Factors for Creating a Safe Tires

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EXECUTIVE SUMMARY

On average, 1,836 deaths and 136,309 injuries per year are caused by icy and snowy roads. Ice Glide Tires (IGT) is a company that has created new tire technology to drop these statistics dramatically. Our unique product fulfils a clear need, this coupled with an effective marketing strategy will result in rapid market profitability. With a loan of 25 million dollars, IGT will be able to quickly reach its goal of manufacturing and distributing the future of tires across America.

The key to our approach is the value of our product, IGT provides a dramatic safety benefit at a cost ($400) in line with high end tires already sold across the US.

At the same time, our manufacturing process is efficient resulting in a high profit margin per tire sold (over $300). The technology behind our product is patented assuring a competitive advantage for years to come. By disrupting the existing US tire market (about 20 billion dollars annually) IGT will establish a customer base that will lead to rapid growth and long term stability.

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Our initial offering will target key regions selected based off of geographic and economic factors that make them ideal for our product. This first release will provide multiple opportunities for growth while limiting risk during the early stages of our company.

By providing a unique quality product at a good price IGT will position itself as the one and only name in high end self heating snow tires. The financial rewards will be many but ultimately our success will be measured in the lives we save.

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PROBLEM

Cold Temperatures Decreasing Tire Pressure: During the cold winter months, tire pressure often decreases due to the contraction of air. This sudden loss of air often leads to flat tires that may not be very visible. With tire pressure being too low, driving can become extremely dangerous. The friction of a flat tire moving against the ground can lead a tire overheating and causing a bad accident. To prevent situations of this kind, IGT is able to keep warm air pulsating through the tires through the night not allowing winter air to be able to contract them.

Ice Covered Roads: One of the largest struggles of winter are ice covered roads. Driving becomes extremely risky and dangerous when rain and cold temperatures are mixed. The quick formations of ice, especially black ice which is not visible to the eye, make hazardous situations which have cost many lives before. IGT constantly tracks temperatures of the roads they are driving on. By doing this, the tires can sense when driving over ice and will heat up dramatically; allowing the ice to be melted as the driver drives slowly.

Snow Blockage: When unexpected snow storms arrive, it can be hard and dangerous to escape a driveway due to snow buildup. When people are in a rush to get to school or work on time, they often try to drive quickly over snow causing their car to get stuck or even break down. IGT allows snow to be melted within seconds so that making it out of the driveway takes no time at all and eliminates risk.

CUSTOMER SEGMENTS

Ice Glide Tires is competing in the automotive tires market. The industry produces about 200 million tires each year making about 3 billion dollars in sales. Though the tire market is large in size and produces tires for many different people, IGT’s target market is more limited due to the uniqueness of the brand.

Geographics: The heated tires are to be sold in in the North-East region due to its high population and average household income. Limiting our initial offering to this region will minimize distribution cost and maximize our profit margin.

Demographics: The targeted age will be from ages 26-65 with an income of $80,000+ per year to be able to afford more expensive tires. Both genders and specifically a family with children or elderly adults looking to stay safe.

Psychographics: A cautious person/driver who wants a safe vehicle for his/her family. Someone with driving experience that has dealt with frightening ice situations before and will understand the need for heated tires.

UNIQUE VALUE PROPOSITION

Ice Glide Tires are a great way to stop danger for everyone on icy roads. With the use of these heated tires, cars will be able to melt ice by simply driving over it. IGT includes a vehicle tire that has heating equipment importantly formed within the tire. The tire tread and the steel belt is activated by a control unit connected to a temperature sensor that will heat up the tire when necessary. This unique product is a great way for people to stay safe on the roads; stopping flat tires and dangerous driving conditions. Unlike other tire brands, IGT will actually prevent dangerous accidents from occuring while other tires will lead to these critical and fatal incidents.

When a car with regular tires is driving in the snow, the tires will wear out due to the amount of traction that they are experiencing. IGT is going to help stop this problem because they are able to push warm air through the tire, allowing it to heat up only when necessary; stopping the risk of the tire overinflating and allowing it to properly function. IGT is working to make sure that everyone is safe on the streets and by buying these tires, customers will make a big difference for their community. Icy roads have become a big problem in areas in the United States and IGT understands the struggles and fears of the icy roads. Using the amazing technology IGT has created, they are working towards a safe and protected experience on the dangerous roads.

SOLUTIONS

There are an average of 1,836 deaths per year and 136,309 injuries per year all due to snowy and icy roads. The Ice Glide Tires are working to stop these horrible incidents from occurring at all by using the new and improved technology to compact heat and melt ice on roads. The top three features of the Ice Glide Tires are that: they sensor when there is ice and will heat up, they allow the heat to stay in the tires and don’t allow cold air to come into contact with the heat, and they are safe in ensuring no tire damage. IGT is working towards safe and secure roads for everyone who drives and by using the new and advanced technology, they are able to make their tires safer and more durable. IGT is expanding their business by producing tires for all types of vehicles from many different types of cars to even motorcycles.

The tires are promoting a safe message by guaranteeing customers satisfaction and safety. Many people are afraid to go out on the roads in bad weather conditions but IGT is going to stop that fear and help people get where they need to go even when there may be ice or snow on the roads. The temperature sensor is an integral part of the tire technology because it allows the tire to heat up only when it senses ice or snow, making sure that there is no wasted energy. The tire tread and steel belt are important because they connect to the sensor and get the tire to actually heat up and melt the ice and snow. By having these advanced systems inside of the tire, it will allow a safe and quick way to melt ice and snow while driving.

