Table of Contents

DAVE: A DAY IN THE LIFE (BEFORE) 4

INTRODUCTION: WHAT ARE HEMORRHOIDS ANYWAY? 4

INDUSTRY ANAL-YSIS: OVER-THE-COUNTER HEMORRHOID TREATMENTS 5

INDUSTRY ANAL-YSIS: HEMORRHOID CUSHIONS 7

DEMOGRAPHICS 17

THE PROBLEM 22

SOLUTION: DAVE’S DONUT 22

1

SWOT 22

UNIQUE VALUE PROPOSITION 23

WHOLE PRODUCT SOLUTION 23

DEFINE THE BATTLE 25

POSITIONING STATEMENT 31

LAUNCH THE INVASION 32

FUTURE EXPANSION 38

COVERING OUR ASS 40

DAVE: A DAY IN THE LIFE (AFTER) 42

2

END NOTES 49

3

Executive SummaryMore than half the population in the U.S. will be afflicted by hemorrhoids

in their lives. Hemorrhoids are swollen, inflamed veins in the anal canal and can cause intense irritation in the form of pain and itching. Currently, sufferers who seek relief from their discomfort can choose from an assortment of products with varying strengths and weaknesses. Direct-application products such as creams, wipes, suppositories and pads are effective at providing temporary relief, but cannot be used for extended periods of time. Hemorrhoid cushions can be used as much as needed, but are conspicuous and can be uncomfortable with prolonged use. Dave’s Donuts seeks to remedy this problem by providing a new kind of cushion that is discrete and comfortable.

A demographic analysis reveals that those who purchase hemorrhoid relief products share much in common. Age is an important factor because hemorrhoids become more prevalent in older folks. The average user is in the low-income, low-education bracket, but a portion of the heavy users fit into the

4

high-income, high-education bracket—this is the segment that is most appealing because Dave’s Donuts are high-end and geared towards heavy users.

Unlike current cushions that are made of foam or rubber and stand out as medical in nature, Dave’s Donuts are composed of a soft cotton batting and look like high-end pillows. Nothing about their appearance tips off outsiders that the user has hemorrhoids and the comfort provided is well above the competition. There is little doubt that Dave’s Donuts is the best product in the hemorrhoid cushion category for those who value discretion and comfort.

An industry analysis shows that competing within the industry is moderately favorable overall. Hemorrhoid cushions have become commoditized and very little differentiation exists between them. The entrance of this highly-branded product will draw a premium over the competition. There is, however, a low barrier to entry and a high likelihood that new entrants will attempt to copy the idea and steal market share.

The strategy involved in bringing this product to market involves Crossing the Chasm. The beachhead selected is Rick Steve’s Travellers because of how well they fit the demographic for our target market—they are seniors with a high

5

amount of discretionary income and in need of comfortable seats in places that don’t offer them. Once the chasm has been crossed, adjacent markets include Canadian and Midwestern Snowbirds, other senior travelers, truckers, and more.

In order to prevent the potential of a competitor’s knock-off stealing market share, a low-end product called “Fanny Friends” will be launched simultaneously. This will not only give pragmatists direct competition for comparison, but it will offer an option to price-sensitive customers.

Dave: A Day in the Life (Before)Dave and his wife are retired Americans who spend their excess savings on European

travels. Unfortunately, they both have hemorrhoids and this puts a damper on their fun. A

typical day involves waking up with a painful itch in their hostel room. This is one of the

few places they know they’ll be able to treat their symptoms in privacy before exploring

some quaint European town. Knowing that everything in their travel care bag will only

6

provide temporary relief, they settle on Preparation H. Next, they head out on their

adventure. Taking a trolley downtown is an awkward affair. The misses prefers to bring

her inflatable donut so she can sit down, but Dave chooses to either endure the pains of

sitting or stand—Dave doesn’t like to let people know about his condition. As the day goes

on, however, Dave’s legs become increasingly tired from standing so he succumbs to using

the donut his wife always brings along for such an occasion. They feel like a pair of old

geezers atop their inflatable thrones.

This is how Dave and his wife dealt with his hemorrhoids day to day—finding temporary

relief from topical products and conspicuous, medical hemorrhoid donuts.

7

Introduction: What are Hemorrhoids Anyway?Maybe one of the most embarrassing ailments a person can have is hemorrhoids and most

people under the age 50 don’t even know what hemorrhoids are. The general public avoids

the topic until they themselves become victims and start to feel the pain and itching

associated with the condition. According to the American Society of Colon & Rectal

Surgeons, hemorrhoids are one of the most common ailments and more than half the

population will develop hemorrhoids after the age of 30. The prevalence of hemorrhoids

(also called piles) in the United States is reported to be 4.4% with most suffering occurring

between the ages of 45 and 65, equally in men and women.1 But only one third of these

8

individuals seek medical treatment (such as surgery)

with most opting for over-the-counter relief purchased

from the drugstore.

Webmd.com describes hemorrhoids as “swollen veins

in the anal canal.”2 The basic upright position of

humans puts a great deal of pressure on rectal veins

which can cause them to bulge. There are two types of

hemorrhoids, external and internal, which refer to their

location.3 While there is no exact cause of hemorrhoids, there area variety of reasons that

can contribute to the ailment: aging, chronic constipation or diarrhea, pregnancy, heredity,

straining during bowel movements, faulty bowel function, or even spending long periods of

time on the toilet.3 Some people may not even experience symptoms but those that do may

9

notice bleeding during bowel movements, protrusion during bowel movements and itching,

pain, and sensitive lumps in the anal area.

Industry Anal-ysis: Over-the-Counter Hemorrhoid Treatments

CURRENT PRODUCT OFFERINGS

A variety of options exist for home treatment such as sitz baths, wipes, suppositories,

creams, fiber supplements, and donut pillows. Over half of those purchasing a hemorrhoid

treatment use a cream (See Product Market Share chart). Preparation H and Tucks are the

leading providers of creams, wipes/pads, and suppositories and can be purchased at most

grocery and drug stores. The table below shows a sampling of current product offerings in

10

the over-the-counter hemorrhoid treatment

market.

