SmartHelmet Ensures Safety and Helmet Use

Statement of Authenticity
This business plan is the original work of the undersigned. All facts and figures are authentic. All
contributions from others have been appropriately acknowledged. We have not read, reviewed,
or used any past Core plans in any way in the development of our plan. We did not misrepresent
ourselves to suppliers or to anyone else who contributed information to this plan.
We each understand that the ideas, analysis, and text contained in our plan are the collective
intellectual property of our team

i
Table of Contents
INTRODUCTION
EXECUTIVE SUMMARY vii
CORPORATE SOCIAL RESPONSIBILITY x
INTRODUCTION 1
MARKETING_________________________________________________________________
MARKETING OBJECTIVES 3
ENHANCE PERCEIVED VALUE OF BRAND 3
BUILD FRIENDLY & MEMORABLE BRAND IMAGE 3
ACHIEVE TOTAL AWARENESS OF 60% BY YEAR 5 3
ACHIEVE ACV OF 34% BY YEAR 5 4
MARKET RESEARCH 4
PRIMARY DATA 4
SECONDARY DATA 4
MARKET SEGMENTATION 5
PRODUCT POSITIONING 8
COMMUNICATIONS, BUDGET, & CREATIVE ADVERTISING 8
INTEGRATED MARKETING COMMUNICATIONS SCHEDULE 8
PULL MARKETING: YEAR 1 9
PULL MARKETING: ADVERTISEMENTS 13
PULL MARKETING: PACKAGING 13
PULL MARKETING: PUBLIC RELATIONS 13
PULL MARKETING: ONLINE MARKETING 14
PULL MARKETING: POINT OF PURCHASE 14
PULL MARKETING: CREATIVE EXPENSES 14
PUSH MARKETING: TRADE SHOWS 15
PUSH MARKETING: TRADE MAGAZINES 15
EFFECTIVENESS OF COMMUNICATION 15
CHANNELS AND PRICING 16
CHANNEL CONFLICT 17
SALES VOLUME 18
SALES FORCE 18
SWITCHING POINT CALCULATION 19
MANUFACTURER’S REPRESENTATIVES 19
DISCOUNT PROMOTION 19
SALES PROJECTIONS 19
OPTIMISTIC & PESSIMISTIC SCENARIO ANALYSIS 20
OPERATIONS MANAGEMENT_________________________________________________
CUSTOMER REQUIREMENTS & PRODUCT DESIGN 22
TARGET COST 23
MAKE/BUY ANALYSIS 23
SUPPLIERS 24
TRANSPORTATION LOGISTICS 24

ii
FACILITY LOCATION 26
CENTER OF GRAVITY 26
FACTOR MODEL 26
FACILITY LAYOUT 27
ASSEMBLY PROCESS 29
BRAKE PRODUCTION PROCESS 29
HELMET PRODUCTION PROCESS 29
QUALITY ASSURANCE 30
ACCEPTANCE SAMPLING 30
STATISTICAL PROCESS CONTROLS 30
RFID QUALITY INSPECTION 30
CAPACITY & STAFFING 32
ORGANIZATIONAL STRUCTURE 33
MATCHING MONTHLY PRODUCTION WITH DEMAND 34
INVENTORY 35
FINANCIAL IMPACT OF SUPPLY CHAIN DECISIONS 36
IMPACT OF OPTIMISTIC & PESSIMISTIC DECISIONS 37
ENVIRONMENTAL IMPACT OF OPERATIONS 37
INFORMATION SYSTEMS_____________________________________________________
CRITICAL SUCCESS FACTORS & VALUE CHAIN 38
CRITICAL SUCCESS FACTORS 38
VALUE CHAIN 40
SOFTWARE COMPARISONS 41
MARKETING BEST OF BREED COMPARISONS 41
OPERATIONS MANAGEMENT BEST OF BREED COMPARISONS 42
FINANCE & ACCOUNTING BEST OF BREED COMPARISONS 43
FINAL BEST OF BREED SELECTION & MIDDLEWARE 44
ENTERPRISE RESOURCE PLANNING (ERP) SOFTWARE COMPARISONS 44
BEST OF BREED VS. ENTERPRISE RESOURCE PLANNING COMPARISON 46
HARDWARE, TELECOMMUNICATIONS, & EMPLOYEES 47
HARDWARE & TELECOMMUNICATIONS 47
EMPLOYEES 48
ENTITY-RELATIONSHIP DIAGRAM 48
REPORTS 50
RAW MATERIALS DEFECT RATE REPORT 50
FINISHED GOODS DEFECT RATE REPORT 50
PROCESS MODEL 51
WEBSITE DESIGN 51
SEARCH ENGINE OPTIMIZATION (SEO) 52
SEARCH ENGINE MARKETING (SEM) 52
WEB ANALYTICS 52
CONTINGENCY PLAN 53
CORPORATE SOCIAL RESPONSIBILITY 53
FINANCE____________________________________________________________________
FUNDING REQUEST 54
OWNERSHIP POSITIONS 54
PROJECTED NPV & IRR 54
NPV PROFILE & MINIMUM REQUIRED RATE OF RETURN 55

iii
BASE CASE FINANCIALS & COMPARABLE COMPANIES ANALYSIS 55
COMPARABLE COMPANIES 55
INCOME STATEMENT 56
BALANCE SHEET 56
TERMINAL VALUE 57
BREAKEVEN ANALYSIS 57
SENSITIVITY ANALYSIS 57
RISK MITIGATION PLAN 58
PRICE 58
SALES VOLUME 59
AWARENESS & ACV 59
VARIABLE COST 59
FIXED ADMINISTRATIVE & PRODUCTION COST INCREASE 60
REGULATION & POTENTIAL LAWSUIT 60
QUALITY ISSUE 60
COMPETITION 61
LIQUIDITY ISSUE 61
TERMINAL VALUE 61
NATURAL DISASTER & UNEXPECTED OCCURRENCES 61
ECONOMIC DOWNTIME 62
SCENARIO ANALYSIS & SUMMARY STATISTICS 62
PRODUCT UNIQUENESS 64
INVESTMENT PROPOSAL 64
CONCLUSION 65
WORKS CITED xii
EXHIBIT 1: NEW PRODUCT SURVEY xvii

iv
Exhibits
MARKETING
MK Exhibit 1:Parents vs. Grandparents Purchase Intent 6
MK Exhibit 2: Who is More Likely to Buy SmartHelmet 6
MK Exhibit 3: Full Segmentation Tree 7
MK Exhibit 4: Safe vs. Durable Perceptual Map 8
MK Exhibit 5: Word of Mouth Calculations 9
MK Exhibit 6:IMC, Pull Marketing Year 1 9
MK Exhibit 7: IMC, Pull Marketing Year 2 10
MK Exhibit 11: Year 5 Average Weighted Manufacturer’s Selling Price to Channel 18
MK Exhibit 12: Salary & Commission of KinderHelm Inc.’s Salesperson 18
MK Exhibit 13: Commission Paid to Manufacturer’s Representatives, Years 1-5 19
MK Exhibit 14: Demand Curve – Parents 20
MK Exhibit 15: Optimistic & Pessimistic Sales Projections 20
OPERATIONS MANAGEMENT
OM Exhibit 1: Target Cost 23
OM Exhibit 2: Supplier Contact Information 24
OM Exhibit 3: Fulfillment by Amazon Fees 25
OM Exhibit 4: Factor Model 27
OM Exhibit 5: Facility Layout 28
OM Exhibit 6: Process Analysis Diagram 29
OM Exhibit 7: Increase in Demand 32
OM Exhibit 8: Machine Capacity Requirements 32
OM Exhibit 9: Year 3 Employees 34
OM Exhibit 10: Percentage of Shimano Sales 35
OM Exhibit 11: Inventory Levels 36
INFORMATION SYSTEMS
IS Exhibit 1: Oracle JD Edwards EnterpriseOne Total Costing 45
IS Exhibit 2: Raw Materials Defect Reports 50
IS Exhibit 3: Finished Goods Defect Reports 51
FINANCE
FE Exhibit 1: Minimum Rate of Return 55
FE Exhibit 2: NPV Profile 55
FE Exhibit 3: Accounting Breakeven 57
FE Exhibit 4: Optimistic & Pessimistic Assumptions Analysis 62
FE Exhibit 5: Weighted Average NPV & IRR 63

v
Appendices
MARKETING
MK Appendix 1: Manufacturer’s Representatives Commissions 66
MK Appendix 2: Focus Group & Interview Summaries 67
MK Appendix 3: Breakdown of Segmentation Tree 68
MK Appendix 4: IMC Schedule. Year 1 68
MK Appendix 5: IMC Schedule, Year 2 69
MK Appendix 9: IMC Cost Breakdown 71
MK Appendix 10: IMC Online Ads 73
MK Appendix 11: Magazine Ads 73
MK Appendix 12: Transit Advertisements 74
MK Appendix 13: Packaging – Landry’s 74
MK Appendix 14: Packaging 75
MK Appendix 15: Point of Purchase Display 75
MK Appendix 16: Creative Advertisement – Smartphone Application 76
MK Appendix 17: Trade Show Booth 76
MK Appendix 18: Trade Show Brochure 77
MK Appendix 19: Sports Equipment Revenue Breakdown 78
MK Appendix 20: Sales Projection – Parents 78
MK Appendix 21: Sales Projection – Grandparents 79
MK Appendix 22: CSR-Adjusted Purchase Intent 79
OPERATIONS MANAGEMENT
OM Appendix 1: House of Quality 80
OM Appendix 2: International Ocean Lead Time 80
OM Appendix 3: Lead Times 81
OM Appendix 4: Nationwide Rail Map 81
OM Appendix 5: Rail Prices 82
OM Appendix 6: Amazon Partnered Carrier 82
OM Appendix 7: Storage Fee for Amazon 83
OM Appendix 8: Facility Brochure 83
OM Appendix 9: Center of Gravity 84
OM Appendix 10: Employees for Year 1 84
OM Appendix 11: Throughput Times 85
OM Appendix 12: Forecasted Demand 85
OM Appendix 13: Yearly Demand 86
OM Appendix 14: PERT Distribution 86
OM Appendix 15: Inventory Equations 87
OM Appendix 16: Optimistic and Pessimistic Assumptions 87
INFORMATION SYSTEMS
IS Appendix 1: Critical Success Factors 88
IS Appendix 2: Value Chain 89
IS Appendix 3: Marketing Best of Breeds’ Breakdowns 90
IS Appendix 4: Marketing Best of Breed Decision Matrix 90

