GreenLite LED lights

MORE EFFICIENT






LASTS LONG


Business plan
MN 4070

NAME M.V.A.S.N. Malwatte
INDEX - 070303u
FIELD - ENTC

Executive summary
With increments of electricity prices and increased interest in energy efficiency a market for
efficiency lighting has been created. Recent advancements in LED technology this need can
be effectively met with LED lights. Currently on one has entered Sri Lankan market.
GreenLite industries is well positioned to step forward and fill this void.
Led lighting technology has many advantages over other lighting types. It is highly efficient,
has three times longer lifetime, uses no hazardous materials and needs no maintain.
Although LED lights have great advantages over than other lights, they are significantly
expensive. But within two years the cost can be recovered.
GreenLite products will be a total solution for customers who are looking for cost effective,
efficient and environmental friendly lighting. The product will consist of 3 parts. LED tubes,
housing and circuit. LEDs used are very efficient, high quality super bright LEDs. Housing is
designed for cost savings, long lasting, protection and aesthetics. The circuit is designed so
that it protects LEDs from voltages surges and it will give power LEDs for longer time
without any problem. All aspects of the product will be branded with our LED brand name,
GrrenLite LED lights.
Some strategic issues that GreenLite will face are, competing with other competitors, creating
unique to prevent imitation and satisfying the customer who are sensitive to prices. To
overcome these barriers we must make a strong brand name, being customer relationship
focused, having a strong supplier chain and used cost pricing are used.
Concept
People still uses much incandescent and Florescent and CFL bulbs even though LED lights
have great advantages over them. If we look at Sri Lankan situation it is clear that LED lights
can be seen very rarely for lighting. LED lights are energy efficient, environmentally friendly
and have longer life than other light types. This product will satisfy customer needs for
energy efficient lighting and he does not need to replace the lights often.
Business Opportunity
With the energy crisis prices oil price is gone up. Also due to lack of rain power generation
is much relies on oil. As a result of that electricity prices have been increasing rapidly.





And also statistics shows that generated electricity is mostly consumed by households. More
importantly most electricity used for lighting purpose. So along with energy prices increasing
and an increased interest for efficient use of electricity, a market for high efficiency,
environmental friendly lighting has been created.
The Product
Opportunity mentioned in previous section can be effectively satisfied by LED lighting
technology because of recent advances in LED manufacturing techniques. Currently no one
has successfully entered in to the market in Sri Lanka to fill this requirement. This product
can fill this gap in the market being well aligned with this opportunity. There is a huge
opportunity to be successful with product.
Advantages of LED lights
Efficiency
The primary benefit of LED lighting is efficiency. They are much more efficient than all
other lighting types.
Electricity prices has been increased
As shown in above graph LEDs emits more light per watt. In efficiency wise they are about
80% efficient. This cuts lighting costs by a large percentage paying back the cost of bulb less
than two years. Another effect is that these LED lights produce less heat. This means cost for
air conditioning and refrigeration are also reduced.
Longer Lifetime
Average fluorescent bulb will last almost a year. Although most CFL manufacturers give one
year warranty for their products I personally experienced that they lasts just little longer than
a year. However, LEDs do not burn out like traditional bulbs. Instead their lumen output is
slowly reduced over time. Most LEDs with proper supply voltage will last more than five
years. In hours they last more than 20 000 hours. The longer lifetime of LEDs reduces
maintenance costs, downtime, and material wastes.

