INDIAN INSTITUTE OF MANAGEMENT, AHMEDABAD & NATIONAL INSTITUTE OF DESIGN, P.G.CAMPUS For requirements of the course
New Technology Applications, Design and Business Models
Final Report
Weather Gather Submitted to: Instructors: Prof. Rakesh Basant Prof. Jignesh Khakkar Prof. Bhavin Kothari
Submitted by: Sanchit Bansal (IIMA) | Kunjan Savaratkar (IIMA) Aprajita Chaudhary (NID - NMD) | Arvind Sethia (NID - SDM) Date of Submission: 6th September 2013
Acknowledgement
We wish to express our deep sense of gratitude towards our project supervisors, Prof Rakesh Basant - IIM Ahmedabad, Prof Jignesh Khakkar – NID and Prof Bhavin Kothari - NID for their able guidance, which helped us in completing the project work in time. We are grateful to the exchange students who spared their time to give feedback on the application. Finally, yet importantly, we would also like to express our heartfelt thanks to all those who wished for the successful completion of this project.
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Table of Contents 1.
Introduction......................................................................................................................... 4
2.
Ideation Stages .................................................................................................................... 4
2.1 2.2 2.3
Stage 1 – Understanding an existing application .......................................................................... 4 Stage 2 – Forming a list of potential ideas .................................................................................... 5 Stage 3 – Selection of an application idea..................................................................................... 6
3.
Motivation and Problem in Detail ........................................................................................ 6
3.1 Problem Definition ........................................................................................................................ 6 3.2 Motivation and Literature Survey ................................................................................................. 7 3.3 Primary Research - Market Survey.................................................................................................... 8
4.
Existing Solutions ................................................................................................................. 8
5.
App in Detail ........................................................................................................................ 9
5.1 Features ......................................................................................................................................... 9 5.2 Flow Chart of Process .................................................................................................................. 10 5.3 Value Proposition ........................................................................................................................ 10 5.3.1 Products and Services........................................................................................................ 11 5.3.2 Gain Creators .................................................................................................................... 11 5.3.3 Pain Relievers .................................................................................................................... 11 5.3.4 Gains ................................................................................................................................. 12 5.3.5 Pains .................................................................................................................................. 12 5.3.6 Customer Jobs ................................................................................................................... 13 5.4 Factors Favoring Gather Weather ............................................................................................... 13
6.
Designing of the app .......................................................................................................... 13
6.1 6.2
Prototype Development .............................................................................................................. 13 Screenshots – User Interface ...................................................................................................... 14
7.
Business Model and Commercialization ............................................................................ 18
7.1 Market Sizing ............................................................................................................................... 18 7.1.1 Potential Customer Segments ........................................................................................... 18 7.1.2 Target Customer Segments ............................................................................................... 19 7.1.3 User Base Projection ......................................................................................................... 22 7.2 Deployment Channels ................................................................................................................. 24 7.3 Key Partners ................................................................................................................................ 24 7.4 Marketing and Promotion ........................................................................................................... 25 7.5 Customer Relationships............................................................................................................... 26 7.6 Key Resources.............................................................................................................................. 27 7.7 Key Activities ............................................................................................................................... 27 7.8 Pricing and Financial Analysis ...................................................................................................... 28 7.8.1 Pricing................................................................................................................................ 28 7.8.2 Revenue Streams ............................................................................................................... 28 7.8.3 Cost Streams ..................................................................................................................... 29 7.8.4 Cash Flow Forecasts .......................................................................................................... 29 7.9 Strategy Diamond ........................................................................................................................ 31 7.10 Business Model Canvas ............................................................................................................... 31
8.
Risks .................................................................................................................................. 32
9.
References......................................................................................................................... 33
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1. Introduction Weather Gather is a mobile application that intends to equip people with the ability to plan their vacation according to their weather preferences. In countries with extreme or fickle climatic conditions, weather becomes an important determinant in determining whether people choose it as their tourist destination. This app will abolish the need of going through the painful process of checking weather for different places and then deciding.