Table A: Sample of Currently Available Over the Counter Hemorrhoid Relief Products Product Name Product

TypePrice Features

Preparation H Cream 11.49 Relief from painful burning, itching, and discomfort; shrinks hemorrhoidal tissue, protects irritated tissue, relieves internal and external discomfort

Tucks Pad 7.99 Relief from burning and itching, cleanses, ph balanced, hypo-allergenic, dye-free, and biodegradable, aids in protecting irritated anorectal areas

Metamucil Fiber 16.49 Promotes healing, easy to use, no side effects, effective, good flavor, relieves pain by softening stool

Balneol Cleansing lotion

15.18 Silky lotion that cleanses without water, non-irritating, forms a protective coating, can be used frequently, can be used with other creams

HemAway Toilet Seat 59.95 Portable, fast relief, fits on any size toilet, avoids

11

Other21%

Creams52%

Suppos-itories19%

Pads8%

Product Market Share

unpleasant touching of hemorrhoids, quick & safe relief, safe, strong, easy to clean

Sitz Bath Portable bath 10.99 Easy to use, comforting, not messy, soothe and relaxRubber Inflatable Cushion

Cushion 15.99 Durable & heavy gauge rubber conforms to body contour, cleans easily, moves easily

Hemspray Spray 6.99 Clean and easy to use, relieves pain, shrinks, soothes, protects

CryoSTAT Coldpack 12.99 Easy to use, no mess, no unpleasant smell, extinguishes itching and burning, shrinks swollen tissues, cold therapy directly to swollen tissue

Tucks Suppository 14.99 Soothes and protects irritated tissue, relieves burning, itching,and discomfort

Preparation H Wipes 13.49 Gentle everyday cleansing to reduce irritation, cools, soothes, comforts, convenient, easy to use, flushable

There are a wide variety of homeopathic options at various price

points distributed by small independent firms which have been

12

ignored for the purpose of this anal-ysis as there is no research on the effectiveness of the

products or their sales revenue. A sample product, “Roid Rage”, is on the left.

AS-IS STRATEGY CANVAS

The graph on the right compares the benefits of the four main forms of hemorrhoid

treatment. Most are comparable in price only and customers must use more than one

product to treat the problem. Unfortunately, the current products provide just temporary

pain relief rather than prevention and can not be used for extended periods of time. In

addition they don’t speed healing and can even make the problem worse with continued

use. The medical field advises against the use of the donut cushion as it exacerbates the

problem.

13

Industry Anal-ysis:

HemorrhoidCushions

14

Pain Relie

f

Protec

tion

Side E

ffects

Price

Portabilit

y

Ease o

f Use

Length

of Use

0

1

2

3

4

5

6

CreamPad/WipesDonut CushionSuppositories

RED OCEAN STRATEGY: PORTER’S FIVE FORCESThis use of Porter’s Five Forces applies to the current industry for hemorrhoid pillows and

to a limited extent, pharmaceutical treatments, as it exists in early 2011.

The threat of the entry of new competitors: high

15

The current threat of entries into the industry

for manufacturing hemorrhoid pillows is

currently high. In the existing market

dominated by home medical product

manufacturers, these manufacturers have a

slight market advantage because they often

produce several other home medical products.

Carex Health Brands is an example of a

company like this, which offers personal care, safety, medication aids and several other

lines. These manufacturers also have established relationships with sales channels such as

Fred Meyer or Rite-aid whichcarry their family of products. However, the actual

manufacturing of the pillows themselves is not difficult, especially for the foam pillows.

16

This simplicity in manufacturing gives rise to the factor of economies of product

differences. Virtually every donut cushion on the market now is made with basic materials:

foam or air cushions, sometimes with a removable cover. These cushions all have a low

price point of $10-$20. These products are undifferentiated with negligible differences in

appearance and quality. (See Table B)

Table B: Direct Competitors, Hemorrhoid Cushions

Manufacturer Product Cushion type Cover type Size Colors/patterns PriceBody Sport Donut Cushion Molded foam Poly/cotton 18” round Blue cover $15.75Duro-med Donut Cushion Molded foam and

convoluted foam Not given 16 and 18”

roundPlaid, navy, white covers

$13.00

Rose Donut Cushion Hard foam Not given Not given Navy blue cover $20.70K-2 Ring Cushion High density

molded foamNot given Not given Black cover $22.99

Softeze Donut Cushion Convoluted foam Not given 16.25 x 13 Plaid with tote bag $32.69Carex Donut Cushion Inflatable Ring None Not given Red rubber $13.22

17

Because the existing products all blend together, there is virtually no brand equity in the

industry. There are several reasons there is no brand equity in the current market. First,

the products are all manufactured as home medical remedies and are not being marketed

as desirable items; their meaning is entirely based on function. The medical manufacturers

use inexpensive materials and basic packaging and none are marketed as branded items.

There are some adjacent industry products that do have brand equity, which will be

discussed later in this anal-ysis.

The existing products are not of high quality and so there are low switching or sunk costs.

The current products, as noted in Table B, do not cost very much money. Further, many

online reviews show dissatisfaction with these products. Customers therefore have a high

motive to switch. The motivation to switch products creates great potential for industry

profitability.

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Other factors also make this market attractive. The hemorrhoid cushion market has high

potential for growth as most sufferers from hemorrhoids are senior citizens. The

Encyclopedia of Emerging Industries notes the overall aging of the U.S. population which

will be detailed in the Demographics section. The sheer growing population of senior

citizens makes the hemorrhoid remedy market very attractive to new entrants.

Theintensity of competitive rivalry: low

Currently the intensity of competitive rivalry within the hemorrhoid remedy market is very

low. Because of this low rivalry level, Dave’s Donuts has many opportunities that have

already been noted by their creator. These opportunities will be elaborated upon below

within the context of competition according to Porter.

In examining the sustainable competitive advantage through innovation, current

manufacturers have virtually none. Dave’s Donuts has many benefits. Because of their 19

innovation in materials (no other cushion using batting/stuffing or a logo-patterned

design), use of humor (advertising spots) and quality of construction (sidewall on pillow,

well-fitting removable cover), all creating a branded item, Dave’s Donuts has a competitive

advantage entering this market otherwise dominated by undifferentiated home medical

care products.

Dave’s Donuts also will benefit from the “clicks v. bricks” advertising and marketing

approach. Existing pillow products can be purchased on Amazon or medical supply

websites. By creating an inexpensive online presence, Dave’s Donuts can compete without

a bricks and mortar presence. This will offset some of the advantage of the presence the

medical care products such as Carex have in established retail channels. A thorough web

presence ensured by Search Engine Optimization will help Dave’s become established in

the online direct sales channel.

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Current hemorrhoid pillows have low to no advertising and marketing costs. Other than

packaging and advertising on websites noted in the previous paragraph, competitors’

online advertising expenses appear to be low. Because Dave’s is entering as a branded

product, it will incur some advertising costs not associated with the current medical

products.

The threat of substitute products or services: high

The buyer propensity to substitute is high because most hemorrhoid sufferers appear to be

using multiple products and methods to treat their ailment. A visit to the aisle at local drug

and general stores shows hemorrhoid creams, suppositories and wipes displayed adjacent

to high fiber treatments and one or two brands of inflatable or foam cushions. Online

searches reveal many compressed foam or inflatable donut cushions as noted in Table B

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above, some with covers and some without. If hemorrhoids are severe enough, surgery

may be needed for internal or external treatment.

The relative price performance of substitutes is high, depending on the product. The

amount that a hemorrhoid sufferer actually seeks treatment will be a great factor in

determining what kind of solution(s) that person seeks. For example, if patients

occasionally need treatment as noted in our MRI-Plus findings, those people may be more

likely to choose a cream or pad for a temporary solution. These pharmaceutical products

are reasonably priced so may very well serve as a sufficient substitute.