vi
IS Appendix 5: Operation Management Best of Breeds’ Cost Breakdowns 91
IS Appendix 6: Operations Management Best of Breed Decision Matrix 91
IS Appendix 7: Finance/Accounting Best of Breed Decision Matrix 92
IS Appendix 8: Finance/Accounting Best of Breed’s Cost Breakdowns 92
IS Appendix 9: Microsoft Dynamics’ GP Total Costing 93
IS Appendix 10: Microsoft Dynamics’ GP Costing Assumptions 93
IS Appendix 11: Selected Oracle EnterpriseOne Modules 94
IS Appendix 12: Oracle EnterpriseOne Costing Assumptions 94
IS Appendix 13: Enterprise Resource Planning Decision Matrix 95
IS Appendix 14: ERP vs. BOB Decision Matrix 95
IS Appendix 15: Hardware & Telecommunication Total Costs 96
IS Appendix 16: Entity-Relationship Diagram 96
IS Appendix 17: ERD Entities 97
IS Appendix 18: ERD – Access View 98
IS Appendix 19: Process Model 98
IS Appendix 20: Website Landing Page 99
IS Appendix 21: Meta Description 99
IS Appendix 22: Keywords 100
IS Appendix 23: Banner Ad Costs 100
FINANCE
FE Appendix 1: Financial Company Comparable 101
FE Appendix 2: Breakeven Analysis 102
FE Appendix 3: Sensitivity Analysis 103
FE Appendix 4: Summary of Scenario Analysis 104

vii
Executive Summary
The SmartHelmet is a revolutionary children’s bike helmet that not only protects
children’s heads from severe head injuries, but also ensures that they have their helmet with them
while riding their bikes. The SmartHelmet consists of two pieces: a helmet and a brake
attachment piece. Our product’s core functionality involves utilizing RFID technology in the
bike helmet and the brake. When the helmet is within 2 meters of the brake attachment piece, the
brake releases and allows the bike to be used freely. However, when the helmet is not within 2
meters of the brake attachment piece, the brake remains locked and the bike will not move.
While our closest competitor utilizes RFID technology to allow a parent to safely stop a child’s
bike via a remote control, SmartHelmet is the only bike product in the market that combines the
protective qualities of a helmet and the technological benefits of RFID proximity sensor
technology.
The market we will be entering is the protective sports equipment market. Modern helmet
technology has the power to keep children safer and prevent traumatic head injuries that result
from biking accidents. According to the Centers for Disease Control and Prevention, children
and young adults (ages 4-24) account for 60% of all bike related injuries seen in U.S. emergency
rooms.1
Furthermore, in an abstract presented at the most recent American Academy of
Pediatrics National Conference, a study analyzing bike accidents involving children concluded
that only 11.3% of children were wearing their helmets when the accident took place.2
The best
way to reduce head injuries is by requiring children to wear their helmets. Thus, SmartHelmet
allows parents to have control over whether or not their children have their helmets with them
when they ride their bikes.
As a company, we will need capital to start production. In order to collect this investment,
we expect to receive 25% of our capital needs through friends, family and management, with the
remaining 75% coming from outside investors. Initial working capital will be used to rent space,
purchase manufacturing equipment, and hire workers. We will also use the capital to purchase
information systems and kick-start our marketing efforts for the SmartHelmet.

1
"Bicycle-Related Injuries," Centers for Disease Control and Prevention, 28 May 2013. Web. 23 Nov. 2014.
<http://www.cdc.gov/HomeandRecreationalSafety/Bicycle/>.
2

American Academy of Pediatrics, “Only 11 Percent of Children Involved in Bike Accidents Wear a Helmet,”
American Academy of Pediatrics. 26 Oct. 2013. Web. 11 Nov. 2014.

viii
The target customers for our product are parents and grandparents of children between
the ages of 5 and 15. We have set four main marketing goals for our company to accomplish
within the first five years of business. Our goals are as follows: enhance the perceived value of
our brand, build a friendly and memorable brand image, achieve total awareness of 60% by Year
5, and achieve an ACV of 34% by Year 5. In order to accomplish these goals, we have
developed both push and pull marketing strategies that utilize the placement of advertisements
and promotional campaigns in magazines, in online blogs, on buses and bus stops in some of the
most active biking cities in the U.S, as well as in trade shows and trade magazines. We plan to
achieve an ACV of 34% by using Amazon as our online selling platform, in addition to relying
heavily on independent retailers, chain stores, and mass merchandisers. This multi-channel
strategy will allow us to reach a large number of customers and cultivate a brand image that
emphasizes our unique approach to children’s bike safety.
Operations management is an extremely important functional area of our business,
especially since SmartHelmet’s success rests heavily on product design and performance. Our
product design balances the needs of customers with the necessary manufacturing engineering
characteristics in order to deliver a bike helmet that combines safety, durability, and
attractiveness to children. We have found suppliers who will deliver the necessary materials and
fixed assets we need at a reasonable cost, and through both a factor analysis and a center of
gravity calculation, we found an ideal facility in Denver that will maximize our productive
capacity and allow for future expansion. By creating an aggregate plan, we forecasted
appropriate demand for each month and outlined the periods where we will need to add staff and
fixed assets in order to accommodate increases in demand. Lastly, we have created and will
implement acceptance sampling and statistical analysis processes to reduce the amount of
defective finished goods we will manufacture, as achieving a low defect rate is one of our
organizational goals as a manufacturer of a safety product.
In addition, our company’s information system links together every functional area.
Through the creation of four critical success factors (CSFs) and their corresponding business
processes, we outlined what organizational goals we hope to achieve. The two primary CSFs –
Achieving a 2% and 5% defect rate for finished goods and raw materials respectively, and
increasing sales by 30% in Years 1-3, and 15% Years 4 and 5 – will determine the future of
KinderHelm Inc. We conducted extensive research to choose our hardware, software, and

ix
telecommunications requirements that best fit the needs and goals of all other functional areas
and of our company as a whole. Our choice of Oracle’s JD Edwards EnterpriseOne as our ERP
software provides us with the most versatility to allow for future expansion as SmartHelmet’s
sales increase.
In terms of financial results, the SmartHelmet represents a relatively low risk investment
with potential for high return. The total required investment is $572,310, which is expected to
yield an NPV of $506,657 with a discount rate of 25% and an IRR of 48.3%. We expect 75% of
the initial investment to come from outside investors and the remainder to come from friends,
family, and management. Starting with sales of $792,664 in Year 1, we hope to reach $3,300,999
by Year 5. Similarly, by assuming a loss of $69,827 in Year 1, we expect to have net income of
$960,310 by Year 5. To adjust for variability in results, we developed a conservative optimistic
case as well as a pessimistic case. Given changes to our most sensitive and uncontrollable
variables, we estimated a weighted average NPV of $463,679 and IRR of 46.4% based on the
weighted average of our free cash flows.
Through the integration of all four of the aforementioned functional areas, SmartHelmet
and KinderHelm Inc. will not only generate returns for investors but will also create value for
society. Our organizational goal as a company is to promote the safety of children while riding
their bikes and to enhance the peace of minds of their parents/guardians, and we strongly believe
that SmartHelmet is the next revolutionary bike safety product.

x
Corporate Social Responsibility
As a company, we will implement two corporate social responsibility (CSR) initiatives in
Years 1-5. The two initiatives include utilizing 90% recyclable packaging and partnering with
various biking advocacy and non-profit organizations to promote wearing helmets and safe bike
riding. The first initiative raises intent to purchase by 0.9% among parents and by 1% among
grandparents. The second initiative raises intent to purchase by 1.7% among parents and by 1.3%
among grandparents. It is also worth noting that we are dedicating the majority of our creative
advertising budget to partnering with biking advocacy groups in Denver during National Bike
Month in May to host various biking events, which will be discussed in greater detail in the
marketing section of our plan.
We chose to pursue recyclable packaging as a CSR initiative because of its
environmental benefits and because it is a trend sweeping through the sports equipment industry.
For example, Recreational Equipment Inc. (REI), one of our potential retailers, is currently
focusing on “unpackaging products” in an attempt to reduce packing materials, leading to some
of its products simply not having packaging at all.3
In addition to REI, Trek Bicycles, one of our
competitors, uses 70-90% recycled packaging, and when recycled packaging is not available, the
company uses “material sourced from certified sustainable forests.”4
As the above proves,
sustainable packaging is becoming a way of life within the sports equipment industry rather than
just a trend. By pursuing a goal of 90% recyclable packaging, we will incorporate this lifestyle
into our business model and decrease our impact on the environment.
Our second CSR initiative, partnering with biking advocacy groups and non-profit
organizations to promote safety in all aspects of biking, stems from the SmartHelmet's focus on
safety. Therefore, working to promote biking safety is a natural fit for our company, as our
product will hopefully be at the forefront of this trend. A few of the groups we are looking at
partnering with are PeopleForBikes, Bike New York, BikeDenver, Youth Educational Sports,
Inc., CYCLE Kids, and the League of American Bicyclists. Not only will working with these
groups allow us to advocate for a safer, more bike-friendly America, it will also give us the
opportunity to raise awareness for our product as it fits in perfectly with the goals of each of

3
Starre Vartan, "Packaging the Future: REI “Unpackages” Five of Their Popular Products." 21 Dec. 2011.
<http://inhabitat.com/packaging-the-future-rei-unpackages-five-of-their-popular-products/>.
4
Trek Bicycle Corporation, "We Believe in Bikes." 22 Nov. 2014.
<http://www.trekbikes.com/us/en/company/products/>.

xi
these organizations. However, our main goal in partnering with these groups is to increase the
number of helmets worn by children and adults in the U.S.
Our CSRs aim not only to increase our company’s public image, but also to promote
safety and environmental awareness. Because we are a part of the biking industry, which places
such a strong emphasis on safety and environmental responsibility, our CSR initiatives are
necessary to our success.