This report is organized into 7 sections. Section 2 will describe the ideation stages and the process of zeroing on the development of this app. Section 3 will describe the problem in detail and talk about the motivation behind choosing to solve this problem. Section 4 will discuss the current solutions and competitor apps available in the market. Section 5 will describe the app in detail with its features and value proposition. Section 6 will discuss the design aspects of the app and give the prototype developed. Section 7 will describe the Business Model and the commercialization process planned for the app. Section 8 will discuss the risks of developing this app.
2. Ideation Stages The following three step process was followed to decide on the new technology application design idea:
2.1 Stage 1 – Understanding an existing application
In this stage, we were given the task to study the design aspects and the business model used for an existing application. We chose Tumblr – one of the most famous microblogging websites for this purpose. After using the app for some days, we learnt a lot about design aspects and some possibilities for the business models which can be used.
Key learnings for design related aspects
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User interface should be highly simplified such that the user does not need to think on how to do a certain task
Most of the options should be embedded using icons so that it appears attractive and easy to use
Color combination used is a very important parameter
Statistics, if possible, should be incorporated somewhere as they really drive users
Customization possibilities with respect to anything in the app helps in giving a personal touch
The app should be integrated with various social media platforms like Facebook, Twitter etc.
Key learnings for business model related aspects
Freemium is a model which generally works well as some features are offered for free which help in attracting new users
Partnering with different stakeholders in diverse fields can help expanding the user base and increasing streams of revenue
Data analytics, if possible, can also be a good source of revenue from the app
2.2 Stage 2 – Forming a list of potential ideas In this stage we were required an initial list of the gaps in the space of mobile applications and brainstorm on each of them. Our group came up with the following ideas:
1) An app which can help people seek opinion on various things they plan to buy. Currently, people do it on facebook but there is no special platform for the same. 2) An app which can help people to control all electric devices from a single device and hence save electricity 3) An app which can help a teacher to control tablets of all students in class so as to prevent them from diverting 4) An app which can help a person to locate his mobile phone when lost 5) An app which helps people plan their vacation based on weather preferences
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2.3 Stage 3 – Selection of an application idea All the above ideas were brainstormed in this stage. Background research was done on all of them and the current solutions were explored in detail. The following parameters were identified for choosing an idea:
Idea
Market Potential
Existing solutions
Complexity –
Feasibility –
Learning
Overall
Potential
development
Opinion Seeking Control Electric Devices Control Tablets Lost phone Weather based search
Thus, according to evaluation on the above parameters, we selected the app for weather based search.
3. Motivation and Problem in Detail We will describe the exact problem we are trying to solve and the motivation behind the same in this section.
3.1 Problem Definition A lot of people place very high importance on a place’s weather conditions before deciding whether or not they want to spend their vacation at that place. In order to do adhere to this criteria, people go to some website to check the weather of a particular place and then do their
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bookings accordingly. Such a process can become painfully time taking as it can go on and on if the weather conditions are not found to be suitable. More importantly, such a process only guarantees that one visits a place if weather is found to be suitable. There is no way for a person to know what locations he can go to if he wants a particular type of weather. This is the main problem we are trying to solve.
There are some other smaller issues which will also get solved through our app. Once a person has done bookings for some location, he needs to check the weather updates regularly as any changes might disrupt his plan. This app will remove the need to check manually for changing weather forecasts. Besides, once a person has decided on a location, he needs to search for good travel and accommodation deals. This process is also tiring at times and this app intends to solve this as well.