A cushion, on the other hand, provides more long-lasting relief and will appeal more to

long-term sufferers. The prices of current cushion (Table B above), are considerably less

because of inferior craftsmanship and materials. While their price is low, their performance

22

is also less than satisfactory. Therefore, the direct substitute threat of a better quality

pillow is very high.

In examining both pharmaceutical treatments and cushions, there are a number of

substitutes. However, a product such as Dave’s Donuts can easily be substituted because of

low buyer switching costs and a higher perceived level of product differentiation and

quality. Therefore, Dave’s Donuts will also create and launch a “flanker” brand called Fanny

Friends to offset other low-priced competitors imitating the design. This product will offer

less brand equity without the logo and advertising, fewer color choices, and possibly be

made with less expensive polyester filling.

The bargaining power of customers (buyers): high

23

As noted in the previous section, the bargaining buyer of customers is high because of the

lack of quality of current products and/or their low price point. Further, there is a higher

buyer concentration to firm concentration ratio, as only a few companies manufacture

cushions.

Buyer power is also becoming higher because consumers have access to information for

more and more home health care products. As noted in The Encyclopedia of Emerging

Industries:

Another industry growth factor (in the home medical device industry) was the rise in home health care, as more people received medical treatment outside of hospitals and other institutions. This rise in home care, coupled with general technological advancement, has led to an increasingly sophisticated array of medical devices intended for personal use. This spells opportunity for companies marketing devices directly to consumers.

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The bargaining power of suppliers: medium

Suppliers in the home medical product industry could imitate the construction of Dave’s

Donuts. Especially for manufacturers of foam cushions with sewn covers, switching costs

would be relatively low. Because the cushions are made of only two materials,

manufacturing would again be easy to emulate. No current supplier would have the same

leverage in product differentiation that Dave’s Donuts plans to deliver.

By using distribution channels as described in the threat of new competitors section,

manufacturers could use existing access to consumer. However, because they are already

supplying hemorrhoid cushions, they would be at risk of cannibalizing their own products.

PORTER’S FIVE FORCES – CONCLUSION

25

In reviewing Porter’s five forces, the opportunities for a new product and supplier in the

hemorrhoid pillow market appear to be very good, based on the summary of the five

forces:

The threat of the entry of new competitors: high

The intensity of competitive rivalry: low

The threat of substitute products or services: high

The bargaining power of customers/buyers: high

The bargaining power of suppliers: medium

26

Because of the combination of these forces, Dave’s Donuts is therefore well positioned to

enter this market.

Indirect Competition – Anal-ogous ProductsBecause there are no similar competitors to Dave’s Donuts on the market right now, an

examination of adjacent industries revealed products that all have relevance to Dave’s

positioning. The four that will be highlighted in place of a direct competitor anal-ysis

include the Tush Cush, Jay wheelchair cushions, meditation pillows, and Anti Monkey Butt

powder.

Table C: Indirect Competitors, Anal-ogous Products

Manufacturer Product Cushion type Cover fabric Size Colors/patterns Price

Tush Cush Coccyx Cushion polyurethane Pleather, 14x18 and Up to 6 colors, $39.95

27

foam velour 13x16 model dependent compact

Dreamtime Zafu Cushion Buckwheat Premium fabrics

Not given Purple, brocade, red, sage

$45.35

Turning Life Zabuton Cushion

Cotton batting Cotton cover with muslim lining

2x25x34 6 colors and patterns

$67.95

Jay Basic Cushion Foam Multiple Multiple Multiple $63.00

Note: Anti Monkey Butt Powder is not included above because it is not a cushion; but it is included in the strategy canvas because it is an anal-ogous for its use of humor.

Tush Cush (http://www.tushcush.com/ )

The Tush Cush comes from the nearby coccyx cushion industry, which helps people achieve

better posture and eliminate back pain. This branded, high-end product is anal-ogous to

28

Dave’s Donuts in its quality construction, variety of materials, brand differentiation and

similar price point.

The multiple benefits of the Tush Cush are prominently displayed on the home page of

their website. The multiple sizes, styles and colors, with finishes including velour and faux

leather, are listed. The different uses for the product are noted on the home page as well.

The cushion comes with a built-in handle, making it easy to carry. It is branded with a logo

that is embellished on the surface of the cushion itself. Finally, the Tush Cush is at a similar

price point to Dave’s Donuts, with a basic black model

at $39.95.

Jay Wheelchair Cushions

(http://www.jaycushions.net/)

29

Jay wheelchair cushions are targeted at the market that must use wheelchairs on an

ongoing basis. These products are manufactured by “Special Medical,” whose tagline is

“Special Medical for special needs.”

The Jay wheelchair line includes cushions from highly technical models to more basic ones,

offering 16 total products in up to eight sizes priced from $90 to $530. The quality of

construction for these premium products is very high. While there are many wheelchair

cushion manufacturers, many at lower price points, Jay is rated as one of the best

manufacturers. According to http://www.wheelchaircushionsage.com/, whose tagline is

“Wheelchair Cushion Seating for People Who Know the Best,” several of Jay’s products offer

superior quality.

The Jay wheelchair market includes senior citizens, which make up the majority of

American hemorrhoid sufferers. While many of these individuals are not bound to

30

wheelchairs, many have more sedentary lifestyles and may have disposable income they

are willing to spend on a high quality product like Jay or Dave’s Donuts.

Meditation Cushions

Meditation cushions are from the neighboring industry of health and wellness, specifically

for discerning customer. The sophistication of the products is reflected by the targeted

market segment of LOHAS (Lifestyles of Health and Sustainability) who practice

meditation. Two manufacturers are included in this analysis: The Dreamtime Pillows

(http://www.dreamtimeinc.com/buckwheat.html) Zafu cushion and Turning Life Zabuton

cushion (http://www.turninglife.com/natural-cotton-meditation-zabuton-cushion-p-

1446.html?

31

utm_medium=organic&utm_source=froogle&zenid=hmmhg4gp6nk2stgd74kq3o2i94)

which is made of cotton batting.

Dreamtime Pillows reflect sophistication in the overall website design, the beauty of the

fabrics and the packaging. The Zafu cushion has a sidewall construction as does Dave’s

Donuts, which is a more difficult and time-consuming sewing construction method.

However, the Dreamtime Zafu cushion is made of buckwheat.

The Turning Life Zabuton cushion, on the other hand, is made of

cotton batting, just as Dave’s Donuts are. As no other hemorrhoid

cushions on the market use cotton batting, this material difference

offers substantial opportunity for distinction in quality and

construction. Also borrowed from Eastern influences, futon

mattresses are often filled with cotton batting. The benefits of this

32

filling are elaborated upon by companies such as Turning Life and other natural products

manufacturers, appealing especially to people who may have latex or chemical sensitivities.