Environmentally Friendly and Safe Materials
Another reason for LED lighting to be better than other bulbs is that it eliminates dangerous
waste products. Fluorescent bulbs contain mercury and lead, which generates toxic waste
when they break or are thrown away. Fluorescent bulbs are fragile and contain mercury
gases that are toxic to breathe in. Mercury and lead waste takes a long time to recycle or
dispose of, making this one of the worlds largest environmental issues. LEDs contain no
mercury or lead, removing this impact on the environment. So they are much safer for
anybody who has to handle them.
Low emission of infrared and ultraviolet
LEDs only emit mostly visible light frequencies, eliminating unwanted frequencies. Because
no ultraviolet or infrared light comes from this spectrum, the spoiling rate of food slows
down, and insects are not attracted to light sources. These attributes are valuable to retail
customers selling produce, meats, and other perishables.
Recent advancements of LED technology
High-power LEDs can be produced in large quantities at reasonable prices. Modern LEDs
are still at much more expensive than fluorescents. But the direct energy savings from more
efficiency and longer life pays back costs back in less than two years. Researchers have
estimates LEDs will be making significant a penetration in the general illumination market
around 2013 or 2014. The goal of introducing this product is to enter this growing market
early, developing a brand and reputation for quality LED lighting.
Entry and Growth Strategy
Successful variables in the marketing plan will be based on the longer lifetime, Energy
savings and a positive focus toward sustainability
The intent is to grow rapidly over the first three years before competition heavily enters the
market. Upon entrance of competition, we will use our understanding of lighting systems to
offer similar products for more lighting fixtures, such as wall mount fixtures found on
business buildings. This will allow us to expand our market segment and ensure a broader
customer base by providing new lighting systems to bridge the implementation of LED lights
for traditional less efficient lighting solutions. The growth experienced by the company will
allow us to give back to the community by providing more alternative lightings. This venture
will also increase employment in the immediate area.
Pricing
Pricing of LED lights have direct on the success of this business. First of all prices must
cover costs and profits. The pricing strategy that used for this product line is one of low cost.
Lighting equipment market is price sensitive. Many other competitors exists in this type of
business and they have resources, experience and brand recognition allowing them to go for
higher prices. But introducing this product with lower prices and delivering it to customers
efficiently can make this product get in to the market.
For this reason the main factor in the initial pricing of the final product is the cost of producti
on plus a modest gross profit margin percentage. This margin is to be varied
based on three factors
Ease of imitation by competition
Bargaining power of the customer
Value of the product
In order to compete with other products considering the factors, ease of imitation and bargain
power of buyers, profit margin of 30% is selected. But when this product becomes more
differentiated and unique, profit margin can be slowly increased. There are two sub-brands of
this product which is explained later.
Here is the calculated price for a normal household type 10W value lighting LED light.
Cost of materials Rs 450
Cost of labour Rs 70
Overhead Rs 90
Total cost Rs 610
Desired profit (30%) Rs 183
Required sales price Rs 793

For a 10W smart lighting LED light.
Cost of materials Rs 550
Cost of labour Rs 100
Overhead Rs 110
Total cost Rs 760
Desired profit (35%) Rs 266
Required sales price Rs 1026