3.2 Motivation and Literature Survey We conducted an extensive literature survey to test our hypothesis that weather is an important determinant in deciding tourist location. We found several studies confirming this hypothesis. Some of the main findings cited by some studies are as follows:
73% of German tourists acquired information on weather of their holiday destination [1]
The World Tourism Organization, in meetings addressing weather, climate, and tourism, noted that weather and climate are perhaps the most important influence on the choice of leisure travel destinations [2]
Wind, humidity, temperature, drought, storm conditions, snow conditions, water temperature, and degree of sunshine are a few of the factors that affect the visitors’ decisions, satisfaction, and spending—that important economic "bottom line" for tourism businesses and tourism destinations [2]
Climate is one of the geophysical elements that make up geographical space, contributing to the environmental conditions that facilitate or hinder human settlement. People seek to settle in those spaces that offer the greatest comfort and possibilities of survival in terms of climate. Tourism, as a human activity, is also governed by these same imperatives [3]
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
An international survey with 66 national tourism and meteorological organizations found that a large majority (81%) felt weather and climate were major determinants of tourism in their nation [4]
Thus, after reading several reports, it was clear that weather is perhaps one of the most important determinants in deciding a tourist location
3.3 Primary Research - Market Survey We also conducted a small market survey to confirm the need for such an application. 10 exchange students, 10 students from different parts of India (in IIM) and 10 people in the working class in India were asked whether they would prefer to use such a survey. The results obtained are as follows: Yes – would use such a product
No – would not use
European Exchange students
8
2
Indian students
6
4
Indian working class
3
7
Total
17
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The results obtained were somewhat expected and insightful as well. A large percentage of European students expressed their desire to use such a product as the climatic conditions in European conditions are fickle and harsh at times which is why climate is such an important consideration for these people. In India, on the other hand, travel is cheap and climate conditions are not very fickle which is why people are not much vary of this before planning their travel. However, Indian students being more tech savvy, would want to use such a product to make their travel perfect.
4. Existing Solutions We did an extensive search over internet and several app stores on different platforms to find solutions to the problem we are trying to solve. We did not find any solution which solved the
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problem we have defined above. However, we found some products which had very basic functionality related to our problem.
Website/App Tripit.com
Features Get automatic weather updates for any selected location
Wunderground
Weather forecast for any location
Weather.com
Get weather and maps for any location
Thus, as we can see, none of the existing solutions solve the problem and offer what we intend to offer to our users.
5. App in Detail In this section, we will discuss the features of the app, the value proposition through the value proposition canvas and see the factors which would help the app become successful.
5.1 Features The app will have the following features for a user:
Select a preferred weather type out of several types (rainy, warm, cold etc.) and find out locations in decreasing order of preferences based on dates of travel. The starting point will be determined through GPS and it will help in suggesting locations within a reasonable distance
Search for possible dates to visit a particular place based on weather preferences
See the different tourist spots in a particular location so as to decide among several possible locations
Book package tours once a location is selected
Book flights (shown starting from cheapest option) once a location is selection
Book hotels once a location is selected
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Book restaurants for food once a location is selected
The color of the background will change according to the weather selected
Add people (from facebook friends or ones who use this app) to your planned journey and chat with them to plan it further
Add the trip to one’s calendar and receive regular updates on weather on locations in that trip
The user can browse through all locations added to the calendar anytime to go ahead with any of them
5.2 Flow Chart of Process In this section, we will describe the entire process to be followed while using the app for a very simple base scenario
Sign in/ Sign up/ Guest user
Choose preferred weather type
Get a list of possible locations
Explore all locations by seeing tourist spots at every place
Book Hotels
Book Tickets and Tours
Plan trip or discuss over chat
Add people to the selected location
Book Food/Restaurants
Add the trip to calendar
Search again (based on dates or location)
5.3 Value Proposition Using the value proposition canvas, the app has the following value proposition:
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5.3.1 Products and Services
As described above, the app will give the following services
Suggestions for destinations based on a weather index, starting point and duration of the holiday
Search for location based on dates, or dates based on location
Browse through different tourist spots for a selected place
Get cheap flights and package deals, hotels and restaurants
Chat and discuss with people to plan your trip
Once a trip is locked, get regular weather updates
5.3.2 Gain Creators
It will save customer’s time, efforts and money by giving them quick and cheap solutions
It will produce outcomes that will be according to customer’s expectations or might be even more than what they expect
It outperforms current solutions by a big margin
Make’s customer life’s easier as there are so many services which are extremely easy to use
Creates positive social consequences as they would be more satisfied and relaxed with their travel
