Validity of GPS tracking devices for Alzheimer's patients in Portugal Case study: Suricare

Validity of GPS tracking devices for Alzheimer’s patients in Portugal Case study: Suricare by Vlad Togui Dissertation for the Master in Management Adviced by: Beatriz Luz Casais 2015 i Biography: Vlad Togui is a Marketing and Management future professional. He is passionate about having an international career, working in different countries and constantly improving his output. His basic education is in computer science, continued by bachelor in Marketing at the Bucharest University of Economic Studies. During his bachelor he had a 6 month exchange period at the Faculty of Economics and Management, University of Porto. Here he decides to return to follow the Master in Management, due to his increased interest in the management and finance theory, and also to broaden his options in the job market. His professional experience starts in the second year of bachelor when he becomes the coordinator of an NGO called LumeBuna,In the same time he starts an organisation with friends called Studentabil, aimed to inform other students about the out of the box alternatives to boost their studies and careers. In the second semester of the second year he has an internship as a marketing assistant at ISIC Romania, helping researching, building and implementing the online marketing strategy of the company, aimed to fellow students like him. During his master studies, in September 2014 he started a curricular internship to build his dissertation on, in a company called Suricare, based in UPTEC, that delivers GPS tracking devices for Alzheimer patients. Here he was a business developer, learning how to apply theoretical concepts like Business Model Canvas to a real company, as well as the research needed to identify all the factors that influence the success of the company. . ii Abstract: The use of GPS tracking devices is extending to many markets, including personal tracking. This make them useful for the Alzheimer’s and Dementia patients, who experiment the phenomenon of wandering or getting lost without knowing how to get home. Suricare is one company that aims to bring this kind of service to the Portuguese market. The purpose of this internship project is to discover how do this kind of business fit the environment and what are the main challenges that the company has to face. A business model is a plan for the successful operation of a business, identifying sources of revenue, the intended customer base, product development and details of financing.The Business Model Canvas framework was applied to the specific case of Suricare. The secondary data analysed through the internship showed that the main difficulties that the company has to face in Portugal and how to overcome them, like the lack of awareness and weak distribution channel. Finally the study concludes that the variable that affect this outcome is the individual vs collective specificity of the culture, Portugal being a strong collective country, and the countries where this device is successful are strongly individual, and suggests for deeper quantitative research in this area. iii Resumo: A utilização de sistemas de localização GPS está se a expandir para vários mercados, inclusive a localização pessoal/individual. Isto torna a sua utilização bastante importante no controlo e cuidado de pessoas diagnosticadas com Alzheimer e outras doenças de foro psicológico, onde por vezes acontece perderem-se sem conseguirem identificar o caminho de volta para casa. Suricare, é uma empresa como objectivo primordial de introduzir no mercado português este tipo de serviços e foi meu objectivo com este estágio, entender como este tipo de serviço pode ser integrado no meio português e quais seriam os seus principais desafios e riscos de negócio. Um modelo de negócio é um plano para a operação bem-sucedida de uma empresa, ndentificando as fontes de receita, a base de clientes pretendida o desenvolvimento do produto.e os detalhes de financiamento. The Business Model Canvas foi aplicada ao caso específico da Suricare. Os dados secundários analisados durante do estágio mostrou que as principais dificuldades que a empresa tem de enfrentar em Portugal e como superá-los, falta de awarness e um canal fraco de distribuição. Finalmente, o estudo conclui que a variável que afeta este resultado é o indivíduo vs a especificidade coletiva da cultura, Portugal sendo um país coletivo, e os países onde este dispositivo é bem-sucedido são fortemente individuais, e sugere para mais profunda pesquisa quantitativa nesta área. iv Table of Contents 1.Introduction....................................................................................................................1 1.1 GPS tracking background ...............................................................................1 1.2 GPS tracking for the elderly ...........................................................................1 1.3 Research Problem and Motivation ................................................................ 2 1.4 Objectives........................................................................................................5 1.5 Expected Contribution ....................................................................................5 1.6 Dissertation Structure......................................................................................6 2. Literature Review .........................................................................................................7 2.1. GPS tracking industry ................................................................................... 7 2.1.1 Overview of the industry.................................................................7 2.1.2 Porter’s 5 forces ...............................................................................8 2.1.2.1 Threat of new entries.........................................................8 2.1.2.2. Bargaining power of suppliers..........................................9 2.1.2.3 Bargaining power of buyers............................................10 2.1.2.4 Threat of substitutes.........................................................11 2.1.2.5 Rivalry.............................................................................13 2.1.3 Competition Analysis…………………………………………….12 2.1.4 Pestle Analysis of the industry…………………………………...14 2.2. Alzheimer’s disease and market opportunity ..............................................15 2.2.1 Market opportunity……………………………………………….15 2.2.2. Related costs……………………………………………………..16 2.3 What is a business model…………………………………..