1
Introduction
The SmartHelmet is an interactive children’s bike helmet that uses state of the art
technology to prevent children from riding their bikes without having their helmets.
SmartHelmet is the only helmet in the market that uses proximity sensor technology—the bike
brakes only unlock when the helmet is within 2 meters of the bike. When the helmet is outside of
the 2-meter sensor range, the brakes lock, thus preventing the child from riding the bike.
The technological advances in the radio frequency identification (RFID) industry and its
increasing use in everyday life will have the most profound impact on our product launch. This is
due to the fact that RFID is a rapidly evolving technology, one that has far from reached its full
potential.5
Therefore, we must acknowledge the volatility of this technology and plan
accordingly to ensure our product does not become obsolete the moment it hits the market. In
order to ensure our survival, we will hire an RFID specialist, whose job will be two-fold: first, he
is in charge of syncing all helmet and brake attachments as a worker on the assembly line, and
second, he must be up-to-date on all RFID-related information so that he can readily inform
management if a breakthrough occurs or if an issue arises.
In addition, we found some surprising statistics that illustrate why SmartHelmet is such
an important investment for a child’s future safety. “Young cyclists are more likely than adult
cyclists to die of head injuries,”6
and yet this demographic is the least likely to wear helmets.7
Helmets save lives, but many people, particularly children, are still very reluctant to wear them,
as children 11-19 “have the lowest rate of bicycle helmet use” at 31%.8
Based on this research,
not only will we market our product as the safest helmet on the market, but we will also take
steps to differentiate ourselves as a company that impacts society in a positive way by taking part
in bike safety campaigns and initiatives that promote wearing a helmet while riding a bike.
The product category in which we will compete, the protective sports equipment industry,
comprises helmets, pads, gloves, and shin guards and yields around $282 million in annual

5
Pat Toensmeier, “Report Predicts Major Growth in RFID Market,” Industry News. Oct 2013. Web. 16 Nov 2014.
<http://news.thomasnet.com/procurement/2013/10/28/report-predicts-major-growth-in-rfid-market>.

6
Children’s Safety Network, “Bicycle Helmet Statistics,” Bicycle Helmet Statistics. June 2009. Web. 24 Nov 2014.
<http://www.helmets.org/stats.htm#child>.
7
JT Finnoff and Laskowski, Altman, and Diehl, “Barriers to Bicycle Helmet Use,” National Center for
Biotechnology Information. U.S. National Library of Medicine, July 2001. Web. 24 Nov. 2014.
<http://www.ncbi.nlm.nih.gov/pubmed/11433083>.
8
Ibid.

2
revenue, 65% of which comes from helmets.9
Our direct competitors include the following firms:
Minibrake, Brontrager, Bern, and Bell, all of whom offer unique, safe, and durable children’s
bike products, as depicted in Intro Exhibit 1:
Intro Exhibit 1: SmartHelmet and its Competitors
Name Price Description Strength Weakness
SmartHelmet $ 60.00 Combination of
helmet and rim brake
equipped with
proximity sensors.
Automatic design that
increases the
likelihood of children
wearing helmets when
riding their bikes
Since our product is a
children’s safety product
with many technological
components, it is more
susceptible to electronic
defects and potential
lawsuits.
Minibrake €109.00 Remote-controlled
brake that allows
parents to stop the
bike with the push of
a button.
Parents can stop the
children from riding
too fast by controlling
the brake.
This product cannot
perform its function
without the presence of a
parent or guardian
Brontrager
Solstice Youth
Helmet
$39.99 In-mold composite
skeleton, proprietary
LockDown strap
dividers, and a
Micro-Manager II Fit
System
This product is soft,
comfortable, and
washable; in addition,
it absorbs moisture.
This product does not
ensure that children have
their helmets with them at
all times when riding their
bikes.
Bern Nino Zip
Mold Helmet
$45.00 Tough polycarbonate
shell with air channel
design
Air channel design
provides ventilation
and expels heat for
maximum comfort.
bikes.
Bell Faction
Helmet
$45.00 Acrylonitrile
butadiene styrene
hard plastic shell and
dual density
Expanded
Polystyrene foam.
This product is
certified for both
bicycle and skate use,
and its smooth, sleek
design makes it
attractive to kids.
bikes.
All of our other competitors, with the exception of MiniBrake, are manufacturers of
assorted biking accessories, and their youth helmets are the products that we will directly
compete with. Unlike our competitors’ traditional helmets that require supervision to ensure
children actually wear them, our SmartHelmet utilizes the rapidly progressing RFID sensor
technology to offer the unique advantage of safety assurance. For the purposes of our business
plan’s analyses and conclusions, we define SmartHelmet’s “high-quality” as achieving a 5% or
less defect rate for raw materials and a 2% or less defect rate for finished goods while also
empowering our employees to have pride in the work they do. Achieving these goals and
monitoring our progress towards these goals will help ensure that SmartHelmet lives up to the
features and functions it espouses and adds value to society as a whole.

9
Britanny Carter, “Protective Sport Equipment Manufacturing in the US.”, IBISworld, 2014,
<http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=5324>.

3
Marketing Objectives
Enhance Perceived Value of Brand
While we understand that entering the highly saturated protective sports equipment
industry will be difficult, we are confident that the unique safety features of our bike product will
differentiate it from our competitors, including MiniBrake and Bontrager.10
According to
IBISWorld, one of the keys to success in this industry is the “ability to adopt new technology,”
as “patented technology can be an advantage when competing with imported products.”11
Therefore, we believe that SmartHelmet’s utilization of proximity sensor technology will be the
driving force behind enhancing the perceived value of our brand.
Our systematic advertising and promotional campaigns over the next five years will
highlight SmartHelmet’s value to society, namely emphasizing that it safeguards what matters
most: children. Thus, SmartHelmet’s slogan – “Protecting what matters most” – arose from the
idea that the product gives parents/grandparents a little more peace of mind when their
children/grandchildren embark on their next bike ride.
Build Friendly & Memorable Brand Image
Our second marketing objective involves establishing the SmartHelmet brand image. In
SmartHelmet’s case, the consumer and customer are two completely different people, as our
product is designed for children (the consumer) but purchased by parents/grandparents (the
customer). Therefore, our goal is to create a brand image that balances fun and safety. While it is
unrealistic to expect our product to be in our target markets’ evoked sets in the first four years,
we aim to get it there by Year 5.
We want parents/grandparents to feel that their children/grandchildren are safe, but we
also want the children to associate SmartHelmet with the joy of riding a bike. Even though the
entire premise of our product is that children cannot ride their bikes unless they have their
helmets, our brand image will not emphasize any “restricting” features.
Achieve Total Awareness of 60% by Year 5
We realize it is critical for a small startup company to generate enough awareness in
order to obtain growth in revenues and profits during its early years. In order to achieve our 60%

10
Britanny Carter, “Protective Sport Equipment Manufacturing in the US.”, IBISworld, Pg. 19, 2014
11
Ibid.

4
awareness goal, we will create a detailed integrated marketing communications (IMC) schedule
to outline our push and pull marketing strategies and their corresponding expenses.
We will place ads in family-oriented magazines, various mom-focused blog sites, as
well as on the backs of buses in select cities to cater to our target market and familiarize the
public with the SmartHelmet brand. We will also establish a strong presence on social media, all
while utilizing search engine marketing techniques to increase our online presence.
Achieve ACV of 34% by Year 5
SmartHelmet’s sales, to a great extent, depend on its availability in retail stores. We will
work with manufacturer’s representatives and their resources to gain access to a large number of
independent retailers (See MK Appendix 1). In Year 3, we will begin using our own sales force to
gain access to chain sporting goods stores and mass merchandisers. In Year 5, our goal is to
make SmartHelmet available in the three largest chain sporting goods stores – Sports Authority,
Academy Ltd, and Dick’s Sporting Goods – and the two largest mass merchandisers – Target
and Walmart. Obtaining sales in these chain stores, in conjunction with the sales earned via
independent retailers and our online outlets, will help us achieve a total ACV of 34% by Year 5.
Market Research
Primary Data
The most common trend we saw in our recorded responses from the one-on-one
interviews and the focus group involved the price sensitivity of customers. They were not willing
to pay significantly more for the additional benefits our helmet provides, even though they
perceived the quality to be higher (See MK Appendix 2).
Moreover, the role children play in their parents’ or grandparents’ purchasing decisions
is larger than we expected. Many of the interviewees suggested that we should expand the color
options of our helmet because children have no desire to wear a helmet they find unappealing.
Therefore, the increased role children play in their parents’ purchase intent prompted us to
provide the helmet in four colors – black, white, pink, and blue.
Secondary Data
The protective sports equipment industry yields around $282 million in annual revenue,
65% of which comes from helmets.12
While the industry’s revenue is only expected to grow 0.8%

12

5
from 2014 to 2019, disposable income continues to rise, implying that consumers are more likely
to purchase “price-premium, domestic goods.” An increase in health and fitness awareness in the
United States, as well as a modest increase in sports participation over the past five years, will
also contribute to the industry’s growth.13
However, competition from “low-cost exports in a saturated market” has limited the
growth of the products produced in the U.S. Outsourcing is a major trend in this industry,
especially if manufacturers want to stay competitive and take advantage of lower labor costs.14
When analyzing our secondary data, we came across many statistics that support the
importance of wearing a helmet while biking, thus increasing SmartHelmet’s value to society.
According to an article published in the Journal of Safety Research, “Children ages 5-14 years
have the highest rate of bicycle-related injuries in the country.”15
While 21 states passed laws
that require young bike riders (typically aged 17 and younger) to wear their helmets while
biking,16
more than half of children in the U.S. do not wear their helmets.17
The arguments in
favor of wearing helmets are overwhelmingly convincing, and we want to capitalize on this
constant demand.18
Market Segmentation
Collecting and analyzing secondary data was important for us to determine
SmartHelmet’s primary target markets. We used demographic factors to classify and separate our
two chief purchasers – parents and grandparents. Since the end users of our product are children,
we determined 5 to 15 to be an appropriate age range to target especially because teenagers 16
and above have more freedom when it comes to riding their bikes.
We began the segmentation process by filtering the American population by households
with household income greater than or equal to $30,000. Since SmartHelmet offers more benefits

13
Britanny Carter, “Protective Sport Equipment Manufacturing in the US.”, IBISworld, Industry Report 2014
14
Ibid.
15
Ann M. Dellinger. “Bicycle Helmet use among children in the United States: The effects of legislation, personal
and household factors.” <http://www.sciencedirect.com.ezproxy.bu.edu/science/article/pii/S0022437510000666>.
16
Insurance Institute for Highway Safety. “Pedestrians and bicyclists.”
<http://www.iihs.org/iihs/topics/laws/bicycle-laws/table-bicycle-helmet-use?topicName=pedestrians-and-bicyclists>.
Ann M. Dellinger. “Bicycle Helmet use among children in the United States: The effects of legislation, personal and
household factors.” <http://www.sciencedirect.com.ezproxy.bu.edu/science/article/pii/S0022437510000666>.
18
Pacific Institute for Research and Evaluation. “Injury Prevention: What Works? A Summary of Cost-Outcome
Analysis for Injury Prevention Programs (2014 Update.”
<http://www.childrenssafetynetwork.org/sites/childrenssafetynetwork.org/files/InjuryPreventionWhatWorks2014Up
date%20v9.pdf>.

