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C1 Report...

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Summary This comprehensive report is written for JAG’s management team regarding Group 5’s solution to the garden watering product. It aims to inform the management team about the product details, and its potential risks and opportunities when entering the marketplace. Topics covered in this report include an overview of the product, target market and market potential, design features and a business plan that outlines both a development budget and a hypothetical breakeven analysis. The report concludes with a summary and assessment of JAG’s potential to break even given all the information. JAG is to use this information to assess whether this product is viable for further production and development.

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Table of Contents 1. Introduction

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2. Product Overview

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2.1 Product Description

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2.2 Scenario Requirement 5 2.3 Target Market

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2.4 Market Potential 5 2.5 Product Advantages

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3. Product Design Features

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3.1 Development Process 6 3.2 Design features 6 3.3 Optimisation for Manufacturing

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3.4 Maintainability 7 3.5 Usability & Safety

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4. Product Business Plan 8 4.1 Development Budget 8 4.2 Breakeven Analysis

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4.3 JAG Breakeven Assessment 9 5. Conclusion

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6. References

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7. Appendix 12

1. Introduction A company called Just Add Glue (JAG) has been awarded a New Business Initiative Grant from the Department of Small Business that is worth $100,000 to Page 2 of 15

develop a new garden watering product. The grant application stated that the product will be manufactured and sold wholesale by the company itself. This report will discuss group 5’s water gardening product, named “splash-free diffuser”, its features and the optimised design solution. It also details a cost analysis including the development and production costs and a breakeven analysis over two years. This report will be separated into three main sections; the product overview, product design features and the product business plan The product overview will describe the product and evaluate some reasons why it meets the scenario requirement. This part also evaluates the target market, market potential and the product features list of why customers should purchase the splash-free diffuser over other existing products. Product design features will focus on optimisations that have been created the design solution for efficiency and effectiveness, assembly, maintainability, and safety. This part also mentions about the design iterations and rejected design alternatives through the developing process. Finally, the product business plan will detail the product development costs associated to be production-ready including production line setup, training, manufacturing and distribution costs. Additionally, this part also includes a proposed breakeven analysis over a two year period and JAG’s ability to make a profit

2. Product Overview 2.1 Product Description The splash-free diffuser is a two-part product that is designed to accommodate most small to medium indoor pot plants. It features a stationary diffusing container on a stand that hangs above the pot plant. Water is poured into the diffuser, which is then spread over the pot evenly and within a confined area. 2.2 Scenario Requirement The splash-free diffuser is a simple and effective design which aims to fill a gap in the market for people with indoor plants and herb gardens. Its simplicity, versatility and robust design are the key

innovative elements that make this a viable competitor in the marketplace when compared to products that aim to solve a similar problem. This design also aims to reduce water wastage and mess created when watering plants, particularly when indoors. Figure 2.1: The drawing of splash-free diffuser using Auto Cad (Source: Original)

2.3 Target Market Our primary target market are households who have small plants around their house, either for small indoor herb gardens or simply a lack of outside space for plants. The retail selling price for a stand and a diffuser will be $50, which although might be higher than some people are willing to pay, are designed to last for many years, ensuring these are only once-off purchases. 2.4 Market Potential Based off Better Homes and Gardens in 2018, it was recommended that every house should have at least 10 plants in every 20 square meter room. Sydney population will reach 5.73 million by June of 2019 (Population Australia,2019). Assume that every family has 4 people which mean there are 1.43 million families based in Sydney and every family has at least three small plants in their homes. That comes to over four million pots that require watering on a daily or semi-daily basis. If only one percent of families are interested in purchasing the splash-free water diffuser for their three plants, that brings the potential to almost 43,000 units (one unit includes one stand and one diffuser). While these numbers are strictly hypothetical, it shows the large potential market that the splash-free water diffuser has in Sydney alone. A more realistic estimation sales value will be discussed in the product business plan. 2.5 Product Advantages • Determining the needs and requirements of customers is the main factor that has shaped the design of the splash-free diffuser. Some advantages of this product include: • Size: The finished product can have its size adjusted to fit different pot sizes and indoor environments, depending on the spatial requirements and limitations. • Ease of Use: The product is designed with minimal components needed for assembly. This assembly process is also tool-free, which increases the convenience and user-friendliness of the splash-free diffuser. Page 4 of 15

• Long-Lasting: Designed using robust, long-lasting materials the splashfree diffuser is a product that users will only have to purchase once and can expect to work reliably as expected throughout its lifetime.