Anti Monkey Butt powder (http://www.antimonkeybutt.com/)

Anti Monkey Butt powder is a medicated powder with calamine that “is specially

formulated to absorb excess sweat and reduce frictional skin irritation” according to their

website. The name of the powder

comes from motorcycle rider slang,

because riders would get skin

irritation from long days of

33

motorcycling in hot weather. The product is currently targeted at motorcyclists, truck

drivers and athletes.

Anti Monkey Butt uses humor to address the otherwise embarrassing symptoms of itching

and discomfort in the anal area. Their home page opens with three hilarious videos with

their red-reared mascot assisting monkey butt sufferers with powder treatment. This

approach mirrors Dave’s Donuts online video segments that use humor to address the

similar embarrassing ailment of hemorrhoids. To quote the webpage

http://hemroidshemorrhoidscure.com, “Wh n you’re suffering pain and discomfort, b ing е еthe butt of a hemorrhoid joke is just adding insult to injury.”Very few similar products use

humor to address the stigma of these medical conditions. Research did reveal one ad from

the UK, which uses the number “3” to look like a sideways view of the gluteus maximus

area.

34

BLUE OCEAN STRATEGY – STRATEGY CANVAS

Current offerings in both the hemorrhoid cushionand pharmaceutical treatment options

for hemorrhoids reveal undifferentiated market space crowded with functional needs-

based products. Therefore, a second strategy canvas was completed with the anal-ogous

competition, as the benchmarking for these products is much more similar to Dave’s

Donuts than existing hemorrhoid pillow competitors.

35

Quality

materia

ls

Quality

constructi

on

Effecti

vePric

e

Brand differe

ntiated

Use of h

umor

Body conform

ing

Preven

tion0

1

2

3

4

5

6

Pillow and Analogous Products with Dave's Donuts

Tush CushMeditation cushionsJay wheelchair pillowsMonkey Butt Typical donut pillowDave's Donuts

36

Another aspect of the Blue Ocean Strategy that was considered was the Eliminate-Reduce-

Raise-Create Grid for Dave’s Donuts.

Eliminate

Placement with other hemorrhoid treatment

products in grocery stores

Rubber and foam

Raise

Discretion

Quality of cushion

Reduce

Association with a medical treatment

Create

“A club” of Dave’s Donuts members

A sense of humor

37

DemographicsThe demographics of the hemorrhoid treatment industry reveal important information

about its customers. The information presented in this section was sourced from Media

Mark, a major database examining media outlets and the characteristics of people who

purchase major media from different channels. The demographics have been consolidated

into information comparing the differences within and across segments. Below, the major

highlights of this comparison are presented. In the appendix, Exhibits 1-4 can be accessed

for further details. All information pertains to the most recent statistics released in the fall

of 2009 so it is assumed that the differences between present figures and 2009 numbers

are negligible.

38

Of All Adults (from Exhibit 1), referring to those who have used a hemorrhoid remedy of any type:Index notation: An index of 100 is exactly average, so anything above that number is greater than average.

Total use: 8.7% of adults have used a treatment in the past 6 month (19,743,000 adults of the 225,887,000 total in 2009)

Educationo Those who graduate high school but did not go to college are more likely

than average to have used a remedyo Those who attended and graduated college or who have completed post

graduate work are less likely than average to have used a remedy Age

o Middle age and above is tied to increasing likelihood of using hemorrhoid relief products

25.6% of adults who have used a hemorrhoid treatment in the past 6 months have been 65+

19.2% have been 55-64

39

21.6% have been 45-54 (although the index is 20 less than the 55-64 age group, this is due to the higher population within that group overall)

According to humorist Dav B rry, “you know you’r middle- ged е а е аwhen hemorrhoid jokes stop being funny.”

Occupationo Management, business, and financial operations have the highest likelihood

to seek treatment at just above averageo The three largest purchasing segments, however, are other, professional and

related fields and sales, and office occupation at 16.2%, 11.8% and 11.4% of purchasers respectively

Household Incomeo From those who make less than $20K to those who make $60-75K, there is a

decreasing likelihood to purchase with indexes of 126 to 84 respectively The index jumps up to nearly average for those in the $75-150K, and

$150K+ brackets

40

o Of adults that have purchased treatment, 27.1% have been in the $75-150K bracket—this is 10% more than the second (<$20K at 17.1%) and 16.8% higher than the third ($150K+ at 10.3%)

Regiono The South, by far, has the greatest likelihood of purchasing by nearly 30%

more than average and the greatest percentage of purchasers at 45.1%o The Midwest is second and the West/North East are nearly tied for third for

overall treatment usage Marital Status

o The Now married segment has the second highest likelihood to purchase at 11% more than average, but controls 61.1% of all purchases

o Widowed/Divorced/Legally Separated status has the highest likelihood to purchase at 13% more than average, but comprises only 21.5% of purchases

o The Never married group comes in third with 17.4% of purchases and a 33% less than average likelihood to buy

41

o The Engaged status is fourth with 5.1% purchases and a 42% less than average likelihood to buy

Child Ageo Increasing child age from 12months up is correlated with larger shares of the

purchasing market The highest share is 18% and that is adults with children 12-17

o It is interesting that all the likelihoods are below average with the segment of adults with children less than 12 months being the only one that stands out

This is probably due to pregnancy-related hemorrhoids This segment highest at 6% less likely than average

Raceo Black/African Americans have the highest likelihood to purchase at 12%

more than average, but only account for 13% of purchaseso Whites come in with 1% more likely than average, but make up 77.7% of the

purchasing population (due to the size of the white population)o American Indians, Alaskan Natives, Asians and Other all had much lower

than average likelihood to buy and jointly make up 10.4% of purchases42

Years at present addresso People who have lived at their current address for more than 5 years are

17% more likely to have purchased This is 64.6% of the market

o There is a correlation with fewer years at the current address and less likelihood to purchase hemorrhoid products

Home ownershipo 76.3% of all purchasers own their own homes

Looking Across Segments of Frequency Usage (from Exhibits 2-4) Of the 8.7% of the population that has purchased a hemorrhoid remedy in the past 6

months, 2.6% are heavy users (5+ uses in the last 30 days), 2.1% are medium users (2-4 uses), and 4.1% are light users (0-1 uses)

Educationo While “no college” is the highest percent of purchasers across all three

segments at about 50%, the likelihood to purchase varies greatly

43

o It seems there is a trend with heavy users being higher educated down to light users being less educated overall

Ageo While there is always a trend to have increased likelihood to purchase with

age, the difference in likelihood grows larger with frequency of use The 65+ age group always has the greatest likelihood to purchase, but

people in this segment are only 39% more likely than average to be light users and 79% more likely than average to be heavy users

The same applies to the lower end where those that are 18-24 decrease in likelihood with increases in frequency groups