Fulfills customer’s desires of being able to plan trip according to weather
Produces positive outcomes according to customer’s expectations by giving them locations according to their tastes of weather
Since there is virtually no cost and with expansion of smartphone usage, it helps in making adoption of this solution easier
5.3.3 Pain Relievers
Produce savings in terms of time and money wasted when customer gets stuck in bad weather
Makes customers feel better as their experience from vacations would be exactly according to their wishes 11
Fixes current solutions which underperform
Puts an end to difficulties faced by consumers in terms of planning according to weather
Wipe out negative social consequences as they might develop hatred for a place if their travel experience is bad
Eliminates weather uncertainty risk to a large extent which consumers might fear
Helps customer sleeps better at night
Limit the mistake made by people to visit places in bad weather condition
5.3.4 Gains
Savings of time, money and effort will all make our customer happy
Our customer expects an outcome where he would get a list of places according to his weather preferences. The thing that might surprise him is the complete package of services offered and the relevance of list of places to his tastes
Current solutions do not really fulfill the purpose
Customer’s life would become easier through the complete service package and hence reduced headache
Customers are looking for an easy to use app with functionalities that would enable them to plan their trip according to weather
Customer measures success or failure by relevance of places suggested to his preferred climate type
The likelihood of adopting the solution would be increased by appropriateness of search results
5.3.5 Pains
Currently customer has to expend a lot of time to plan vacations which he finds painful
Bad weather at any place makes a customer feel bad
Customer fears the risk of encountering bad weather to a destination he has planned to visit
This headache makes the customer’s life difficult at times
Customer makes a common mistake of not planning according to weather at times
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5.3.6 Customer Jobs
We are helping a customer to plan his vacation
We are helping a customer to relax during his vacation
We are helping a customer to be happy
Customer is acting as a buyer
5.4 Factors Favoring Gather Weather There are several factors which might help in ensuring that this app becomes successful over time:
Expanding base of smartphone users – Users of smartphone are increasing across all geographies and in such a scenario, the possibility of such an app being used will increase
Global Warming and changing climatic conditions – Due to global warming, there have been significant and abrupt changes in weather conditions at several places which means that the importance of keeping weather in mind before planning a trip is more than ever
No competitor solution – Since there is no solution in market as of now, the chances of this app being successful are very high
Need for one stop solution – As people are getting richer, they need a one stop solution for their needs and this app fits in perfectly in this role
6. Designing of the app 6.1 Prototype Development A working prototype of the app was developed by using wireframes and linking them on a mobile device. A simple base case was taken where the user was an Indian user and he was searching for places to visit in India. 13
6.2 Screenshots – User Interface The screenshots of the prototype developed are as below. Here, as a person selects a weather type, he is displayed the associated details like temperature and humidity. This is a very basic case and can be made advanced after alpha-beta testing. It is important to note that user never selects the temp range or humidity. He will only select a preferred weather type and will be displayed the associated details. (The resolution in some screen shots is slightly lower but the text is visible upon closer examination)
Application Launcher icon (IOS icon and Android icon respectively)
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15
16
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7. Business Model and Commercialization In this section, we will describe the business model in detail and the commercialization process that has been planned.
7.1 Market Sizing The possible market for this app is all smartphone users. The details of different segments have been discussed below.
7.1.1 Potential Customer Segments
All the customers for this app have to be smartphone users. Among smartphone users, they can be divided using two parameters – geography and age.
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The different geographies are: 1) European Countries 2) Asia 3) Americas 4) Africa 5) Australia
The different age groups are: 1) Below 18 2) 18-27 3) 27-40 4) Above 40
This classification has been done keeping in mind differences in tastes and preferences when it comes to travelling for vacation.
7.1.2 Target Customer Segments
The target segments initially would be the ones who have the highest need for this product. As the app becomes famous, we will expand to other segments as well. The decisions were taken based on the survey (primary research) done earlier and the studying the smartphone market trends.
Below 18
18-27
27-40
Above 40
Europe Asia Americas Africa Australia
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Below 18 will not be targeted as they are seldom the decision makers when it comes to travel. Decisions are generally taken by their parents. Similarly, above 40 people will not be targeted initially as they are not the main users of mobile apps. 18-27 and 27-40 will be the main target segments in Europe, Americas and Australia. In Asia, only 18-27 will be targeted because they are the ones who are tech savvy and might use such an app. This decision was also influenced by the results obtained from the survey. In Africa, since the percentage of smart phone users will be smaller as compared to other geographies, it will not be targeted initially.
Some statistics which support above decisions are:
So, as can be seen a large percentage of users of smartphones engage in downloading apps.
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It is clear that a majority of smart phone users are in the age group 18-44 which is adequately covered in our target segment.