Competitors
There are number of companies already doing LED light business. So their recognition and
brand name are advantages for them. But with low cost, effective marketing strategies and
efficient distribution gradually our LED light can acquire a considerable market share.
Existing competitors are
Acstra Power Solutions (Pvt) Ltd.
Business type - Supplier, distributer, Wholesaler, Agent
Target market - Local market
Product range includes LED bulbs, tubes, lanterns, ceiling lamps and spotlights.
UE LED Technics (pvt)Ltd
Business type - Supplier, distributer
Relevant products - LED Spot Outdoor Lighting
Yiwu Liuxuan Trading Co., Ltd
Business type - Agent, Distributor/Wholesaler, Trading Company
Target market - Dubai, Qatar, Saudi Arab, Sri Lanka and USA
company size - 5 - 10 People
Relevant products - LED Lights
ACE power
Business Type - Trading Company, Buying Office, Agent, Distributor/Wholesaler
Relavent products - all kind of LED Lights
gsm technics
Business Type - Manufacturer, Distributor/Wholesaler
company size - Fewer than 5 People
Target market - Southeast Asia
Export Percentage 1% - 10%
Product/Service - LED lights
RONA Advance Technologies (Pvt) Ltd
Business Type - Manufacturer, Distributor/Wholesaler, installation
Target market - Local market
Relevant products - LED Lights
Greentec International (Pvt) Ltd,
Business Type - Manufacturer, Distributor
Target market - Local market
Relevant products - LED Lights
R Jayamanne & Co
Business Type - Manufacturer, Distributor
Target market - Local market
Relevant products - LED Lights
In addition to existing current competitors, it is necessary to estimate future competitive
threats. The potential customers can be companies selling other bulb types, Electronic
equipments and new start companies. The entrance of new competitors is likely with the high
profit margins in the industry, if there is unmet demand (insufficient supply) in the industry
and growth potential in future. So it is very important to do the pricing carefully so that other
company cannot compete with the pricing of our product. Also meeting the demand, growing
and being complied with new technology, reducing manufacturing cost and overhead,
satisfying the customer by its quality is really important. Not only from other LED lights but
also from other types of bulbs like incandescent, flourcent and CFL can be threat as well. It is
needed to stress out the efficiency, longer lifetime, payback time and ease for eyes which are
great strength over them.
Marketing
Marketing strategy
Our marketing strategy will occur through sales calls, advertisements and customer
satisfaction. A successful product introduction will raise our brand equity significantly
amongst retail buyers.
Markets
Our primary target market is the local market. Since this is a Sri Lankan company
this market best fits our core competencies. After successfully acquiring the local market
necessary steps can be made to try the foreign market as well. After gaining the experience in
lighting industry we can enter other markets which can benefit from environmental friendly
efficient lighting.
The list of markets is nearly endless.
Households
Government firms
Hospitals
Shops
Schools
Office buildings
Street lighting
Garden lighting
Universities
STP strategies
Segmentation
This is the first thing is segment the market. Segmentation is essentially the identification of
subsets of buyers within a market that share similar needs and demonstrate similar buyer
behavior. Segmentation can be done by all sorts of variables.
Demographic
Income middle and higher income class
Students vs. others
Geographical segmentation
Urban market vs. rural market
Commercial vs. household
Outdoor lighting vs. indoor lighting
Targeting
After segmentation of market we need to target required segments. Multi-segment approach
is selected since with several differentiated products we can target variety of different
segments. It is required to have lights with different wattages, different shapes and plug-in
types, water proof, spot lights vs. globe type. Since these differences does not need different
underlying technology it is good to target the maximum market segments as soon as possible.
Positioning
Positioning is all about perception. Perception differs from person to person. Products are
mapped together on a positioning map. This allows them to be compared and contrasted each
product in the market in relation to each other. It is needed to have competitive position
which enables to distinguish our products from the competitors. For our product we can make
LED lights cheaper than others with high quality. But for some segments price and amount of
quality can be varied. For example middle income class price is more important while higher
income people mostly go for the quality. So by introducing different products being
accordance with each market segments those segments can be positioned. For example two
products are shown in below map. Low cost product and high quality product.












Above map can be used to identify the possible market gaps.


+High
(efficiency/
lifetime/
quality)
-Low (price)
-Low
(efficiency/
lifetime/
quality)
+High (price)
This is where the our
products would to be
Other competitorss products
Branding
This is an important part of the marketing plan. By establishing sub-brands for individual
products, it is possible to create a level of distinction for each individual product. There will
be several sub-brands for separate market segments. The first brand will be GreenLite value
lighting. It will be marketed toward the customers with cost sensitive lighting needs. The
second brand will be GreenLite smart lighting and will be toward customers who are less
sensitive to price. Material supplier should remove his branding in order to prevent any links
of material supplier to the customer. This will make the product one branded solution.
Unique selling proposition
This is important so that is makes a proposition to the customer. More efficient, Lasts long
is the USP of this LED lights. It simply says the major advantages of our product compared
to others. Our product is carefully designed so that it is highly efficient and high quality
which makes this product to use longer than the other products.