Gendero Within the heavy users, men are slightly more likely to purchaseo There is a growing trend, however, where women are slightly more likely to

buy in the medium users and greatly more likely to buy in the light users Occupation

o From light to heavy users, those in the management, business and financial operations segment grow in likelihood to buy from 6% less likely than

44

average to 11% more likely than average Also, the differences polarize in the heavy users compared to the light In the light user category, all are below average likelihood to buy

Household incomeo The highest likelihoods to purchase are always within the lower income

brackets across frequencieso Those who are light users and making less than 20K are 49% more likely

than average to purchase Region

o These numbers are mostly the same across frequencies with a minor exception of medium users in the Midwest shooting up to slightly above-South levels

Marital Statuso Those widowed/divorced/legally separated, never married, and engaged

decrease in likelihood to purchase with increases in frequency of use categories

o Those who are married increase in likelihood over increasing frequencies45

Raceo Whites increase in likelihood with frequency slightly while Blacks/Africans

Americans decrease tremendously

In-Depth Look at Heavy Users (from Exhibit 5)This information was pulled because heavy users would be more prone to use a

cushion like Dave’s Donuts. It describes how the heavy users of hemorrhoid products differ from the average users by subtracting Exhibit 1 figures for percent down and index from Exhibit 2.

Educationo Heavy users with higher education have a higher likelihood to buy

Post graduates are 30% more likely to buy as a heavy user than as an average user

Ageo 65+ is 23% more likely to purchase as heavy users than as average users

(79% more likely overall)o 55-64 has 0 variance with findings in all users

Gender46

o Women are not as likely to be heavy users Occupation

o Sales and Office Occupation is 20% less likely to purchase as heavy users than average users

o Management, business and financial operations are 9% more likely to purchase as heavy users than average users

Household Incomeo Higher incomes tend to have higher likelihoods to purchase as heavy users

than average users Marital Status

o The Now Married group is 8% more likely to purchase as heavy userso Engaged and windowed/divorced/legally separated are 11% and 13% less

likely to purchase as heavy users respectively Home Value

o Those with homes over $500K are 23% more likely to purchase as heavy users than average

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o Those with homes less than $50K are 50% less likely to be heavy users than average users

Raceo While whites are 5% more likely to purchase as heavy users, Blacks/African

Americans are 50% less likelyo Also, American Indians or Alaska Natives are 46% more likely to purchase as

heavy users than average users

Census Projections about a Possible Target Age SegmentThis information was sourced from the U.S. Census and the Encyclopedia of

Emerging Industries. This data shows that if seniors are targeted, their overall size in both sheer numbers and as a percentage of the total population are growing faster than any other age group into the next 40 years. According to the Encyclopedia listed above:

Leading the list was the graying of 77 million baby boomers. According to Home Care Magazine, by the mid-2000s some 24 million baby boomers had reached age 50. After the first members of this generation reach age 65 in 2011, those over age 65 will continue to represent a larger share of the overall population. By 2020, more than 54

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million people in the United States will be over age 65. In fact, by 2030, members of the 66 to 84 age bracket will constitute an estimated 20 percent of the U.S. population.

The 65+ age group is projected to increase in proportion to the American population for the next 40 years

o By 2015, it is expected that there will be a 1.4% increase in this group (the only positive increase of all age groups)

This means that seniors are gaining population share over their younger counterparts

o By 2015, there will be approximately 6.4 million people in this age group The 45-64 age group is expected to decrease continually into the next 40 years

losing 0.3% in the next 5 and 0.9% in the 5 years after that

The Problem

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There are actually two pain problems –psychological and physical--associated with

hemorrhoids. First, hemorrhoids are embarrassing and nobody wants to talk about them.

They involve a very personal part of the body that excretes waste which looks disgusting

and smells foul. Second, hemorrhoids are physically painful, especially when sitting.

Solution: Dave’s DonutDave’s Donuts for Delicate Derrières solves both of these issues. Not only is Dave’s Donuts

differentiated through branding; it also turns hemorrhoids into a funny subject that people

can joke about instead of an embarrassing one by adding humor. The product itself is

discreet and inclusive; the only people who will recognize your problem are those who

have it themselves. Most importantly all these claims are backed up by a product that is

more effective than current cushions.

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SWOT

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Unique Value PropositionDave’s Donuts will provide a product unique from other hemorrhoid pillows on the market

because it offers superior comfort, discretion and class, with a touch of humor to lessen the

psychological pain of having hemorrhoids.

While many hemorrhoid cushionsexist on the market, none have the differentiation of

Dave’s Donuts in terms of material, construction, branding and positioning.

- Material: most pillows are constructed of hard foam or a blow-up cushion on the

inside. The exterior coverings, when available, are limited in color choice and are

made of inferior, ill-fitting fabric. (See brand comparisons from industry anal-ysis).

Dave’s features cotton batting, or polyester or recycled plastic (the final prototype

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has yet to be determined) filling with a cotton-lycra blend fabric cover that has the

logo patterned on it like a Coach pattern.

- Construction: Dave’s features inner pillow with zip cover, outer zip cover, side wall

construction and a downward sloping shape in front to promote a more comfortable

tailbone position.

- Branding: Dave’s has a complete product positioning with its 1930’s Art Deco

inspired motifs, themes and colors, including cushioncovers with the Flying DD’s

logo.

- Positioning: Every hemorrhoid cushionfound is positioned as an undifferentiated

medical care product. Dave’s uses humor in its advertising and discretion in its

pillow covering to create a “tribe” of hemorrhoid sufferers who can identify with

someone simply from seeing the product.

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Whole Product Solution

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Dave’s Donut

Existing Options for Whole Product Solution• Color options: Dave’s will launch in three colors with the logo. More options may be

available through a printable fabric supplier located in the Midwest. • Size options: Dave’s will probably launch with the travel size option, which is

16”x13”. They will next consider an 18-inch wide version.• Unwrapping experience: Dave’s

Donuts will come in a beautiful custom-made diecut cardboard box that can also serve as a shipping container. The customer will open the box to find their new cushion wrapped in white and silver logo-stamped tissue with a silver seal. The unwrapping experience of delight associated with the iPod’s award-winning packaging inspired this method.

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• Natural or recycled stuffing options:Dave’s will be made either with a cotton batting stuffing or a recycled soda bottle synthetic stuffing. Cotton batting may be reserved for Dave’s Donuts, while the synthetic may be used for the flanker brand Fanny Friends.

Recommended Options for the Whole Product Solution • Warranty: Because of the premium

price and quality of the cushion, it is recommended they come with a satisfaction-guaranteed warranty of six months. Cotton batting futons often come with a five-year warranty.

• Travel Bag: To add to the discretion of carrying your cushion, it is

recommended that a matching travel bag be included in the purchase. 57

• Customer Service: A strong sales force, both for answering the phone for call-in orders and to introduce the market, is recommended. Sales staff should be sympathetic to the hemorrhoid sufferer and sensitive in the sales transaction.