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As can be seen again, the highest penetration is also in our target age group. Thus, the initial target groups will be the ones described in the matrix. The targets will be expanded later.
7.1.3 User Base Projection
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Based on the above projections and target segments, the calculations for user base projection for this app are as follows: 2013
2014
2015
2016
2017
Smartphone Users - US (in mn)
140
159.9
178
193.7
207.4
Users in US as % of world
10%
9%
8%
7.50%
7%
Smartphone Users - World
1400
1776.667
2225
2582.667
2962.857
% who use apps
70%
74%
78%
82%
85%
Potential Target
980
1314.733
1735.5
2117.787
2518.429
Actual Target %
50%
55%
65%
75%
80%
Actual Target
490
723.1033
1128.075
1588.34
2014.743
Travel Enthusiasts %
10%
15.00%
20%
25%
30%
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108.4655
225.615
397.085
604.4229
Penetration %
0.5%
1%
1.5%
2%
3%
Number of Users (in mn)
0.25
0.54
3.38
7.94
18.13
Available Target
Thus, as we can see, there is a huge potential in terms of number of users by 2017. According to our projections, we will have around 18 million users which seems to be a promising number.
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7.2 Deployment Channels There are several app platforms in market today. They are – Android, iOS, Symbian, Blackberry, Windows and Others. Some of the statistics available are as follows:
As we can see Android and iOS are the major platforms and growing rapidly. For others, Symbian is declining continuously while blackberry and Microsoft also are not showing good signs in future. Thus, our primary targets would be Android and iOS platforms and app stores as the trends favor them. Among these, Android will be the main focus because of their policies which enables quick and easy monetization as there are no checks from their side. While in iOS, the process is somewhat longer and has lots of restrictions.
7.3 Key Partners We will have 8 key partners for our app.
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Tourist Agencies
Flight Booking Portals
Hotels and Restaurants
• Tours shown in our app will be linked to tourist agencies • Revenue sharing agreements
• Flight deals shown will be linked to some portals • Revenue sharing agreements
• Hotels and restaurants will be listed on our app • Revenue sharing agreements
Weather websites
Advertising Agencies
• This will be to get weather forecasts and updates for all places • BBC can be a good choice for this
• This will be to get advertisers through such companies • Will be a cost to us
Websites showing cheap flights • We do not intend to have our own search for cheap flights • This partnership will help us list the relevant options
Search Engines • Partnership with them will help our app to come at the top in search results
Advertisers • Several companies will be partnered with who will advertise on our app • Pay per click will be the main source of revenue here
7.4 Marketing and Promotion We intend to use several marketing and promotion strategies for our app:
Search Engine Optimization (SEO) – This will be done so that our app is in the prominent results when someone searches for planning travel according to weather. We will buy several related keywords
Display in App Fairs and Conferences – Several app fairs or conferences happen round the world where we will showcase our app
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Social Media Promotion – Platforms such as Facebook, Twitter etc. will be used extensively
Leveraging partner networks – Partnerships with tourist agencies, hotels, restaurants and flight booking portals will be leveraged so that we could reach out to their consumer base
Advertising on popular apps – Highly popular apps will be chosen for advertising
Advertising on print media like magazines – Several tech magazines discuss about trending apps. We will use this channel as well
Technology to be used
SMS – This will be the main technology for letting people know about our app besides the above methods
Increasing effectiveness of advertising
Track post download activity and revenue and derive insights for better targeting
Use different metrics cost per click or cost per impression for finding out the best way of going ahead
7.5 Customer Relationships There are several ways through which we plan to maintain customer relationships and engage them regularly:
It will be a free to use app totally which would propel consumers to use it
We will try to add new features regularly. The initial app will not have all the features mentioned in the starting but will be added gradually
There will be promotional offers for flight bookings etc. to engage customers
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We will have a point system where a user will get points for doing any transaction through our app which can later be redeemed for attractive things
There will be a 24 hour customer care centre which can be contacted through e-mail or phone in case of any issues and the issues will be resolved at the earliest possible
7.6 Key Resources The key resources for our app would be: 1) Algorithm to rank tourist destinations – This will be a proprietary resource and will determine to a large extent the success of our application 2) User Interface – The ease of use will be another Critical Success Factor for the app 3) Developers – They will be responsible for app development and continuous improvements and addition of features 4) Management – Responsible for designing and executing the strategy for the app 5) Partnerships – Forming successful partnerships and effective leverage will be the key to earning revenue 6) Hardware Infrastructure – As with any tech company or an app, hardware should be robust 7) Software – This will be important so as to ensure programs are safe from external cyberattacks or any unfortunate damage.