6
than normal helmets, it is priced higher (retail price for Years 1-5 is $60). Therefore, we are
assuming that households with incomes lower than $30,000 will not be willing to purchase our
product. We chose to target households because it allows us to target mothers, fathers, and single
parents.
We then further divided this segment into households led by parents or grandparents. As
mentioned above, we will only target those households led by parents with children ages 5 to 15
or those led by grandparents with grandchildren ages 5 to 15.
Even though a greater percentage of grandparents than parents would “Probably Buy” or
“Definitely Buy” our product at the price they expect it to be sold in retail stores (see MK
Exhibit 1), when we asked who was more likely to buy our product, the overwhelming answer
was parents (see MK Exhibit 2). We attribute this discrepancy to the fact that grandparents are
more willing to spend extra money on a product for their grandchildren, while parents are more
likely to buy safety products for their children because they are generally the primary caretakers.
MK Exhibit 1: Parents vs. Grandparents Purchase Intent
MK Exhibit 2: Who is More likely to Buy SmartHelmet

This data helped us establish parents as our primary segment, which we call “Safety
Freaks.” Grandparents, or “Anxious Ancestors,” are our secondary segment as they are less
likely to purchase our product, but nevertheless will increase our product’s purchase intent and
unit sales, a conclusion that is supported by our survey results.
We used population statistics from the 2012 U.S. Census Bureau to determine category
sizes, including the size of the U.S. population, the percentage of parents in the U.S. population,
and the percentage of children aged 5 to 15. Additionally, we used Peter Francese’s “The
Grandparent Economy” report to determine the number of grandparents in the U.S., which came
Parents(or(Grandparents
Definitely(Not
Buy
Probably
Not(Buy Not(Sure
Probably
Buy
Definitely
Buy Grand(Total
Parents 11.51% 19.42% 28.78% 100.00%
Grandparents 4.55% 18.18% 25.00% % % 100.00%
Grand(Total 9.84% 19.13% 27.87% 36.61% 6.56% 100.00%
Purchase(Intent
Parents 79.41%
Grantparents 20.59%
Grand
Total 100.00%
Who
You
Think
is
More
Likely
to
Buy
This
Product

7
out to 70 million.19
One assumption we used to determine the percentage of parents with children
aged 5 to 15 and the percentage of grandparents with grandchildren aged 5 to 15 is that there are
1.5 children per parent in the U.S., as illustrated in the 2012 Census (See MK Appendix 3).20
Next, since SmartHelmet is a bike accessory, purchasers of our product will have access
to bikes, thus making bikes and SmartHelmets complementary goods. If a household does not
have access to a bike, it is highly unlikely that this household will buy our product. For this
reason, we further filtered the attributes of our target markets to only include those households
that have access to bikes. Based on a survey conducted by the National Survey of Bicycle and
Pedestrian Attitudes and Behavior average, 57.4% of households with annual income greater
than $30,000 have access to a bike.21
Thus, access to a bike serves as our final determining factor
for our target segments.
MK Exhibit 3: Full Segmentation Tree
In order to generate sufficient revenues and profits, we must correctly target those
segments that are substantial in size, easily reachable, and responsive to our unique selling
proposition. There are a total of 2.83 million households in our Safety Freaks segment and 3.54
million households in our Anxious Ancestors segment. We also assume that our target segments
will grow at the same rate as the total U.S. population, which is 0.8% per year.22

19
Peter Francese. “The Grandparent Economy.” Grandparents.com, 2014,
<http://www.grandparents.com/grandparent-economy>
20
Rose M. Kreider, “America's Families and Living Arrangements: 2012.”, United States Census Bureau,2014,
<http://www.census.gov/prod/2013pubs/p20-570.pdf >
21
Dawn Royal and Darby Steiger, "Key Findings: Bicyclist Attitudes and Behaviors." National Survey of Bicyclist
and Pedestrian Attitudes and Behavior. Vol. 1. 2008. 32. Web. Pg. 2 file: <///home/chronos/u-
6f07efb8c7eca9d37261516b05c90e721112abaf/Downloads/810971.pdf>
22
"Population Growth (annual %)."Data. The World Bank. Web. 22 Nov. 2014.
<http://data.worldbank.org/indicator/SP.POP.GROW>.

8
Product Positioning
SmartHelmet’s positioning statement is as follows: “For parents and grandparents of
children ages 5 to 15 who want to ensure that their children have their helmets at all times while
biking, the SmartHelmet is a children’s bike product that utilizes proximity sensor technology,
encourages continual safety, and is unlike a generic children's helmet.” The safety of children is
the most crucial concern of households in our target segments, as proven by the fact that 176 out
of our 183 survey respondents ranked “safety provided by the helmet” as “very important” or
“extremely important.” Therefore, our company’s goal is to make the SmartHelmet the safest
bike helmet on the market. As our perceptual map demonstrates, we are well on our way to
achieving this goal, as potential customers ranked the SmartHelmet highest amongst our main
competitors in terms of safety.
MK Exhibit 4: Safe vs. Durable Perceptual Map
Communications, Budget, & Creative Advertising
Integrated Marketing Communications Schedule (See MK Appendices 4-9)
Our Integrated Marketing Communications (IMC) schedule details what we believe to be
the best possible combination of push and pull marketing strategies for creating awareness within
our two target segments, Safety Freaks and Anxious Ancestors. While the IMC aims to reach
both segments, more effort and money will be put into generating awareness within the Safety
Freaks segment because they are our primary target. The main pull vehicle through which we
will generate awareness is magazine advertisements. Moreover, we will rely heavily on word of

9
mouth to generate awareness within our target segments after Year 1. Based on our calculations,
word of mouth should generate more awareness than the IMC depicts, and therefore we can
count on higher awareness numbers than shown in our IMC schedule.
MK Exhibit 5: Word of Mouth Calculations
Lastly, we believe our push marketing strategy sets us up for success because we will
display the SmartHelmet at three of the largest trade shows within the outdoor recreation and
child accessories industries.23
Pull Marketing: Year 1
In Year 1, we will place four full-color, one-third-page advertisements in Scholastic
Parent & Child at a cost of $50,000 each. This will provide us with a base awareness of 4.6% in
the Safety Freaks segment and 3.7% in the Anxious Ancestors segment. In addition to these
magazine ads, we will use online advertisements, point of purchase displays, fairs and expos,
transit posters, public relations, and creative expenses to reach our target segments and arrive at
11.5% total awareness and 10.6% total awareness for our respective segments.
MK Exhibit 6: IMC, Pull Marketing Year 1

23
Absolute Exhibits, Inc. "Top 100 USA Shows." <http://www.absoluteexhibits.com/Top-100-USA-Shows/>.

10
Our Year 2 pull marketing expenses will actually decrease by about $250 to $339,118
even though we are not changing any of our marketing vehicles. This decrease occurs because
we will not have to pay for the cost of the trade show booth in Year 2, which will cause a
decrease in the overall cost of creative expenses. We chose not to change any of our marketing
vehicles in Year 2 because we generate word of mouth, which yields a high awareness (as
depicted in MK Exhibit 5 above). Additionally, our online marketing awareness numbers will
increase to 3%, and we will see 1% carryover awareness from Year 1. Combined, this will lead
to an increase in our total Year 2 awareness to 15.5% in the Safety Freaks segment and 15% in
the Anxious Ancestors segment, all at a lower cost to us.
We will increase our pull marketing expenses starting in Year 3, as we expand our transit
marketing into Seattle. This is the only adjustment we will make, but it will affect online and
creative expenses because they are percentages of the pull marketing costs and total marketing
costs respectively (see MK Exhibit 8 below). We chose to increase our pull marketing expenses
in Year 3 because, while word of mouth will generate a significant amount of awareness for us,
we have the capital and we want to maximize sales over our first five years. These changes, in
addition to competitors entering the market, will lead to the awareness numbers increasing to
25.1% for Safety Freaks and 24.1% for Anxious Ancestors.

11
Our pull marketing strategy will undergo three changes in Year 4. We will expand our
transit advertisements into Minneapolis,24
replace our fairs with four new fairs that reach a larger
market, and switch our magazine advertisement from Scholastic Parent & Child to Parents
magazine. While these adjustments will lead to increased pull marketing costs, they will also
lead to increased awareness, which in turn will lead to increased sales. The switch from
Scholastic Parent & Child to Parents will affect the awareness numbers the most, as Parents
reaches a much larger market than Scholastic Parent & Child.25
Parents magazine has a total
circulation of around 2.2 million, while Scholastic Parent and Child circulation is around 1.3
million.26
Once again, while our word of mouth awareness numbers will increase significantly in
Year 4, we feel that an increase in pull marketing expenses is acceptable because our awareness
numbers increase to 30.8% and 29.1% respectively.

24
Rodale, Inc. "America's Top 50 Bike-Friendly Cities." <http://www.bicycling.com/news/advocacy/america-s-top-
50-bike-friendly-cities?slide=1>.
25
Alliance for Audited Media. "MAGAZINE Publisher’s Statement Six Months Ended June 30, 2013." 30 June
2013. Web. <http://www.meredith.com/mediakit/parents/print/pdfs/Parents-ABC.pdf>
26
Scholastic, Inc. "Scholastic: Parent&Child." <http://www.scholastic-parents.com/pdf/SPC_Print.pdf>.