……………….18 2.4 Impact of culture on product sales……………………………………………20 3.Methodology.................................................................................................................24 3.1. Data Analysis................................................................................................25 3.4. Data Collection ............................................................................................26 3.5. Methodology-related Limitations.................................................................27 v 4. Business model canvas ...............................................................................................28 4.1 Customer Segments......................................................................................28 4.2 Value Proposition.........................................................................................29 4.3 Channels .......................................................................................................30 4.4 Customer Relationships ................................................................................31 4.5 Revenue Streams...........................................................................................32 4.6 Key resources………………………………………………………...…….33 4.7 Key Activities………………………………………………………………34 4.8 Key Partners…………………………….………………………………….34 4.9 Cost Structure………………………………………………………...…….45 5. The impact of the cultural dimensions theory on product sales – Results and discussion………………………………………………………………………….……37 6. Conclusion .................................................................................................................40 6.1. Contribution to Theory.................................................................................40 .6.2. Contribution to Practice ..............................................................................40 6.3. Research Limitations and Further Research Recommendations ................41 7.References ............................................... ............................ ......................................42 1 1. Introduction 1.1. GPS tracking background Global Positioning System (GPS) devices offer the opportunity for continuous and intensive high-resolution data collection in time (s) and space (m) for long periods of time. GPS and other tracking technologies are now used in a wide variety of fields such as environmental health (Phillips et al., 2001 and Elgethun et al., 2003); risk behaviors (Wiehe et al., 2008), the medical field, in such subjects as Alzheimer’s disease (Miskelly, 2004, Miskelly, 2005 and Shoval et al., 2008), physiology (Terrier and Schutz, 2005), cardiology (Le Faucheur et al., 2008); and as a tool to assist in navigation for visually impaired and blind pedestrians (Golledge et al., 1991 and Golledge et al., 1998). However, most of the research conducted based on material gathered by advanced technologies has been in the field of transportation studies, usually in regard to tracking the spatial paths of motor vehicles (see, for example, Zito et al., 1995, Quiroga and Bullock, 1998, Wolf et al., 2001 and Bohte and Maat, 2009) 1.2. GPS tracking and the elderly Globally, the number of older persons (aged 60 years or over) is expected to more than double, from 841 million people in 2013 to more than 2 billion in 2050. (World Population Ageing Report, 2013). Increasing life expectancy raises the question of whether longer life spans result in more years of life in good health, or whether it is associated with increased morbidity and more years spent in prolonged disability and dependency. The major causes of disability and health problems in old age are non-communicable diseases including the “four giants of geriatrics,” namely: memory loss, urinary incontinence, depression and falls or immobility, as well as some communicable diseases and injuries. As population age, health expenditures tend to grow rapidly since older persons usually require more health care in general and more specialized services to deal with their more complex pathologies. (World Health Organization, 2007). 2 Mobility behavior of elderly people has received increasing attention in recent years due to the aging of Western societies and the necessity to anticipate and plan for the needs of the growing elderly population (Paez et al., 2007). Out-of-home mobility is critical to numerous aspects of elderly people’s quality of life (Mollenkopf et al., 2005), since outdoor mobility is a prerequisite for partaking in social, commercial, and cultural activities. Various studies have found that people who are unable to move about freely as a result of physical limitations and people who cannot move freely due to limitations imposed on them by their surroundings have a lower quality of life (Breeze et al., 2005,Golant, 1979 and Gabriel and Bowling, 2004). Senior analyst Patrick Connolly says, “The hardware market remained below 100,000 units in 2011. However, it is forecast to reach 2.5 million units in 2017, with significant growth in elderly, health, and lone worker markets. Dedicated devices can offer significant benefits, with insurance and liability increasingly encouraging the use of approved equipment.” Around the world, more and more companies are entering this market. We are also seeing the first signs of leading CE companies entering the market, such as Qualcomm, Apple (via PocketFinder), Garmin, Cobra, etc. and there will also be significant partnerships and acquisitions in this space as new entrants looks to add tracking to their portfolio,” adds Connolly. Other markets include family, personal items (e.g. luggage), and pet and offender tracking. ( Abiresearch.com) 1.3. Research problem and motivation A significant