7.7 Key Activities The key activities to be performed are as follows:
Front end maintenance and upgrades – The UI will be critical component at the front end and will need constant innovation
Back end maintenance – This will include increasing the efficiency of code running on back end and maintenance of servers
Getting good deals from partners – This will be important to engage customers
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Sending weather updates – Once a customer finalizes a destination, we will be required to send continuous updates
7.8 Pricing and Financial Analysis In this section, we will discuss the pricing of the app and a breakdown of revenue streams and cost streams. Then, we will do a profitability analysis for the next 5 years and see if the app will be worth going ahead with.
7.8.1 Pricing
The app will always be a free to download and use app. This is because not many people might be prompted to use a paid app. Once the app becomes a hit, we can then charge for certain premium features which would be introduced later. But all the features that have been discussed till now will be offered for free.
7.8.2 Revenue Streams
There will be 5 different revenue streams: 1) Revenue from Tourist Agencies – We plan to have a revenue sharing agreement where we will charge 5% of the total tour charges from the tourist agency. 2) Revenue from Hotel bookings – We plan to a similar revenue sharing agreement where we will charge 5% of the total booking charges. This has been kept at 5% because big hotel booking portals themselves charge 10% from users. So, they won’t be able to give us much margins if we book through them. 3) Revenue from Flight bookings – We plan to have a revenue sharing agreement where we will charge 2% of the ticket amount. This is lower than the above 2 as our secondary research showed that margins are generally lower in this segment. 4) Revenue from Restaurant bookings – In this we will be charging a flat amount of 2$ per booking per restaurant.
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5) Revenue from advertisements – We plan to have a pay per click arrangement for all advertisements put on our app. Average charges are around 1$ per click on google according to trends [5]. So, for purpose of calculations, we will take it to be 1$ per click.
7.8.3 Cost Streams There will be six major areas of cost for our app.
Salaries Marketing and Advertismen t
Maintenanc e
Expenses Hardware and Infrastructur e
Partnership costs with flight search engines
Partnership costs with weather websited
7.8.4 Cash Flow Forecasts Assuming the number of users to be same as calculated earlier and accounting for the above revenues and costs, we will have the following cash flows for the next 5 years. It has been assumed that revenue for every year will be realized at the end of the year. Development time of the app has not been accounted for. So, it has been assumed that 2013 will also be a year of full revenue. Other assumptions have been listed below the calculations.
Number of Users (in mn) Booking rate for tours and packages Average Booking Amount Revenue Sharing % Revenue from tours and packages (in mn$) Booking rate for Hotels
2013 0.25 0.10 300.00 0.05 0.37 0.10
2014 0.54 0.11 330.00 0.05 0.98 0.11
2015 3.38 0.12 363.00 0.05 7.37 0.12
2016 7.94 0.13 399.30 0.05 20.61 0.13
2017 18.13 0.14 439.23 0.05 55.75 0.14
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Average Booking Amount Revenue Sharing % Revenue from hotels (in mn $) Booking rate for Flights Average Booking Amount Revenue Sharing % Revenue from flights (in mn) Booking rate for restaurants Fees charged Revenue from restaurants (in mn) Cost charged per click Click through rate Revenue from advertisements (in mn) Total Revenue (in mn $)
50.00 0.05 0.06 0.10 80.00 0.05 0.10 0.10 2.00 0.05 1.00 0.01 0.00 0.58
55.00 0.05 0.16 0.11 88.00 0.05 0.26 0.11 2.00 0.12 1.00 0.01 0.00 1.53
60.50 0.05 1.23 0.12 96.80 0.05 1.97 0.12 2.00 0.81 1.00 0.01 0.02 11.40
66.55 0.05 3.44 0.13 106.48 0.05 5.50 0.13 2.00 2.06 1.00 0.01 0.05 31.66
73.21 0.05 9.29 0.14 117.13 0.05 14.87 0.14 2.00 5.08 1.00 0.01 0.13 85.11
