut at home. Once sales have begun to increaseand the product has become popular, we can consider raising our profit marginsand outsource our product to other parts of the globe where Apples products areeasily accessible.

Product reviewiCut the app that allows you to get a haircut at the convenience of being athome. The following features include:

Accessible through Apple products-(iPad, iPhone, Macbook and iPod) Sleek and modern design Thousands of styles to choose from, Photos available. Customizable haircuts to your choosing. Easily operated for all ages. Quiet No waiting time. 15 - 20 minutes operating time Higher end materials to become available in the future Compatible with iOS 7 Rechargeable USB access for charging Made in the USA

Competitive review

Ever since the Aztec times, men and women have been using tools to gettheir haircut and keep themselves looking proper. The hair cuttery business hasexperienced growth even though the economy has not been doing too well.People, especially men, get their hair cut once every two weeks on average. Thishas contributed to a steady economy that is saturated with numerous differenthair salons, barbers, and home use clippers. Competitively, we will have to lookat the hair salon industry as a whole, and the home use clippers industry aswhole. Haircuts for men range from $5 to anywhere in the $50 dollar range, andhome use clippers range anywhere from $50-$200 depending on their quality.

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Key competitors to the iCut will be hard to determine because there is no productlike it in the market place.

Channels and Logistics ReviewiCut will be distributed through network of electronic retail stores. We want tointroduce the product to all local areas so that its accessible to those who are notcapable of getting haircuts at their convenience.

Apple Stores- Every apple store will hold product available for users topreview and purchase the product.

Major electronic stores- Chains such as Best Buy, ABT, HHGreg,Radioshack and other major stores.

Online- Product will be available through various websites such as Appleand the Major retail stores that the product is featured at.

Once iCut has taken off more distribution channels will be available so that itsmore accessible to users in remote areas.

SWOT

Our teams feels like it is necessary to define what a SWOT analysis isand define in what context we have done this analysis. In its most basic sense, aSWOT analysis gives a company the ability to see what it is doing right, and whatthings it can change so that it is better situated in the market place. In our case,our objective is to analyze the strengths, weaknesses, opportunities, and thethreats that our product, the iCut, holds. This is especially important because weare planning on releasing a revolutionary product in the open market that willeither become very popular or not take off the way we hope it will. Below, we

have compiled what we believe are the strengths, weakness, opportunities, andweaknesses that we face.

Strengths

1. Value: Our major strength is that, in the long run, the iCut will prove tobe cheaper than haircuts in general. At the minimum, a single haircut costsaround five dollars. Over the course of a mans life, that number is likely tomultiply extensively. With the iCut, customers will have to pay a lump sum up-front, but after that, they will not have to pay every time they get a haircut.

2. Convenience: The convenience that a home barber unit can provide

cannot be overlooked. The ability to chose what kind of haircut you want at thecomfort of your home is undoubtedly resonate with our clients.3. Connectability: A major strength is that it is connectable with the

iPhone. This is very important because it gives our client the ability to show theunit exactly how they want their hair to look. This measure takes out the variableof human error, and the haircut comes out just like the client wants it to.

4. Superior quality:As product of the Apple, our customers know that anyproducts that are released have superior quality. This goes for the iCut as well.

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Even though it is a brand new product, we will make sure that it has the bestquality possible.

5. Portability: The portability factor of the product would allow itscustomers to take the iCut whenever travelling. As this product only requires any

Apple product whether it be the iPhone, iPod and iPad. The iCut headset

portability would not be a problem for its consumers.6. Extensive budget:as an Apple product, we have an extensive amountof capital that we can use to produce the best product possible,

Weaknesses

1) Combating social norms: One major weakness that we have is that it isa brand new concept, and it goes against what is traditionally acceptable. Just ascutting your own hair at home with a set of clippers is not a practice that is widelyused, the iCut has to compete with what is traditionally done.

2) Limited to men: Another weakness is that it is only based for men thusfar. This is because we know that women will not trust their hair with a productthat has not been proven. For now, this will limit us to half of the market, ratherthan the whole market.

3) Limited to the Iphone: As an Apple product, we want to cater thisproduct just to Apple users to gauge how popular it is within our own communitybefore we open it up to the general public, but this again limits us to only asegment of our potential target market.

4) Lack of product awareness: as a brand new product the iCut will enterthe market with little to no reviews from actual customers. This will be combatedto some extent with the fact that we already have a loyal fan base of Apple users.

Opportunities

1) Fan base: Because our other products already have a strong following,we have a strong base that will likely buy into the product. This base is global, sowe have a strong opportunity to make a product that will be popular worldwide.