3. Product Design Features 3.1 Development Process Between the initial brainstorm of potential design solutions to the final product, we have evolved the design to improve its adaptability and structural stability while maintaining the core features of the original design. The main change we made from this design was from a spring-loaded clip that

attaches to the edge of a pot plant to having a dedicated frame and base on which the pot plant sits. It was decided that this would be a more reliable, stable system and would be easier to manufacture. 3.2 Design features Figure 3.1: Original design sketch of The splash-free diffuser is a two-part the splash-free water diffuser (Source: Original )

design, containing a stand and the diffuser. The two parts can be separated at any time and don’t require any tools to either assemble or attach / detach from each other. The stand features an adjustable bass that will allow the user to fit to their current pot. The bass will sit underneath the plant and provide a stable base for

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the diffuser rest on. The height of the diffuser may also be adjusted by the vertical arm on which the diffuser sits. The diffuser is a simple watering container that will rest on the supporting arm of the stand. It will come in a variety of volumes to meet the different plant watering requirements and pot sizes. Water will trickle down and shower the plant through small holes at the bottom of the diffuser, providing a steady stream of water over a selected area without flooding the plant or creating a mess. Moreover, the water diffuser will help to distribute water evenly to the plant pot. Both of these sections will be made of either plastic or stainless steel, and are designed to be lightweight and easy for the user to assemble / disassemble. They feature no sharp or potentially dangerous surfaces on which the user may injure themselves, and the materials used are safe to use in an indoor environment. 3.3 Optimisation for Manufacturing The splash-free diffuser is designed to make the most of a production environment. Its construction has been based off readily available materials that aren’t difficult to source, minimising the chance that production is affected by a lack of available materials. The design also utilises simple manufacturing and assembly techniques, reducing the time and manpower required to manufacture the splash-free diffuser. This also allows the manufacturer to use unskilled labourers or factory workers for the construction and assembly as opposed to a highly skilled workforce, further reducing costs and dependence on skilled employees. 3.4 Maintainability The splash-free diffuser is constructed using robust and long-lasting materials that are designed to maintain structural integrity over time. Due to this, maintenance for this product is negligible as the product should leave the production line in a ready-to-use condition 3.5 Usability & Safety As stated previously, the splash-free water diffuser is a simple product to set up and operate. It requires no tools to assemble or disassemble once purchased, and once it’s set up it will function consistently and reliably for years. Page 6 of 15

All sharp, pointed or potentially dangerous surfaces are sanded to significantly reduce the possibility of someone hurting themselves. Similarly, the materials selected for production are non-toxic or damaging to the user and are suitable for use in an indoor domestic environment.

4. Product Business Plan 4.1 Development Budget Our initial development budget for this project is approximately $37,000. This will allow us to purchase and set up all the tools, machinery and material that will be required for the manufacturing process. This will also allow us to train the employees on the processes and tasks that they will be required to undertake and create some prototypes before undergoing full production.

Fixed Costs Item Rent Metal Saw Heat Gun Drill Press MIG Welder Other Tools Total Fixed Costs

Price

Fixed Costs-1 Item $24000.0 Labour 0 $189.00 Material $79.00 Transport $249.00 Total Var. Costs $249.00 Fixed Costs $1000 Variable Costs $25766.0 0 Total Costs

Price $9600.00 $731.25 $250.00 $10581.25 $25766.00 $10581.25 $36347.25

Figure 4.1: Table of proposed fixed and variable costs. Fixed costs are calculated as a onceoff payment over the 24 month period, whereas the variable costs are calculated on a permonth basis (Source: Original)

For this 3 labourers will be required to undertake the manufacturing process. These labourers will be hired at a rate of $20 per hour, and work a total of 40 hours per week for 48 weeks of the year. All material and machinery has been sourced from Bunnings Warehouse, and material has been calculated as 30% of the retail price to reflect the wholesale rate when purchasing in bulk quantities. Our product only requires a small well set up a factory for manufacturing to commence, and we predict that we will be able to complete an average of 250