problem faced by people in early stages of Dementia is getting lost while they are outside alone. A survey showed that 43% of people with dementia had been lost at some point. (McShane et al. 1998). Most lost persons were quickly found. However, 28% of them had been lost more than five occasions, and 14% had been lost for six or more hours on at least one occasion. This substantially increase the risk for involvement in dangerous situations or even death. (Hope & Fairburn, 1990: Meredeth & Vikki, 2003) Finally, research shows that in people with dementia, those who often 3 get lost are more likely to be placed in nursing homes (McShane et al, 1998; Rasquin, Willems, de Vlieger, Geers, & Soede, 2007). The GPS tracking devices can prove useful in the caregiving offered to dementia and Alzheimer’s patients. These devices allow wandering people to avoid confinement at home and thus promote autonomy. However, these devices, largely commercialized with various shapes (wristwatch, cell phone, etc.), have been developed without enough knowledge of end-users’ needs. (V. Faucounau, M. Riguet, G. Orvoen, A. Lacombe, V. Rialle, J. Extra, A.-S. Rigaud, 2009) Moreover, the acceptability and the usability of these products have rarely been assessed (Laila M, Rialle V, Brissonneau C, Pinciaux D, Sécheresse C, Boukhalfa D, et al, 2008) and (R. McShane, K. Gedling, B. Kenward, R. Kenward, T. Hope, R. Jacoby, 1998), and ethical issues associated with their use are raised (R. McShane, T. Hope, J. Wilkinson, 1994), (Rialle V, 2009) and (S. Welsh, A. Hassiotis, G. O’Mahoney, M. Deahl 2003). The underlined arguments are the breach of privacy and dignity of the person and the loss of liberty. Another raised issue is the capacity to consent. Conflicting ethical principles are discussed in relations to tracking devices. These include tensions between the principles of beneficence (“doing good”) and nonmaleficence (“avoiding harm”), and between safety and rights to autonomy, dignity and privacy, that is the balance between societal/legal values versus person-centred/individual values (Robinson L, Hutchings D, Corner L, Beyer F, Dickinson H, Vanoli A, et al. 2006) According to the theory, there have been a lot of studies concerning the success of new products. The perhaps most well-known are the studies by Booz, Allen and Hamilton, the Conference Board, Cooper and Kleinschmidt as well as de Brentani. The findings can be summarized as follows: 10 suppliers, including suppliers of labor, can squeeze profitability out of an industry that is unable to pass on cost increases in its own prices. (Porter, 2008) The products that the company gets from the suppliers are the GPS devices themselves and the SIM cards. To get a SIM card is a really easy operation, so I am not going to discuss it. I will just focus on getting the devices: ● Supplier switching costs relative to firm switching costs:the switching cost for the suppliers are low. However, if the companies want customised products, the costs arise, since the supplier has to adapt its working capabilities. ● Degree of differentiation of inputs is very, most devices doing the same things. ● Presence of substitute inputs: there are a lot of suppliers, mainly in China, that offer the same type of products ● Strength of distribution channel: the products they are bought directly from the producer, and they are shipped to the company directly. 2.1.2.3 Bargaining power of buyers Powerful customers – the flip side of powerful suppliers – can capture more value by forcing down prices, demanding better quality or more service (thereby driving up costs), and generally playing industry participants off against one another, all at the expense of industry profitability. Buyers are powerful if they have negotiating leverage relative to industry participants, especially if they are price sensitive, using their clout primarily to pressure price reductions. (Porter, 2008) Potential factors: ● Buyer concentration to firm concentration ratio: there are only a few companies serving a large theoretical market ● Degree of dependency upon existing channels of distribution: the products are usually distributed by request, mostly online. Even if you go to a large 11 telecom player to ask for their product, they don’t have it in stock, just by request. ● Buyer switching costs relative to firm switching costs: buyer switching cost are low if there are no loyalty programs in use. however, the offer is limited and similar. ● Buyer information availability: the information is available online, although the awareness about this solution is still low in Portugal. The company knows that very few doctors, for example, recommend it to their patients. ● Availability of existing substitute products: the market for the products designed for Alzheimer’s patients is a niche market, so the products are not easily available. 2.1.2.4 Threat of substitutes A substitute performs the same or a similar function as an industry’s product by a different means. Sometimes, the threat of substitution is downstream or indirect, when a substitute replaces a buyer industry’s product. Substitute products or services limit an industry’s profit potential by placing a ceiling on prices. If an industry does not distance itself from substitutes through product performance, marketing, or other means, it will suffer in terms of profitability – and often growth potential. (Porter, 2008) ● Relative price performance of substitute: price is a very sensitive matter: from the company’s experience, if the price is too high, customers are not affording it, if the price is too low the customers are not going to trust the product. In the case of the Portuguese market, there is not a big differentiation between prices, because they are not set yet. ● Buyer switching costs are low, if not for loyalty contracts. ● Number of substitute products available in the market: there are 5 main competitors in the market that offer GPS tracking devices options. The other solutions, that serve the same purpose, like bracelets that work with self-locking doors, are even less accessible. 