Define the BattleThere are several segments where Dave’s Donuts could achieve market momentum that

would develop into market leadership:

• Snowbirds • Retired people who travel but do not stay in one place like snowbirds do• Truckers• Young mothers

From these segments our beachhead will be retired travelers. The first area of focus for the

beachhead will be on the retired Rick Steves’ travelers who represent the innovators and

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early adopters. Rick Steves is considered the leading European travel operator. Their travel

philosophy from their website is summarized below:

“Travel is freedom... one of the last great sources of legal adventure. Travel is intensified living, with maximum thrills per minute. It's recess, and we need it. Experiencing the real Europe requires catching it by surprise, going casual... Through the Back Door.

Affording travel is a matter of priorities. (Make do with the old sofa.) You can travel simply, safely, and comfortably anywhere in Europe for $100 a day plus transportation costs. In many ways, spending more money only builds a thicker wall between you and what you came to see. Europe is a cultural carnival, and time after time, you'll find that its best acts are free and the best seats are the cheap ones.”

But the best seats may not be the most comfortable ones, opening up opportunity for Dave’s

Donuts to save the day!

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The Rick Steves’ travelers are the highly educated, more adventurous, budget-minded

retirees than snowbirds who you would typically find sunning themselves all winter in

Florida or less affluent senior travelers who may take a short trip to Mexico to escape the

winter at an all-inclusive resort. The Rick Steves’ traveler would typically stay at senior

hostels or European home stays. Senior hostelling is a less expensive method of travel than

staying in hotels; European home stays will not be considered because they are each

usually run by a single proprietor and offer unique one-off housing.

A February 6, 2011 article in the Philadelphia Inquirer titled “Senior Traveler: Today's

hostels offer comforts” notes how today’s hostels are catering to budget-minded seniors,

such as those who go on Rick Steve’s adventures.4 According to the article, “Seniors account

for up to 80 percent of Steves' tours and half of book sales” and Rick Steves’ staff are

planning to increase their number of hostel listings in their guidebooks.

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For the Rick Steves’ guidebook traveler (innovator) and the Rick Steves tour traveler

(visionary), informed intuition will be used in developing these archetypes. As noted in

Crossing the Chasm, identifying these user groups that currently little data exists about

means beginning with a high risk, low data decision. Therefore, actual people with their

stories (names and some circumstances changed for privacy) were used to develop the

beachhead.

Early Markets: Innovators

While it may be a stretch that seniors are “technology enthusiasts,” their beloved children

certainly are and in order to keep up with them and their grandchildren on their travels,

will most likely be competent with internet access so they can Skype with their relatives

while away.

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Innovators must have several issues addressed that are important to them, and the Rick

Steves’ tour traveler embodies these issues. First, they want the truth. Therefore, it is

important that Dave’s Donuts communicate clearly but not make medical claims that

cannot be substantiated. Also, innovators want cheap products. The Rick Steves’ traveler is

budget-minded so would appreciate an effective but not overly priced Dave’s Donut.

Perhaps key innovators are therefore targeted with the lower cost travel version of Dave’s

Donuts and/ or a free promotion as part of a Rick Steves’ tour. Last, innovators want to be

the first to have new products, so perhaps Dave’s Donuts labels its first short

manufacturing run as the “original limited edition,” much like prints from an artist. In

return for their limited edition cushion, customers could provide feedback on their

products that could be used to improve future editions of Dave’s Donuts or target them

more effectively at the customer.

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Those who buy Rick Steves’ books may be categorized as the innovators. They are risk

takers who are willing to travel to new places on their own. They may be the hard-working

individuals who have saved for retirement and now are going to enjoy the deferred dream

of travelling to see the world. They also could be self-made entrepreneurs who have retired

early or are taking a year or two off to travel around the world. They again may simply

want Dave’s Donut for its comfort, as they are now on their adventures and forced to sit for

long periods of time on public transit seats that may not even be cushioned when in their

previous lives could stop their car when they wanted to

stop driving.

Meet Dexter. Dexter created a software program that he

sold to the U.S. military for a tidy sum of money. He was

able to retire early but only because he worked hard to do

so. Dexter now wants to travel the world for a year before 63

he comes up with his next business endeavor. He may not be travelling in style but he

wants to be comfortable while he goes on long adventures like taking the Trans-Siberian

Railway to places he read about in The Gulag and to make a stopover in Mongolia.

Early Adopters: The Visionaries

Meet June and Jack (Names changed for

privacy), friends of one of the authors. They are

active, highly educated seniors who enjoy

traveling. They are both Midwestern and

sometimes enjoy less than nutritious food such

as French Fries and Kansas City BBQ. Jack now

runs his own technology company, June enjoys

creative pursuits. They enjoy some finer things

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in life and occasionally splurge on travel. They would personify the Rick Stevestour traveler

because they have taken them before and really enjoy them. They are looking forward to

another trip this year to celebrate their wedding anniversary.

They may therefore recognize the “breakthrough” of the cushion as the hidden donut.

Because they are seeking new solutions, they will not be as price sensitive as the

innovators and would be more willing to pay a premium for Dave’s Donuts.

Because Rick Steves is also a Northwest creation, their company may be influenced to carry

Dave’s Donuts in their travel store and not even market it as a hemorrhoid cushion, but

simply to market it as an inventive seat cushion that relieves pressure while sitting for long

periods. They could be asked for their candid feedback on the Original Donuts and upon

filling out a survey, receive a second donut as a free gift.

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Both the innovators and visionaries would be interacting extensively with new people

around the world and could open up global markets to Dave’s Donuts and expand the small

initial reach of the product launch in the United States. They also would be exchanging best

travel stories and tips, which are often funny or sometimes embarrassing: just think of

different restroom (or lack thereof) experiences in developing countries.

Both of these groups could be immediately accessed easily through Rick Steves’ free

ongoing travel classes in Edmonds. While active solicitation would not be appropriate, the

creator of Dave’s Donuts could attend these sessions with his cushion and most likely strike

up several casual conversations around the subject.

Moving to Mainstream Markets

The Early Majority and the Pragmatists: the Snowbirds

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Long-term Stay Snowbirds: Snowbirds were chosen as the Early Adopters because they

spend four to six months every winter socializing with other snowbirds from around the

United States and Canada. American snowbirds in the “sunbelt” states stay an average of

six months and number around one million. About 500,000 Canadian snowbirds

congregate in the southern American states for about four months of the year.5 According

to the Snowbird Extravaganza, the 55+ age snowbird attendees have the following

statistics:

• 80% of their income is discretionary• 92% own their principal residence• 60% own their winter residence• 81% are in Florida 3 to 6 months per year

This focus needs to be sharpened even further to narrow the early majority target market.