2) Potential Specified Models: Another opportunity that we have is theopportunity to create a product segmented by different specifications if our baseproduct brings in sufficiently. Also, we may be able to sell and license high endmodels to barber shops that hope to keep their clients. The barber shop inmodern day society is not only a place to get a haircut, but it is a way for men tokeep up with one another in their community. By serving barbershops, we will beable to provide and sell our product without taking away from the community

aspect of the barber shops.3) Economic recession: with the fact that the economy is still doing

somewhat poorly, customers try to find ways to save money. The iCut will allowthem to save money by eliminating the need to pay for haircuts.

4) Hipster movement: in a time where more and more young people aretrying to go against what is traditionally done, the iCut will allow them to get theirhaircuts on their own time without having to do what is socially acceptable.

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Threats

1) Technological changes: With technology changing so fast, we have tomake sure that we keep up with what is changing technologically. There are newiOS updates that come out every month, so we have to make sure that ourapplications are up to date at all times.

2) Potential competition: Once a product is in the market, all of the othertechnological companies will try to make products to compete with ours. We mustmake sure we are continuously innovative.3) Social Backlash: We may face backlash due to the fact that we will likely becreating job loss in the salon or barber field. We are hoping to combat this byselling higher end products to barber shops so that they can still stay in business.

Objectives and Issues

It is necessary for a company to define its objectives in a specific

time period in order to keep track of its progress as planned. Also, take any formof corrective actions if the company fails to meet any of its objectives and facewith any kind of issues.

Objectives

As an entirely new product we decided to keep achievable targetsfor the first year. However, gradually as people get to know the product we aregoing to set challenging targets for the second year. Also, we would considernew potential markets.

First-year objectives. During iCuts first year on the market, we aim to

sell at least 35,000 units which would translate to $5,390,000 worth of profit. Second-year objectives. Our second-year objective is to sell at least

100,000 units and also, based on customer reviews change the product. Weplan on doing this by incorporating consumer suggestions, as well as competitorinnovations.

Third-year Objectives. If the product is successful enough to meet ourset targets, we would then consider launching our products in new potentialmarkets.

Issues

One of the major issues we to expect is the fact that customers might notbe willing to try the iCut. This is because it is an entirely new idea and people areless likely to adapt to new technological changes. Also, people might be reluctantto pay the lump sum amount upfront.

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Marketing Strategy

Positioning

Since i-Cut will be the only do-it-yourself barber, it is hard to compare it to othersimilar products, since there are none at the moment. However, iCut is designedto be a cheap first time payment for the consumer, taking into consideration itscapabilities. Because it will be so cheap for the benefits it brings, we arepositioning iCut to be known for its great value.Since it will also be controlled from an application on your iPhone mobile phone,iCut will also be associated with unbeatable convenience for its targetedcustomers.

Product Strategy

When iCut is first released it will be a basic product without modifications. If wenotice a pickup in sales and popularity, we will add more features to the iCut tomake it more customizable and personal. Also, just like most apps we have,there will be updates for the iCut app. This will also upgrade the product allowingit to do more with the customers hair; this will always keep the consumersinterested in the iCut as it will introduce new features periodically.

Pricing

Since the closest competitor to the iCut upon release will be haircuts from anactual barber shop, the pricing for this product has to take the average cost of a

barber shop visit and the iCuts capabilities into consideration. Also since wewant our product to be a hit upon availability to the public, we will set a price at$249.00, in order to help us finance future additional features to the iCut and topush customers to buy it.

After many calculations and predictions, we are determined to set the price of theiCut product at $249.00 (USD) and the complementary app will be free for a yearor until we see sales dramatically rise, whichever comes first.

Note: We estimate that it takes about $95.00 to make the iCut product, so wewould be making $154.00 on every sale which is necessary for us to pay our

employees, operational, distribution, advertising, and other miscellaneousexpenses in order to continue innovation and production .

Distribution StrategyThe distribution strategy of the iCut will be a selective distribution. A few retailstores will be chosen to distribute our product in neighborhoods in theChicagoland area (initially). We will also hire a reputable intermediary totransport our iCut products from our factory to the retail stores so we can trust

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that the merchandise will get to the stores in a timely and undamaged manner,both important to establish customer satisfaction and a good reputation for theproduct.

Also, in order to make the iCut look good, it is vital to push it into retail stores that

are well known among consumers such as Kohls, Radioshack, Best Buy, andhhgregg (in the Chicagoland area).

Marketing Communication StrategyIn order to market ourselves towards our target consumers, we need to take intoconsideration their habits, hobbies, likes, and dislikes. Since we are starting outin Chicago, it is a good idea to advertise the iCut on banners on the CTA bussesand trains.

Our target consumer, men in Chicago who dont like to go the barber, probablylike to pass time sitting on the couch watching T.V. As a result, we would market

ourselves through commercials on television networks as well.