12 2.1.2.5 Rivalry For most industries the intensity of competitive rivalry is the major determinant of the competitiveness of the industry. Rivalry among existing competitors takes many familiar forms, including price discounting, new product introductions, advertising campaigns, and service improvements. High rivalry limits the profitability of an industry. The degree to which rivalry drives down an industry’s profit potential depends, first, on the intensity with which companies compete and, second, on the basis on which they compete. (Porter, 2008) Potential factors: ● Sustainable competitive advantage through innovation: the innovation is still a big issue, since the technology is cheap and and the domain is very dynamic. ● Level of advertising expense is very high, creating the awareness being one of the barriers the industry has to overcome ● Powerful competitive strategy: companies are more worried to penetrate the market than to fight against other. Overall, we can state that the industry GPS tracking industry is a blue ocean in Portugal. There are a lot of growth possibilities, mentioning that they are not yet tested. 2.1.3. Competition Analysis The main competitors in Portugal are Optimus OneCare, of True-Kare, INOSAT, Localizador GPS and of the location service offered by Cruz Vermelha Portuguesa. True Kare INOSAT Localizado r GPS Cruz Vermelha Optimus One Care 13 Price 49,9 +12.5/me s 259 +card, 2,5 initially 149 +card buy: 150 +10 monthly rent: 17/monthly 2 euro discount CVT 149 + 8,5/mes Call center no no no yes no Device telephone GPS tracker GPS tracker GPS tracker GPS tracker Geofence yes yes, 3, with central point no no no 2 way call yes no calls no yes yes Panic button yes yes yes yes yes platform yes no no no no extra alarms yes no no yes no mobile application yes no no no no alerts yes yes no yes no distribution channels MEO shops, by request online online Cruz Vermelha offices NOS shops, by request Regarding the competition, the most dangerous are True Kare and Optimus One Care, since they are backed up by the telecom operators and benefit from huge 14 marketing budgets and a developed distribution network. Also, Cruz Vermelha has a huge trust capital, considering their tradition and history. 2.1.4. Pestle analysis of the industry The Pestle Analysis is a useful tool to fully understand the environment in which the company is running, containing all the external factors that influence the future development of the business. Applied for the case of GPS tracking devices: Political factors - Government changing regarding the policy towards persons with Alzheimer's can affect the company’s outcome. Economical - The price of home care rises - Nursing homes see the device as a threat to their business Social - The percentage of old people is growing, so more and more cases of Alzheimer are expected to happen in the future Technological - New and more efficient treatments for Alzheimer are being developed - The technology is cheap Legal - Privacy concerns regarding the fact that the patient might not realize that somebody can know where he is all the time - Ethical rea Environmental 15 - No environmental concerns 2.2 Alzheimer’s disease and market opportunity 2.2.1 Market Opportunity Alzheimer's disease (AD), also known as Alzheimer disease, or just Alzheimer's, accounts for 60% to 70% of cases of dementia.(Burns, 2009) It is a chronic neurodegenerative disease that usually starts slowly and gets worse over time. The most common early symptom is difficulty in remembering recent events (short-term memory loss). As the disease advances, symptoms can include problems with language, disorientation (including easily getting lost), mood swings, loss of motivation, not managing self-care, and behavioral issues. As a person's condition declines, they often withdraw from family and society (Burns, 2009). Gradually, bodily functions are lost, ultimately leading to death (Querfurth, 2010). Although the speed of progression can vary, the average life expectancy following diagnosis is three to nine years (Todd S, Barr S, Roberts M, Passmore AP 2013). Demographic ageing is a worldwide process that shows the successes of improved health care over the last century. Many are now living longer and healthier lives and so the world population has a greater proportion of older people. Dementia mainly affects older people, although there is a growing awareness of cases that start before the age of 65 (Mendez, 2012). Population ageing is taking place in nearly all the countries of the world. Ageing results from decreasing mortality, and, most importantly, declining fertility. Globally, the number of older persons (aged 60 years or over) is expected to more than double, from 841 million people in 2013 to more than 2 billion in 2050. In Portugal there is a large number of old people. From a population of around 10.5 million, the percentage of the ones over 65 is 18.1% (male 800,339/female 1,156,361) (2012 est.) and the ones between 15-64 years is 65.7% (male 16 3,548,140/female 3,538,562) according to CIA World Factbook. This may happen due to different reasons. Firstly, there has been, initially in the more economically developed countries (MEDC) but also more recently in less economically developed countries (LEDC), an increase in life expectancy which causes the ageing of populations. For the entirety of recorded human history, the world has never seen as aged a population as currently exists globally (UN World Population Ageing Report, 2013). Secondly, the birth rate is decreasing. In 2012 the average global birth rate was 19.15 births per 1,000 total population, compared to 20.09 per 1,000 total population in 2007. ( CIA World Factbook). In Portugal, according to “unstats.un.org” the birthrate is only 8% in 2013, constantly declining since 2000. Portugal has one of the lowest birthrates in the EU. As of 2013, there were an estimated 44.4 million people with dementia worldwide. This number will increase to an estimated 75.6 million in 2030, and 135.5 million in 2050. Much of the increase will be in developing countries. Already 62% of people with dementia live in developing countries, but by 2050 this will rise to 71%. The fastest growth in the elderly population is taking place in China, India, and their south Asian and western Pacific neighbors. (ALZ.co.uk) Alzheimer Europe estimates the number of people with dementia in Portugal in 2012 as being 182,526. This represents 1.71% of the total population of 10,699,333. The number of people with dementia as a percentage of the population is somewhat higher than the EU average of 1.55%. 