According to a University of Florida study on snowbirds, the majority of Florida’s

temporary residents are:67

• New Yorkers: 13.1 percent of Florida’s temporary residents• Michiganders at 7.4 percent• Ohioans at 6.7 percent• Pennsylvanians at 5.8 percent• Canadians at 5.5 percent

The report also states “Given Florida’s 7 million households in 2004, these results suggest

that about 920,000 temporary residents called the Sunshine State home during the peak

winter months.”6

From these statistics, the Midwestern (total 19.9%) and Canadian (5.5%) Florida

snowbirds were chosen as the early majority. While New Yorkers represent the largest

population, they are vastly different in personality from Midwesterners and Canadians and

outside of Florida, do not interact with them. In fact, even in Florida, the Midwesterners

and Canadians would most likely avoid New Yorkers because they may be stereotyped as

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brusque, loud and obnoxious. One Midwestern author of this paper has lived in Manhattan

and can honestly say that New Yorkers are like aliens from different planets. One needs

only to picture Jerry Seinfeld’s parents in Florida to understand how their Midwestern and

Canadian senior counterparts might avoid them.

Canadians and Midwesterners are the “prudent souls” who “let somebody else debug your

product.” Unlike New Yorkers, they do not draw attention to themselves. Most importantly,

they do not like risk, because it can be an opportunity to waste money and time. The

snowbirds have earned their place in the sun, literally, and especially the older ones who

come from the Depression era do not want to waste their money. They will be loyal once

won over and could be the purchasers of many Dave’s Donuts.

Canadians alone could be good pragmatists for the simple fact that Dave’s Donuts

proximity to Canada and potential manufacturing in Canada could mean that this audience

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could be more easily reached with shipping than what other American companies would be

able to consider. As keeping the competitors out is an important part of establishing the

beachhead, this physical proximity to the Canadian border could facilitate “good fences”.

Canadians do not identify donut cushions as hemorrhoid cushions and may be more likely

to adopt them whether or not they have hemorrhoids.1

Also, Midwesterners and Canadians would much more appreciate discretion than the

average New Yorker, who talks openly about such issues as visiting their therapists.

Therefore, this early majority would like the discrete and classy nature of Dave’s Donuts.

1In Canada, donut cushions are not even marketed as hemorrhoid cushions; they are sold as “invalid” cushions which in some ways sounds worse! “They are called invalid rings here, because they are marketed at a wider range of people than just those with hemorrhoids (people with anal fissures, women after childbirth, etc.),” says Robert Chin, Pharmacist and owner of two Shoppers Drug Marts, a leading Canadian drugstore chain. However, this different perception of donut cushions leads into the choice of Canadian snowbirds as one of the mainstream markets to target.

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Further, Midwesterners are an ideal target market once the chasm has been crossed

because they may not be as health-conscious as east coast residents. For example, this

Midwestern author’s father has his Specialist degree (one step away from a PhD), yet he

enjoys Southern style cooking and thus has a weight issue. Older Canadians are also less

image- conscious and more likely in their colder climes to have a more sedentary lifestyle.

A certain Canadian finance professor who suffers from diabetes and teaches at Western

Washington University comes to mind.

Next, Midwesterners and Canadians that are 55+ are more likely to have been raised in a

rural lifestyle than New Yorkers, and thus have been influenced by richer rural diets of

their youth. These now seniors who were more physically active as young people and

burned calories working on farms, in factories or loading palettes at grocery stores can no

longer keep the weight off.

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Last but not least, Midwesterners and Canadians are more likely to have dispersed

relatives and close friends than New Yorkers. Many New Yorkers, with their vastly different

lifestyle, simply never leave except for holiday. The Midwesterners and Canadians probably

have more dispersed relatives throughout the United States and Canada who they can

share their success stories with about Dave’s Donuts. They would therefore become

reference points for Dave’s Donuts either upon their return home or while they were still

travelling. For example, this author has immediate relatives in Missouri, Texas, Oklahoma

and Pennsylvania.

Positioning StatementFor the “Rick Steves’ traveler” hemorrhoid sufferers Who are dissatisfied with current donuts, creams, suppositories, and wipes,

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Our product is a donut cushion That provides relief, unlike existing donuts, We have assembled a variety of personalizing options for a donut with added comfort, discretion and class.

Launch the Invasion

BrandingThe1930’s Art Deco inspired motifs, themes and colors, and the Flying DD’s logo will be the

basis for all creative elements of launching the invasion. Samples of the motifs and colors

are shows in the pictures.

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Price

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Dave’s Donuts will be priced between 39.95 - $49.95. This price point is appropriate as it is

low enough to be affordable but high enough to be desirable. It also significantly higher

than current hemorrhoid pillows which range between $10.00 - $25.00.

Place

Initially and within the foreseeable future, the Internet will be the only location where one

can buy Dave’s Donuts. This makes sense because when people experience pain they will

often search the web for the next best thing to solve their problem. Even though online

sales simplifies distribution, the customers will not be able to physically handle the product

before hand to experience the quality. The places online that will sell the product will be a

direct representation of the company.

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The company will have its own website (see picture below) through which the product may

be purchased but other important online sales venues are Amazon.com and Facebook.com.

Amazon.com offers easy research, payment, and shipping for the consumer and simple

hosting for the business. New Facebook ads and apps allow for sales through Facebook and

can offer a click and buy option so that consumers will not have to stop what they are doing

to purchase the product. The more sites on which Dave’s Donuts is mentioned are

important because it improves Search Engine Optimization.

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Promotion

1. #1 Option: SEO

2. Facebook

a. Adsb. Fan page

3. Banner Ads

a. Rick Steves website

b. The Virtual Tourist

4. Radio

a. A Prairie Home Companion

i. http://americanpublicmedia.publicradio.org/underwriting/docs/

underwriting_online.pdf

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ii. http://americanpublicmedia.publicradio.org/underwriting/docs/

underwriting.pdf

5. Magazine

a. SkyMall

6. Social Media

a. YouTube: post videos

b. Twitter: Invite users to post a tweet referencing Dave’s Donuts and receive a

gift certificate

c. Flickr: Search for people holding a Dave’s Donut in a picture

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Future Expansion

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Other Winter Vacationers: Many Americans and Canadians who have some discretionary

income may travel somewhere warm for a winter holiday but not for permanent residence.

For example, three years ago one author travelled to a large all-inclusive resort in Puerto

Vallarta, Mexico, for one week. The vast majority of other guests were very pale,

overweight, older people. For all the reasons aforementioned in the early majority section,

this segment could be ideal current or future candidates for Dave’s Donuts. A promotion in

partnership with popular resorts could help reach the appropriate consumers.

They may also take a cruise where they would meet other retirees and visit different ports

of call. Holland America and Cunard cater mostly to wealthier older residents, with senior

programming. Other less exclusive cruise lines that target older adults includes Princess,

Celebrity and Royal Caribbean. Carnival and Disney would not be good choices because

they focus on much younger populations and families.

