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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?
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