2.2.2 Related Costs The greatest origin of costs for society is the long-term care by healthcare professionals and particularly institutionalization, which corresponds to 2/3 of the total costs for society. In Portugal there are about 2000 institutions that provide care for the patients (Alzheimer Portugal). According to the Association of Nursing Homes 17 (ALI.pt), the cost of living at home is also very high, especially when informal costs for the family, such as care giving time and caregiver's lost earnings, are taken into account. Dementia, and specifically Alzheimer's disease, may be among the most costly diseases for society in Europe. These costs will probably increase with the ageing of society, becoming an important social problem. AD-associated costs include direct medical costs such as nursing home care, direct nonmedical costs such as in-home day care, and indirect costs such as lost productivity of both patient and caregiver. (Moore, Zhu, Clipp, 2001) Costs increase with dementia severity and the presence of behavioral disturbances, and are related to the increased care giving time required for the provision of physical care. Therefore any treatment that slows cognitive decline, delays institutionalization or reduces caregivers' hours will have economic benefits. The role of the Suricare service, with the GPS tracking and panic button, is to do just that. The fact that the person can be located anytime will offer much more freedom to the patient and less stress for the family/caregiver, and also the emergency button will reduce the need for constant surveillance, the patient now having the possibility to get help by just pushing a button. Key success factors: ● only 1-in-4 people with Alzheimer’s disease have been diagnosed. (Alzheimer’s Disease International) ● Globally, 40 percent of older persons aged 60 years or over live independently, that is to say, alone or with their spouse only. They would require extra care ● 2-in-3 people with Alzheimer’s are women. (Alzheimer’s Association) ● Alzheimer’s and dementia is most common in Western Europe (North America is close behind) ● Alzheimer’s is least prevalent in Sub-Saharan Africa. (Alzheimer’s Disease International) ● People with Alzheimer’s disease are hospitalized three times more often than seniors without Alzheimer’s. (Alzheimer’s Association) ● 68% of nursing home residents have cognitive impairment from Alzheimer’s disease or a related disorder. (Alzheimer’s Association) 18 ● 52% of assisted living facilities provide dedicated memory care for residents with Alzheimer’s disease. (Alzheimer’s Association) ● 40% of Alzheimer´s patients got lost at least once, while just 10% got lost twice, which means that after the event, families start to be much more careful into taking care of the patients, 2.3 What is a business model Companies commercialize new ideas and technologies through their business models. The economic value of a technology remains latent until it is commercialized in some way via a business model. The same technology commercialized in two different ways will yield two different returns. In some instances, an innovation can successfully employ a business model already familiar to the firm, while, other times, a company will have a business model that can make use of the technology via licensing. In still other cases, though, a potential new technology may have no obvious business model, and in such cases technology managers must expand their perspectives to find an appropriate business model in order to be able to capture value from that technology. (Chesbrough, 2009). The concept of business models appeared with the development of businesses and with the innovations that changed the market in the last century.In the 1950s, new business models came from McDonald's Restaurants and Toyota. In the 1960s, the innovators were Wal-Mart and Hypermarkets. The 1970s saw new business models from FedEx and Toys R Us; the 1980s from Blockbuster, Home Depot, Intel, and Dell Computer; the 1990s from Southwest Airlines, Netflix, eBay, Amazon.com, and Starbucks.(Beasley, 2014) The concept of business model it is integrated in the concept of strategic management. Strategic management involves formulation and implementation of the major goals and initiatives taken by a company's top management on behalf of owners, based on consideration of resources and an assessment of the internal and external environments in which the organization competes. (Nag, R.; Hambrick, D. C.; Chen, M.-J (2007) 19 “A business model design template can facilitate the process of designing and describing a company's business model.” Daas et al. (2012) developed a decision support system (DSS) for business model design. In their study a decision support system (DSS) is developed to help SaaS in this process, based on a design approach consisting of a design process that is guided by various design methods. In the early history of business models it was very typical to define business model types such as bricks-and-mortar or e-broker, after the way that they were acting. However, these types usually describe only one aspect of the business (most often revenue model). Chesbrough and Rosenbloom we have suggested that a business model fulfils the following functions:1 ● Articulates the value proposition (i.e., the value created for users by an offering based on technology); ● Identifies a market segment and specify the revenue generation mechanism (i.e., users to whom technology is useful and for what purpose); ● Defines the structure of the value chain required to create and distribute the offering and complementary assets needed to support position in the chain; ● Details the revenue mechanism(s) by which the firm will be paid for the offering; ● Estimates the cost structure and profit potential (given value proposition and value chain structure); ● Describes the position of the firm within the value network linking suppliers and customers (incl. identifying potential complementors and competitors); ● Formulates the competitive strategy by which the innovating firm will gain and hold advantage over rivals. 