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Even if seniors do not have great discretionary income, they still want to be comfortable

while travelling and sitting. One specific market that cater to longer-term though more

budget travellers would be camp hosts. Camp Hosts (http://www.camphost.org/) would be

ideal because they stay in an RV at a campground all season as hosts and interact with

every single guest when they welcome them. One author’s parents have seriously

considered this travel option.

Truckers: Truckers don’t eat well and they sit all the time. They eat at truck stops where

the usual fare is greasy food. They drive several hours a day, with the law stating that long-

distance/multi-state drivers can drive no more than 11 hours daily. In 2006, there were 3.4

million drivers working in the total industry.7

This segment would be ideal to target because they cannot get up and move around if they

are uncomfortable, unlike an office worker, and they also communicate frequently with

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their peers at the aforementioned truck stops. In addition to communicating directly with

their peers, many organizations that support truckers in the United States could be

targeted with advertising and promotions:

Teamsters Union Owner-Operator Independent Driver Association (OOIDA) American Trucking Association (ATA) United Truck Drivers Association (UTDA) America's Independent Truckers' Association (AITA) NorthAmerican Transportation Association (NTA) Freight Haulers of America (FHA)

The website Hemorrhoid Information Center has an entire section devoted to truckers,

partly because the working conditions can contribute to hemorrhoid development.

http://www.hemorrhoidinformationcenter.com/truck-drivers-and-hemorrhoids/

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This group could be an ideal segment because generally trucks are a private domain where

they would not have to feel embarrassed about having their cushion.

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A Lesson from Febreeze: Make Dave’s a Part of Your Daily Routine

Febreze found success after it was reintroduced as a product to be used daily to prevent smells, and Dave’s could be positioned as a product to prevent pain while sitting instead of getting rid of pain from sitting. “The problem is thought to be that consumers see Febreze as a product that gets rid of fabric smells, rather than preventing them occurring…The ad represents part of an international attempt by P&G to reposition Febreze as a cleaning product that consumers should use as part of their daily household routine.”

Much like the repositioning of the product Febreze, marketing Dave’s Donuts as a comfort device would remove the stigma of hemorrhoids and perhaps further their introduction into marketplace and allow them to cross the chasm.If Dave’s or Fanny Friends were introduced as a comfortable seating product for anyone, then hemorrhoid sufferers could discover the product on their own. Many of R.W. Goodwin’s stories about the popularity of his product come from individuals who have adopted use of the cushion even though they do not have hemorrhoids. However, as all product development and positioning thus far has been targeted at the hemorrhoid sufferer, this option will not be further considered in this paper.

Source: http://www.campaignlive.co.uk/news/76433/P-G-ad-plan-reposition-Febreze/

Covering Our AssPatents provide legal protection, but this protection can be easily side-stepped with a

product that has a small change from the original design. If Dave’s Donuts goes to market

without a plan to deal with this threat, it is almost inevitable that another company will

quickly move in with a knock-off product and steal market share. This very thing happened

with the introduction of the C-shaped neck pillow intended for neck support while flying.

The original company from Seattle made an undifferentiated product with a premium

price, but the idea was quickly stolen, replicated, and sold at a fraction of the price. The

result of this was the complete loss of market share by the original neck pillow company

and its eventual disappearance from the marketplace.

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In order to avoid this potential catastrophe, it is necessary for Dave’s Donuts to make sure

the flagship brand is highly differentiated and come to market with an existing knock-off.

A high level of differentiation can come in the form of product quality or brand equity—for

Dave’s Donuts, the hope is to be high in both qualities. This is necessary because when a

customer is evaluating purchase options, there needs to be a compelling reason to spend

more on a product. In the situation of the neck pillow, this was not the case. Coming to

market with an existing flanker brand will give the knock-off product the first-mover

advantage in the low-end donut cushioncategory. Any company that tries to invade with

their own knock-off will be fighting for second place. There is already a plan in the works

to come out with “Fanny Friends”. The advertising that will go into this will be akin to,

“Why spend more for the other brand (referring to Dave’s Donuts).” It won’t have the same

quality or marketing budget as Dave’s Donuts, but it will fulfill the needs of those who are

price sensitive.

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Potential Derailers

There are a number of different reasons for why this product may fail to meet

expectations. Efforts have been made, however, to make sure these risks are minimal.

1. Failure to manufacture Dave’s Donuts on the scale required

a. Producing too many will lead to high inventory cost and may lead to negative

cashflow

b. Cost of manufacturing with current cotton batting method is too high to

provide enough of a profit margin

c. Producing too few will lead to customer dissatisfaction for wait times

2. Inability to cross the chasm

a. Poor beachhead selection

b. End product is not a whole product solution

c. Beachhead is not a reference group for the pragmatists

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d. Inability to create product awareness

i. Marketing channels poorly selected

ii. Unexpected lack of “buzz”

3. Improper assessment of the marketplace

a. Knowledge about dissatisfaction with current offerings was derived from

Bob’s personal experience and talking with others

i. Could be a biased group

ii. No official survey was conducted

4. Distribution Problems

a. Website may be inappropriate channel for the beachhead

5. Catastrophes

a. Bob Goodwin not following through on this product for any reason

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Dave: A Day in the Life (After)The morning starts as it usually would—with a painful itch. The awkwardness of treating

Dave and his wife’s symptoms with direct-application products is limited to this time

though. Once they are out and about, they have Dave’s Donuts to save their derrières.

During the trolley ride they both take a seat on their Dave’s Donut and rest their legs up for

all the exploring they have to do. The only comments they receive from fellow travelers are

how jealous they are that Dave and his wife thought ahead to bring a comfortable seat.

Instead of feeling old and plagued by an embarrassing affliction, their attention focused on

the wonderful time they’re having.

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End Notes

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1 Hemorrhoids & Fissure-in-Ano, Nancy Morin, MD, Quebec, Canada, http://www.fascrs.org/physicians/education/core_subjects/2008/hemorrhoids_fissure_in_ano/, accessed February 11, 2011.

2 http://www.webmd.com/a-to-z-guides/hemorrhoids-topic-overview, accessed February 12, 2011.

3 http://www.fascrs.org/patients/conditions/hemorrhoids/ Conditions/Patient Brochures-Hemorrhoids ©2008 American Society of Colon & Rectal Surgeons, accessed February 12, 2011.

4http://www.philly.com/philly/travel/ 20110206_Senior_Traveler__Today_s_hostels_offer_comforts.html

5http://www.snowbirdextravaganza.com/pdf/FloridaMarketingKit.pdf

6 http://news.ufl.edu/2004/11/22/snowbirds-2/

7"Truck Drivers and Drivers/Sales Workers" .Occupational Outlook Handbook.Bureau of Labor Statistics, U.S. Department of Labor.2007-12-18. http://www.bls.gov/oco/ocos246.htm#projections_data.Retrieved 2008-01-25.

http://www.ricksteves.com/news/classes/class_menu.htm