12
In Year 5, we will replace the New York Bike Expo with the New York Toy Fair. We
chose to make this change because the Toy Fair reaches a larger market, we will have the capital
to participate, and it will increase our awareness numbers. Therefore, by Year 5, our overall
awareness for our segments will be 33.3% and 31.6% respectively.

13
Pull Marketing: Advertisements (See MK Appendices 10-12)
Our main banner ad (See MK Appendix 10 – Leaderboard) uses primary colors, namely
blue and yellow, to grab the viewer’s attention. There is reflective symmetry via the sensor
waves to direct the viewer’s attention to the communication occurring between the bike brake
and the helmet – the core functionality of our product. The two lines of copy – “SmartHelmet is
a children’s bike safety product that utilizes proximity sensor technology. The bike brakes only
unlock when the helmet is within 2 meters of the bike.” – further explain the product’s core
function.
Our full color ad (See MK Appendix 11 – Full Color) is the only piece of our advertising
portfolio that places the SmartHelmet directly in the context of intended use. The ad displays a
happy young boy sitting on a bike wearing a helmet, with SmartHelmet’s slogan – “Protecting
what matters most” – displayed in the top left corner of the advertisement. Overall, the full color
ad enhances the power of our marketing efforts, especially in Years 1-3, because we will use this
ad to great effect in Scholastic Parent and Child magazine.
Pull Marketing: Packaging
We based SmartHelmet’s packaging design on helmet packaging that currently exists in
retail stores (See MK Appendix 13). Therefore, our helmet will be placed in a box with an open
face covered in bright, primary colors. This allows both the parents and children to touch the
bike helmet prior to making the final purchase, a valuable part of the decision making process for
a sports equipment product.
Our 100% cardboard box, covered on all four sides with the same blue color as was
used in our banner and 4-color ads, secures both the helmet and rim brake in place with zip ties.
Printed on the front of the box are our company name, logo, slogan, and product name (See MK
Appendix 14). Using consistent colors, images, and fonts will help customers remember
SmartHelmet when exposed to these same images over time, thus relating to our organizational
goal of achieving 60% awareness by Year 5.
Pull Marketing: Public Relations
Throughout our five years of marketing, public relations will cost us $10,000 per year
and generate 1% awareness per year. We will generate awareness by reaching out to magazines
and blogs, with a focus on the parenting, children, and biking areas. The public relations kits that
we will send to these magazines and blogs will consist of sample SmartHelmets, along with a

14
brief description of the product, what our company does, and our CSR initiatives. It is important
that these media outlets know we are not only concerned with making a profit, but also have
goals to improve the community and the environment.
Pull Marketing: Online Marketing
Our online marketing targets three blogs – SNEWSnet.com (a trade blog), Cool Mom
Picks, and Family Education – and uses Google AdWords in order to gain awareness of up to 7%
in Year 5. The blogs we target will allow us to advertise via banner ads, floating ads, skyscraper
ads, and more. Google AdWords will allow us to increase our ranking on Google’s search engine
results based on the amount of money we bid and on certain search words, such as “bike helmet”
(See IS Appendix 18). Please consult the information systems section for a more in-depth
description of our online marketing plan (pg. 52).
Pull Marketing: Point of Purchase
We will use one consistent point of purchase (POP) display throughout our five years.
Our POP will feature a colorful design and a child riding a bike on top, allowing the display to
echo our advertising goal of colorful simplicity aimed at attracting all potential consumers (See
MK Appendix 15).
This display will generate 1% awareness per year and will cost a total of
$20,000 per year. We plan to use our POP displays during April, May, November, and December
because these are prime selling months for bikes,27
as they are in close proximity to two key bike
events: National Bike Month (May) and the winter holidays.28
Pull Marketing: Creative Expenses
We will use two different creative advertising strategies in order to gain a maximum of
2.2% additional awareness in Year 5. Our first creative strategy is the construction of a
smartphone application for children (See MK Appendix 16). The application will be a memory
game, similar to the card game, “Concentration.” The goal of this marketing strategy is to raise
awareness within the children’s segment because they are our main influencers. If children
discover our product via this app, their parents and grandparents will take notice. The creation of
this application will utilize most of our Year 1 creative advertising budget, but will cost us very
little in Years 2-5.

27
Shimano, Inc. “Summary of Financial Results.”
<http://www.shimanousa.com/content/Corporate/english/index/financial-infomation/summary-of-financial-
results.html>.
28
The League of American Bicyclists, "League of American Bicyclists."<http://bikeleague.org/bikemonth/>

15
Our second creative advertising strategy involves partnering with bike stores and biking
advocacy groups in Denver during National Bike Month in May to host various events that raise
awareness of both the joys of biking and the safety precautions that must be taken while biking.
Some groups we are hoping to partner with are BikeDenver and PeopleForBikes, and, in Year 5,
USA Cycling, because we are hoping to sponsor some of the children’s events held in the USA
Pro Cycling Challenge. Not only will this strategy increase our awareness numbers, it will also
add to our corporate responsibility initiatives, which in turn will make customers more receptive
to the SmartHelmet. We will only partake in one event in Year 1, as most of our creative budget
will be dedicated to creating our application, but we will participate in two events during Years 2
and 3, and at least three during Years 4 and 5.
Push Marketing: Trade Shows
We plan to participate in three trade shows throughout our five years, starting with
Playtime in New York ($6,975) and Interbike in Las Vegas ($8,820) in Years 1-3. After this
point, we will replace Interbike with the Outdoor Retailer Summer Market in Salt Lake City
($9,450). We chose these trade shows because they are the top trade shows in their respective
industries, meaning that we will generate more awareness, while also attracting the industries’
largest players. The reason for the switch in Year 4 is that the Outdoor Retailer expo garners
more national attention and also attracts more exhibitors and industry representatives.29
Our trade
show booth will be the same at each trade show because it fits in with both the children’s toy
industry and the bike industry (See MK Appendix 17-18).
Push Marketing: Trade Magazines
We plan to place advertisements in the same two trade magazines throughout Years 1 to
5, at a cost of $14,420 per year. The two magazines we will advertise in are Dealernews and
Bicycle Retailer, both of which target the bike industry, but still display children’s accessories.
We chose these two magazines because we believe that we must be accepted by the biking
industry if SmartHelmet is ever to become successful.
Effectiveness of Communication
Overall, we will measure the effectiveness of our communications strategies depicted in
the IMC schedule via multiple metrics, including customer relationship management (CRM)

29
Outdoorretailer.com. "Exhibitor List + Floor Plan." Exhibitor List + Floor Plan. Outdoorretailer.com, 2013. Web.
23 Nov. 2014. <http://www.outdoorretailer.com/summer-market/show-info/exhibitor-list-floor-plan.shtml>.

16
software, click-through rate, Google Analytics, and feedback from industry representatives at
trade shows. Our main mode of analysis will come from the CRM module of our ERP software,
which will provide us with information regarding sales. We can use the information this software
generates to analyze if our marketing strategies are affecting sales and make adjustments
accordingly. Additionally, we will use the feedback from industry representatives at the trade
shows to improve our product and our marketing strategies. Lastly, we will use click-through
rate and Google Analytics to measure the effectiveness of our online marketing strategies. Please
refer to the information systems portion of this plan to see a more detailed description of how we
will use these metrics to measure our online marketing effectiveness (pg. 52).
Channels & Pricing
In 2012, the protective sports equipment industry generated $282.3 million in revenue.30
To effectively increase our product’s market presence, we will adopt a multichannel strategy by
selling through online retailers, independent retailers, chain sporting goods stores, and mass
merchandisers.
We will use Amazon as our online selling platform throughout Years 1-5 because of its
heavy online traffic and relatively lower margin of 35% (versus a 50% margin to independent
retailers). Since Amazon is one of the largest online retailers in the world, its website will raise
the awareness of our product.31
However, we will depend less on this online channel in later
years as we enter chain stores in Year 3 and mass merchandisers in Year 4, since these channels,
together with independent stores, earn 82% of total industry revenue (See MK Appendix 19).
Starting in Year 1, we will cooperate with manufacturer’s representatives in order to
gain access to independent retailers. Our representatives can reach up to 80% of all independent
stores every year, and eventually 30% of those stores will carry our product. Since independent
retailers account for nearly 23% of industry sales, we will continue our cooperation with them
for all five years via the manufacturer’s representatives.32
We plan to enter chain sporting goods stores in Year 3, as we will have gained sufficient
market acceptance. We assume that the chain stores we enter will place our product in 50% of

30
31
Netonomy.NET. “Top 5 Largest Online Retailers – Who Are These Companies and How Did They Make it to the
Top?” <http://netonomy.net/2013/01/30/top-5-largest-online-retailers-who-companies-how-did-they-make-it/>.
32
National Sporting Goods Association. "Sporting goods equipment sales by channel of distribution in the U.S.
from 2008 to 2013." <http://www.statista.com/statistics/201225/sport-equipment-sales-by-channel-of-distribution-
in-the-us-since-2006/>.

17
their stores in Year 3, and 70% in Year 4. We selected our target chain stores based on market
research we conducted on stores in the sporting goods industry in the U.S.33
We aim to enter
Sports Authority in Year 3, Academy Ltd in Year 4, and Dick’s Sporting Goods in Year 5. Our
retail margin from chain stores is 45%, and the retail price is $56 because we believe the quantity
we will sell in chain stores will outweigh the price reduction.

We expect our product to be sold in mass merchandisers beginning in Year 4. The fact
that mass merchandisers offer a greater variety of products attracts larger amounts of customers,
providing us with the opportunity to increase awareness of the SmartHelmet. Target is our
preferred mass merchandiser in Year 4, because it is the second largest mass merchandiser in the
protective sports equipment industry.34
We also plan to sell our product in Walmart by Year 5,
after we have built up a strong brand name. The retail price in mass merchandisers will be $54,
along with a retail margin of 40%. The lower margin in conjunction with the lower retail price
lowers our company’s manufacturing selling price, but we believe the benefits, namely increased
sales and awareness, offsets the above costs.
Channel Conflict
Once we enter chain stores in Year 3, we estimate that we will lose 20% of the
independent stores that year, along with 25% in Year 4, and 30% for Year 5. The lower retail
prices offered by chain stores and mass merchandisers drive customers away from independent
stores, so less independent stores will be willing to carry our product.

