Peanut Detective Business Plan

2007
A device that detects peanut traces in foods,

helping those with peanut allergies avoid
potentially deadly allergic reactions.
SM 323 Spring 2007

Section X4 Team 2
PTA: Professor Donald Santini
April 17, 2007
This business plan is the original work of the undersigned.
All facts and figures are authentic. All contributions from
others have been appropriately acknowledged.
Frederick Hoang
Leora Kadisha
Alejandro Moreno‐Paz
Roman Nurik
Salonie Patel
Ryan Shore
Danielle Varney
Table of Contents
Executive Summary .............................................................................................................................. 1
Product Need ......................................................................................................................................................... 1
Product Description ............................................................................................................................................ 1
Marketing ................................................................................................................................................................ 1
Operations ............................................................................................................................................................... 2
Information Systems .......................................................................................................................................... 2
Finance...................................................................................................................................................................... 2
Introduction ............................................................................................................................................ 3
Food Allergies ........................................................................................................................................................ 3
Peanut Allergies .................................................................................................................................................... 3
BSure Diagnostic Devices, Inc. .......................................................................................................... 4
Organizational Goal ............................................................................................................................................. 4
The BSure Peanut Detective ............................................................................................................................ 4
Revenue Sources .................................................................................................................................................. 6
Critical Success Factors ..................................................................................................................................... 6
Industry, Trends and Competitive Analysis ................................................................................ 8
Industry .................................................................................................................................................................... 8
Competitive Environment ................................................................................................................................ 9
Positioning the Peanut Detective ............................................................................................................... 11
Competitor Response ...................................................................................................................................... 12
Marketing Plan ..................................................................................................................................... 14
Communication Objectives ........................................................................................................................... 14
Segment Analysis .............................................................................................................................................. 14
Promotional Plan ............................................................................................................................................... 16
Push Strategies ................................................................................................................................................... 17
Pull Strategies ..................................................................................................................................................... 18
Advertisement Design ..................................................................................................................................... 20
Distribution ......................................................................................................................................................... 21
Pricing Strategy .................................................................................................................................................. 23
Sales Projection .................................................................................................................................................. 25
Operations & Manufacturing Plan ................................................................................................. 27
Product Design ................................................................................................................................................... 27
Patent Information ........................................................................................................................................... 29
Plant Characteristics ........................................................................................................................................ 30
Management Level Employees .................................................................................................................... 32
Supply Chain ........................................................................................................................................................ 32
Direct Sales .......................................................................................................................................................... 41
Situational Analysis .......................................................................................................................................... 42
Continued Development ................................................................................................................................ 43
Information Systems Plan ................................................................................................................ 44
Plan Overview ..................................................................................................................................................... 44
Achieving Critical Success Factors ............................................................................................................. 45
Value‐Adding Activities .................................................................................................................................. 46
Core Application Software ............................................................................................................................ 47
Web Strategy ....................................................................................................................................................... 49
Supporting the Business Model .................................................................................................................. 52
Hardware and Telecommunications ........................................................................................................ 53
Data Security ....................................................................................................................................................... 54
Personnel .............................................................................................................................................................. 55
Implementation Schedule ............................................................................................................................. 55
Costs ........................................................................................................................................................................ 56
Summary ............................................................................................................................................................... 57
Financial Analysis & Plan ................................................................................................................. 58
Internal Rate of Return & Net Present Value ........................................................................................ 58
Investment ........................................................................................................................................................... 58
Cash Flows ........................................................................................................................................................... 60
Ratios Analysis ................................................................................................................................................... 62
Risks ........................................................................................................................................................................ 63
Scenarios ............................................................................................................................................................... 65
Why Invest? ........................................................................................................................................... 68
Beyond Year Seven ........................................................................................................................................... 68
Conclusion ............................................................................................................................................................ 68

Table of Exhibits
General Exhibit 1: Product Image ..................................................................................................................... 4
General Exhibit 2: Competitive Products .................................................................................................... 10
General Exhibit 3: Product Positioning A .................................................................................................... 11
General Exhibit 4: Product Positioning B .................................................................................................... 12

MK Exhibit 1: Segment Psychographics (Children & Teen Segment Separated) ....................... 15
MK Exhibit 2: Promotional Plan (Year 1) .................................................................................................... 17
MK Exhibit 3: Product Packaging ................................................................................................................... 21
MK Exhibit 4: Holder Purchase Intents ........................................................................................................ 23
MK Exhibit 5: Cartridge Purchase Intents .................................................................................................. 23
MK Exhibit 6: Holder Price Points .................................................................................................................. 24
MK Exhibit 7: Cartridge Price Points ............................................................................................................ 24
MK Exhibit 8: Product Lifecycle ...................................................................................................................... 24
MK Exhibit 9: BASES Sales Forecast .............................................................................................................. 25

OM Exhibit 1: Consumer Attribute Importance Preferences ............................................................. 27
OM Exhibit 2: Distributor Locations ............................................................................................................. 30
OM Exhibit 3: Factory Layout ........................................................................................................................... 31
OM Exhibit 4: Supply Chain Diagram ............................................................................................................ 33
OM Exhibit 5: Supplier Map .............................................................................................................................. 33
OM Exhibit 6: Holder Lead Times ................................................................................................................... 35
OM Exhibit 7: Cartridge Lead Times ............................................................................................................. 36
OM Exhibit 8: Holder Process Time ............................................................................................................... 36
OM Exhibit 9: Cartridge Process Time ......................................................................................................... 38

IS Exhibit 1: Information Systems Plan Summary .................................................................................. 44
IS Exhibit 2: Information Systems Value Chain ........................................................................................ 46
IS Exhibit 3: Implementation Schedule ........................................................................................................ 56
IS Exhibit 4: Pre‐launch IS Costs (w/o $60K in Salaries) ..................................................................... 56

FE Exhibit 1: IRR & NPV ...................................................................................................................................... 58
FE Exhibit 2: Contribution & Ownership..................................................................................................... 59
FE Exhibit 3: Contribution Details ................................................................................................................. 59
FE Exhibit 4: Cash Flows (years 0‐7) (data table values in thousands) ........................................ 60
FE Exhibit 5: Summarized Income Statement........................................................................................... 61
FE Exhibit 6: Breakeven for Cartridges ....................................................................................................... 61
FE Exhibit 7: Company & Industry Ratios .................................................................................................. 62
FE Exhibit 8: Sensitivity Analysis ................................................................................................................... 64
FE Exhibit 9: IRR & NPV for Optimistic, Base, and Pessimistic Cases ............................................. 65
FE Exhibit 10: IRR & NPV for Investors (Opt./Base/Pess.) ................................................................. 66
FE Exhibit 11: Cash Flows for Optimistic, Base and Pessimistic ....................................................... 67

Table of Appendices
General Appendices ........................................................................................................................... 69
General Appendix 1: External Product Design ..................................................................................... 69
General Appendix 2: Internal Product Design ...................................................................................... 70
Marketing Appendices ...................................................................................................................... 73
MK Appendix 1: Segmentation Tree ......................................................................................................... 73
MK Appendix 2: Press Release .................................................................................................................... 73
MK Appendix 3: Instruction Manual Contents ..................................................................................... 74
MK Appendix 4: Survey & Result Summary .......................................................................................... 76
MK Appendix 5: Online Post‐Purchase Survey .................................................................................... 79
MK Appendix 6: Focus Group Summary ................................................................................................. 80
MK Appendix 7: Marketing Budget Expenses ....................................................................................... 81
MK Appendix 8: Base Case Sales Forecast ............................................................................................. 82
MK Appendix 9: Online Rebate ................................................................................................................... 83
MK Appendix 10: Introductory Advertisement ................................................................................... 83
MK Appendix 11: Web Commercial Storyboards & Snapshots ..................................................... 84
MK Appendix 12: Magazine Advertisements ........................................................................................ 85
Operations Management Appendices .......................................................................................... 86
OM Appendix 1: House of Quality .............................................................................................................. 86
OM Appendix 2: Organizational Chart (Year 1) ................................................................................... 86
OM Appendix 3: Supplier Information ..................................................................................................... 87
OM Appendix 4: Component Price Breaks ............................................................................................. 87
OM Appendix 5: Economic Order Quantities ........................................................................................ 88
Information Systems Appendices .................................................................................................. 89
IS Appendix 1: Preliminary Operations/Manufacturing ERD ....................................................... 89
IS Appendix 2: Preliminary Data Flow Diagram .................................................................................. 89
IS Appendix 3: Microsoft Dynamics GP Resources ............................................................................. 90
IS Appendix 4: peanutallergy.com Screenshots ................................................................................... 91
IS Appendix 5: Website Details ................................................................................................................... 92
IS Appendix 6: Information System Cost Schedule (w/o IS Manager Salary) ........................ 93
Finance Appendices ............................................................................................................................ 94
FE Appendix 1: Cash Flows & Returns ..................................................................................................... 94
FE Appendix 2: Income Statement ............................................................................................................ 95
FE Appendix 3: Balance Sheet ..................................................................................................................... 96

Executive Summary 1

Executive Summary
Product Need
Currently, the three million people who are diagnosed with peanut allergies have no means
of detecting peanuts in their food. They must rely on incomplete nutrition labels and other
inaccurate means to decide if there are peanut traces in foods. The Peanut Detective will
fulfill this need for a diagnostic device by accurately and quickly informing the consumer of
peanut contents within a food item.
Product Description
The Peanut Detective, which will be slightly larger than a USB flash drive, is comprised of
two components, a holder and a cartridge. The holder will contain the electronics of the
device, including the LED lighting, which will illuminate green if the food is safe to eat and
red if the food contains peanut traces. The cartridge, which will be one time use only, will
contain the chemicals necessary for the device to work. The chemicals will be contaminated
after each usage, which warrants the one time use.
Marketing
The Peanut Detective is targeted towards children and teens, ages 2‐17, and adults 18 and
older. These two markets are made up of 2.5 million people, whose reactions to peanut
ingestion lead to hives, vomiting, and anaphylaxis. Marketing towards the first segment will
target parents and guardians, for they will be the buyers. These advertisements will appeal
towards a mother’s maternal instincts. Advertisements targeting the adult segment will be
more light hearted, portraying slightly comical situations. The Peanut Detective will be
distributed through major drug stores including CVS, Walgreens, and Rite Aid. Consumers
will also be able to purchase the Peanut Detective online (www.bsuredd.com), where a
subscription plan can be set up and customized to the consumers’ needs. The holder will
sell for $41.99, assuming a 39% retailer markup. The cartridge will sell in boxes of 16, for
$58.40, and boxes of eight for $29.20, assuming a 35% retailer markup. $8 rebates will be
included with the larger cartridge boxes, and can be redeemed at the BSure website.
Executive Summary 2

Operations
All thirteen components needed for production will be purchased from suppliers. However,
none of the production process will be outsourced. The variable costs per cartridge unit are
$1.68 in year 1, where price breaks will not be available. Eventually, cartridge price will
drop to $1.62 per unit due to price breaks. The holder will cost $1.92 to produce in year 1,
dropping to $1.87 once demand enables price breaks on plastics and packaging. Labor
costs are minimized through the usage of part time labor. Machines, needed for cartridge
production, will cost $100K; one machine will be necessary in year 1 and eight machines in
year 7. BSure will use a chase strategy to keep inventory levels low, necessitated by
expiration dates on the cartridge and holder, which limit the amount of time each unit can
spend in finished goods holding.
Information Systems
Information systems will be used in order to achieve the following three critical success
factors: exceptional product reliability, rapid customer base expansion, and secure
intellectual capital management. IS will also integrate and monitor all aspects of inventory
management in order to keep inventory levels low and track quality throughout the
production process. A web site will be set up where consumers can learn about peanut
allergies as well as purchase the Peanut Detective.
Finance
BSure will provide investors with a rate of return of 55% and a net present value of $2.6
million. Within four years, investors will recover their initial investments and receive
increasing cash flows through year 7. To achieve these cash flows, investments of $1.4
million are needed from investors over a three year period. By the end of year 7, 286K
holders and over 30 million cartridges will have been sold. After year 7, with a terminal
value of $15 million dollars, BSure will explore the option of expansion into diagnostic
devices for other food allergies such as tree nuts and egg, which are two of the more
prominent food allergies.
Introduction
Introduction 3

Introduction
Food Allergies
Food allergies are irregular responses to food that are triggered by a reaction in the
immune system.1 They are characterized by symptoms ranging from hives to anaphylaxis,
which is a severe respiratory reaction involving the closing of the throat. According to the
Food Allergies Initiative, over 11 million people in the United States are affected by some
form of food allergy, and that number is growing.2
Peanut Allergies
Peanut allergies are characterized by reactions to peanuts or peanut bi‐products. They are
the most common form of food allergies in the United States—of the 11 million food allergy
sufferers, an estimated three million people are diagnosed with peanut allergies.3 The
biggest concern with this allergy is the severity of its reactions: “As the most common cause
of life‐threatening allergic reactions, peanut allergies account for 80 percent of fatal or
near‐fatal allergic reactions each year.”4
At this time, peanut allergy sufferers have unreliable ways to prevent these potentially
deadly allergic reactions. There are no preventative medications or devices currently
available on the market. Reactionary medications currently available include Merck’s
EpiPen, Pfizer’s Benadryl, and calamine lotion (see Competitive Environment for further
information). Other alternative methods include examining food labels for packaged foods,
asking restaurant waiting staff for assistance about ingredients in the meal, and avoidance
altogether.