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units per month, assuming the labourers are trained and efficient in their duties. One complete unit comprises of both the diffuser and the stand. Once manufactured our product will be distributed straight to retail stores in order to minimise storage and warehousing costs. Transportation has been calculated under the assumption that 10 units will be able to fit within a cubic meter. It is assumed that each cubic meter will cost $10 for all distribution and retail costs. This also eliminates the need for JAG to set up, develop and maintain their own store, as all expenses are accounted for and retail stores already have an established customer base. 4.2 Breakeven Analysis In order to illustrate the potential for our product to succeed in the marketplace, we have generated a break even analysis. This shows the projected sales against expenses over a 24 month period and highlights at what point the product is expected to break even. Based on these projections we expect that the break even point is between 13 - 14 months, and must sell a total of 3357 units to achieve this. $300000.00

$225000.00

$150000.00 Sales Fixed Costs Total Costs $75000.00

$0.00 0

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4

6

8

10

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24

Month Figure 4.2: Breakeven analysis of the product over a 24 month period (Source: Original)

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4.3 JAG Breakeven Assessment The splash-free diffuser has potential meet sales targets and break even within a two year period, however, it’s success is heavily reliant on both the existing need and the marketing and exposure of the product. The break even point may be subject to change with fluctuating variable costs in manufacturing and wholesale distribution, which we won’t be able to establish unless we begin to manufacture the product. This breakeven point is very sensitive to such fluctuating costs, and even a slight increase in costs per unit may result in the product not breaking even within a two year time frame. Conversely, if sales exceed our expectations and the product is in high demand, the product may have a higher profit margin and an earlier breakeven point.

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There is a potential market for the splash-free diffuser, however, JAG may also have to invest a significant amount of finance towards marketing the product, as we are unsure if this product will be in high demand. Ultimately this will raise overall costs which will delay, or even diminish any possible chance for JAG to break even.

5. Conclusion While the splash-free diffuser is aimed at solving a problem in the marketplace for which there are currently a very limited number of solutions, we are unsure if there is enough demand to justify further development and manufacturing. While the actual production of the product doesn’t require significant labour or machinery costs that extend beyond the scope of JAG’s business capabilities, a misjudged market could result in poor initial sales. This will result in total costs exceeding the total sales and result in a failed product. Additionally, while the splash-free diffuser might break even, the profit margins for the product will likely be slim for the first few months after the breakeven point is achieved, and may not be enough to justify JAG’s investment. Ultimately it is JAG’s decision to use this information to decide if this is a good investment with market potential, or simply too risky to pursue and develop any further.

6. References Population Australia 2019, Sydney Population 2019, viewed 26 May 2019 . Laura Barry 2019, This is how many plants you should have per room, viewed 27 May 2019 . PayScale 2019, Average Construction Labourer Hourly Pay, viewed 27 May 2019 Bunnings Warehouse 2019, Metal Mate 20 x 20 x 1.6mm 3m Galvanised Steel Square Tube, viewed 27 May 2019 Bunnings Warehouse 2019, Ryobi 390W 13mm Drill Press, viewed 27 May 2019 Bunnings Warehouse 2019, Ryobi 2000W Corded Heat Gun, viewed 27 May 2019 Bunnings Warehouse 2019, Bossweld 100 Amp M100 Gasless MIG Inverter Welder, viewed 27 May 2019 Bunnings Warehouse 2019, Ryobi 2200W 355mm Corded Metal Cut-Off Saw, viewed 27 May 2019

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7. Appendix

Figure 7.1: Assembled CAD view of the splash-free diffuser (Source: Original)

Figure 7.2: Disassembled CAD view of the splash-free diffuser (Source: Original)

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Figure 7.3: Individual components for the splash-free diffuser (Source: Original)

Figure 7.4: Detailed CAD drawings of the diffuser (Source: Original)

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Figure 7.5: Business model canvas for the splash-free diffuser (Source: Original)

Key Partners -

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Key

Value Propositons

Customer Relatonships

Distributon from factory to Actvites and Marketng Producto retail store branding n

Versatlity / fexible design Interchangeable parts Long lastng design

Acquire and lock-in -

Key -

Channe

Retail stores (Bunnings, fower / store ls garden s) -

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Cost

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Producton Structure facilites - Labou - Materi r al

- -

- --

Distributon Resources Raw materials (stainless steel, channel plast APG Producton c Facilites

Revenue

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1 unit /(stand fuse Spare replacement +Streams di fr) parts

Customer Segments Households Florists

Figure 7.8: Table of data used for the breakeven analysis (Source: Original)

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