Even though we predict to lose 30% of independent stores by Year 5, we believe actual
channel conflict will be less than expected. Our reasoning behind this is that our bike helmet is a
specialty product, as it offers unique characteristics and benefits to customers. Consequently, a
higher price is reasonable. Thus, we do not believe that we will lose as many sales form
independent stores as expected, since customers who shop at independent stores are generally
searching for specialty products and are more willing to spend extra on high-quality equipment.35

33
National Sporting Goods Association. "Sporting goods equipment sales by channel of distribution in the U.S.
from 2008 to 2013." <http://www.statista.com/statistics/201225/sport-equipment-sales-by-channel-of-distribution-
in-the-us-since-2006/>.
34
Ibid.
35

18
Sales Volume
Sales from independent retailers will account for 31.5% of our total sales in Year 1 and
will peak at 44.7% in Year 2. However, due in large part to channel conflict, as was explained
above, independent retailers’ sales decline to 25.5% in Year 5.
Once we enter chain stores in
Year 3, 5.1% of our total sales will come from this category. This percentage will gradually
increase over Years 4 and 5 to ultimately reach 17.1% in Year 5. With regard to mass
merchandisers, we aim to enter Target in Year 4, which we predict will generate 7.3% of our
total sales in Year 4. With our planned entrance into Walmart in Year 5, a total of 21.2% of our
sales will come from mass merchandisers.
MK Exhibit 11: Year 5 Average Weighted Manufacturer's Selling Price to Channel

We will sell our product online throughout Years 1-5. Online sales are of great
importance to us in Year 1 because they will comprise 68.5% of our total sales. However, online
sales will decline to 36.3% of total sales in Year 5 as we enter more brick and mortar stores. This
is because our product will become more visible and readily available in-person, as it will be
sold in prominent chain stores and mass merchandisers.
Sales Force
In Years 1 and 2 we will only utilize manufacturer's representatives to sell our product.
Starting in Year 3, we will hire our own salesperson to interact with chain stores and mass
merchandisers. In the base, optimistic, and pessimistic cases, we will have only one salesperson
from Years 3-5. It is this person's responsibility to target and communicate with potential
retailers. Our salesperson will earn a base salary of $75,000 per year plus a commission of 3% of
sales made. This combined method of compensation will offer our salesperson a greater feeling
of job security and safety, since his/her pay does not rely only on the sales he/she generates.
MK Exhibit 12: Salary & Commission of KinderHelm Inc.’s Salesperson

19
Switching Point Calculation
Using the base salaries and commission rates earned by the manufacturer's
representatives and our sales force, we were able to calculate the point at which using our own
sales force is less expensive than hiring manufacturer’s representatives. Supposing our revenue is
‘x’ and 10% represents the manufacturer’s representative’s commission rate, we generate the
following equation: 10%x=$75,000+3%x.
The solution, $1,071,429, represents the revenue at which we are no longer supposed to
use the services of manufacturer’s representatives and instead solely rely on our own sales force.
However, we decided to retain the services of manufacturer’s representatives over all five years
because we do not expect to have a well-established selling division and because sales to
independent retailers are vital to our company. Therefore, we will employ manufacturer’s
representatives from Years 1-5, and hire one salesperson in Year 3.
Manufacturer’s Representatives
Manufacturer's representatives will help us sell our product to independent retailers.
They will be paid solely on commission – 10% of the manufacturer’s selling price to
independent retailers. As a startup company with limited selling experience and business
connections, employing these representative will help us increase our presence in independent
retailers and build up our core competencies, especially in Years 1 and 2.
MK Exhibit 13: Commission Paid to Manufacturer’s Representatives, Years 1-5
Discount Promotion
After conducting our financial analysis, we found that our NPV is highly sensitive to our
selling price (See FE Appendix 3). A small decrease in price can have a large negative impact on
profits. As a result, we will not offer any discounts on our price.

Sales Projections (See MK Appendix 20-21)

Our base case sales projection forecasts Year 1 sales of $862,332 and Year 5 sales of
$3,249,201, with an average annual growth rate of 30.4%. This sales projection is based on the
revenue-maximizing retail price and purchase intent we obtained from our survey results and

20
demand curve. Our demand curves indicate the same revenue-maximizing retail price for both
target segments, which is $60.
MK Exhibit 14: Demand Curve – Parents
Our primary segment’s purchase intent is 16.8% at the price of $60, after adjustment for
CSR initiatives. Our secondary segment’s CSR-adjusted purchase intent is 24.7% at the same
revenue-maximizing price (See MK Appendix 22).
Since overlap exists between our two target segments (parents and grandparents could
potentially purchase the SmartHelmet for the same child), we adjusted for this overlap based on
our survey results. When we asked the question, “Who do you think is more likely to buy this
product, parents or grandparents?” 79.4% of our respondents answered parents. Thus, only a
portion of the revenue from our secondary segment is realizable. Therefore, we will only accept
35% of projected revenue from our secondary (grandparents) segment.
Optimistic & Pessimistic Scenario Analysis
MK Exhibit 15: Optimistic & Pessimistic Sales Projections
In order to predict sales in the optimistic and pessimistic cases, we changed awareness,
ACV, and competition. To understand the impact of awareness on our sales forecast, we changed
the number of impressions required to make a consumer aware. In the pessimistic case, we
assumed it would take 5 impressions to make a consumer aware of our product. In the optimistic
case, we assumed it would take 3 impressions to make a consumer aware of our product.
For protective sports equipment industry, independent retailers and chain stores together
earn almost 50% of total category sales. We made our ACV assumptions based on sales by

21
independent retailers and chain stores. Starting in Year 3, we assume that the loss of sales in
independent stores due to channel conflict will decrease by 10% in each year. This change
increases sales. In the pessimistic case, we assume loss of sales in independent stores due to
channel conflict will increase by 20%. We chose to adjust channel conflict because it is the key
determinant of whether we can maintain our sales in independent stores after we enter chain
stores and mass merchandisers. Also in the optimistic case, in Year 3, instead of entering the
third largest chain store, Sports Authority, we assume we enter the largest one, Dick’s Sporting
Goods. In the pessimistic case, we assume our product will enter the fourth largest chain store,
REI, in Year 3, and that we will not enter Sports Authority until Year 5.
As a result, our ACV will increase to 35.4% in Year 5 in the optimistic case, and decrease
to 28.3% in Year 5 in the pessimistic case. We change these variables to fully capture the
possible results of our success in keeping sales in independent stores and entering chain stores,
because it relies not only on salespeople’s effort, but also market acceptance and our reputation,
which are highly subjective and unpredictable.
The last key assumption we make is the competition level. The competition level factors
in direct competitors entering the market based on how successful our business becomes. In the
optimistic case, we increase the competition level by 15% from Year 3-5, as our business
becomes more attractive and more competitors enter the market. The opposite holds true for
pessimistic case, in which we expect to face less competition because of our reduced profitability.
Therefore, we assume that competition level decreases by 5% from Year 3-5. We are uncertain at
this point about our competing firms’ reaction to our business, which is to some degree
dependent on our sales performance.
Taking into consideration all of these assumptions, we come up with sales projections for
optimistic and pessimistic cases. Ideally, in the optimistic case, we will have an average of 11%
increase in sales through five years. Similarly, we will experience an average of 12% decrease in
sales in the pessimistic case. Therefore, we believe that our assumptions about both cases are
realistic, and the results given those assumptions help us develop a better understanding of our
situation.

22
Customer Requirements & Product Design
The SmartHelmet is designed to promote safe bike-riding habits for children at an early
age. As children grow older and ride their bikes without supervision, it is more difficult for their
parents to ensure their children are wearing their helmets. We developed a house of quality
matrix in order to balance customer desires with what was feasible from an engineering
standpoint. The house of quality allows us to weigh customer attributes with engineering
characteristics, as well as compare our product versus competitors on customer attributes. This
helped us to develop SmartHelmet’s position in the market as well as its key differentiating
factors (See OM Appendix 1).
As with any product, price is essential to SmartHelmet’s success in retail stores. To find
the revenue maximizing cost we used survey data on our target markets. Our primary target
market is parents, while our secondary target market is grandparents. By comparing pricing data
with purchase intent, we found that revenue would be the greatest at $60 per unit. We believe
that consumers will be willing to pay an above average price in exchange for the added value the
SmartHelmet provides over a typical bike helmet. To deal with the variety of different bikes that
our product can be used on, we decided to manufacture the brake attachment piece. The
attachment piece serves to connect the rim brake to the bike and allows the product to be
customized to fit children’s bikes of different styles and sizes.
While parents/grandparents are the people actually purchasing the SmartHelmet, the
influencers are the children/grandchildren. Since they are the ones actually using the
SmartHelmet, it is important that the product is attractive to them and that they want to wear it.
Because of this important requirement, we thought it would be beneficial to have different colors
for our Helmet in order to make our product more appealing for the user. For the first five years,
we will carry black, white, blue, and pink. Offering these color options will encourage children
to want to use our product and incentivize parents to buy a product they know their children will
wear. At the end of the day, if our product is not being used, its purpose of protecting children is
not being fulfilled.
Many survey respondents were also concerned with the safety of the brake’s locking
mechanism around the rear wheel of a bike. The components most responsible for the brake’s
locking mechanism are the RFID tag and reader. In order to ensure these components are
working properly, we will test each unit during the manufacturing process. Lastly, our surveys