1 "food allergy." MedicineNet. MedicineNet Inc., 2001. Answers.com 11 Apr. 2007. http://www.answers.com /topic/food‐allergy‐2
2 “food allergy information.” Food Allergy Initiative, Food Allergy Initiative (FAI)., 1970. 11 Apr. 2007.
http://www.foodallergyinitiative.org/section_home.cfm?section_id=3
3“Peanut Allergy, the shocking facts.” MecicineNet, MedicineNet Inc., 2002. PeanutAllergyResource.com 11 Apr. 2007.
http://www.medicinenet.com/script/main/art.asp?articlekey=15618
4 “Peanut Allergy” Mayo Clinic, 2006. Mayoclinic.com 11 Apr. 2007. http://www.mayoclinic.com/health/peanut‐allergy/DS00710
BSure Diagnostic Devices, Inc. 4

BSure Diagnostic Devices, Inc.
Organizational Goal
The organization’s overall goal is to capitalize on the unmet market need for a reliable,
preventative measure against peanut‐related allergic reactions. To achieve this goal, BSure
has developed the Peanut Detective, a consumer device that detects peanut traces in foods.
The organization’s success also depends on the Peanut Detective’s ability to become the
leading prevention method in the United States within five years.
The BSure Peanut Detective
With the Peanut Detective, consumers will be able to test a large variety of foods before
consumption to verify that there are no peanut traces present. The product will enable
users to avoid allergic reactions and help prevent uncomfortable or painful usage of
medication or unnecessary hospital visits. Key attributes of the product include:
• 99.99% accuracy
• Easiness of use, can be taught to children five and older
• Ability to test a large variety of foods
• 45 second response time
• Discrete size
General Exhibit 1: Product Image


Product Usage
To test foods, the consumer inserts a disposable Peanut Detective cartridge into a reusable
holder. Next, he or she takes off the cartridge cap, brushes the device over the food, snaps
the cap back on, and pushes the “test” button. In 45 seconds, the Peanut Detective holder
will indicate, with either a green or red light, whether the food contains traces of peanuts. A
red light indicates that the food has traces of peanut bi‐products and should therefore not
be consumed, while a green light indicates that the food is safe to eat. In a situation where
there is not a proper sample size or the test is inconclusive, the test will show a red light,
indicating the presence of peanut. This default feature is to prevent false negative results.
However, with an accuracy of 99.99%, consumers will be able to trust the outcome in all
but very rare cases.
Consumer research has indicated that over 76% of people diagnosed with peanut allergies
alter their frequency of eating outside their home to avoid potential reactions.5 The Peanut
Detective will help alleviate this problem, allowing consumers to feel safe in many locations
such as restaurants, camps, friend’s or relative’s houses, and their child’s school, among
other desired locations. The Peanut Detective will be able to test a large variety of foods at
these locations, including cookies, pasta, sauces, and meats. Generally, any food with a
consistency similar to or thicker than oil can be tested with the product.
Consumers using this product will be able to ease food‐related anxiety and experience a
tremendous positive lifestyle change. Worrying about a peanut allergy influences many
daily decisions; with the Peanut Detective, consumers will be able to trust the foods they eat
knowing that they can use a device that can protect them against the consequences of an
allergic reaction. There are currently no preventative products on the market, and the need
for protection against these severe reactions is growing.

5 Peanut Allergy Survey. WebSurveyor.<http://desktop.vovici.com/Default.aspx>

Revenue Sources
The Peanut Detective will generate revenues through two distinct channels. The product
will mainly be sold in traditional drug stores such as CVS and Walgreens. Direct internet
sales, which will include refill subscription plans, will provide a steady alternate revenue
stream.
Critical Success Factors
The Peanut Detective’s, and consequently the organization’s, success depends
tremendously on a variety of critical success factors, each relying on different functional
areas of the organization. Product reliability, consumer base expansion, and intellectual
capital management were each carefully considered in the development of the Peanut
Detective plan.
Exceptional Product Reliability (Operations, IS)
The Peanut Detective must maintain 99.99% accuracy for each usage of the product
because of the potentially deadly consequences of false negative results for customers.
Although both the holder and cartridge are designed for high accuracy, effective supply
chain management and meticulous manufacturing control will be crucial to achieving high
reliability.
Rapid Customer Base Expansion (Marketing, IS)
Because the market for peanut allergy products is relatively small, it is important for a
company in this industry to achieve high segment awareness levels to generate sufficient
revenues. BSure will strive to achieve 25% segment awareness by its peak year of demand.
More specifically, the goal will be to increase awareness anywhere from 3‐5% each year.
The organization will also strive to achieve a 95% customer satisfaction level by the second
year of operations. Satisfied customers will contribute word‐of‐mouth awareness thus
increasing sales.

Secure Intellectual Capital Management (Information Systems)
In a such a high technology operation, intellectual property must be carefully managed.
BSure will aim to stay ahead of the technology curve by obtaining at least one medical
technology patent per year after year 1.
To keep human and structural capital within the organization, BSure will focus on retaining
its employees and keeping its data secure.
Industry, Trends and Competitive Analysis 8

Industry, Trends and Competitive Analysis
Industry
The Peanut Detective will be classified in the Chemicals and Allied Products industry under
the sub category of In Vitro6 and In Vivo7 Diagnostic Substances. This category is SIC code
28358 and NAICS code 3254139. The device is classified as an in vitro device as it performs
the chemical test inside a controlled environment and outside a living organism (e.g. after
the airtight cap is applied and the chemical pouch is pierced). The product however will be
categorized as a self diagnostic device.
The self diagnostics device industry has grown over the past few years as the population in
general has become more health conscious and comfortable using technology. It has also
grown due to lower prices and easier to use product designs.10 Many large corporations are
part of this industry. Among the largest is Switzerland’s Roche Group with a 17% market
share of global diagnostic devices. Closely following is Abbott Laboratories with a 15%
market share and Johnson & Johnson with an 11% market share.11 While all of these
companies manufacture self diagnostic devices, none make a peanut detection device.
BSure will therefore be creating a new niche sub industry within the self diagnostic device
industry.
Trends
There are a variety of socioeconomic trends that will impact the success of the Peanut
Detective. Immigration into the United States has been steadily increasing and has brought
with it exposure to new cultures and subsequently new cuisines. Asian influence in the

6 Reaction occurs outside of the body
7 Reaction occurs inside the body
8 "In Vitro and in Vivo Diagnostic Substances." Standard Industrial Classification. U.S. Department of Labor. 1 Apr. 2007
<http://www.osha.gov/pls/imis/sic_manual.display?id=609&tab=description>.
9 "In Vitro Diagnostic Substance Manufacuring." 2002 NAICS Definitions. 5 May 2003. U.S. Census Bureau. 1 Apr. 2007
<http://www.census.gov/epcd/naics02/def/ND325413.HTM>.
10 Marquez, Rachelle C. "Home Self‐Testing Market Grows as Medial Costs Rise." The Business Journal 15 (1997): 6.
11 Pearce, Lynn, ed. "In Vitro and in Vivo Diagnostic Substances." Encyclopedia of American Industries. 4th ed. 2 vols. Thomas Gale, 2005.

United States is growing, as 200 to 300 thousand people from Asian countries immigrate to
the United States each year. As a result of this immigration influx, sales of Japanese, Thai,
Vietnamese and other pan‐Asian cuisines rose 250% between 1996 and 200012. BSure has
found through market research that people with peanut allergies avoid Thai and other
Asian restaurants because of the high concentration of peanuts in such cuisines.
Travel also has a big impact on the Peanut Detective. In 2000, 61 million Americans made
trips overseas, representing over 20% of the United States population.12 Less regulation of
food labels in foreign countries represent a vital time in which the Peanut Detective can be
used to test foreign and unknown foods. In some European countries for example, an
ingredient is required to appear on a label only if it constitutes more than 25%13 of the
product. Ingredients like peanuts that are usually used in small quantities are many times
omitted. In other foreign countries, regulation is even more lax.
Competitive Environment
The product’s chief competitors will be those who make products that are reactionary, as
there are no currently available preventative products against peanuts. A company named
Tanox was recently developing a preventative drug named TNX‐901 that they hoped would
increase sufferers’ resistance to peanuts14. Legal issues, however, prevented the drug from
entering the market15. Future competitors for the Peanut Detective are those companies
developing similar drugs that will fight allergic reaction to peanuts. BSure does not believe
that such drugs will be released and widely adopted during the main years of operations. A
comparison of current competitive products can be found in General Exhibit 2, followed by
a brief description of each.

12 "Emerging Ethnic Foods." Mintel Reports. Mintel, 2002. 1 Apr. 2007.
13 Nicolas, Nathalie, Joyce W. Yu, Ann Clarke, Rhonda Kagan, Nina Verrault, Lawrence Joseph, and Yvan St. Pierre. "Accidental Ingestions
in Children with Peanut Allergy." The Journal of Allergy and Clinical Immunology 118 (2006): 471.
14 Merz, Beverly. "Studying Peanut Anaphylaxis." The New England Journal of Medicine 348 (2003): 975‐976.
15 Pollack, Andrew. "Wrangling May Delay Peanut Allergy Drug." The New York Times 13 Mar. 2003, Late ed., sec. C: 1.
Industry, Trends and Co
ompetitive An
nalysis 10

Gen
neral Exhibit 2: Competitiive Products
EpiPen Benadryl TNX‐901 Caalamine Lotio

on
by Merck by Pfizeer by Tanox
Speed Fasst Slow Slow Slow

Preventio
on Type Reactive Reactivve Preventatiive Reeactive
Ease of Usse Haard Medium Medium Eaasy
Comfort LLevel Painful Distastteful N/A Uncomfortablee
Market Avvailable Availab
ble Not Availaable Avvailable
Availabilitty
Product P
Photo
EpiPen byy Merck16
This dev
vice deliverss the fastesst results an
nd is the mo
ost highly eeffective treeatment afteer an
anaphylaaxis reactio
on has occurrred. While this devicee is the indu
ustry standaard, it has ssome
major side effects aafter a painful injection
n, such as aa quickening heart beaat, dizzinesss and
sweatingg.
Benadryll (Pfizer)17
This medication yieelds slow results and is only mild
dly effective. Side effects are min
nimal
compareed to the EpiPen and in
nclude fatigu
ue, dry mouth and blurred vision.
Calaminee Lotion18
This gen
neric type of skin lotion
n delivers sslow resultss and has m
mild effectiv
veness in geetting
rid of hiv
ves and itch
hiness. Side effects inclu
ude rashes aand irritatio
on on the sk
kin.

16 "Allergic R
Reactions & Anaph hylaxis Allergy." E
EpiPen. Merck & Co. 1 Apr. 2007 <
<http://www.epip
pen.com/>.
17 "Benadryl.." Benadryl. Pfizer. 1 Apr. 2007 <http://www.pfizerrch.com/brand.asspx?id=34>.
18 "Calamine Lotion Informatiion." Drugs.Com. 1 Nov. 2002. 1 Ap pr. 2007 <http:///www.drugs.com//cdi/calamine‐lottion.html>.

TNX 901 (by Tanox)19
This drug is currently being researched and developed by Tanox, a biotherapeutics
company. It will not be designed as a cure to peanuts allergies, but rather will defend
against a reaction when small quantities are consumed or touched. TNX 901 will not be
released within the lifetime of the Peanut Detective, however, it is still in the early stages of
development and the company behind the drug is currently facing legal problems.20
Positioning the Peanut Detective
Although the EpiPen is the most commonly used product21 to treat peanut‐related allergic
reactions, it is painful to use—this discomfort in usage is a quality of many reactive
treatments. Antihistamines such as Benadryl and skin lotions such as calamine lotion are
also slow to react and can only help if the reaction is not too severe. The Peanut Detective
will be positioned as the only reaction prevention method for consumers; it will also be
positioned for quick response time (45 seconds). A positioning map illustrating these
dimensions can be found in General Exhibit 3.
General Exhibit 3: Product Positioning A

19 , Beverly. "Studying Peanut Anaphylaxis." The New England Journal of Medicine 348 (2003): 975‐976.
20 Pollack, Andrew. "Wrangling May Delay Peanut Allergy Drug." The New York Times 13 Mar. 2003, Late ed., sec. C: 1.
21 "Allergic Reactions & Anaphylaxis Allergy." EpiPen. Merck & Co. 1 Apr. 2007 <http://www.epipen.com/>.

In comparison to other methods of coping with food allergies, the Peanut Detective is
reliable and gives fast results. Other coping methods such as asking restaurant wait staff
are less reliable because of human error and negligence. The Peanut Detective will be
99.99% accurate and thus extremely reliable. A positioning map for these dimensions can
be seen in General Exhibit 4.
General Exhibit 4: Product Positioning B
Competitor Response
The organization expects to be the only peanut detection device on the market until at least
the third year of operations, as it will take the competition time to develop a product
similar to the Peanut Detective. In the third year, the organization expects to have at least
one competitor enter the market. BSure will maintain the majority of the market share due
to the fact that by year 3 the product will have had built up consumer loyalty and trust
through proven reliability of the product and through the usage of the company’s
community‐driven website (see Web Strategy).
Another foreseeable response from potential competitors is the buyout of the company in
the future. The self diagnostics industry has witnessed a fair amount of consolidation over
the past few years involving larger companies acquiring smaller ones in order to provide

lesser known products with more marketing muscle.22 Larger corporations such as Johnson
& Johnson and Abbott Laboratories may acquire BSure Diagnostic Devices once the Peanut
Detective proves its profitability.

