An iPhone Application by BHIS BHIS is an innovative partnership that is currently developing Fun Run, a mobile application that makes running more interactive, social, and fun. BHIS seeks sell this product to the ever-growing number of health conscious consumers who need some extra motivation to get exercising. Spring 2013 Executive Summary Company: Belatti, Herder, Imamura & Smith (BHIS) Contact: Tom Belatti (CFO), [email protected] Company Summary BHIS is an innovative partnership that is currently developing Fun Run, a socially competitive mobile application. BHIS seeks to sell a way for consumers to add motivation and fun to exercise. Using the user’s target distance or time, Fun Run automatically generates locations or “flags” the user must run to. There is a suggested order of the flags-with turn-by-turn directions, that the user can follow to ensure the correct time or distance is achieved. The more flags the user captures-the higher his or her score is. Users can compare their scores, which indicate how fit one is. Management Holly Imamura, President and CEO, is pursuing a BBA in Management Information Systems and Chinese. She has leadership experience in her sorority and in previous work at a mobile application start-up. Tom Belatti, CFO, is pursuing a BS in Mechanical Engineering. He has business and finance minors and has previous programming experience. Ben Smith, Head of Product Development, is pursuing an MS in Computer Science. He has prior business and programming experience with iOS applications with several 5-star-rated apps currently in the app store. Oliver Herder, Head of Business Strategy, is pursuing a BS in Math and Computer Science. He has previous programming experience. Market & Competition BHIS believe the market of competitive, exercise mobile apps has not been penetrated yet. According to the Sports Business Research Network, 17.3% of the United States’ population engages in outdoor workouts-such as running, jogging, hiking, etc. This is a huge market. The young adults (25-34 year olds) population especially enjoys the active lifestyle; 24% of the young adult population engages in outdoor fitness. According to Mintel, this young adult niche is the most likely sector to try mobile applications. This innovative, active market is BHIS’s target market. BHIS believes that this young adult market not only is the most active, but the most likely to use an application, while working out. Fun Run is completely unique; there are no applications available that are mimic both Fun Run’s utility and competitive spirit. As a result, Fun Run does not have any direct competitors, but BHIS acknowledges its numerous indirect competitors, which include Nike+ Running App and MapMyRun; these mobile applications track distance, pace, routes, and one offers turn-by-turn directions. On a functional level, Nike+ and MapMyRun have the same utility as Fun Run, but these applications lack the competitive and motivational spirit Fun Run has. On the other hand, another indirect competitor, Zombies, Run! creates a post-apocalyptic story line for the customer to listen to while working out. This has motivation, but lacks the social, spirited feel Fun Run has. Competitors’ application prices range from free (Nike+) to $7.99 (Zombies, Run!), but the majority offerings are valued at $.99. As a result of the mode price, BHIS has decided to use value Fun Run at $.99. Funds Requested BHIS will derive funds from two primary sources: $250 from each of our owners listed within management, and $5,000 from either a VSEC grant or a single bank loan. These funds will cover equipment, advertising, and salary costs. In its financials, BHIS has assumed it will obtain the VSEC grant. Financials BHIS is in a very unique financial situation; since 50% of the partnership consists of experienced application developers, BHIS does not need to hire a third-party to code Fun Run. Using its partners’ knowledge and Villanova’s academic resources, BHIS will be over to control its vision, by developing all aspects of Fun Run in house. Without the financial burden of salary expenses, BHIS has lower expenses allowing it to invest in marketing and have a bigger potential net income. Below is a summary of BHIS’s annual foreseeable variable and fixed costs. Variable Costs: Description iOS Developer Account Hosting (Amazon) TOTAL VARIABLE COSTS Amount $99.00 $70.00 $169.00 Fixed Costs: Description Legal/Insurance Expense Advertising (Pandora) Small Business Liability Insurance TOTAL FIXED COSTS Amount $2,800.00 $1,200.00 $1,200.00 $5,200.00 TOTAL COSTS: $5,369.00 In order to be competitive in the marketplace, BHIS has decided to price Fun Run at its competitors’ rate-$.99. Apple charges 30% of the amount for displaying the application on the App Store and handling distribution and updates. BHIS will receive $.70 per sale and as a result, in order to breakeven, Fun Run must be downloaded 7,670 times. BHIS is confident that this breakeven point is obtainable and can easily be surpassed. Our application will appeal to a large segment of the population, specifically a group that actively uses their smartphones. Implementation Our application will be based on the iPhone platform. It will be a native iOS application, relying mostly on what’s already included in the iPhone. However, our application will also use web services from Google Maps and Amazon Web Services for certain user experiences. Both of these external services offer a free tier which will fulfill our needs for the near future. Their pricing is scalable if our usage exceeds this tier and would be well below the increase in income at these sales levels. In order to be conservative, BHIS has included the second to lowest data tier in its financial assessment. We are currently working on the prototype of the application. Our current software is capable of taking the user’s location, creating a course of flags to be run through, and leading the user through this arena with directions. We hope to have a fully working prototype by the time of the final presentation. From that point, our implementation will shift to marketing, getting word out about our app through web ads targeted to users known to have an interest in fitness. This marketing will include Pandora ads on workout music stations and Facebook ads targeted to users who have expressed interest in running.
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