26 Key Partners Network of suppliers and partners that make the business model work. Revenue streams Money a company generates from each customer segments. Cost structure Costs involved in the operation of the business model. Unlike other existing models in the literature (Hedman, Kalling, 2003; Lecocq, Demil, Warnier 2006; Johnson, Christensen, Kagermann 2008) the BMC is considered the most complete model in the business model theory, as it addresses, in detail, the relationships of all internal and external organizational components, and show how these relate to create and capture the value proposed by the organization. 3.2 Data collection Secondary research involves the summary, collation and/or synthesis of existing research rather than primary research, where data is collected from, for example, research subjects or experiments. Care should be taken to distinguish secondary research from primary research that uses raw secondary data sources. The key of distinction is whether the secondary source being used has already been analyzed and interpreted by the primary authors.(Crouch, Hudson, 2003) The term is widely used in health research, legal research, and in market research. The principal methodology in health secondary research is the systematic review, commonly using meta-analytic statistical techniques, although other methods of synthesis, like realist reviews and meta-narrative[2] reviews, have been developed in recent years. Such secondary research uses the primary research of others typically in the form of research publications and reports. During my 5 month stay in the company I had access to a lot of secondary data and experiences that the company had before. I mean company knowledge, experiments, tests, analyses carried out since the creation of the company until now. 27 3.3 Methodology-related Limitations There are advantages to using secondary sources. First and foremost, secondary sources are often less costly and time-consuming than collecting original materials. Disadvantages exist as well. There may not be enough secondary sources on your topic . The quality of the available information could also be a problem. The original material may have been analyzed or interpreted by someone without the necessary expertise. There is also a chance that a secondary source could be outdated. But these disadvantages didn’t apply to my case. The persons working in the company had the necessary expertize and could understand the market and the business. And since the company is a startup, the data was recent. 28 4. Business model canvas In this chapter I am going to apply the business model canvas to the specific case of Suricare, based on the data I’ve collected from the company. 4.1 Customer Segments The customer segments are the people/organizations for which the company wants to create value for. So, in order to define our customer segments, we will firstly distinguish between the B2B and B2C customers. Therefore, the B2B customers are the hospitals and nursing homes, clinics and day care center where Dementia and Alzheimer’s patients are being cared of. According to laresonline.pt there are 1997 “nursing homes” with around 78.000 people registered and around 76.000 get home services. Regarding the B2C market, the customer segments include the “persons at risk “ category, which includes old people living alone, Alzheimer’s and dementia patients, blind people, lone workers etc. Alzheimer Europe estimates the number of people with dementia in Portugal in 2012 as being 182,526. This represents 1.71% of the total population of 10,699,333. The number of people with dementia as a percentage of the population is somewhat higher than the EU average of 1.55%. According to ALZ.org, 6 out of 10 Alzheimer patients experience the phenomenon of “wandering”, even in the early stages of dementia. A person can become disoriented or confused for a period of time, may not be able to return home safely, and it’s a huge source of stress, both for the patient and for the caregiver. Also, more than 40% of family caregivers report that the emotional stress of their role is high or very high. (Alzheimer’s Disease International). Regarding the difference between customer and consumer, for the Alzheimer’s and dementia patients the consumer is not the customer. Since the patients are generally old, around 65 or more, the customer will be the caregiver that would buy the service for them. The caregiver is in generally represented by the family or children, who are probably around the age of 40, so the efforts are conducted towards them to convince them of the benefits that the service bring. Profile of the end user: 29 ● person suffering from Dementia or Alzheimer in the initial stages ● over 60 years old ● still able to walk, go to visits or do shopping ● able to use the device, understands what is doing ● person receiving home care from an institution, this device would facilitate the interaction between the parts implied and offer the patient a lot more comfort and control 4.2. Value proposition In what respects the value proposition, we should stress which is the value proposition for the B2B customer, the B2C, and the final consumer. Starting by the B2B customers, our value proposition focus on the increase of customers and revenues that Suricare will potentiate. The emergency system will allow a more efficient care of the patients in homecare, and also a cheaper way to deal with the emergencies of the patients that are in the nursing homes in a full time regime. Not only that they can be traced faster when they get lost, but this solution is much more ethical than locking them inside with cards or access codes, or other systems. The GPS trackers are very accurate and a safety area can be set for each device, so when a patient leaves the safety area the alarm will go on. So