22 "Self Diagnostic." Mintel Reports (2004). 1 Apr. 2007.
Marketing Plan
Marketing Plan 14

Marketing Plan
Communication Objectives
BSure is focusing on four primary marketing objectives:
• Gain the target segments’ trust in the Peanut Detective by the end of year 2
• Achieve a national awareness of 25% by year 7 (spurring customer base expansion)
• Develop the website as an information hub, partly by partnering with four doctors
by year 2 for web‐blogging
• Have online revenues account for 20% of total sales by the end of year 7
The success of the Peanut Detective will be dependent upon BSure’s ability to build trust
with its consumer base by gaining the support of respected doctors. Through an effective
marketing campaign, the Peanut Detective will gain the trust needed to build consumer
loyalty among peanut allergy sufferers and their guardians.
Segment Analysis
BSure identified three market partitions in the category of peanut allergy sufferers; those
who experience mild irritations, such as an itchy throat or small rashes, those who
experience hives, vomiting, and anaphylaxis if peanuts are ingested, and those who
experience severe reactions from touching or smelling peanuts. BSure plans to target those
who experience hives, vomiting and anaphylaxis if peanuts are ingested. This is the largest
target market, with 2.5 million people. The Peanut Detective will not be targeting the other
two categories because research analysis has indicated that people with mild irritations are
not concerned enough with their allergy to purchase the Peanut Detective. In contrast,
those who experience a severe reaction by merely touching or smelling traces of peanut
would not use this device because it would not fulfill their needs (see MK Appendix 1).
Marketingg Plan 15

MK
K Exhibit 1: SSegment Psycchographics
(C
Children & Teen Segment SSeparated)
Child
dren (2‐12)
This categoory enjoys going to zoos, playying on sports tteams, and attends school fo or the
majority of their day. Theey look for neww, fun productss that help them stand out am mong
their frien
nds. To avoid ppeanuts, they ssit at a separate table during lunch and do n not
share snaacks with their classmates. In n their backpacck is an EpiPen just in case of an
allerrgic reaction.
Teens (13‐17)
On weekend ds, this segment likes to go to the mall, thee movies, and h hang out with
he same music as their friends. It is importaant to
friends. Theey dress, act, aand listen to th
fit in and hid
de embarrassing traits. To prrevent a peanu ut reaction, theey avoid new
foods, new restaurants an nd carry an EpiPen in their pu
urses and backkpacks for
emergenciees.
Adults (18+)
Between co ollege, work, an
nd seeing frien
nds, this segmeent has little tim
me to worry abbout
themselves. They do thinggs at a fast pacce, and requiree services to bee quick and
hey are interessted in buying stylish clothingg and new elecctronic products.
efficient. Th
To avoid a p peanut reaction, they ask wait‐staff for meaal ingredients aand search thee
internet forr nut free products.

Children and Teens
Through
h market reesearch, BSu K Exhibit 1) that
ure discoveered key pssychographiics (see MK
affect the purchase intent of eaach segmen
nt. The mostt important of these disscoveries sh
hows
hough children and teeens—betweeen the agess of 2 and 17—would be the prim
that alth mary
users of
f the Peanutt Detective, the primarry buyers would
w be thee parents of
o these chilldren
and teens. Therefo
ore, adverttising mustt target parents ratheer than ch
hildren. Parrents,
especiallly mothers, are alwayss seeking altternative fo
orms of prottection and reassurancce for
their chiild or teen w
with an alleergy; the Peeanut Detecttive fulfils this need. Th
his segment has
an appro
oximate sizze of 875K consumers,, with an esstimated grrowth rate of 5% per year,
yearly increaase of children who deevelop peanut allergies.23 This segm
which reeflects the y ment

23 Sicherer, SScott, Anne Muñozz‐Furlong, and Hu
ugh Sampson. "Prrevalence of Pean
nut and Tree Nut AAllergy in the Uniited States Determ
mined
by y Means of a Rand
dom Digit Dial Telephone Survey: a 5‐Year Follow‐U
Up Study." J Allergy Clin Immunol 112 (2003).
Marketing Plan 16

is also likely to use the Peanut Detective at a variety of locations from schools and camps to
restaurants and malls.
Adults
With a population size of over 1.6 million people and a growth rate of 1%, this segment is
categorized as being self‐purchasers, indicating they will purchase the Peanut Detective for
themselves or someone in their demographic, such as a spouse. Consumer research has
shown that 75% of those who eat out are influenced by their peanut allergy. Survey data
also indicates that half of this target segment eats at restaurants about four times per week.
The Peanut Detective is specially positioned and marketed to capitalize on these lifestyle
needs by advertising its minimalistic design, quick response time, and portability (see MK
Appendix 10).
Promotional Plan
Marketing Budget
BSure will begin rolling out the Peanut Detective nationally in January 2008. A summary of
promotional activities can be found in MK Exhibit 2. In year 1, BSure is setting aside $400K
for marketing and promotional purposes, which will be distributed amongst the push and
pull strategies highlighted below. For years 2 through 7, the marketing budget will increase
with sales, although at a lesser rate. The year 2 marketing budget will be $460K and
continue to grow to $1.1 million in year 7.
Marketing Plan 17

MK Exhibit 2: Promotional Plan (Year 1)
Jan Feb Mar April May June July Aug Sept Oct Nov Dec
PULL
Magazines
Web MD

Online Advertising
Peanutallergy.com
Allergykids.com
Blogs

Rebates

PUSH
Promotions
Doctor's Kits
Press Kits
Eastern Allergy
Conference
MD&M East
Push Strategies
Doctor Kits
The most effective way to reach allergists and related professionals is to send customized
doctor kits. Included within these doctor kits will be the product itself and a BSure
informational CD. The CD will include a thorough medical and scientific explanation of the
product as well as testimonials from respected allergists from around the country. It will
also educate doctors on the benefits of the Peanut Detective and how to use this product
correctly. Doctor kits will ship out until the end of year 3, at which point the Peanut
Detective will have built up enough trust and credibility among consumers.
Press Kits
In order to generate buzz and awareness, BSure will provide 150 low‐cost press kits to
large and small magazines as well as talk shows. At an annual cost of $200, these press kits
will build 0.65% awareness. Starting in year 1, BSure anticipates at least two annual write‐
ups from magazines with high circulations. An example press release that would be
packaged in press kits can be found in MK Appendix 2.
Marketing Plan 18

Medical Conferences
BSure will enter two medical conferences each year. These medical conferences are held
once a year in different states across the country. In the first two years, BSure will set up
booths at the Medical Design and Manufacturing (MDM) conference as well as the Eastern
Allergy (EA) conference. These conferences showcase medical devices and other ways of
coping with different types of allergies. The MDM conference will be replaced in year 3 by
the larger and more respected Florida International Medical Expo (FIME) to reach new
audiences. Even though these three conferences only generate a total awareness of 0.31%,
they are a reputable way of getting the product noticed by doctors, allergists and medical
specialist.
Pull Strategies
Online Ads
Not only does PeanutAllergy.com reach a population magazines cannot, but it is also the
most cost‐effective and valuable outlet for advertising. Costing only 6% of the first year
marketing budget (see MK Appendix 7), it contributes over 35% of the total awareness
generated due to the fact that the website is accessed and read by many people in both
Peanut Detective target segments. Another inexpensive website BSure will be advertising
on is AllergyKids.com. This site has received national exposure on major media outlets.
Allergykids.com helps parents cope with their children’s food allergies. Advertising on
these two websites will be vital for the Peanut Detective in creating segment awareness and
thus boosting sales.
The BSure Website
Given the scope of the product’s distribution, the primary goal of the company website is to
become a trusted web resource for expert advice as well as the latest information about
peanut allergies. Accordingly, the website will include news, information, and discussion
sections that doctors are encouraged to participate in. Doctor web‐blogs about peanut
allergies will only amplify BSure’s credibility as a trustworthy brand (see Web Strategy).
Marketing Plan 19

An equally important goal of the website will be to sell the Peanut Detective directly to the
consumer. By selling directly to the customer, BSure will be able to obtain much higher
profits than if sold through retailers, whose markups nearing 40% require a lower
manufacturing selling price. The website will account for 5% of sales in year 1 and rise to
20% of sales by year 7.
However, BSure will make certain that the website’s public image centers around
distributing information and establishing community. To appear unbiased and impartial,
this website will feature alternative means of dealing with allergies, such as Benadryl,
EpiPen, and calamine lotion; further increasing the site’s credibility (see IS Appendix 5).
Magazines
Reaching a target market that is distributed on a national level can be expensive, especially
for a startup business. A solution to this problem is to communicate via far‐reaching and
expansive mediums such as magazines. The Peanut Detective will appear in highly
circulated magazines such as WebMD and Health.
WebMD is a medical magazine sent to 85% of medical waiting rooms across the United
States24. This magazine reaches millions of readers each month, many of them concerned
about their health and the health of others. It is very likely that users in the target segments
viewing a Peanut Detective advertisement in this magazine will ask their doctor about the
product during their visit.
Health magazine’s target audience includes young professionals as well as parents. Each
month the magazine publishes articles about allergies and methods to cope with them. As a
result many parents of children with peanut allergies read this publication each month.
Both WedMD and Health will hit the desired target segments generating awareness of
1.92% and 0.76% respectively. Health magazine will not be part of the promotional plan
until year 3 as their ads are costly and the organization’s budget will be tight. WebMD, on

24 Haskin, John. "Patients in waiting rooms throughout the United States".The Magazine Group. 9 April 2005
http://www.themagazinegroup.com/clients‐case‐studies‐webmd.asp
Marketing Plan 20

the other hand, will be part of the promotional strategy from the start as their ads are less
costly.
Advertisement Design
Since mothers have the final buying power and influence over the children and teens
segment, BSure will deploy a specialized campaign targeting maternal responsibilities and
instincts. The tone and mood for this campaign will be dramatic and emotional to
specifically attract the attention of mothers. Visually, this campaign will utilize images of
children, toddlers, and families to stimulate the connection between family members (see
MK Appendix 11). BSure expects mothers to respond passionately and become emotionally
attached to the Peanut Detective’s message. The focus is not just on the product’s immediate
benefits but also on whom the product is affecting and their lifestyle. In order to keep this
campaign fresh, ads will periodically be presented in a clever and light‐hearted tone.
Unlike the children and teens segment, the adult segment is difficult to reach due to media
saturation. Therefore, comical ads will be used to engage the 18‐24 year old age range,
which will have a stronger impact than a scientific or educational approach. Furthermore,
because this segment is young and computer savvy, online video advertisements will be
used at peanutallergy.com and allergykits.com (see MK Appendix 11). The objective will be
to reach as much of the adult segment as possible by differentiating the Peanut Detective as
a preventative device.
Brochures and Packaging
The Peanut Detective holder will come packaged with four cartridges and an instruction
manual. Both the holder and cartridge packaging will clearly indicate how to use the
product, the chemicals involved in the process, the name of the primary website
(www.bsuredd.com) and a phone number (1‐800‐2BE‐SURE) for customer service
available five days a week. The packaging will emphasize BSure’s token green and maroon
colors, which will be prevalent on most of BSure’s products and advertisements (see MK
Exhibit 3).
Marketingg Plan 21

MK Exhibit 3
3: Product Pa
ackaging
The prod
duct brochu
ure will con
nsist of a write
w up abo
out the com
mpany, prod
duct informaation
and statiistical facts about pean
nut allergiess. It will alsso clearly diisplay the B
BSure websiite as
well as ccontact inforrmation (see Attached B
Brochure).
ng Effectiveness
Measurin
To meassure the efffectiveness of BSure’s ad campaiign, the com
mpany will offer an online
rebate w
with the purrchase of a 16 cartridgge box. Thiss is to enticce the custo
omer to visiit the
website and fill outt a post purrchase surv
vey in orderr to go through the reb
bate process. By
encouragging consum
mers to purchase a 16 ccartridge bo
ox, BSure w
will reduce th
he cost of in
n‐box
surveys, and increasse revenuess.
Distribu
ution
Retail
BSure w
will use a nattional rollou
ut strategy b
because pottential consu
umers are sspread relattively
evenly th
hroughout tthe country. The self diiagnostic deevice catego
ory consists of productss that
are prim
marily sold through
t dru
ug stores. The
T sale of such produ
ucts througgh supermarrkets
Marketing Plan 22

has been declining at a steady rate, according to a recent Mintel industry report.25 Market
research has shown that consumers trust products that are purchased from drug stores
rather than supermarkets.26 Given the nature of the Peanut Detective and statistics from the
industry report, BSure has decided to retail solely through drug stores.
In year 1, BSure will target three of the major players in the drug store industry: CVS,
Walgreens and Rite Aid; selling through these stores will achieve an all‐commodities‐
volume (ACV) of 3.15%. This strategy was chosen because the biggest three drug stores,
with a market share of 47.3%, are the most effective outlets for reaching the peanut allergy
population. Furthermore, CVS, Walgreens, and Rite Aid all have nationwide stores; this
helps to enact the nationwide rollout.
In the subsequent years, BSure will strengthen its position on the coastlines. In year 3, the
Peanut Detective will be sold at Longs Drug Store, which has a prominent market share on
the west coast. In year 4, BSure will complement this position with more east coast
exposure by offering the product in Duane Reade, New York’s most popular drug store. The
estimated store penetration rate will be 20% in year 1 and will swell to 85% by year 7.
Sales Force
BSure will employ sales representatives to maintain relationships with individual retail
stores. To simplify sales force management, the organization will divide the country into
three regions: east, central, and west. The east and west coasts are top priorities due to
higher population densities; they will require two sales representatives to target “A” level
drug stores, which are the 20% of stores that generate 80% of total sales for a corporation.
The organization estimates that there are 912 “A” level drug stores nationwide.
Specially trained sales representatives are preferred over third party sales representatives
for a number of reasons. Trained sales representatives are paid a salary and bonuses,
ensuring their loyalty to the company. Third party sales reps on the other hand, depend
entirely on commission and usually work for multiple companies, often dedicating the