Marketing and Advertisement (in mn) Partnership Expenses (in mn) Hardware and Infrastructure (in mn) Maintenance (in mn) Salaries (in mn) Total Expenses (in mn $)
1.00 0.10 2.00 0.00 1.00 4.10
2.00 0.11 2.20 0.22 1.25 5.78
4.00 0.12 2.42 0.24 1.56 8.35
8.00 0.13 2.66 0.27 1.95 13.01
10.00 0.15 2.93 0.29 2.44 15.81
-3.52 -1.06 -2.47
-4.25 -1.27 -2.97
3.05 0.92 2.14
18.65 5.59 13.05
69.30 20.79 48.51
Total Profit Tax (at 30%) Net Profit (in mn $)
Assumptions: 1) Booking rate has been assumed to be same for all revenue heads 2) Average booking amount has been assumed to increase 10% year on year for all revenue heads 3) Marketing Expenses have been assumed according to trends observed in other apps 4) Partnership and hardware expenses have been assumed to increase by 10% year on year 5) Maintenance expenses = 10% of total hardware and infrastructure expenses 6) Salary expenses have been assumed to increase 25% year on year Thus, the app will start making profit only 3rd year onwards which is quite understandable as all our estimates are very conservative and actual profit could be higher.
NPV of this app today assuming a cost of capital of 10% is $35.94 million which is a handsome amount for an app. This is only for the period of 5 years. If sold after 5 years, this could be an extremely profitable investment. 30
7.9 Strategy Diamond We propose the following strategy for weather gather:
Arena
Vehicles
Staging
•All the services to be provided have been describe above •Target platforms will be android and iOS to begin with •Target regions and age groups have already been described
•Aggresive partnerships will be formed with various entitties as described above •Growth will always be inorganic through internal development and careful selection of employees
•In 3rd year, the app will be expanded to other age groups of all continents except Africa •In 5th year, the app will be expanded across Africa •Feature of chat will be rolled out in 2nd year
•Only application which solves the identified problem •One stop solution for everything related to travel Differentiators •Introduction of new features to engage customers
Economic Logic
7.10
•NPV of more than $35 million today •Profit from 3rd year onwards which is common for technology startups
Business Model Canvas
To summarize different elements of the business model and commercialization process discussed thus far, we have the following Business Model Canvas
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8. Risks There are two major risks to the success of the app:
1. Accuracy of weather forecasts: Since weather forecasts are not accurate for more than 1-2 weeks, bookings for beyond that period might not be attractive which could become a problem for the app.
2. Forward Integration by existing full-fledged travel solutions: Websites like make my trip already provide all the services except for the main service we provide of searching according to weather. So, we could become an early potential acquisition target.
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9. References 1. http://www.lincoln.ac.nz/PageFiles/6750/WeatherLitReview.pdf 2. http://www.ecu.edu/cs-acad/sustainabletourism/Climate-Weather-and-TourismInitiative.cfm 3.http://www.glerl.noaa.gov/seagrant/ClimateChangeWhiteboard/Resources/Mac2/weather% 20climate %20sceince.pdf 4. http://sdt.unwto.org/sites/all/files/docpdf/wcc3tourismwhitepaper.pdf 5. http://www.research2.ecu.edu/tourism/Documents/Summary%20Report.pdf 6. http://www.hochmanconsultants.com/articles/je-hochman-benchmark.shtml 7. http://www.marketsandmarkets.com/Market-Reports/smartphone-market-219.html 8. http://www.statista.com/statistics/201182/forecast-of-smartphone-users-in-the-us/ 9. http://www.tech-thoughts.net/2012/12/smartphone-market-share-trends-bycountry.html#.UilI2RtHLdA 10. Fling, Brian, Mobile Design and Development, Sebastopol, O’Reilly, 2009 11. Basant, R and DevikaVyas, ‘Elements of a Business Model’, Teaching Note, Indian Institute of Management, Ahmedabad. 2010 12. Alexander Osterwalder, Yves Pigneur, Business Model Generation: A Handbook for Visionaries, Game Changers
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