Moreover, iCut will make it imperative to create beneficial relationships withretailers offering them discounts for buying our product in bulk quantities. A fewlucky customers will also be rewarded free iCuts by winning an online contest onour website so they can try it and tell their friends how they liked it.

Marketing ResearchIn order to update the product and make changes to it, we need to know thecustomers opinions towards the iCut. When consumers download the app totheir phones, they will be encouraged to rate it and share their opinionsexpressing their satisfaction or dissatisfaction.

We will also send out emails to our customers that contain short, but veryinformative, surveys that will help us determine what needs to be updated,changed, and kept regarding the i-Cut and our method of doing business.

Action Plan

iCut will be introduced in January. The following are action programs that will be used

during the first six months of the year to achieve the stated objectives.

January: iCut will work with independent distributors and retailers to educate them on

the promotional campaign of the product and the advantages of selling this product.

During the first month the iCut team will also launch the official website for iCut as well

as start to emerge on Facebook with an official page for the product. These two web

pages will present teaser information about the product as well as the release dates and

location. As a result of the first month, we hope to build a strong relationship with our

distributors and retailers and as well as develop a fan base/ following.

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February: A month into the introduction of iCut to the event planning market, we plan

to market ourselves and spread our name as much as possible as it is the foundation of

a successful product to make people aware of it. When marketing ourselves we will

focus more on iCut itself instead of degrading the competitors or possible substitutes.

This will not only make our product look different but it will also help us in building aloyal customer centered relationship.

March: To expand our market even more, the team at iCut will begin to expand our

market location. We are located in the heart of Chicago, but we will start marketing our

services and reach out to clients outside of the city and into the suburbs by offering

online purchases as well as having distributors sell our product in the suburbs. In order

for our plan of expanding services to be successful, we will have to locate certain niche

markets in each suburb. This will be done by doing extensive demographic research for

suburbs in the Chicagoland area and then implementing a marketing plan to cater the

respective market needs.

April: Since we would already have come out in the market by this time, we plan on

spending the whole month in expanding our product on the social media such as

Facebook,Twitter, Instagram. Although this product already has an app for itself on

Apple devices we would also have certain other applications which will be a user manual

or a help related application. This application will also feature a column for any

product enhancements that the customers would be willing to have on the iCut.

May: In the month of May iCut will reach out to as many non- profit organizations as it

can and also hold several fundraising events in collaborations with the NPOs.. Since the

month of May is known for Mothers day we hope to have an event that caters to themothers of Chicagoland for everything that they have done for their children. We will

also be offering several volunteering opportunities for young adults as this is the month

when the weather starts to warm up and most schools and colleges kick start their

summer break at this time. We believe that the outcome of this month will not only

strengthen our image in the local community but also build a good fan-base for us.

June: As the iCut reaches its six month anniversary, we will celebrate by hosting our

retailers, distributors and customers at an event of appreciation for their support. This

will build a long lasting relationship with our clients and give us a chance to gain new

customers through referrals.

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Budget

Revenues 12,450,000COGS

Operating Expenses 4,433,000Raw materials 2,215,000Development/Employees 1,174,000Distribution 1,044,000

Administrative expenses 317,000Overhead

Material handler 57,000Depreciation on equipment 100,000Safety and environmental Costs 47,000

Total Overhead expense 197,000Advertisement

Internet Advertising 50,000Banners 30,000Infomercial Ads 40,000

Total Advertising expenses 120,000Total COGS 4,750,000Gross Profit 7,700,000

iCutstotal revenue we are aiming to achieve is 12,450,00 dollars for the firstyear. With the our first year objectives we aim to sell 50,000 units. Each unit willbe sold for a retail price of 249.00 U.S dollars. The cost to make each individualunit is 95.00. In result with every unit sold the profit would be 154.00 Dollars

(249.00-95.00=154.00). Total profit would be 7,700,000 dollars (154.00 dollars x50,000 units = 7,700,000). To break even, we will need to sell at least 19,077units (4,750,000/249=19,077). As a max we aim to sell 50,000 units at the veryleast, we expect to sell 35,000, which would result in $5,390,000 worth of profit.

ControlsDue to the fact that iCut would be an entirely new technological product, it

isreally necessary for every single unit of iCut to be made out with perfection inorder to avoid any form of errors in making of the products. There would be strictquality control measures that would allow our team to detect any possible defector imperfection that the product might have and correct it before it is out for our

potential customers. These quality control measures would allow us to build upour goodwill and customer satisfaction. Not only this, but we would alsoimplement plans that would allow us to closely monitor the market trends (thrusending out surveys and benchmarking our results with competitors) as well asconsumer behavior. Based on the results, iCuts management can innovate theproduct and also watch competitors in order to help us price our products andmake the product more efficient.