25 “Self Diagnostic." Mintel Reports (2004). 1 Apr. 2007.
26 Focus Group, MK Appendix 6: Focus Group Summary.
Marketing Plan 23

greatest effort to the employer offering the largest reward. Therefore, BSure will employ
two sales representatives for year 1, and three additional representatives in succeeding
years to meet increasing distribution requirements.
Pricing Strategy
The Peanut Detective consists of two parts: the holder and the cartridge. The holder is
priced at a revenue maximizing retail price of $41.99 (according to surveyed purchase
intent, see MK Exhibit 4) and includes four one‐time use cartridges. Each cartridge will be
priced at a revenue maximizing retail price of $3.65 (see MK Exhibit 5); therefore, 8 and 16
cartridge boxes will sell for $29.99 and $58.99, respectively.
MK Exhibit 4: Holder Purchase Intents MK Exhibit 5: Cartridge Purchase Intents
45% 40%
Expected Purchase Intent
40% 35%
Expected Purchase Intent
35% 30%
R² = 0.852
30% 25%
25% 20%
20%
R² = 0.993 15%
15%
10%
10%
5% 5%
0% 0%
$0 $20 $40 $60 $80 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00
Holder Price Cartridge Price
As previously mentioned, the box of 16 cartridges will contain a coupon for an online
rebate of $8. According to customer research, 41% of buyers are willing to purchase the
packages of 16 cartridges.27 Of these buyers, an estimated 5% will fill out the online rebate.
To avoid channel conflict, website prices will reflect the estimated markup retailers will
use on the Peanut Detective, although retail and online sales events may differ in timing.

27 Peanut Allergy Survey. WebSurveyor.< http://desktop.vovici.com/Default.aspx>
Marketing Plan 24

Starting in year 4, the price will drop by 5% for the holder and by 1% for the cartridge
every year to help battle entering competition in year 3 (see MK Exhibit 6 and MK Exhibit 7).
By year 7, peak product demand will be reached due to competition and the potential
entrance of competitive new drugs (see MK Exhibit 8).
MK Exhibit 6: Holder Price Points
Holder Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

Retail Price per Unit $41.99 $41.99 $41.99 $39.89 $37.90 $36.00 $34.20
Retail/Distribution Margin (39%) $11.78 $11.78 $11.78 $11.19 $10.63 $10.10 $9.60
BSure Selling Price per Unit $30.21 $30.21 $30.21 $28.70 $27.26 $25.90 $24.61
Variable Cost $8.61 $8.66 $8.75 $8.80 $8.85 $8.88 $8.91
MK Exhibit 7: Cartridge Price Points
Cartridges Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

Retail Price per Unit $3.65 $3.65 $3.65 $3.61 $3.58 $3.54 $3.51
Retail/Distribution Margin (35%) $0.95 $0.95 $0.95 $0.94 $0.93 $0.92 $0.91
BSure Selling Price per Unit $2.70 $2.70 $2.70 $2.68 $2.65 $2.62 $2.60
Variable Cost $1.63 $1.63 $1.64 $1.65 $1.65 $1.65 $1.65
MK Exhibit 8: Product Lifecycle
$35 M
$30 M
Decline
$25 M Growth Maturity Phase
Phase Phase
Revenue
$20 M Total Sales
$15 M
$10 M Intro
Phase
$5 M
$0 M
0 2 4 6 8 10 12 14 16
Year
Due to the nature of the industry and the product, consumers have to trust the product
before using it. BSure will have by then established significant customer loyalty through its
reputable reliability as well as its community‐driven website. BSure will also have a
competitive edge over new similar products because of its industry experience and
obtainment of design patents. Furthermore, the declining pricing strategy will maintain
Marketing Plan 25

growth by limiting competition‐related effects resulting in no higher than 20% of sales in
years five through seven.
Sales Projection
Base Case
The base case was calculated assuming that it takes four impressions to make a person
aware of a product. Furthermore, a 33.7% purchase intent was calculated by analyzing 277
surveys28 and based on the 80/30 rule of thumb. In addition, a repurchase rate of 37.5%
was projected for the holder and 76% for the cartridge. As shown in the BASES model (see
MK Exhibit 9), BSure will generate a demanded quantity of 2,661 for the holders and
281,931 cartridge units in year 1. These projections are calculated using the previously
determined 7.28% awareness rate and 3.15% ACV figures.
MK Exhibit 9: BASES Sales Forecast
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

Target 2,500,000 2,560,000 2,622,350 2,687,161 2,754,549 2,824,638 2,897,554
Market
Purchase 34% 34% 34% 34% 34% 34% 34%
intent
Adjusted 843,250 863,488 884,519 906,379 929,110 952,750 977,345
Target
Market
Awareness 7.28% 8.17% 11.50% 14.68% 17.63% 21.37% 27.66%
ACV 3.15% 7.09% 18.46% 22.49% 23.99% 32.98% 33.98%
Holder units 2,661 6,880 23,240 34,966 43,235 73,871 101,052
Cartridge 281,391 727,533 2,457,515 3,697,466 4,571,875 7,811,556 10,685,745

Units

Marketing Plan 26

Optimistic Case
In the most optimal case, BSure expects that it would take three impressions to make a
person aware of the product. The repurchase rates in this case are estimated to increase
from 37.5 % to 45% for the holder and from 76% to 85% for the cartridge. Store
penetration used for ACV calculations is estimated to increase from the base figure of 20%
in year 1 to 25% in the best case. Thereafter best case penetration continues to increase at
a faster rate than base case. This results in a demand of 17.9 million cartridge units and
160K holders in year 7.
Pessimistic Case
In a pessimistic scenario, it would take five impressions to make a person aware of the
product. The repurchase rate could decrease from 76% to as low as 65% for the cartridge
and from 37.7% to 30% for the holder. Store penetration could be as low as 15% in year 1,
resulting in a worst case demand of approximately 1,500 holder units and 146K cartridges
in year 1. The pricing strategy would also differ in this scenario—beginning in year 3, the
price would begin to drop by 5% for the holder and 1% for cartridges.
Operations &
Manufacturing Plan
Operations & Manufacturing Plan 27

Operations & Manufacturing Plan
Product Design
Customers purchasing a peanut detection device put their complete trust in the product.
The consequences of the products’ failure are severe, in some cases even fatal. Customers
therefore demand a product that not only tests a large variety of foods, is easy to use, quick
responding, portable, and visually appealing, but most importantly, customers require
extreme accuracy (see OM Exhibit 1). Accuracy is crucial to any device when false responses
could lead to severe side effects, ranging from hives to possible death in the more extreme
cases. While severely allergic people may not trust peanut detection devices, it is still
BSure’s number one priority to guarantee the product works flawlessly, every time,
without exception. Therefore, all aspects of the Peanut Detective, from initial design (the
details of which can be found in General Appendix 2), to the production process, to the final
shipping methods are designed with accuracy in mind.
OM Exhibit 1: Consumer Attribute Importance Preferences
Test Large Variety of Foods
Consumers highly prioritize the ability of the Peanut Detective to test a large variety of
foods. There are many different forms of peanuts found in everyday foods; from traces in
candy bars, to peanut oil in Asian cuisine, to the homemade cookies at a friend’s house. As a
result, the cartridges need to have a tip that is both capable of scraping a candy bar while
also having the ability to capture even the lightest pasta sauces. Therefore, each cartridge
tip (also referred to as “metal mesh”) is made of high grade sterilized steel wool. The steel

wool is strong enough to be rubbed against solids, coarse enough to take a bite out of a
candy bar, and yet airy enough to suspend sauces and other liquids. This ensures that the
tip can provide a large enough sample to provide the required device accuracy.
Minimize Parts
The BSure Peanut Detective is manufactured with as few pieces as possible, thus
minimizing complexity that can lead to product failure. Additionally, reducing excess parts
and complexity allows the Peanut Detective to be relatively inexpensive to construct, which
carries over to a lower cost to the consumer. This is a product that has the ability to change
the way people live by allowing them to feel confident while they eat. It was therefore of
upmost concern that the Peanut Detective be easily obtainable by the general public, which
is accomplished through a relatively low retail price compared with other self diagnostic
products, made possible by low manufacturing costs. In effect, the Peanut Detective can be
priced as a convenience item opposed to a shopping item.29
Small Inconspicuous Design
Through surveys, consumers between the ages 18‐24 indicated they do not want to be
liberated from their fear of an allergic reaction if it meant being embarrassed by public
attention. Therefore, the product was designed to be as small and inconspicuous as
possible (see General Appendix 1). The goal in the design was to make the holder no larger
than a USB flash drive. While certain requirements mandated a slightly thicker design, the
end product is not only small, but it is designed to fit on a keychain, thereby ensuring the
consumer never leaves home without it. As for the actual appearance of the Peanut
Detective, it is purposefully clean and minimalistic so as to minimize attention. Moreover,
the red and green LED lighting would most likely be mistaken for a computer device; this
will increase the designers’ attempts to have the Peanut Detective appear similar to an
ordinary USB Flash Drive, opposed to an attention grabbing medical device.

29 Kerin, Roger A, Steven W. Hardley, William Rudelius. Marketing The Core. 2. New York, McGraw‐Hill. 2007 p.215.

Ease of Use
Another advantage to the small minimalistic design is ease of use. There will be no buttons
to decipher, no assembly required, and symbols to decipher. Simply insert a cartridge into
the holder, which would be possible to insert in only one direction, press a clearly marked
button on the holder, and wait for a red or green LED light to illuminate, indicating the
presence of peanuts. It is simple, easy, and the true test—even a child can do it, as focus
groups demonstrated.
Quick Response Time
Designers at BSure acknowledge that even if the consumer slipped the device into their
food unnoticed, it might be obvious if he or she had to wait several minutes before eating,
especially with other people at the table starting to eat. Therefore, the compact design is
further utilized to guarantee results in less than forty‐five seconds. This is because with a
small design, chemicals do not have to move as far, thereby eliciting quicker reactions. As a
result, the consumer can be quickly informed of the presence of any allergens in the food
being tested. Minimal distances for chemicals to travel means the Peanut Detective requires
less chemicals per cartridge, thus each chemical will be even more diluted with the food
being sampled. This helps ensure 99.99% accurate results.
Patent Information
In order to protect the technology behind the Peanut Detective and maintain a competitive
advantage through intellectual capital and technology advancement, BSure will patent the
Peanut Detective and all subsequent products. BSure, which would apply as a small entity,
would have to pay an initial filing fee of $665, with an additional fee of $450 due in the
middle of year 3.30 The patent, which would last throughout the product life span, ensures
potential competitors will face the struggle of developing a similar product using an
alternative method, which would require significant time to develop and produce. This

30 United States. United States Patent and Trademark Office. FY 2007 Fee Schedule. 08 Dec. 2004. 30 Mar. 2007
<http://www.uspto.gov/web/offices/ac/qs/ope/fee2007february01.htm>.

would give the Peanut Detective ample time to generate awareness, and more importantly,
trust among consumers.
Plant Characteristics
All raw material suppliers, such as packaging, plastics, and chemicals, handle their own
shipments to the BSure factory at a price included in the cost of the raw materials they
supply. Therefore, BSure has chosen to minimize costs by choosing a plant location that is
central to the CVS, Walgreens, and Rite Aid distribution centers, with minimal
consideration for supplier locations. BSure will incur the cost of shipping to the
distributors, which make up the majority of its product destinations. CVS, Walgreens, and
Rite Aid distribution centers are located primarily on the East Coast, as is a concentration
of major cities. Accordingly, location analysis has projected that to minimize costs, optimal
location for the BSure headquarters and factory will be in Louisville, KY (see OM Exhibit 2).
Louisville, being a large city, offers access to major highways, the Louisville International
Airport and nearby railroad transportation centers. Having many different means of
transportation helps avoid the risk of transportation backup caused by unforeseen
circumstances affecting either road, rail, or air travel.
OM Exhibit 2: Distributor Locations
BSure
Space Allotment
The factory itself will be rented for $57,375 per year, with a five year lease to prevent rent
from increasing with inflation, property tax, and other fluctuations in the real estate

market. While this lease amount is significant, the cash required to purchase a factory
would be excessive for BSure to incur in its startup years. Of the total 135,000ft2 facility,
BSure will be renting an 11,250ft2 space, which includes 2500ft2 of air conditioned office
space. The remaining area, which is fan cooled, will be dedicated to the assembly areas,
inventory holding areas, a research and development center, and break rooms for the
factory workers. Adjacent to each of the three inventory holding areas—cartridge raw
materials, holder raw materials, and finished goods holding—is a dock high door for easy
loading and unloading of trucks. While holder demand will be small enough that only one
person is necessary for production, more thought had to go into the cartridge production
area where eight massive machines and over fifteen employees will be working by year 7. A
vibratory feeder will be placed in front of each machine, feeding raw materials through.
After the machine produces the cartridges, materials will be put onto conveyor belts lining
the outside walls, which will bring finished goods through the inspection department and
back to the final inventory holding area. This layout minimizes employee movement and
keeps all movements in the same direction as shown in OM Exhibit 3.
OM Exhibit 3: Factory Layout


Management Level Employees
Overseeing all operations at BSure will be the President, who will have an MBA degree and
extensive sales and marketing background. The president must have at least seven years of
experience, particularly in starting and running a small to midsize company. The manager
and director of operations will also require a college degree and a minimum of three years
of experience in running a production line. Another manager will be added in year 6 to
maintain close control over expanding production. All managers as well as the president
must be strong proponents of supply chain management so that lower level employees will
follow their example. All executives will undergo training in supply chain management,
especially in terms of integrating suppliers smoothly into the supply chain, since BSure
requires thirteen suppliers (see OM Appendix 3). Maintaining a competitive edge through
new technologies requires a scientist to head a research and development department. The
scientist must have a strong background in the food allergy field, so that BSure can
eventually expand into different types of food allergies. With the growth of the company,
the research and development department will also grow in order to continually stay ahead
of the competition by maintaining secure intellectual capital, which is one of BSure’s critical
success factors.
Supply Chain
With thirteen suppliers and only two distributors, the Peanut Detective’s supply chain has a
much larger supply component than demand component. Accordingly, most efforts have
been focused on streamlining the supply side of the supply chain, from the suppliers of raw
materials to production of the Peanut Detective. All efforts have been made to minimize the
costs of raw materials, production, and distribution in order to maintain an affordable
product.