the device not only that will allow the nursing home to take better care for the patients that are in home care and expend their number, but they can also charge a monthly fee or a price for this service. The same for the patients in full time care, they can also be charged for the service, if they want it or not. The customer for the Suricare services is not the same one as the consumer. As a simplification, the one that buys the product is the caregiver (it can be family or no) of the consumer, considering that an old Alzheimer's patient will not have the skills to understand and set this device without external help. of course this doesn’t mean that all the customers are different from the consumers. So, considering the caregiver, he will benefit from our device by an increase in comfort and a stress reduction by being able to continually track and keep in touch with his care receivers (parents, grandparents). In 30 case of emergency, he will be able to offer the required help in a much more efficient and prompt way. As for the consumer, he is the main beneficiary of this service. The total increase in his own safety is huge, as with this device can prevent situations in which he could suffer a lot of extra stress (getting lost, receiving faster help, get in contact with family etc). 4.3. Channels The channels are the means to reach to the customers. For the B2B market, the best way to reach the customers is by direct sale. All the nursing homes, hospitals will be contacted via the sales force, with a brochure describing the product, and an invitation to further negotiations. Also, Suricare will be present at all medical faires and in all brochures. If an agreement is reached, the purchace will be made via a salesman. The products will be delivered by mail, with clear instructions on how to be used. If there is a need for further assistance, there will be a person to answer all calls/e-mails or even go there in person. For the B2C market, Suricare will firstly sell online, via an online shop. The idea is to raise the awareness of the service, present the advantages of using the product, attract the customers to the website through marketing campaigns, from where they can order the product. The purchase would be made via the online shop, and it will be delivered by mail or by a delivery company. Depending on the final version of the product, joining a retail network is the prefered option, since the company does not have the compatibilities to develop a distribution network. Direct marketing is also considered a future solution, but it still depends on how the product is received by the market. The B2C customers will also benefit from post sale assistance. Distribution is the most difficult part of the whole business plan. GPS tracking device is a niche market, so a network of stores is irrelevant. Also, an online shop might not be reachable by the target market, due to age and unfamiliarity with online shopping. For this, Suricare will also offer traditional mail order and coupons, or phone sale. 31 4.4. Customer Relationships Considering the fact that the device is a device that has a potential of saving a life or replacing human care in a lot of situations, the relationship that we want to maintain and build with the customers is a relationship based on trust and professionalism. Everybody that has to deal with the company must trust us and believe that what we offer them can really make a difference. Every interaction between the company and a customer must happen based on this coordinates. The customer relationships are the link and the way to deliver the value proposition to the customer segments defined. Thus, we divided the customer relationships into the pre-sale and the post-sale relationships. For the B2B market, concerning the pre-sale relationships, it is of major importance that Suricare engages with the nursing homes communities, whether they are medical fairs or events or online communities. Additionally, a marketing one-to-one approach will be necessary to reach and to convince each nursing home to buy the service, since this consists of an important investment and it is not a daily decision. In so doing, we will deliver personalized contact and can better and directly understand the customer feedback. At the same time, we should not forget that the nursing homes industry is a complex and a very special one in what relates to networks and relationships, increasing the importance of one-to-one approaches. The company believes that nursing homes are resilient to change, but since the competition is high, if one nursing home will add the service to their portfolio, a lot will follow. Regarding the post-sale relationships, they will be governed by flexibility and continuous improvement. Suricare will maintain in contact with all the customers, listening to their feedback and their suggestions on ways to improve the product to satisfy the needs. For the B2C customers, the presale relationship has to be developed carefully. The company will rely on targeted marketing campaigns, in magazines, brochures etc containing testimonials of users and the endorsement of community leaders, in order to make ordinary people trust the service. The idea is to make the customer a partner in offering the best quality service to the end user. 32 Regarding the post sale activities, flexibility is again very important, the company listening constantly for the feedback of the users, and ways to better understand their needs and requirements. 