23
also suggested target consumers wanted a brake that was easily installable and configurable. On
the brake attachment piece, we added an adjustable ring that is placed below the seat of the
child’s bike and lowered into position around the back wheel, where it can lock and unlock the
use of the bike. The ring can also be tightened with a screw around the base of the bike seat to fix
its orientation around the back wheel. The ability to tighten the position of the brake on different
positions of the seat bar answers the customer desire for simple, customizable installation.
Target Cost
In order to obtain a target cost for the
SmartHelmet, we started with our retail price of $60.
After the standard 50% retail margin, we arrive at a
manufacturing selling price of $30 per unit. Our
fixed costs per unit are $6 for sales and marketing
costs (20%), $6 for general and administrative costs
(20%), and $3 allocated to profit for our company
(10%). By subtracting the appropriate fixed costs per
unit from the selling price, we achieve a target cost of $15 per unit. We allocated 70% of the
target cost, $10.50, to direct materials and direct labor, while we allocated 30% of our target
cost, $4.50, to manufacturing overhead.
Make/Buy Analysis
We chose to buy helmets because we wanted to focus on our core competency, which
involves the improving the functionality of a traditional bike helmet. However, one piece we will
manufacture is the brake attachment piece that will connect the rim brake to the bike seat.
Manufacturing this piece gives us the flexibility to create a product that can be used on nearly
any bike. This piece will be made out of steel and will be purchased from a supplier in China,
due to its lower costs than domestic competitors. The steel will be cut using a steel cutting
machine to create 6-inch pieces of metal small enough to be processed by the casting machine.
We decided it would be more cost effective to purchase the steel cutting machine from a Home
Depot branch in Denver close to our manufacturing facility, in case sudden issues or
complications arise. In order to make this part, the steel will be casted into the desired mold. The
process manipulates the steel by using extreme heat to form the piece and then cool it to solidify
OM Exhibit 1: Target Cost

24
OM Exhibit 2: Supplier Contact Information
the metal. The casting machine we intend to use will be purchased from Die Cast Machinery
Corporation, located in Waukegan, Illinois.
Suppliers
The SmartHelmet supply chain involves both domestic and foreign players, with the
majority of the raw materials coming from Alibaba suppliers in China. We have decided to
purchase most of the raw material components of the SmartHelmet in order to avoid the high
initial costs associated with investing in machinery, employees, and specialized training. While
domestic suppliers may offer higher quality goods than international suppliers, we do not believe
the benefit of purchasing these high quality goods outweighs the cost of purchasing domestically.
Based on our conversations with international suppliers (see OM Exhibit 2), we found raw
materials that fulfill our requirements in terms of price and quality.
Also, almost all of our suppliers are Alibaba Gold Suppliers, which means they have been
vetted and verified to ensure their work is consistent, their labor is legal, and they are properly
certified. Basic materials, such as screws, and packaging materials, including the cardboard box
and tape, will be purchased domestically. Purchasing materials domestically gives us greater
flexibility because lead time is shorter and the costs of shipping these materials overseas would
be unreasonable. We do not want to incur excessive holding costs for materials that we can
easily purchase in the United States and receive within several days.
Transportation Logistics
Our suppliers will transport the most important materials, including the brake, the RFID
sensor and tag, the motor, and the helmet to Long Beach Port, which will take 16.5 days, on
average (See OM Appendix 2). Lead times given by international suppliers include the
transportation of raw materials to the port of Long Beach (See OM Appendix 3). We chose Long
Beach as the entry point into the United States because of its ideal location as not only one of the

25
OM Exhibit 3: Fulfillment by Amazon Fees

closest ports to China but also a connection to the rest of the country via the nationwide railroad
(See OM Appendix 4). The infrastructure for both inbound and outbound deliveries allows for an
effective transportation process, including access to nearby rail, air, and road transportation.
When the raw materials arrive at the port of Long Beach, they will first go through
customs, which takes about three days, and will then be loaded onto freight trains. From this
point, it will take about two days to reach Denver, Colorado, using a nationwide railroad. Using
Google Maps, we calculated the distance in miles (approximately 1,113 miles) from Long Beach
Port to Denver, Colorado.36
Using the price per mile, we calculated the total cost of railroad
transportation (See OM Appendix 5). Upon arrival in Denver, the raw materials will be
transported to our facility by trucks, with an average transit time of less than one day, as the
railroad is only a few miles away from our facility.
In order to sell to retailers around the country, we considered handling our own internal
transportation and logistics service but ultimately decided third-party logistics would be the best
option. We will utilize fulfillment by Amazon (FBA) as our third party logistics provider.37
We
chose fulfillment by Amazon because of the large variety of warehouse storage locations they
can provide to our company. Once our finished goods are ready to be shipped, our Chief
Operations Officer will select an Amazon warehouse location to store our product. Our finished
goods will be picked up by Amazon through Amazon Partner Carrier (See OM Appendix 6) and
transported to warehouses we designate. Utilizing FBA will allow us to react more quickly to
fluctuations in
supply chain
demand.
In
addition, the cost
of storing finished
goods will be
$0.48 per cubic foot per month from January to September and $0.64 per cubic foot per month
from October to December (See OM Appendix 7). Once we receive an order quantity from
retailers or directly from Amazon customers, we will relay this information to Amazon, and FBA

36
“5360 Washington St, Denver, CO 80216 ,” Google Maps. <http://www.google.com/maps>.
37
FBA Overview, “Amazon.com Help: Fulfillment by Amazon,”
<http://www.amazon.com/gp/help/customer/display.html?nodeId=200229160>. Web. 21 Nov. 2014.

26
will use its modes of transportation to deliver our product. There is an order handling cost of
$1.00 per order. Since our finished goods will be large standard size, there is a fixed cost of pick
and pack per unit of $1.02—Amazon will pick and pack units of its choosing to send to the
retailer whose order we will fulfill. Based on the weight of the goods Amazon delivers, handling
costs will be $1.34 plus $.39 per pound after 2 pounds.
The greater amount of warehouses Amazon offers around the country will allow our
products to travel to channel retailers faster and more efficiently. Transporting goods via our
own logistics service would require utilizing our own trucks and warehouses as well as hiring
truck drivers, paying them a salary, and accounting for the cost of gas. Therefore, we conclude it
will be more productive for us to use FBA as our third party logistic provider, since it allows us
to focus more on improving the processes of our core business rather than wasting time and
resources on expenses and transportation costs for our own logistics service.
Facility Location
Our manufacturing facility is located at 5360 North Washington Street, in Denver,
Colorado, and we intend to rent Unit A (See OM Appendix 8). Other locations we considered for
our facility included Omaha, Nebraska, due to cheap real estate prices and labor, and Long
Beach, California, near the Port of Long Beach where our raw materials will arrive. However,
Omaha's location and distance to major markets as well as California's expensive real estate and
high labor costs posed obstacles for us.
Center of Gravity
We then conducted a center of gravity analysis in order to find a central location with
respect to our retailers. Center of gravity takes into account the latitude and longitude of various
important locations, along with a weighted factor to choose the best location (See OM Appendix
9). We weighted locations using the number of bike retailers in the region because it correlates
well with the number of active bikers in an area.
Factor Model
Another tool we used to find a versatile location was a factor model. In this analysis, we
used five factors to rate our possible locations, which include real estate prices,38
income rate,

38
Land and Property Values in the U.S, “Lincoln Institute of Land Policy Home,”
<https://www.lincolninst.edu/subcenters/land-values/land-prices-by-state.asp>. Web. 20 Nov. 2014.

27
number of wholesalers,39
minimum wage, and ability to attract employees.40
We calculated real
estate prices using average price per square foot for each state. This gives us a sense of what to
expect in regards to real estate prices for facilities and potential costs involved with expansion.
We calculated the income rate by using the tax rate; a lower tax rate allows more income to be
made per dollar of sales. Using the Yellow Pages, we found the number of retailers for bike
helmets and products each location offers, since this information impacts the number of
customers we will be able to reach. Lastly, the ability to attract employees is important in terms
of being able to staff and retain employees in our organization and facility. We used a CNBC
ranking that measured states in a variety of characteristics, such as average education level and
average home value, and then compiled all measurements to create a comprehensive ranking of
states.41
The center of gravity analysis led us to coordinates for an area in Colorado, with our
closest possible manufacturing site located in Denver, Colorado. Our factor model rated Denver
as the most compatible with our needs. In the end, a manufacturing site in Denver offers a central
location and is highly ranked in all of the characteristics we deem important to our business.
Facility Layout
The facility we chose in Denver is a 10,950 square foot industrial space that costs $5.95
per square foot per year. The entire complex contains four units, but we will only be renting Unit
A. The facility consists of a large portion of industrial space as well as office space, two
bathrooms, a kitchen, a maintenance closet, and 4 separate offices. There is also room to store

39
YP.com - Yellow Pages, the New Yellowpages.com, “YP.com - Yellow Page the New Yellowpages.com.”
<http://www.yellowpages.com>. Web. 21 Nov. 2014.
40
Overall Rankings 2013, “CNBC,” <http://www.cnbc.com/id/100824779>. Web. 21 Nov. 2014
41
Ibid.
OM Exhibit 4: Factor Model

28
incoming raw materials, work in process goods, and finished goods before they are shipped to
retailers. Currently, we only plan to occupy one unit of the building, thus leaving more space for
us to potentially expand if our operations outgrow the current space.
Within the manufacturing space of our facility, we are implementing a U-shaped layout
in order to maximize capacity and efficiency with the fewest number of workers. In the early
years, when demand is relatively small, the U-shaped layout will allow a few workers to work on
multiple stations in order to keep costs down. Also, since our staff consists of only 3 assembly
line workers in Year 1 (See OM Appendix 10), the U-shaped layout allows them to multi-task
and familiarize themselves with all stages of the assembly process, rather than limiting
themselves to only one process. As demand rises, the U-shaped layout will allow us to bring
more workers in and work in one steady space, so as to minimize errors and train the workers to
be knowledgeable in all aspects of production.
OM Exhibit 5: Facility Layout