OM Exhibit 4: Supply Chain Diagram
Choosing Suppliers
The first link of the Peanut Detective’s supply chain is the suppliers (see OM Exhibit 4).
BSure strategically chose suppliers based on key characteristics; suppliers were measured
and compared based on quality guarantees, location of facilities, cost of materials, lead
times, quantity discount programs, transportation methods to BSure’s factory, and lastly
whether or not the suppliers had open communication channels. These communication
channels include electronic data interchanges (EDI), which enable BSure’s ERP (see Core
Application Software) to have access to the suppliers’ purchase orders, shipment details,
and invoices.31
BSure has decided to keep all major suppliers within the OM Exhibit 5: Supplier Map
United States (see OM Exhibit 5). The decision to stay national
was based on quality assurance and lower lead times, both of
which are crucial to the key raw material, chemicals. Quality
assurance ultimately influences the product’s defect rate, BSure
which must be kept low in order to reduce costs and build a
reliable reputation. Accordingly, BSure will maintain a
supplier policy of “3 Strikes, You’re Out.” This policy dictates
that when a supplier is responsible for defects in a production batch on three separate
occasions, it will be replaced by a secondary supplier. BSure’s information system will
allow the tracing of defective product batches by maintaining detailed records linking
finished goods to the raw material suppliers.

31 Stevenson, Willam. Operations Management. 8. USA: McGraw Hill, 2005. Pg 700

Raw Materials: Make/Buy Analysis
Analysis has indicated that it would be more cost effective to buy all raw materials. Buying
raw materials also allows BSure to minimize inventory; complicating the production
process by manufacturing certain parts would make inventory management less precise
and allow more room for breakdowns. Because the chemicals involved have expiration
dates, delays in any one components’ production would possibly mean having to abandon
massive amounts of chemicals. While any manufacturing plant can have machine
breakdowns, factories specifically equipped to make certain raw materials will be better
equipped for machine failure and quality assurance. This will help ensure that all raw
materials arrive at BSure facilities on time and in functioning condition.
Raw Materials: Order Quantity
Raw material prices will fluctuate in years 2‐7 due to inflation and quantity discounts (see
OM Appendix 4). BSure has been able to utilize quantity discounts for plastics, packaging,
springs, and o‐rings. Using discounted pricing will decrease variable costs on both the
holder and the cartridge, thereby offsetting the additional holding cost associated with
larger ordering quantities. All other ordering quantities are based on the Economic Order
Quantity model (see OM Appendix 5), which assumes holding costs are 30% of the
manufacturers selling price, and order costs are 10% of the manufacturer selling price.
However, adjustments to ordering costs had to be made in order to get more accurate
quantities that include extensive quality inspection costs. Accordingly, year 1 ordering
costs for the holder are $104.98 and ordering costs for cartridge are $164.25. Because most
suppliers are small scale manufacturers, providing small initial order sizes is feasible,
especially since few of the raw materials require specialization with the exception of the
plastics. However, because plastics have the highest lead time of 30 days, holding excess
plastic inventory, mandated by minimum order sizes of 1,000 units, will help hedge against
inventory shortages. Chemicals used in the cartridge have a shelf life of approximately six
months. This constraint will require that contracts between BSure and chemical suppliers
ensure low lead times, fixed or fixed percentage increases of price, and guaranteed quality,
measured by defect rate. When the computer indicates inventory levels have reached the
Op
perations & M
Manufacturingg Plan 35

reorder point, raw materials w
will be ordered from th
he BSure facctory. Comp
puters will ttrack
the locattion of the m
materials, ass well as reccord invoicees associated with each
h order.
Raw Matterials: Movvement and Inventory P
Policy
Deliveriees will be m
made to the shipment d
docks on th
he east side of the BSure factory. Once
shipmen
nts arrive, employees w
will unload the suppliees and inspeect the raw materials. A
After
passing inspection,, employeees will scan
n the shipm
ments into
o the ERP database. Once
entered, a worker w m that the raaw materiall quantities match the purchase order.
will confirm
Next, an
n employee uses the fo
orklift to move
m raw materials
m to their appropriate storage.
Cartridgge and holdeer raw mateerials must be separateed due to FD
DA regulations. Holderr raw
materialls will be brrought to a
a storage arrea located near the ho
older assem
mbly area, while
w
cartridgee raw mateerials must be stored in freezers and sanitized stockro
ooms. Oncee raw
materialls are appro
opriately stored, they will
w be scan
nned at a sttorage checckpoint and
d raw
materialls inventory
y will be updated. The ERP prograam will then
n monitor in
nventory veersus
expected
d productio
on levels, an
nd reorder inventory based on lead time per unit (seee OM
Exhibit 6 d the desired 98% serv
6 and OM Exxhibit 7) and vice level, wh
hich is used
d to calculatte the
safety sttock needed
d in each year. Becausee the cartrid
dge compon
nents have aa holding co
ost of
merely $
$0.26 and holder demaand is relativ
vely low, 98
8% will adequately pro
otect BSure from
stock ou
uts with min
nimal costs o
of holding in
nventory.
OM Exhibit 6
6: Holder Lea
ad Times
30
0 Days 10 Days 8
8 Days 7 Days Tim
me 0
•P
Plastic Shells Board
•Circuit B •Battery •Packagiing •Prroduction
Daay

Op
perations & M

O
OM Exhibit 7:
: Cartridge Leead Times
30 Dayys 10 Days 8 Days 7 Daays 3

3 Days Time 0
•Plastiic Shells •Spring •Antiboddy •Buffer •Pin •Producttion
•Enzyme •Substraate •O‐rring •Steel Wool Day
•Pacckaging •Cotton Strip
p
Outsourccing Producttion
BSure will
w not ou
utsource beecause its product cannot
c hav
ve any defaaults, thereefore
mandating close insspection at every process to ensure that all gglitches are caught. Witth so
many diffferent raw materials ssuppliers, it would overrly complicaate the supp
ply chain to have
to coord
dinate prod
duction with
h outsourceed components. BSuree also valuees the pateented
knowled
dge behind the Peanutt Detective. Even with
h a patent, outsourcingg would exxpose
many of BSure’s ttrade secretts.

Holder P
Production P
Process and C
Capacity
The hold
der production processs commences when raw
r materiaals are rem
moved from raw
materialls and scann
ned into thee organizatiion’s ERP sy
ystem (see Core Appliccation Softw
ware),
prompting the computer to
o place them
m into the work
w
OM Exh
hibit 8: Holdeer Process Tim
me
ocess inventory. The holder
in pro h is theen assembleed in
Timee
(Sec))
Process
the ho
older produ
uction area.. Once the holder
h is piieced
10 Snap Circu
uit Board Into Shell togeth
her, it trav
vels to quality contrrol followed
d by
10 Insert Tesst/Ejection Button packaaging and finally
f placeement into finished goods
g
20 Insert Battery storagge. The entiire process takes 150 seconds, with
w a
10 Attach TTop Half of Shell cycle time of 50 seconds (seee OM Exhib

bit 8). Given
n the
50 Te
est Holder
demand for hold
ders and the low cyccle time, ho
older
assem
mbly will be
b perform
med solely by part time
50 Package an
nd Send to Holdingg
workeers who require
r minimal traaining in basic
b
150 Total Process Time
assem
mbly. One part
p time worker will be
b sufficien
nt for

holder production through year 5 of operations, at which point another part time worker
will be added to increase capacity.
Quality Control: Holder
During assembly, employees will be encouraged to stop production of both the holder and
cartridge if they observe quality problems. They will then submit quick defect reports at
the nearest floor computer. At the end of the holder assembly line, each holder will go
through an inspection process. A quality technician will hold the unit under a portable
fluorescent light and confirm that the optic sensor is working properly. This test is to
ensure that the optic sensor can test for chemical reactions. Again, any problems will be
reported and entered into a computer so that the cause of the defects can be understood
and dealt with.
Cartridge Production: FDA Requirements
Because the Peanut Detective will require FDA approval as a medical diagnostic device,
many precautions must be taken in order to meet the FDA’s stringent requirements of a
Class II medical diagnostic device. A Class II device, which is a device used externally from
the body, requires special labeling that is carried out by the packaging and plastic
suppliers, performance standards, which are executed by BSure quality technicians, as well
as post market surveillance, which is done through customer feedback. Furthermore, the
FDA requires that chemicals in raw materials be kept in a freezer at all times until
production32. The production must be kept sterile, which is accomplished by separating the
holder production area from the cartridge production area to prevent contamination.
Additionally, workers must wear medical gloves at all times. Machines involved in
production must pass daily sanitary inspections.
Cartridge Production Process
The production of cartridges is completely automated, requiring a highly accurate custom
built Flow Animation machine for assembly. Materials include metal mesh, pins, springs,

United States. United States Food and Drug Administration. CBER Guidances / Guidelines / Points to Consider. 2007. 10 Apr. 2007
32
<http://www.fda.gov/cber/guidelines.htm>.
Op
perations & M

and smaall amountss of chemiicals; therefore a labo
or intensivee assembly
y would no
ot be
appropriate given the high demand fo
or technolo
ogical proficiency and
d accuracy. The
materialls are scann
ned by a bar
b code scaanner and inventory amounts
a arre electroniically
transferrred into wo
ork in proceess. Next, an
n employee feeds raw materials in
nto the macchine
via vibratory feedeers. The machine
m theen indexes, orients, an
nd presentts the partss for
assembly
y. The mach
hine producces a batch o
of fifteen caartridges every minute,, and can ru
un for
the entirrety of an eiight hour w he cartridges then pass through qu
work day. Th uality contro
ol. At
this stattion, a skilleed employeee will test one out off every sixtty cartridgees. After passsing
through quality co
ontrol, the cartridges are packeed and scaanned into finished goods
g
inventorry. While the machine iis completely automateed, one worrker will be required to
o run
each maachine, whicch can be handled
h by part time workers
w un
ntil full timee employeess are
needed. It is BSure policy to have
h no more than 100
0K cartridges per mon
nth produceed by
part tim
me employeees, mitigatiing reliancee on part time
t peoplee who willl not alway
ys be
availablee. 100K carttridges is th
he equivalen
nt of one parrt time worker workingg approximately
fourteen
n days a mon
nth.
Cartridge
e Production
n Capacity
BSure uttilizes a chase strategy for producttion, meanin
ng capacity will closely
y match dem
mand,
with cap
pacity consttraints being workers aand machin
nes.
OM Exxhibit 9: Cartrridge Processs Time
Thereforre, there is zero tolerance for mach
hine
Tiime
breakdown. Accord
dingly, a full time mecchanic will be (SSec)
Process
present from year 1 on, which

h would mo
ore than offfset 1
10 Vibratory Feeds into Macchine
the costts associateed with baacklogs due to mach

hine 1
15 Maachine Run Time
failure. Furthermo
ore, full tiime speciaalized quality
4
45 T
Test Cartridges
control technicians
t will be prresent at all times. Wh
hile
1
10 Shrink
k Wrap and Packaage
ning shows high capaccity utilizatiion,
the aggrregate plann
which iss characterisstic of a chaase strategy
y, the plann
ning
schedulee anticipatees safety sto
ock being consumed
c e
every period
d, which is highly unliikely.
Howeverr, BSure is prepared for
f excessiv
ve demand in order to
o prevent backlogs,
b ass the
backlog policy explaains.