4.5. Revenue Streams The customers are paying for peace of mind and safety. This are things that is really hard to put a price on, but since any company can work without money, Suricare has developed price strategies to different types of customers. Customers are paying for a physical device, access to a platform to easily manage the device, set the safe zone, emergency numbers, track the device etc. Also, because the device works with a SIM card, they need to pay for the service too. Suricare does not want the customers to pay directly to the telecom operator, since in case the client forgets to pay for it, the device will not work anymore, and this can bring a bad fame for the company. So the company wants to avoid completely this situation from happening, so it will make sure that the cards are working all the time, and getting the money back from the customers. In case the customers will not pay, it will interrupt the service, but not before contacting him For the B2B market, the price is fully negotiable, depending on the order quantity, how many devices they buy and the options that they want to use with the device, the access to the designated platforms and the options that it offers (the client may just opt for the devices without any additional help). For the B2C market, the company will develop different pricing options, in order to give to the customers greater flexibility in choosing a plan that satisfy their needs. Firstly, the service can be sold for a lifetime contract (until the death of the user), without any other costs associated, for a fee between 2000 to 5000 euros. This means that the company will offer the device, the platform and will support the SIM card costs, without requesting more money from the client. 33 Other possibility is selling the device, with a limited time contract ( 2 years) in which the customer buys the device and pays either a fixed monthly fee for the SIM card traffic, or the bill with the month’s usage (how much data he consumed, remember, the device can also work as a mobile phone, and the device communicates with the platform or with the emergency numbers via SMS). Other option is to lease the device, in this case the customer pays a fixed amount per month for using the device, and the costs from the SIM card (either a fixed subscription or the month’s usage). This kind of contract will also have a time frame, when it ends the customer having to return the device in good working condition back to the company. And the last is without a time frame. So the customer pays for renting the device a fixed amount, higher than in the previous case, and a fixed amount for the SIM card. 4.6. Key Resources Starting a new business and sustaining a competitive advantage implies having specific and key resources. Our most important resource will be the platform that will allow a facile control of the device. The platform will allow the operation of the device, like as setting the geo-fences areas, the emergency numbers, to be transformed from a difficult and unattractive process, accessible just to high technical individuals, to a simple process that can be accessed by anyone, without any special training. The platform is in continuous development, adding new and new functions as the opportunity arises, and will be developed in close contact with the producer of the device. Other key resource is the brand. The plan is to transform Suricare in a leading name in the industry of GPS trackers, so any person that wants to buy a GPS tracker should think first at Suricare. The human resources of Suricare will be of major importance, mainly the sales force, because they will communicate the brand and be the direct link between the company and the customer, especially in the B2B market. Of course, the technical human resources are very important too. The platform has to be bulletproof and free of errors. It has to work perfectly every time and in case 34 something happens it has to be fixed as quickly as possible. The platform has also to be secure and in constantly improved. 4.7. Key Activities The key activities performed by the company in order to deliver the promised value are the following: ● Creating the awareness for the devices, marketing and brand management. ● Design and optimization of the platform, depending on the customer feedback and preferences as well as the technical possibilities of the devices. ● Sales and distribution, finding new corporate customers and transforming them in long term partners. ● Customer relationship management, including all the public relations’ activities plus the post sale assistance. ● Lobbying is another key activity. Following England’s example, where this devices are government subsidised for the Alzheimer's patients, this kind of measure here in Portugal will lead to a steady flow of customers. 4.8. Key Partners The company is not able to function without the help of some key partners, that can benefit too by the development of Suricare. They are: ● The device supplier. Suricare can’t work without a GPS tracking device. The devices are bought from China in batches and distributed by Suricare. They have to be reliable and of very good quality. In case of large orders, Suricare can participate in the design and customization of the devices. Having a few trustfull device suppliers is essential for the company. ● The SIM card provider is also capital partner. The devices work with a SIM card, and Suricare must make sure that they are working all the time. Also, since Suricare will be the one paying the fees for the cards, there must be a positive working relationship between the Telecom 35 operator and the company. The company wants to benefit from their network as well as from special tariffs ● The delivery company is the one responsible of bringing the product in good condition to the customer. The company wants a company with a good rate of successful deliveries opened to negotiate special tariffs for it. ● The nursing homes, hospitals etc are another key partner of the company. Because the company expects them to be the main source of revenue and because the model that we are proposing is a win - win situation, a close collaboration is expected. Since the service adds value to their business and also is a source of extra revenue, since they can easily monetize it, a close partnership is mandatory. Hospitals are also a great partner. Because of the fact that doctors benefit from much higher degree of credibility in the eyes of the patient, winning their trust can be a huge free boost for our business. Basically, if we get a doctor to recommend the service to the patients, a huge part of our marketing work is already done. ● NGO’s that work with Alzheimer’s patients and old people are also a partner in creating awareness. 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