Midterm Presentation 02-04-2012

7/30/2019 Midterm Presentation 02-04-2012

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MAP Midterm Presentation

April 2, 2012

Calvina Cheng, Elvira Mah, Raj Sharan, David Yang


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Objective Ross MAP Team will explore feasibility of operationally sustainable

hub & spoke style business model for VisionSpring in India

Scope

Focus on Karnal district, Haryana for pilot

Conduct field & secondary research to achieve following:

Validate financial feasibility of hub

Test-drive marketing campaigns to drive demand

Explore partnerships to increase credibility

Propose enhancements to spoke operations

Deliverables

High-level business plan with actionable recommendations

Project Overview


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Phase 1

Understand scope of project

Travel to India, meet with ground team, and visit potential sites to do initial analysis

Gather and analyze relevant data to conduct Phase 2 work

Phase 2

Gather data by conducting interviews and surveys in Karnal and high potential towns/villages togauge feasibility of hub operations

Process data constantly to drive next days efforts

Phase 3

Evaluate collected data and explore variables that affect sustainability of hub and spoke model

Outline recommendations for profitably applying the hub and spoke model in India

Develop and present interim presentation to VisionSpring team

Phase 4

Incorporate VisionSpring feedback, and conduct further field & secondary research

Develop and deliver final presentation deck and written report (business plan) to VisionSpring

Timeline & Methodology


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Nearly 65% of Karnal District Residents Need Eyeglasses,

But Do Not Currently Own Them

898,219 Karnal district residents need

eyeglasses

When the focus is shifted to

urban residents in Karnal city,the number of those in need,

but without represents a pool

of approximately 195,948

people

These residents currently have

plentiful options to buy

eyeglasses in Karnal

Based on our analysis, webelieve VisionSpring can enter

the market and be profitable

despite existing competition

739,026 Karnal district

residents needeyeglasses and do not

have them

Source: Theoretical demand estimates based on 2001 India

census data and 2008 Essilor BOP Strategy in India report


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Market Landscape Karnal Spokes

Villagers prefer eye screening camps due toconvenience: minimize travel and time-off

work, women dont need male relative escort

to travel to store, etc.

Previous glasses owners have purchased

from word-of-mouth sources WTP for prescription glasses: up to 500 INR

Occupations: primarily Farmers and

Housewives

Convenience and trust are two main factors that drive purchasing

decision for glasses in villages.


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Competitive Landscape - Karnal Hub

Number of customers/day: 10-20

ASP of prescription glasses: 350 INR

Education: High school plus 2 yrs

hospital on-the-job training

Years in Business: 10+ years

Product / Services Mix: 90% Rx

glasses, most patients already have a

prescription

Current customer base is informed and cost-conscious, though

interested in viewing various designs and brands.


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VisionSpring Should Target Middle Class Karnal Residents

Tehsil -Rural

KarnalDistrict -Rural

(Villagers)

KarnalResidentsLower Class

KarnalResidentsUpper Class

KarnalResidentsMiddle Class

Tehsil -Urban

Target Market:- Karnal (district HQ) residents (total pop: 579,485 as of

2001)

- Target middle class residents, ages 35 55, earning ~

10,000 15,000 monthly)

- Consumers value style and price over quality

Already well served

by government

programs, otherNGOs and Arpana

Hospital

- Will prefer brand name

products

- Not ideal to rely on low

volume, high ASP products

Served by

VisionSpring vans


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Marketing Plan Preliminary Assessment of Karnal Hub

Promotions and Place are areas that VS can differentiate itself from

other stores in Karnal city

Close proximity to hospitals

Create a comfortable, clean,but not flashy shoppingenvironment

Cross-promotions

Easy access to info

Enhanced customerexperience

Partnership with Arpana

Readers, Rx,

sunglasses Variety: ~50 pairs

Free eye check-ups

Outsource productofferings that are moreexpensive

Readers: 100+ INR

Rx glasses: 320-600INR

Sunglasses: TBD(same)

Full-range options

Product

Price

Promotion

Place


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Marketing Plan Promotions for Karnal Hub