CHANNELS

Ice Glide Tires will have a distribution channel that goes from the manufacturer to retailers to the customer. This type of distribution is known as selling through retailers. The company is in the business to business market; the reason being is that the tire is easy to acquire for customers when it is sold to local tire and car shops. Customers can order the tires online and will be provided with shops near them where they are sold. IGT will be sold to tire and car shops all near Pennsylvania because that is where the manufacturer is. Over the years, they are looking to expand their business to spread across the map. These specialty tires will be transported by truck to retailers. The manufacturing takes place in Pennsylvania so that IGT can get an upfront view of how the tires work on snow and ice. Once customers find the nearest shop, they are able to go in and get the tires added to their car. IGT is using the selling through retailers market because by selling these tires to local tire and car stores, they are able to distribute them to people all over the United States.

REVENUE STREAMS

The U.S. tire industry sells almost 3 billion tires per year. Based on our unique value proposition, Ice Glider Tires is positioned to capture 0.01 percent of the market resulting in sales of 200 thousand units annually.

With the cost of Ice Glide Tires at 400 dollars per unit, projected gross annual revenue comes to about 80 million dollars a year.

Many popular companies can make up to 3 billion dollars a year, but as IGT is a new start-up business without much popularity yet, sales will not be as particularly high during the first year. However, reinvestment in marketing will increase our percentage of the overall market share.

Within 5 years, sales are predicted to increase to point four percent of the market effectively quadrupling our gross revenue.

COST STRUCTURE

Acquisition Cost: The tires will cost a reasonable 400 dollars. With that 400 dollars, approximately 10 percent will be devoted to acquisition costs. Through a combination of targeted social marketing and traditional advertising we will effectively bring in new customers.

Distribution Cost: Shipping a tire from the Pennsylvania warehouse to auto shops to the northwest region and ultimately across america can cost anywhere from 9-27 dollars per tire. The lower end pricing would be for states and cities nearby Pennsylvania such as New York, new Jersey, and Delaware. The higher end pricing would be for states much farther away such as colorado, alaska, and Washington.

Human Resource Costs: Since the tires will be manufactured by vendors outside of our company, paid employees will be confined to staff and salespeople within IGT. Approximately 30 employees will be required to maintain operations and 3 million dollars annually will be used towards paying these employees.

KEY METRICS

The Key Metrics for the Ice Glide Tires company are the sales, the production cost, the social media marketing, return rates and retention, revenue, and the lifetime value of the customers. All of these examples factor into the success of the company. The production cost plays a big part in keeping track of how much it takes to make the product, that way they know how much to sell the product for. The transportation cost will factor in with the production cost because bringing the tires to the retailers plays a big part in the company; making sure that they are taking those costs into consideration and focusing on that aspect. Social Media marketing plays a key role in getting the word out about the company. So many people use social media today so it would be a great way to spread the ideas of the new tire technology.

Return rates and retention help the company figure out what they’re doing wrong and how some customers got to learn about their company. IGT should become a well known name and by asking buyers these questions, customers likes and dislikes can be tracked, as well as how the company name is getting around. Revenue plays one of the biggest aspects in terms of finding out how well the company is doing and how much money they are making. Keeping track of revenue will give the company an overall profile and let them know how much money they need to make in order to receive a profit. Revenue helps with marketing tactics, pricing and company strategies. Customers also play a crucial part in how well the company does; no customers means no money or company.

COMPETITIVE ADVANTAGE

Ice Glide Tires are a very unique product. Although tire heating attachments have been created before, a full heatable tire has been long awaited. By allowing warm air to travel through the tires whenever it is in park, the buyers can feel safe at all times. A big concern that people have had about IGT is that it may be using up too much energy. IGT is actually very energy efficient as they hold a generation system inside. While the tires are moving, energy is being generated allowing for the heat to be created and used or stored. When putting the car in park, the saved up energy is used to boost minimal, but enough warm air throughout the tires constantly.

By creating a safe tire that not only prevents death by keeping people safe on the road, is energy efficiency and safe for our environment, but is also the first of its kind, stealing or recreating IGT would be extremely difficult. An attempt to recreate the tire would also result in a major legal battle since there are so many factors that are specifically unique to IGT. Almost every idea presented by IGT is new and innovative. There may have been attempts to create some of this technology in the past, however, none were fully successful until now. The trust IGT will create with its customers through complete safety will outcompete any other tire business due to their inability to guarantee accident free features.

Conclusion

Ice Glide Tires are working towards a better and safer future for America by ensuring safety on the roads. The company is helping everyone on the roads by eliminating dangerous hazards that may cause accidents. Although the company is very new and has just started, sales are expected to rise as customers tell others about this new unique and innovative product. This is a product that many people will realize is essential when living in areas that have snow and ice, resulting in higher sales and more profit. While the company wants to make a profit like all companies do, they are also concerned with the well being of the customers; IGT works to make sure that their products are safe and working before distributing to retailers. The business is in a position to execute the plan by making sure their products are to the highest potential and expertise possible. To be able to do this, the company will need enough money to manufacture their tires for the first 3 months; about $25 million.

Using this money, Ice Glider Tires will be able to manufacture and distribute their tires to retailers around Pennsylvania and the Tri-State area. If the company is producing 500,000 tires every 3 months with each tire costing $50 to manufacture and transport, they will be able to use the loan of $25 million dollars to pay for distribution and manufacture costs for the first 500,000 tires. After the profit from the first 3 months is made, they can then use that money to produce 1,000,000 tires for the next 6 months. The company is not sure when they will be able to pay off the loan but with profit costs from the year, they can project about 2-3 years.

Bibliography

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Factors for Creating a Safe Tires. (2021, Oct 14). Retrieved from https://studymoose.com/factors-for-creating-a-safe-tires-essay

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