29
Another key benefit of this layout is that, since our facility includes only one loading
dock, the U-shape layout allows us to start and end the production process at the same spot,
enabling us to make use the loading dock more efficiently. We will store raw materials and
finished goods near the loading door, which allows us to minimize the labor of the warehouse
freight manager in unloading raw material shipments, getting raw materials onto the assembly
line, as well as storing finished goods and loading them onto delivery trucks.
Assembly Process
Brake Production Process
Our assembly process begins
with checking all raw materials
for quality, and then it branches
off into the helmet production
process and the brake attachment
production process. The brake
production process starts when
we cut 20-foot poles of steel with
a metal cutting machine. The
casting machine will heat and
cool the steel to our desired
molded shape for the brake. This
step in producing the brake is our bottleneck, since it takes approximately 48 minutes to produce
20 units of the molded brake attachment piece. The next step involves attaching the rim brake to
the molded brake extension using screws. We then connect the motor, battery casing, and then
the RFID reader to the brake.
Helmet Production Process
While this brake production process occurs, the helmet production process takes place
concurrently. The first step in this process includes cutting open the foam within each helmet,
inserting the RFID tag, and gluing the foam back together. Our product’s core functionality relies
on the RFID proximity connection, and we must ensure it works. Therefore, once the RFID
readers and tags are attached to the brakes and helmets, there will be one final quality check on
20% of each batch (100 units) to test whether the brake will lock and unlock depending on the
OM Exhibit 6: Process Analysis Diagram

30
distance the helmet is from the bike. After this quality check, the last station will be responsible
for packaging all finished goods and storing them near the loading dock.
Quality Assurance
Ensuring a high-quality product is integral to the success of the SmartHelmet since our
company’s mission is to keep children safe while riding their bikes. Quality checks occur before,
during, and after the manufacturing process, and will be the only way to ensure the SmartHelmet
lives up to its safety guarantees. Our most important CSF is to achieve a defect rate of less than
5% for raw materials and 2% for finished goods each year, which can only be upheld if our
product undergoes detailed quality checks and acceptance sampling tests.
Acceptance Sampling
Our acceptance samplings will occur as follows: 20% of each raw material shipment and
each finished good batch (100 helmets of a single color) we receive will be checked for defects
upon arrival to the facility by the warehouse freight manager in Years 1 and 2. In Years 3-5, this
percentage will decrease to 15%, due to the fact that we will gain a better understanding of the
reliability of our suppliers. We will record the number of defects per batch and keep a log of the
percentage of defects from each supplier. Should the supplier not meet our goal defect rate of
5%, we will either work with that supplier to improve their processes or decide on a new supplier
to acquire our raw materials from. With respect to finished goods acceptance sampling, we will
keep a log of the number of defective SmartHelmets we produce. If we do not meet our goal
defect rate of 2%, we will break down the process to find the part that is contributing the most to
the rate.
Statistical Process Controls
Since our goal is to keep defect rate below 2% for finished goods, we will implement
statistical process controls in order to limit defective products should a machine malfunction. We
will purchase the Quality Management module to add to our Oracle ERP system. The system
generates alerts about deviations that may require corrective action. Using this system, our
warehouse freight manager will be able to shut down the entire manufacturing process should
significant deviations occur.
RFID Quality Inspection
The two most important raw materials whose quality we will test are the RFID units and
the helmets. Upon receiving shipments of the RFID units, the RFID-trained worker checks the

31
appropriate sample size for quality, such as the presence of broken pieces and missing
components. Since we receive the helmets already completely manufactured, once the shipments
arrive, we will check the sample size for defective components, such as faulty chin straps,
missing padding, and broken shell pieces. In addition, we will do a stress and impact test on 1%
of each helmet shipment to make sure the helmets conform to legal standards set by the
Consumer Product Safety Commission.42
The stress and impact test will destroy the helmet
tested, but it is worth the cost in order to make sure the helmets are safe and legal.
After we test the raw materials upon the arrival of each shipment, the next quality check
occurs during the manufacturing process. During this check, the RFID tags and readers will be
connected to each other digitally and assigned a specific identification number in order to isolate
a one-to-one relationship between units. After this point in production, the brake attachment
piece and helmet piece of assembly will come together as one SmartHelmet, and we will test the
entire finished good.
We will conduct acceptance sampling to make sure the RFID are connected and
communicate with one another. As mentioned above, we will test 20% of each finished goods
batch in Years 1 and 2, and 15% in Years 3-5. The test will involve determining the range over
which the sensors in the helmet and the brake communicate. The first part of the test involves
selecting an arbitrary distance above 2 meters to check if the brake’s locking function works. The
brake should always be locked when the helmet is not within 2 meters of the bike, so our upper
control limit for the test is 10 meters. If the brake is not locked at 10 meters, this indicates a
malfunctioning brake.
The second part of the finished goods test involves testing to see that the brake actually
unlocks within 2 meters. Our lower control limit for this second test is 1.8 meters, meaning that
any brake that does not unlock when the helmet is within 1.8 meters of the bike fails the test. We
chose 1.8 meters because this equates to a height of a little less than 6 feet, which encompasses
the heights of most children ages 5-15, thus ensuring taller children will not activate the locking
feature of the brake while riding the bike. We will use control charts to determine the average
distances over which the brake’s unlocking and locking features do not work. Our long-term goal

42
Darren Grant. "The Effect of Bicycle Helmet Legislation on Bicycling Fatalities." Journal of Policy Analysis and
Management 23.3 (2004): 595-611. <http://www.cpsc.gov>. Web. 20 Nov. 2014.

32
is achieving a defect rate of no more than 2% each year, and this can only be possible if our
quality checks are thorough and supported by the collected data described above.
Capacity & Staffing
The process of molding the steel into the brake
attachment using the casting
machine is the bottleneck of the
production process, taking 48
minutes to produce 20 units. The
throughput time for 20 units is 138
minutes (See OM Appendix 11). In
our case, the staffing procedures
directly track our production
forecast. Since on average we
believe it will take 6.9 minutes for
a worker to make one SmartHelmet, a worker should typically be able to produce 1,322 helmets
per month. Demand for our product trends upward throughout our forecast of five years; because
of this, it makes fiscal sense to add more workers incrementally when demand exceeds capacity
instead of using overtime or part-time workers to compensate for increases in demand. We
believe additions in employees and machinery are necessary to accommodate the continual
increase in demand. Therefore, we will add another worker each time capacity exceeds a
multiple of 1,322. The casting process also is limited by the capacity of the casting machine. In
order to know when to add casting machines, we must find the point at which an additional unit
of labor provides less output than an additional unit of capital. We calculated that the optimal
time to add casting machines is at the beginning of Years 3 and 5, respectively, in order to
decrease the time of our bottleneck when demand exceeds capacity.
-
10,000
20,000
30,000
40,000
50,000
60,000
1 2 3 4 5
Units
Year
Units Demand
OM Exhibit 7: Increase in Demand
OM Exhibit 8: Machine Capacity Requirements

33
At the inception of our business, we will start with three manufacturing workers, as well
as one warehouse freight manager, whose job it is to load, unload, keep stock of raw materials
and finished goods, and assist the other workers during various parts of the production process.
Since we are using a U-shaped facility layout, we can compensate any number of workers to be
able to do multiple tasks in a small time frame because all stations are in close proximity with
one another. At the end of the forecasted period, we will employ 11 manufacturing workers.
Our manufacturing employees will be trained in all parts of the manufacturing process, as
it will be necessary for employees to handle more than one operation throughout the production
cycle. It will be the responsibility of the warehouse freight manager to organize and distribute the
manufacturing labor efficiently.
Organizational Structure
In Year 1 we will have 8 employees total. Our CEO will also act as CMO, receiving
compensation of $120,000 in Year 1. This executive will receive a 3% raise every year over the
next four years to account for cost of living expenses.43
We will also have one Chief Technology
Officer (CTO), who is responsible for the information systems and operations management
departments, and one Chief Financial Officer (CFO), responsible for the finance and accounting
departments. The CTO and the CFO will each be paid a $110,000 annual salary, along with a 3%
increase each year.
The three assembly line workers we have for Year 1 each will receive $10 per hour and
will work 40 hours per week and 45 weeks per year. This is above the $8 minimum wage in
Denver, since our aim is to have a low turnover rate. We will have a total of four assembly line
workers in Year 2, five in Year 3, eight in Year 4, and eleven in Year 5 to account for our
increases production. We will also have a warehouse freight manager in Years 1-5, who will
manage the inflow of raw materials and outflow of finished goods, including loading and
unloading trucks. We will also hire two customer service representatives in Years 1 and 2 who
will be paid $15 per hour. Beginning in Year 3, we will add one more customer service
representative, and all three representative’s salaries will be $17 per hour.
In Year 3, we will have separate operations and information systems departments, each
with its own chief officer who has a salary of $116,700. We will also have a chief marketing

43
D. Johnson "ERP Software Cost Comparison: On-Premise, SaaS, and Hosted." ERP Cloud News RSS. N.p., n.d.
<http://erpcloudnews.com/2011/03/erp-software-cost-comparison-on-premise-saas-and-hosted/>.Web. 21 Nov.
2014.

34
officer in Year 3 that will be paid $116,700 as well. Year 3 also marks the first time we will hire
our own internal salesperson, accounting for the fact that we enter chain stores at this time. The
salesperson will earn a $75,000 salary, plus a 3% commission rate based on his/her sales. As the
number of employees in our company increases, we are going to have a Human Resources
Manager beginning in Year 3 that will be paid $85,000 per year with the 3% salary increase each
year as well. Apart from the addition of more assembly line workers in Years 4 and 5 and the
inclusion of cost of living expenses factored into the salary increases, there are no other changes
after Year 3.
OM Exhibit 9: Year 3 Employee Layout
Matching Monthly Production with Demand
In order to forecast production, we chose to base our demand on Shimano USA’s bikes
sales for the most recent fiscal year 2013.44
We broke the percentages of sales into four quarters:
Q1 accounted for 23% of sales, Q2 accounted for 26% of sales, Q3 accounted for 25% of sales,
and Q4 accounted for 26% of sales. Using Shimano USA as a comparable company for demand,
we used its percentage of sales to determine our monthly forecasted demand (See OM Appendix
12).

44
Summary of Financial Results. “Summary of Financial Results. N.p., n.d.”
<http://www.shimanousa.com/content/Corporate/english/index/financial-infomation/summary-of-financial-
results.html>.Web. 21 Nov. 2014.

SmartHelmet Ensures Safety and Helmet Use

SmartHelmet Ensures Safety and Helmet Use

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

En vedette

En vedette (19)

Similaire à SmartHelmet Ensures Safety and Helmet Use

Similaire à SmartHelmet Ensures Safety and Helmet Use (20)

SmartHelmet Ensures Safety and Helmet Use