Credibility and greater brand awareness in market is critical given

long-standing stores by local entrepreneurs

Cross-promotions

VS posters in local coffee stores, hair salons, grocery stores

Create brand awareness and navigate interdependencies

Easy access to information

Fliers in-/outside hospitals, website with basic store(s) information

Enhanced customer experience Offer eye checkup services, create comfortable shopping environment

Partnership with Aparna (or other local hospital)

Driver for traffic

Builds greater recognition and credibility depending on level of collaboration


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Hub Operations: Similarities to Existing Competition

Considerable similarities in a competitive and well-served market,

unlike in El Salvador

Product Offerings Readers, Rx, coatings,

progressives, transitions,

multiple frames, etc.

Location

Main market strip

Turnaround Time

Under 60 minutes for most

Rx. Rest sourced from

manufacturer in New Delhi

Price

Readers: > 100 INR

Rx

90% of sales between

320-600 INR 10% of sales > 600 INR

Hub

Similarities


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Hub Operations: Differences to Existing Competition

VisionSpring Hub Competition VS Advantage / Disadvantage

Size &Design

600 Sq. Ft., including testingand workshop area; clean &

welcoming, but not flashy

300 Sq. Ft. 1200 Sq.Ft., dowdy

Advantage - Clean store withample display shelves to

draw customers

Staff 2 professional trained and

attired staff

1 2, owner + help Advantage - Trained local

technicians can explain the

benefits of product and

provide higher quality

serviceEye check-up Examined by professional on-site Not typically offered,

referred to

ophthalmologist

No value add Customers

prefer check-up at hospital due

to low cost

Ownership Corporate Local entrepreneur Disadvantage Credibility with

target market missing

Sunglasses Unbranded Branded and Unbranded Disadvantage - Inventory

management complex withbranded

Not many significant advantages, VS will need to carefully positionthemselves to capture market share


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Preliminary Financial Analysis of a Karnal Hub Store

- Estimated with 1 hub in Karnal, VisionSpring can

conservatively generate approximately INR 300,000

in profit annually

- VisionSpring would be able to cover fixed costs for

at least 3 of the vans operating in Northern India

(assuming partial cost coverage by current sales invillages)

- To achieve 100% cost coverage, including

overhead, VisionSpring will need to increase foot

traffic and sales

- VisionSpring may need to reconsider average

selling price of their readers, given primary

research conducted with stores


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The Current Van Model Is Predicted To Remain a Cost

Center Going Forward

With four existing vans, high fixed costs, and low transaction prices,and an assumed a 15% conversion rate, our model anticipates

yearly losses in three cases:

Source: India 2012 Base Plan Final Version.xlsx

Note: Costs of operations are assumed to be constant in all scenarios; assumed 300 selling days/year

Low Medium High

50 people/day 65 people/day 75 people/day

15,000 people/year 19,500 people/year 22,500 people/year

2,400 pairs sold/year 3,000 pairs sold/year 3,300 pairs sold/year

INR 424,800 Loss INR 267,000 Loss INR 188,100 Loss


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But Can Achieve Improved Cost Coverage with Hub

Support and Operational Improvements.

Additional hubs in teshils in Karnal district can potentially support

increased van services A staggered launch of additional hubs will drive increased revenues

in the Karnal district

VisionSpring should consider internal capabilities to support andmange a dramatically different model than what currently exists

We are investigating other ideas for operational improvements,including:

Scheduling predictable van visits to villages, thereby increasingVisionSpring awareness and providing multiple opportunities toprovide services to villagers

Increasing marketing/awareness/education efforts to villagers

Forming partnerships with other local NGOs to provide symbioticservices

Refer cataract patients at VS camps to Arpana

Run eye care camps in partnership with other health camps


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Next Steps

April 26

Complete Field Research in Karnal focus on collecting primaryresearch to support VisionSpring positioning & marketing efforts

Explore feasibility of additional hubs in teshils

April 23 Deliver Final Presentation to VisionSpring

By

April 26

Submit Final Report to VisionSpring


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Questions?

Midterm Presentation 02-04-2012

Documents

Transcript of Midterm Presentation 02-04-2012