Quality Control: Cartridge
At the end of each work day, a quality technician will prepare a viscous solution, consisting
of water, starch, peanuts, and a phosphate buffer. This mixture will test the accuracy,
sensitivity, and specificity of the cartridge. After boiling the solution, the mixture will be
placed in a refrigerator overnight to thicken. The following day, an employee will test one
cartridge in every batch of sixty, by inserting the trial cartridge into a holder and then
sticking the Peanut Detective into the viscous solution. The results should conclude that
there are peanut traces, turning the red light on. Should the cartridge fail this test, the
entire batch will be discarded. When cartridge defects are found at quality control, the
quality technician will generate a report at his or her workstation. Operations managers
will then be able to generate monthly defect reports to make decisions on supplier
reliability and manufacturing process tweaks. These quality check points are important to
measure the amount of defects as well as recognize any problems along each of the
assembly lines. Their proper implementation will allow managers to cut scrap costs and
prevent lawsuits by producing an accurate product.
Finished Goods
At the end of each production line, holders and cartridges will be placed into bar coded
boxes. An employee will scan each box, prompting the ERP system to enter the item into
the BSure database as finished goods. Employees will then place the appropriate number of
holder and cartridge boxes in a pallet according to each purchase order. From this point,
the inventory will sit in storage until proper shipping arrives to deliver batches to
distributors.
Meeting Demand Peaks with Finished Goods
BSure’s chase strategy was chosen to reduce excessive finished goods inventories, which is
necessitated by the expiration on the chemical components of the cartridge as well as the
holder battery; it is important to get the cartridges to the consumers as soon as possible.
Holding holders and cartridges in inventory for extended periods of time will mean each
unit will be less valuable to the consumer, for they will get the product for a smaller portion
of its six month lifespan. In order to properly meet seasonal demand forecasts, BSure has

made the assumption that May and August will require higher than usual finished goods
inventories in order to meet June and September demand peaks, brought about by children
leaving for camp and school, respectively. Production is therefore increased significantly
when necessary in the months preceding these demand peaks, ensuring there are always
finished goods ready to be shipped out when the orders come in. It is also expected that
during summer months while children are away at camp, demand will lessen slightly
compared with normal levels, which will allow finished goods inventories to rejuvenate for
the upcoming September demand peak. While most years do not require any inventory
buildup to meet the demand peaks, years of strong growth, such as years three and seven,
when marketing efforts and store distribution peak, will require a slight break from the
chase strategy in order to meet demand. However, slight inventory buildup avoids
needlessly increasing capacity through machine purchasing and hiring costs.
Backlog Policy
BSure will implement a zero‐backlog policy, ensuring consumers receive the product when
they need it. From a goodwill standpoint, consumers will come to rely on the Peanut
Detective, often for daily eating habits. Therefore, failure to provide the product on time
will result in an unfavorable reputation, which is especially harmful to a new company
trying to build trust among its consumers. From a financial standpoint, the backlog cost per
holder unit is nearly $125, and about $6 per cartridge, which includes lost margin per unit
plus additional lost margin of future sales. Distributors will also reduce their orders to
BSure if orders cannot be fulfilled on time. CVS imposes fines and the right to reject any
orders that are not complete. Because most of BSure’s lead is comprised of raw materials’
lead time opposed to the production and shipping process, keeping stringent inventory
records will help prevent any backlogs, as will the very high 98% service level.

Distribution
Distribution channels will handle the logistics involved in delivering the Peanut Detective to
appropriate retailers.33 CVS, Walgreens, and Rite Aid handle their own distribution, as do
the smaller drug stores which will be added later on in the product life cycle. These major
stores specify which carriers to use for shipment to different warehouses. When shipments
leave the BSure facility, employees will scan the pallets with bar code scanners, taking that
inventory out of the database, thereby indicating goods have been sold. As an inventory
policy, BSure loses ownership of the inventory upon delivery to distribution. BSure is not
liable for any damages to property once distributors receive their orders.
Direct Sales
In addition to distribution channels, BSure will be selling the Peanut Detective online
through the BSure website. The advantages of using this channel are that distribution
margins will be eliminated and the purchase orders will be directly connected to the
inventory system, ensuring accurate inventory numbers.
Consumers will go to www.bsuredd.com and select the amount of holders and cartridges

they would like to purchase. After submitting the order to the website, the purchase order
information will electronically transfer to the BSure database. After payment confirmation,
employees will either begin production of the order, or remove the purchase from finished
goods and arrange for appropriate shipment through FedEx, UPS, or the United States
Postal Service, depending on customer preference, since customers will incur the cost of
shipping.
Measurement of Supply Chain Efficiency
To ensure that the supply chain is maximizing revenues and helping to reduce costs, the
company will cross reference target numbers to actual ones in these areas:
• Amount of time it took to receive raw materials from suppliers

"Distribution Channels." Encyclopedia of Small Business. The Gale Group, Inc, 2002. Answers.com 11 Apr. 2007.
33
http://www.answers.com/topic/distribution‐channels

• The amount of scrap in each of the raw materials
• Inventory turnover
• Finished goods scrap
• Amount of time it took to ship finished goods to distribution
Situational Analysis
Base Case
Base case calculations were made assuming marketing is able to achieve all of its objectives
and forecasting is accurate, leading to demand that closely matches expectations. Price
breaks will be used to effectively reduce variable costs as demand increases based on the
forecasted numbers. Variable cost per cartridge unit should drop from $1.92 in year 1 to
$1.87 in year 7. Holder variable costs will be reduced from $1.68 in year 1 to $1.61 in year
7. In the base case model, initial capital investments, which include the factory, equipment,
and other factory furnishings, will be more than sufficient to meet demand through year 7.
As the factory layout plan shows (see OM Exhibit 3), there will be excess room, even in year
7, for cartridge production as well as excess office space. The holder production area also
has excess room throughout the Peanut Detective life cycle.
Optimistic Case
The best case scenario projection is cartridge demand of 18 million and holder demand of
160K in year 7, which assumes 9% increase in repurchase rate for the holder and cartridge
as well as increased ACV and awareness. This results in a 50% increase in demand over the
base case scenario. In order to cope with the extra cartridge demand, four more cartridge
manufacturing machines, at a total cost of $400K, will be required. However, the factory
already has space built in for cartridge production expansion, thereby negating the need to
expand the BSure facilities. Each new machine will require an operator, at a total annual
cost of $80K. Also, as in the base case scenario, quantity discounts will reduce variable
costs, although the discounts will be active earlier on in the Peanut Detective life cycle.
Holder requirements will easily be met by adding an additional worker to the already
abundant workspace provided for holder production, adding an additional $7K in labor,
which is relatively low because part time workers handle holder production. However,
because all added capital is a direct cost of production and costs such as machine

mechanics will now be dispersed over a larger quantity of production, contribution margin
per unit will increase with the increased demand.
Pessimistic Case
Worst case estimates have year 1 production at 1,500 holders and 146K cartridges. While
very little of the factory would be utilized at this production level, production can easily
match low demand by varying the amount of part time workers, which will make up most
of the work force in year 1. Capital requirements in factory equipment will not change
because year 1 is already using the minimum of one cartridge production machine. Price
breaks on the O‐ring and packaging will not be feasible until year 4, thereby keeping
variable cost for holders at $1.92 and for cartridges at $1.68.
Continued Development
As previously mentioned, an integral part of BSure is its value on patents, shown through
extensive research and development costs. The goal is to have as many products patented
as possible, in order to maintain the technological advances on which BSure is founded.
Therefore, future products, which include detectors for other types of allergens, will be the
main objective of the research and development department, as will be improving the
existing Peanut Detective design based on customer feedback. While the product has an
estimated life cycle of seven years, development of new products ensures the life of the
organization will far exceed that of the Peanut Detective. Given the similarities between the
Peanut Detective and further products, it will be easy to convert production in the main
factory from one product to another. Furthermore, the machines used to produce the
Peanut Detective will be able to construct other detection devices as well, with minimal
changes required. Therefore, the factory is very well equipped for the diverse future of
BSure products.
Information
Systems Plan
Information Systems Plan 44

Information Systems Plan
Plan Overview
BSure will utilize information systems to integrate the main functional areas—marketing,
operations management, and finance—as well as help them in making the best decisions
possible. An effective IS implementation requires the right combination of application
software, hardware, telecommunications infrastructure, and personnel. A brief summary of
BSure’s information systems plan can be seen in IS Exhibit 1.
IS Exhibit 1: Information Systems Plan Summary
System Selection Reasons for Selection Feature Highlights

Component
Application Microsoft • Implemented and serviced by • In‐house ERP
Software Dynamics GP industry‐tailored vendor • Runs on MSSQL backend
9.0 • Tight Office & Exchange integration • Fully supports EDI
• Familiar Outlook‐like UI minimizes • Custom dashboards
training costs, human error • Developer API for web site
linking
Server Dell Servers and • Proven industry standards • Quad‐proc. servers
Hardware Workstations • Top of the line, at fairly low costs • Desktop and laptop
workstations
Telecom. BellSouth DSL & • Available near plant location • 6 mbps DSL
Phone • Inexpensive (~$1,000/mo. will • < $0.10/min. for
handle all internet needs and 800 800 number calls
number customer service calls)
Backup LiveVault 5GB • Simple, proven off‐site backup • Upgradeable for higher
Solution backup solution data volumes
Website ASPwebhosting. • Vendor reputation • $225/mo.
Hosting com • Supports ASP.NET (MS standard) • Dedicated server
Personnel 1 IS Manager + • Small businesses do not usually • IS manager must be very
ERP partner require large IT/IS staffs well qualified
support staff • ERP certified partner staff is
experienced in mfg. solutions

Achieving Critical Success Factors
BSure’s implementation of information systems will directly influence the achievability of
the organization’s critical success factors. Specifically, the chosen system must accurately
capture, store, process, and report certain data for use by functional area managers in their
analyses. Valuable metrics such as defect rates, website hit counts and poll data are
examples of data that must be easily accessible for the organization to realize its critical
success factors.
High Product Reliability
To achieve the reliability success factor’s objective of 99.99% accuracy, both the supply
chain and manufacturing process must be under complete control. For example, in order to
enforce the supplier policy of “3 Strikes, You’re Out” (for defective‐material prone
suppliers) BSure’s information system will trace defective product batches by maintaining
detailed records linking finished goods to work in process inventory. As the operations‐
specific ERD depicts (see IS Appendix 1), each Production Batch “uses” multiple Material
Batches; both entities are referenced by their unique ID numbers, which are tracked by
barcode scanners. This simple tracking mechanism would be impossible without
information systems in place because of massive volumes.
Holder assembly and cartridge QA employees will have the ability to submit quick defect
reports at their closest floor computers. Operations managers will then be able to generate
monthly defect reports to measure the reliability success factor and make decisions on
supplier dependability.
Rapid Customer Base Expansion
BSure’s web presence will be very important in gaining product awareness and thus
expanding the customer base. To contribute in achieving the demanded 3‐5% annual
growth in awareness, the website will aim to reach 100K monthly page hits by the peak
year of demand. Website‐related market research consisting of weekly user poll and web
analytics metrics will also help measure awareness growth (see Tracking Segment
Awareness in Web Strategy for details).

Intellectual Capital Superiority
BSure will aim to hire two full time research scientists by year 4 to be on the forefront of
new technology exploration to revise the product design and lower costs. The research and
development team will be provided with industry‐leading software such as Wolfram
Research’s Mathematica 5 and Adobe’s Creative Suite 3 to help develop their ideas.
Value‐Adding Activities
The primary activities in the organization’s value chain, which are shown in IS Exhibit 2,
are described in accordance to the Porter’s value chain model34.
IS Exhibit 2: Information Systems Value Chain
Technology
Human Resources
Procurement
Research & Development
Operations Outbound Marketing Customer
Inbound Logistics
& Mfg. Logistics & Sales Service
(15%)
(40%) (5%) (30%) (10%)

Operations and manufacturing adds the most value (40%) to the organization because it
determines the quality and thus the reliability of the product, which is one of the
organization’s critical success factors. Inbound logistics (15% value added) also plays an
important role in product reliability because suppliers must deliver chemical materials on
time to keep cartridge shelf lives long. Marketing and Sales (30%) will largely determine
the organization’s ability to expand its customer base and thus generate revenues.
Marketing and sales activities are similarly crucial to the success of the business.

34 The Value Chain. 2006. 11 April 2007 <http://www.netmba.com/strategy/value‐chain/>.


Supporting Activities
Each of the supporting value chain activities influences different primary activities, as is
depicted by the colored dots ( ) in IS Exhibit 2. The most important of the
supporting activities in the organization’s value chain is technology, which affects all
primary activities, as well as secondary activities.
Core Application Software
Microsoft Dynamics GP
As shown in the information systems overview, BSure will use Microsoft Dynamics GP 9.0
to manage core electronic business processes. Dynamics GP is an in‐house ERP solution
that Microsoft purchased and redesigned in 2000. The software is customized,
implemented and serviced through Microsoft Certified Partners; BSure will employ
JourneyTEAM, LLC.35 as the Dynamics GP liaison because of the company’s excellent track
record with organizations dealing with manufacturing of durable consumer goods36.
Dynamics GP, like many other ERP solutions, is capable of handling all aspects and
functional areas involved in BSure’s Peanut Detective operations.
Contribution to High Product Reliability
Dynamics GP allows users to create custom views and “dashboards” (screens with
customized pieces of information chosen per user), giving managers the ability to have the
information they use most often readily available37. This functionality will allow operations
managers to track progress for achieving high product reliability. OM managers will have
single‐screen access to current production rates in comparison to aggregate planning
forecasts, as well as supplier‐specific defect summaries for effective three‐strike supplier
policy enforcement. Dynamics GP’s standardized data export functionality will also allow
OM managers to run statistical analysis on quality levels in MS Excel when needed.

35 JourneyTEAM Homepage. 5 April 2007 <http://www.journeyteam.com/>.
36 Solutions Directory. 12 April 2007 <https://solutionfinder.microsoft.com/SDK/Solutions/ SolutionsDirecto
ry.aspx?vertical=45d6efe1cdda4cd492992514d3114584&location=e0766ffbae1c4668a2e1826e6008cf94>.
37Microsoft Dynamics GP for construction companies. 9 April 2007 <http://www.microsoft.com/dy namics/gp/
product/construction.mspx>.


