Market research- Primary Research Census Data Statistics from Department of Rural Development Interviews and reports on the internet.- Secondary Research – Work in Progress Expert interviews – Mahindra Finance, Team Everest (Charity) Survey Questionnaire- Cost estimation from suppliers.
Questionnaire- Family size.- Typical income and expenses.- Awareness about the government grants.- Willingness to spend over and above the grant.- Other funding options – awareness.- Ideal requirements for their dream house.
Material palletteMaterials CostPolycarbonate sheets (Roof) $2-3/sq meterFRP Roof sheets $2-15/sq meterFRP wall panel $4-16/sq meterFRP honeycomb panel $30-150/sq meterSolar panels $0.9-$1.1 per watt (65 watts)Solar battery $80-100FRP I-beam $20-40 per meterBamboo beam Work in progressLooWatt $70 + $0.05 per monthConcrete Canvas Work in progressOther components Work in progress
Product/ market matrix Hut Shop Typical Elderly dwellers cum house village family community SAC Home 9,279 - survey -SAC Home 172,352 2,810 survey -PowerSAC Home later stage -WaterSAC Home - - - surveyAnand
Pricing- Work in progress.- Recommended price based on limited expert interviews is around $1500.- Margin of $35 or less in year1. Scope to improve margins from year 2 due to scale.
Value chain Types of playersUpstream Downstream FinancialResearch – Product & Suppliers – Suppliers – Assembly / institutions Marketing market & services raw compliment Production Distributors design /Govt. & salesmaterials materials ary assets house grants Index • The SACs • Other players
Value chain Value chain and the players •Design SAC •Special •Suppliers Home promotion •Raw •Financial s - fairs •Transport /moduleR materials D •Services P institutio M •Charities D •Other •Market ns / grants agencies & Overall / NGOs •Assembly Package •Media DesignResearch Development Production Marketing Distribution Index • The SACs • Other players
Value chainValue package and delivery to customer Product Design & Services Material Suppliers Customers Assembly/Production House Financial Institutions Index • The SACs • Other players
Value Chain What is the customer paying for? Value Addition Players (or holders of complimentary assets)Sustainable homes Designers (The SACs)(durable & sanitized) Raw material suppliersAffordable homes Designers (The SACs)(via grants & private finance) Financial institutions / Government grantsComplimentary assets Designers (The SACs)(loo-watt, community, additional revenue Complimentary asset supplierssource)Brand Name Marketing(on-going purchase & growth)Availability Distributors – Work in progress
Value Chain - conclusions- Significant initial capital investment- High dependency on raw material suppliers - Albeit a number of suppliers are available in Indian market - Complimentary assets are not available locally in India- Market acceptance challenges - Surveys in progress to close this gap- More research needed on financial options and distributors.- More thinking and research needed!
Competitive factors SWOT of Porter’s 5 forces Supplier Power Many suppliers available locally Complimentary assets not available locally Can supply to competitors Threat of New Entrant Internal Rivalry Substitutes Uniqueness of product Less competition Product differentiation Protection Price sensitivity of Quality and perceived mechanisms customers value-additions Relationship with Specialised market – Competitive price suppliers high ‘barriers to exit’ Complexity High capital Buyer Power Potentially large volume Potentially contribute to design Index Switching cost • The SACs Customer Loyalty Price sensitivity • Other players
Competitive factors- Threat of new entrants (Low) The barriers to entry is high but we bring value addition by product differentiation and patented innovative designs. Complexity and modest margins make the venture unattractive for an entrant but there is huge potential of economies of scale.- Supplier Power (Low to medium) Many local suppliers of raw materials available. However, complimentary assets are not available locally. Collaborative partnerships with suppliers will promote exclusive arrangements.- Buyer Power (Medium) Buyers can choose a competitor over SAC Homes; but switching costs are high. We propose to involve our buyers to customise and contribute in design development. Also, affordable financial arrangements can incentivise a buyer.- Threat of substitutes (Low) Continue to live in huts or sub-standard houses or choose a competitor. Perceived value-additions offered by SAC Homes will make it more attractive proposition.- Internal Rivalry (Medium) Only one direct competitor identified (WorldHaus). SAC Homes will provide a unique product. There can be a potential price pressures but the huge market volume provides economies of scale.
Protection mechanismTYPE PROS CONS CommentsPatents • Novel Idea • Long time before patent is granted Cost might be a • Long duration of Protection • High cost of getting a patent deterrent in the short • Attractive to Banks & term but patents are Investors critical for funding and • High Valuation long term protectionTrade • Easily distinguished • Right to prevent unauthorisedMarks use of Trade Mark. • Indefinite subject to renewal • Low CostsTrade • NDA with suppliers & • Once lost, it is lost forever. Manufacturers • Susceptible to independentSecrets • Negligible cost discovery • Can be protected with patentsComplexity • Low protectatbility as Idea can No clear advantage easily be imitated for SAC homesSpeed to • Sufficient Critical Mass in short • Different ways of offering the Unfavourable due to time product . large capitalMarket • Fast pull effect with low cost and • Large capital required during requirement during easy finance early phase early phases • Friendly and customisable solution
Business model - Teece analysis Complementary Assets Free available or unimportant Tightly held and important Difficulty to make Profits Holders of Assets Profits H I G HImitability INNOVATORS Highest Bargaining Power L PROFIT PROFITS O • Create entry barriers via IPR • Create entry barriers via partnering with the supplier W • Direct supply of materials to us for assembly of SAC • Profit sharing depends on Homes negotiation with the partner Competition Strategy Collaboration Strategy - Outsource building blocks - Partner with suppliers, eg (loo watt, solar panels etc) Ikea leveraging their marketing, - In-house design and assembly distribution channels and deep - In-house marketing, pockets service and support - Shared risks leading to dilution in profits
Business model - Teece analysisJoint Venture Vs. Strategic AllianceJoint Venture- Significant investment from all partners- Creation of a a new separate companyStrategic Alliance- Gaining Capabilities- Easy acess to target markets- Sharing the Financial Risk- Wining the Political obstacle- Achieving synergy and competitive advantage