New Product Marketing

In Japan, many homes have an electronic toilet seat rather than the conventional ones we use in the United States. The seat features an integrated, self-sanitizing bidet with a nozzle the size of a pencil that comes out from underneath the toilet seat and squirts water (adjusted to the user's comfort) to cleanse one' body after using the toilet. An attached blow drying unit eliminates the need for wiping with toilet paper. Users can adjust the water pressure, the temperature of the water, and the duration of the spray.

The electronic bidet is well established in the Japanese market. Its manufacturers enjoy a competitive advantage due to the unique characteristics of the Japanese people, who are very concerned about hygiene, and due to constraints on space that preclude installing a standalone bidet in most Japanese homes. Given Japan's high GDP, its technological savvy, and its dense population, a compact electronic product that enables people to maintain cleanliness is a natural fit. The electronic bidet is also popular because it reduces the expense of buying toilet paper, important in a country where timber resources are limited. Finally, in contrast to their foreign counterparts, Japanese families often look at the long-term economic and societal benefits of a product when making purchasing decisions. There are no other substitutes in the market that clean as efficiently and economically as the electronic bidet. Firms in this mature industry compete on price, features, and quality of the established brand.

Our analysis of the US market indicates that a service-oriented provider focused on a particular niche in the consumer market can expect to reach breakeven volume levels in this industry with only modest market share at our anticipated price point of $240. See Exhibit 1-Breakeven and Sensitivity Analysis, below. Details of our promotion plan follow.

Customer. Our target customers are healthcare institutions (e.g., hospitals and assisted living facilities) in the U.S. that provide care to the elderly and elderly people who need assistance with daily living. Based on US Census data and projections for 2005, there are nearly 32.5 million people aged 65-84, and 5.2 million individuals aged 85 and over, currently living in the United States. Within these groups, 13% and 46%, respectively, need assistance with their daily living activities. Based on these figures, we estimate that more than 4.4 million individuals can benefit from our product. See Exhibit 2-Estimation of Institutional Supply. Our initial marketing efforts will focus on regions of the country that have high concentrations of elderly people living in them, such as Florida, California, and Arizona.

Company. We view ourselves as being in the healthcare/lifestyle improvement category, and our value premium is predicated on the exceptional service we will provide to our institutional customers. This will serve as a competitive barrier to entry for a more established, foreign producer who may be able to compete with us on price in the US market, but who cannot match our service capabilities. Among our other strengths, we believe our niche marketing effort and knowledge of our customers' needs give us a competitive advantage. In terms of weaknesses, we are dependent on a foreign supplier who may one day become our competitor in this market, and our costs may fluctuate as exchange rates between Japanese and US currencies move. Furthermore, there may be adoption issues within our prospective customer base, since bidets are not traditionally viewed as relevant for medical and/or therapeutic purposes. Finally, our product may be heavily dependent on word-of-mouth promotion, and therefore, not likely to benefit from traditional advertising alone. In our promotional strategy below, we discuss ways we plan to overcome these weaknesses.

Competition. Since there are no major Japanese firms targeting the US market for Japanese bidets, our primary source of competition comes from domestic paper manufacturers and domestic bidet distributors. The major paper manufacturers in the industry control up to 85% of the bath tissue market and enjoy strong brand loyalty. For many years, these firms have used images of babies, kittens, and fluffy bears in their packaging and advertising to promote their products on the basis of softness,