Software Selection Process
The major choices for core application software types were: separate best‐of‐breed
systems, a SaaS ERP system and an in‐house ERP system. Best‐of‐breed systems were
eliminated because of the unnecessary overhead costs involved and the lack of a unified
user interface across business processes. Overhead would include separate
implementation, training, and maintenance costs for each package. A more advanced IT
department would also be required for best‐of‐breed system implementations38. Integrated
systems are also more streamlined, giving managers quicker access to cross‐functional
data.
Software‐as‐a‐Service (SaaS) ERP systems were also eliminated because of their reliance
on internet up‐time. Internet service providers that could provide adequate bandwidth and
reliability levels would cost thousands of dollars each month. It would not make sense for a
manufacturing firm to run daily operations over the internet. Thus, it was determined that
an in‐house ERP was the best solution for the BSure business.
In‐house ERP Decision
The two candidates considered were Microsoft Dynamics GP and
SAP Business One. Other Dynamics and SAP products (Dynamics AX,
CRM, SAP All‐in‐One) were not considered because of either lack of
experience or too large of a scope.39 Although SAP is the world renowned leader in ERP
solutions, Dynamics proved to be a more ideal solution for the organization because of its
extremely familiar and consistent user interface and tighter MS Office integration. The
primary reason that BSure will be using Dynamics GP over SAP Business One, which is a
slimmed down version of All‐in‐One, is its user interface. Axel Angeli, an expert in ERP
packages, states:
Dynamics looks fresh and attractive and navigating around it is easy for everybody
familiar with applications like Microsoft Outlook… Beyond the look and feel, the way

Best of Breed Vs. Integrated Systems. 2 April 2007 <http://olcsoft.com/select_0800.htm>.
38
Karasev, Andrew. Microsoft Dynamics: GP, AX, NAV, SL, CRM – Merge or Coexistence? 1 June 2006. 11 April 2007
39
<http://ezinearticles.com/?Microsoft‐Dynamics:‐GP,‐AX,‐NAV,‐SL,‐CRM‐‐‐Merge‐or‐Coexistenc e? &id=211028>.

individual program components are controlled is pretty homogeneous within
Dynamics, while every transaction within [SAP] R/3 sports a high degree of
individualism.40
Joe Gulino, another expert in the field, also states in the same article:
Most employees who work for midmarket companies use Microsoft Outlook… How
many of these employees have had formal training in Outlook? The answer is very
few…One of the biggest reasons ERP implementations fail is the inability to get
employees to adopt the system.40
A more familiar user interface will result in lower training costs and human error due to
confusion. Minimizing human error is a key method of ensuring that the organization’s high
reliability critical success factor is met. Dynamics GP also integrates more natively with all
MS Office products, as well as MS Exchange for e‐mailing purposes.41
Web Strategy
The organization’s core web strategy is to create a website, the “BSure Center for Peanut
Allergies,” to be an online community for people who are in some way affected by peanut
allergies. The website, which is currently located at http://peanut.nurik.net, will eventually
be located at www.bsurecfpa.org, www.bsuredd.com, and at www.peanutdetective.com. The
strategy focuses on the critical success factor of rapid customer base expansion as well as
customer retention. There are few active web sites that provide information and
community resources for the Peanut Detective’s target segments. Of those few,
peanutallergy.com is the most highly visited, based on their own estimates (7‐35 thousand
hits per month) as well as their Google’s search ranking.42 For screenshots of
peanutallergy.com, please see IS Appendix 4.
The BSure Center for Peanut Allergies website will also advertise the Peanut Detective
wherever possible. However, it will not push the product on users; instead, users will have

40 SAP All‐in‐One vs. MS Dynamics. 22 November 2005. 7 April 2007 <http://searchsm b.techtarget.c om/gen
eric/0,295582,sid44_gci1225574,00.html>.
41 SAP Business One vs Microsoft Dynamics GP ‐ Highlights for Consultant. 3 April 2007 <http://ez inearticles.com/?SAP‐Business‐One‐
vs‐Microsoft‐Dynamics‐GP‐‐‐Highlights‐for‐Consultant&id=102624>.
42 Google Search for "peanut allergy". 9 April 2007 <http://www.google. com/search?hl=en&q =peanut%20allergy>.


a variety of resources at their disposal that describe the benefits of various allergy coping
methods, cleverly promoting the benefits of the Peanut Detective.
Reaching the Target Segments
It is currently relatively difficult to find concrete information about the Peanut Detective’s
target segments; Consumers in the target segments are geographically spread out and are
not clustered in any specific region due to the ubiquitous nature of peanut allergies. This
makes it difficult to reach consumers for market research and product awareness
purposes. The community website will create a new, very valuable communications
channel between BSure and its consumers. This will greatly aid in providing marketing
managers with a new source of market research data. This data will empower managers to
make more accurate projections and thus make better decisions.
Tracking Segment Awareness
Because customer base expansion will be measured partially by segment awareness, it will
be important to have access to accurate metrics for this data. The website will utilize the
free Google Analytics web software to track page views and unique hits.43 Information
systems personnel will have daily access to see how well the website is progressing in
reaching the 100K page views/month goal. Web server logs will also provide user IP
addresses, which can then be cross‐referenced with a free online geo‐location database for
access to user geographical information.44 Weekly website user polls, controlled mostly by
the marketing department, will also provide valuable market research useful for calculating
the product’s customer satisfaction rates and product awareness.
Conveying Product Information
The website will also contain content describing the Peanut Detective family of products
under the “BSure Products” section. Product usage videos and reference information such
as the instruction manual and customer service phone number will be available at this

43 Google Analytics Homepage. 23 March 2007 <http://www.google.com/analytics/>.
44 “Map of Peanut Allergy Meetups." Meetups. 12 Feb. 2007 <http://peanutallergy.me etup.com/about/>.MaxMind Homepage. 2 April
2007 <http://www.maxmind.com>.


location. “Add to cart” links will also be visible on the product pages for easy online
ordering.
Website Structure
The basic website structure, which is detailed in IS Appendix 5, is positioned as an
information resource. The homepage will aggregate industry news and doctor articles (see
DocBlog below) to compel visitors to bookmark the page. The homepage content will also
be available in newsletter and RSS45 forms to maximum circulation and availability.
FeedBurner will be used to monitor RSS usage rates for market research purposes.46 The
homepage will always contain advertisements for the BSure Peanut Detective so that users
are aware of the organization supporting them.
DocBlog (doctor’s blog) will be a weekly article posting (similar to a
blog post) by doctors that will partner with the organization. DocBlog
articles will promote doctors’ opinions about how to deal with peanut
allergies; the marketing department’s distribution of doctor’s kits will
provide incentives for doctors to promote the Peanut Detective. An
example of DocBlog is shown in IS Appendix 5.
The community aspect of the website will allow users to communicate with each other by
discussing their stories in forums (message boards). Each user will have the ability to share
their relationship to peanut allergies (“My Story”) by editing their user profile. This will
provide a simple way for users to quickly become part of the community.
Other website resources will include comparisons of various peanut allergy coping
methods as well as links to internet articles on peanut allergies. This will promote the
website’s position in Google’s PageRank search rankings because it will act as a “hub” site
by hosting useful outbound links.47

45 RSS (Really Simple Syndication) allows users to embed live content on their personal homepages and in other news aggregation
software.
46 FeedBurner Homepage. 4 April 2007 <http://www.feedburner.com/fb/a/home>.
47 Google Technology. 25 March 2007 <http://www.google.com/technology/>.

Building Competitive Advantage
BSure’s main competitive advantage will be the amassment of consumer trust in the Peanut
Detective. Consumer trust is crucial to the success of customer base expansion and the
overall success of the firm. Doctor sponsorship via the DocBlog will help tremendously in
gaining this necessary trust. Consumer trust is also vital to the growth of word‐of‐mouth
awareness. Because none of the Peanut Detective competitors have great online presences,
providing a community‐intensive website and thus earning consumer trust will promote
the BSure brand and provide a significant competitive advantage.
Web Site Implementation
BSure will enlist the services of a contracted web developer experienced in ASP.NET and
other Microsoft technologies such as IIS to develop and maintain the website. The website
will be hosted at ASPwebhosting.com on a dedicated server, guaranteed with 99.95%
uptime, and allowing for 100 gigabits/mo. throughput.48 The web developer will also be in
charge of developing the shopping cart module and subscription services. ASP.NET will be
the core web technology used because of its ability to integrate with Dynamics GP’s
developer API (application programming interface).
Finally, the web developer will be asked to create a simple content management system
(CMS) to provide easy web content control to other managers in the organization. One
example of a CMS‐enabled process is marketing managers’ creation and monitoring of user
polls. Because the web developer will be contracted for maintenance as well as
development, managers will easily be able to request more dynamic content updates as
well.
Supporting the Business Model
The BSure Peanut Detective business model offers a robust variety of revenue streams and
distribution channels, including drug store distribution, direct online sales, and even a

48 Dedicated Server Hosting from ASPwebhosting.com. 11 April 2007 <http://www.asp webhosting.c om/dedicated serverhosting.htm>.


product replenishment subscription service. The organization’s information systems were
coordinated to handle and deliver data from and to all of these sources.
Retail Drug Store Sales
Because drug store retail sales will be the primary source of revenue for the Peanut
Detective, the organization’s information system was coordinated to best handle large
volumes of external data. Microsoft Dynamics GP has built‐in electronic data interchange
(EDI) support that fully meets the requirements of BSure retailers such as CVS and
Walgreens.
Internet Sales
Because only 5% of those surveyed said that they would initially purchase allergy‐related
products over the internet49, BSure will not concentrate on single purchase online sales;
instead, web marketing efforts will be focused on pushing direct subscription sales,
orderable by internet or phone, which will be one of BSure’s top revenue streams. Survey
data shows that 25‐50% of the target segments would be interested in purchasing such a
plan. Users will receive paper statements or online statements made available under the
“My Account” section of the website.
Both types of online‐submitted orders will be communicated from the web server to the
organization’s in‐house application servers via a secure line. The contracted web developer
will work in coordination with the marketing and information systems managers to ensure
that both types of internet sales run smoothly. Subscription plans benefit both the
consumer and the organization—consumers have the comfort and security of quick and
easy home delivery and the organization secures a profitable customer relationship.
Hardware and Telecommunications
The organization’s IT infrastructure is designed around the chosen ERP solution, Microsoft
Dynamics GP. Dynamics GP requires at least two servers—an application/transaction


server, and a dedicated MS SQL server.50 These servers will sit behind two APC Smart‐UPS
(uninterruptable power supply) systems to prevent damage due to power outages. The
factory floor will also require five or more client workstations for USB‐connected barcode
scanning and manual data entry. Managers will require laptops for both in‐office and from‐
home work.
Dell was chosen to satisfy all server and workstation computing requirements because of
their long standing reputation for cost effectiveness, on‐site support, and B2B expertise. All
supporting hardware will be purchased over the internet from CDW, a well‐known
business computing retailer. All machines will be networked together using a business‐
ready 16‐port Cisco VPN router, which also provides firewall security. Wireless routing can
quickly and easily be implemented if necessary and if it is allowed by FDA regulations.
BellSouth (now AT&T) business DSL and local/long distance phone service will be
purchased to handle the organization’s telecommunications needs. The long distance
phone service provides access to an 800 number at a very affordable cost ($0.10/min.).
This line will be used for supplier and retailer relations, customer service and for taking
direct consumer purchase orders. Carroll Communications’ Partner Phone System will be
purchased for the phone system’s hardware components—the system is designed for small
businesses with up to 20 phones.
Data Security
There are inherent security benefits when using software from Microsoft. Automatically
installed software patches provide up‐to‐date security for the operating systems and
productivity software installed on servers and workstations. Microsoft has a colossal
reputation of dedicating extensive development efforts towards security of their products.
Also, the tighter integration that comes with having a single software vendor implies
smaller chances of security leakages. The organization will also standardize the usage of

50 System requirements for Microsoft Dynamics GP 9.0. 12 April 2007 <http://www .micro soft.com/dyn amics /gp /pr oduct /90s yst e
mrequirements.mspx>.


Symantec AntiVirus Corporate Edition on all servers and workstations. For offsite data
backups, LiveVault’s 5GB backup service will be used and incremental data will be backed
up nightly, with full backups weekly.
Personnel
A single information systems manager with significant MIS and IT (troubleshooting,
networking) experience will be sufficient maintenance personnel throughout BSure’s years
of operations. The reason is that the bulk of application support can be handled by the
Dynamics GP liaison, JourneyTEAM, and hardware support will be enacted by Dell via three
year on‐site warranties and upgrades. The IS manager, who will be promoted to chief
information officer in later years, will communicate with the servicing departments of
these organizations whenever trouble arises. The IS manager will also be in charge of
ensuring that employees are familiar with the system and that they can positively exploit
all of the available features of the ERP for maximum efficiency. As mentioned in the
organization’s web strategy, a web developer will be contracted for initial web
development as well as continued maintenance and upgrades. BSure’s IS manager will also
support this web developer in meeting hardware and data access needs.
Implementation Schedule
The implementation of the system will begin seven months before launching the product.
First, the founding IS manager will order Dynamics GP and work with JourneyTEAM to
customize the ERP solution. Hardware and other software will also be purchased at this
time. System testing will then be performed by JourneyTEAM and the IS manager to ensure
that all business needs are met and that business processes are operating smoothly.
After the product launches, the IS manager will continue to work closely with JourneyTeam
to enact IS system servicing. The IS manager will also be in charge of basic network
administration. Over the first few years of operations, hardware will be upgraded and new
servers and workstations will be purchased from Dell as necessary. IS Exhibit 3 illustrates
BSure’s basic information systems implementation schedule.