Manufacturing plan
LED lights consist of three parts that need to be manufactured. LED tubes, housing and
circuit. LEDs and circuit components can be purchased from Chinese suppliers since they are
cheap. Housing can be manufactured locally using plastics and metal. These parts are
brought to assembling plant and circuits are made and they are fixed to the housing. Then
quality assurance can be carried out. Units are produced in large batches. After forecasting
the demand the required numbers of lights are manufactured.
After testing they are packed and stored. Then they are distributed all over Sri Lanka.
A technician, low skilled laborers are required for the manufacturing plant. An experience
manager is to be recruited at the beginning of the 2
nd
year. Reason is 1
st
year is the riskiest
and needed have proven sales of this product. The technician should have experience in
design of power supplies, LED technology. Other personnel will include sales members.
More is to be recruited depending on the success of the business.
Strategic issues
LED lights have not only opportunities but also barriers to success that must be overcome.
First barrier is other competitors have been in the industry for sometime. They have already
researched and developed products leaving us behind on the research and development curve.
The second barrier we face is that is out product is not currently very unique. It consists of a
LED tube, housing and a circuit. All of these parts can be easily imitated by a competitor. It
is a challenge to create a differentiation and barriers to imitation.
Other issue is LED lights very high upfront cost compared to customers existing lighting.
Sometime it will be difficult to convey the benefits of LED lights over other existing
lightings.
These barriers are not insurmountable. With proper strategies in place, they can be planned
for and overcome.
The first strategy will maintain strong customer relationship. By listening to customers needs
and meeting their needs cost effectively, our customers are offered a value other competitors
cannot match. So we can use competitors new technology to apply them in innovative ways
and create customer value.
Second strategy involves branding our product under one strong brand name. By creating a
brand name customers can trust we can create a barrier to imitation.
Third strategy is focused on the material suppliers. By forming strong strategic alliance high
standards of quality control, reduce the costs can be done.
Financial Analysis
Purpose of financial analysis is to evaluate the feasibility of LED light manufacturing.
Another goal is to determine the value that the LED lights to customer. This analysis consists
of four quarters income statements. This income statement shows the profitability of the
business. Using this, appropriate price recommendations can be determined. There is a major
issue. It is the size of the sales achieved in four quarters. It is assumed that in first year 2000
units are sold form both value and smart types of lights. In further years 4000 and 8500 is
assumed. Current financial environment is always changing. For example cost for raw
materials, transport costs may vary. So the profitability may fall but overall result remains
positive. Price of product varies according to the wattage of the light and according to the
finishing. But for ease of calculation average price is used.
Income statement
No of sales Price(Rs) Total
Sales(Rs)
COGS(Rs)
1
st
year Value lighting 1500 793 1189500 780000
Smart lighting 500 1026 513000 325000
Total 2000 1702500 1105000
2nd year Value lighting 3000 785 2355000 1530000
Smart lighting 1000 1020 1020000 640000
Total 4000 3375000 2170000
3
rd
year Value lighting 6500 775 5037500 3250000
Smart lighting 2000 1015 2030000 1260000
Total 8500 7067500 4510000







1
st
year 2nd year 3
rd
year
Revenue(Rs) 1702500 3375000 7067500
COGS(Rs) 1105000 2170000 4510000
Gross
profit(Rs)
407500 825000 1752500
Operating
expenses(Rs)

Marketing and
sales
150000 200000 270000
R&D 100000 150000 250000
G&A 50000 100000 140000
Total operating
expenses
300000 450000 660000
NIBIT 107500 375000 1090000
Taxes 35830 100000 320000
NIAT 71670 275000 770000

Capital cost requirement can be fulfilled by requesting a bank loan. It can be paid back as
monthly installment.

407500
825000
1752500
0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
2000000
1 2 3
Gross Profit Projection
Gross Profit