IS Exhibit 3: Implementation Schedule
Order Dynamics
GP and install Add new hardware,
with upgrade software,
JourneyTEAM Train request new features
employees as business grows
L‐7 mo. and test
system 1‐2 year after launch
L‐2 mo.
Launch product
and website 1 month after launch
Analyze system
L‐4 mo. performance and request
L‐6 mo.
changes as necessary
Order and Hire web developer
install and communicate
computer requirements
hardware

Costs
Because information systems will be such an integral part of BSure’s Peanut Detective
operation, the costs will be relatively high. Pre‐launch costs will be around $86K and total
costs after a single year of operation, including the IS manager’s salary and benefits, come
close to $205K. Web developer contracted work was estimated at $50/hr for 50 hours to
develop the initial web site. The cost of maintenance was also estimated at $300‐$500
monthly (average of 6‐10 hours per month of minor updates). A summary of pre‐launch
and year 1 IS costs are presented in IS Exhibit 4.
IS Exhibit 4: Pre‐launch IS Costs (w/o $60K in Salaries)
Component Total Cost
Core Application Software $42,755
Core Hardware $19,600
Support Hardware $5,147

Component Total Cost
Support Software $5,048
Services & Resources $13,634
Total $86,184

After the first year, information systems costs fluctuate due to bi‐annual hardware
upgrades and new purchases due to estimated workforce and operation expansion. An IS
costing schedule for the first seven years of BSure’s operations can be seen in IS Appendix
6.
Summary
Information systems play a crucial role in the success of BSure’s Peanut Detective product.
If the product is to become the leading preventative measure against peanut‐related
allergic reactions, the implemented information system must run smoothly. The system
must be able to facilitate, support, and monitor the organization’s critical success factors of
reliability, customer base expansion, and intellectual capital security. The founders of
BSure Diagnostic Devices, Inc. are confident that these requirements will be satisfied and
exceeded with the described information systems plan.
Financial
Analysis & Plan
Financial Analysis & Plan 58

Financial Analysis & Plan
Internal Rate of Return & Net Present Value
Company
BSure Diagnostic Devices will have a healthy internal rate of return of 61% and a net
present value of $4.7 million based on a 25% discount rate (FE Exhibit 1).
FE Exhibit 1: IRR & NPV
IRR NPV
Total 61% $4.73M
Investors 55% $2.60M
Friends, Family & 76% $2.13M
Management
Investors
Investors will receive an internal rate of return of 55% and have a net present value of $2.6
million. The investor will receive positive cash inflows by year 3 and every year thereafter.
Friends, Family & Management
Friends, family and management will receive an internal rate of return of 76% and have a
net present value of $2.1 million (see FE Exhibit 1).
Investment
Ownership
Share for investors will be 60% while friends, family and management will receive a 40%
stake (see FE Exhibit 2). BSure believes this is a reasonable ratio since friends, family and
management invented and developed the Peanut Detective, but feel outside investors
should get majority ownership since their investment is ¾ of the total cash needed and the
investment has significant risks associated with it.
Financcial Analysis &
& Plan 59

FE Exhibit 2: Co
ontribution & Ownership
Ownersh
hip Tottal % C
Contribution
Contrib
bution
Total 100% $1.96M 100%
Inve
estors 60% $1.47M 75%
Frie
ends, Family &
& 40% $0.49M 25%
Management
Contribu
utions Contribution of Fu
unds
Investors
In orderr to launch and operatte properly,, BSure Diagnostic Friends, Faamily, and Man
nagement
Devices will need a
a total inveestment of $2.0 million. This
$0.5
investmeent will not be needeed immediately, but ov
ver the M
(25%) $1.5
course of
o 2.5 yearss in order to
t offset neegative cash
h flows. M
(75%)
Investorr contributio
on will be 75% of the total investm
ment or
$1.5 milllion, whilee friends, faamily and managemeent will
contribu
ute 25% or $
$0.5 million
n. BSure Diaggnostic Dev
vices will ask for $0.5 m
million in staartup
investmeent in order to cover startup exp
penses, rentt and produ
uct develop
pment. Investors
will therrefore need
d to contribute $0.4 miillion whilee friends, family and management
m t will
invest $0
0.1 million b
before operrations begin
n (see FE Exxhibit 3).
FE Exhibit 3:: Contribution
n Details
Inittial Year 1 Ye
ear 2
Total $0.5M $0.8M $0
0.6M
Investors $0.4
4M $0.6M $0
0.5M
Friends, Fam
mily $0.1M $0.2M $0
0.2M
& Managem ment

The follo
owing two y
years will require conttributions frrom investo
ors of $0.6 aand $0.5 miillion
in years 1 and 2 resspectively aand friends, family and
d managemeent of $0.2 aand $0.2 miillion
in yearss 1 and 2 as
a well. Th
hese additio
onal investm
ments will be used in
n order to keep
operatio
ons running at an efficieent pace by hiring new
w employeess and contin
nuing to incrrease
Financcial Analysis &
& Plan 60

marketin
ng, as sales will takee two years before th
hey find trraction and
d acceleratee the
company
y into positiive cash flow
ws in year 3
3.
Cash Flo
ows
As menttioned earlier, cash flo
ows will rem
main negatiive in the fiirst 2½ yeaars of operaation.
The com
mpany’s inittial costs arre substantiially high du
ue to the faact that thee organization is
providin
ng a medicall device which needs a higher leveel of quality
y to both inccrease reliab
bility
and accu
uracy for thee end user ((see FE Exhibit 4).
FFE Exhibit 4: C
Cash Flows (yyears 0‐7)
(data table values in thousands)
$20M
$15M
Cash Flows
$10M
$5M
$0M
($5M)
0 1 2 3 4 5 6 7
Term
minal Value ‐ ‐ ‐ ‐ ‐ ‐ ‐ $15.2M
FFM
M ($0.1M) ($0
0.2M) ($0.2
2M) $0.0M $0.5M $0.7M $1.3M $2.1
1M
Inveestors ($0.4M) ($0
0.6M) ($0.5
5M) $0.0M $0.8M $1.1M $2.0M $3.2
2M
Year
Assumin
ng paymentt of dividen
nds every month,
m inveestors shou
uld expect to
t recover their
investmeent in 4.77
7 years or 4
4 years and
d 8 monthss. Thereafteer investorss should exxpect
increasin
ng cash infflows until the end off year 7. Future cash flows werre calculateed by
ng the terminal value off BSure at th
obtainin he end of yeear 7. Terminal value fo
for the comp
pany,
at $15.2 million, waas calculated
d by taking the presentt perpetuity
y of future cash flows w
with a
discountt rate of 25
5% and a sh
hrinkage raate of 10%.. This declin
ning rate due
d to increeased
competittion, was caalculated baased on the product liffecycle of th
he Peanut Detective (see MK
Exhibit 8
8).

Profitability and Breakeven
BSure will experience negative net income in years 0 through 2 (see FE Exhibit 5).
Breakeven analysis shows that for years 1 and 2 the company would need to sell an excess
of 1 million cartridges in order to turn a profit (see FE Exhibit 6). Only cartridge breakeven
has been analyzed as holder sales are much less relevant.
By year 3, the company will turn a profit of $0.8 million, due to sales more than doubling
between years 2 and 3. This large increase in sales is mainly due to an aggressive
marketing campaign in the first three years that builds up both brand awareness and
reputation while also increasing customer retention. Thereafter net income continues to
increase, surpassing the breakeven point by a large margin as a larger quantity of both
holders and cartridges get sold.
FE Exhibit 5: Summarized Income Statement
Year 0 1 2 3 4 5 6 7
Total Sales $0K $856K $2,233K $7,606K $11,382K $13,999K $23,792K $32,376K
Total COGS 86K 645K 1,416K 4,416K 6,570K 8,098K 13,727K 18,737K
Gross Profit 0K 211K 817K 3,191K 4,812K 5,901K 10,065K 13,639K
Start up Costs 371K
SGA 0K 941K 1,227K 1,814K 1,986K 2,236K 2,534K 2,749K
Depreciation 0K 18K 18K 32K 47K 61K 71K 118K
EBT (371K) (748K) (428K) 1,344K 2,780K 3,605K 7,459K 10,772K
Taxes 0K 0K 0K 537K 1,112K 1,442K 2,984K 4,309K
Net Income ($371K) ($748K) ($428K) $806K $1,668K $2,163K $4,476K $6,463K
FE Exhibit 6: Breakeven for Cartridges
Year 1 2 3 4 5 6 7
Breakeven Units (Cartridge) 1,029 1,303 1,875 2,099 2,414 2,796 3,112
Forecast Units (Cartridge) 281 738 2,458 3,697 4,572 7,812 10,686
Breakeven Total Revenue $2,913 $3,829 $5,976 $6,917 $7,979 $9,829 $11,329
Forecast Total Revenue $856 $2,233 7,606 $11,382 $13,999 $23,792 $32,376

Ratios Analysis
The product team has conducted extensive analysis of both industry ratios in the diagnostic
substances industry (SIC 2835) as well as ratios of two leading companies in the self
diagnostic business: Roche Pharmaceuticals and Abbott Laboratories (see FE Exhibit 7).
Roche is a Swiss‐based company and the leader in diagnostic products.51 Abbott
Laboratories is a U.S. based company and second in terms of its market share of diagnostic
devices.52 Unlike Roche, Abbott is not performing as well year‐to‐year. While both
companies make products similar to the Peanut Detective, neither makes a product to
detect the presence of peanut and thus they are indirect competitors, but may become
competitors in the future.
FE Exhibit 7: Company & Industry Ratios
BSure Industry Roche Abbott

Cash % of Sales 7% 20% 7% 6%
Current Ratio 3.12 3.6 3.22 0.94
Quick Ratio 3.08 1.7 2.78 0.71
Gross Margin 39% 61% 73% 56%
Profit Margin 16% (6.3%) 18% 7.6%
Cash to Sales Ratio
BSure Diagnostic Devices will hold a cash to sales ratio of 7%. This is similar to the cash to
sales ratio of both Roche Pharmaceuticals as well as Abbott Laboratories which are 8% and
6% respectively. The industry however holds on to 20% of cash, the reason being that they
want high liquidity in case of litigations or recalls. While the organization expects to hold
more cash in later years, the first few years will require investments in new machines and

51 Figures and Reports. Roche. Annual report, 2006. 10 Apr. 2007 <http://www.roche.com/ home/inv_fin_link>.
52 Annual Report. Abbott. Providence, RI, 2006. 12 Apr. 2007 <http://www.abbottinvestor.com/phoenix.zhtml?c=94004&p=irol‐
irhome>.

equipment, employment of new workers and aggressive spending in marketing in order for
the product to turn a profit.
Current/Quick Ratio
BSure Diagnostic Device’s current ratio is 3.12 and a quick ratio of 3.08. This compares
favorably with Roche which has a current ratio of 3.22 and a quick of 2.78. Abbott’s current
and quick ratios are both below zero, indicating that their liabilities are weighing heavily
on the company. The industry as a whole has a current ratio of 3.7 and a quick of 1.7. This
indicates that there is a large amount of inventory accounted for on the balance sheet. To
deal with this problem, BSure is utilizing a chase strategy and thus its inventories are
efficiently used and kept in small quantities.
Gross/Profit Margin
BSure’s gross profit margin is 39% while its net profit margin is 16%. Gross profit margins
in both the industry, Roche and Abbott Laboratories are high at 61%, 74% and 56%
respectively. BSure’s gross margin is significantly less because it is a startup company with
high variable costs and less bargaining power then its indirect competitors. The 16% net
margins, however, are in line with Roche and Abbott at 18% and 7% respectively and are
well above the industry at ‐6.3%. The industries negative net margin is due to large fixed
assets and the fact that many of these companies have a diversified line of diagnostic
devices. The company’s net margin will remain positive by focusing efforts on the Peanut
Detective in the first few years thus maximizing factory and administrative efficiency in that
one product.
Risks
BSure Diagnostic Devices has analyzed some of the greatest risks that will adversely affect
the company. They include four cartridge variable costs, the distribution price for
cartridges, repurchase rate and entering competition (see FE Exhibit 8).

FE Exhibit 8: Sensitivity Analysis
Legend Cartridge Chemicals Other

Variable Original New % Change
Cartridge Selling Price $2.70 $2.40 11%
Repurchase Rate (Cartridge) 190 134 ‐29%
Antibody $0.80 $1.71 114%
Competition (years 5‐7) 20% 47% 135%
Shell/Window $0.24 $1.10 358%
Substrate $0.24 $1.15 380%
Enzyme $0.21 $1.12 434%

Cartridge Variable Costs
There are four variable costs that go into making the cartridge that if changed could have a
hefty negative impact on the company’s financials. These four costs in order of biggest
impact are the antibody, plastic shell, substrate and enzyme. The antibody, substrate and
enzyme are the series of chemicals inside the cartridge that combine to create the chemical
reaction needed to detect peanut traces. The plastic shell encloses all of the chemicals
inside the holder. These four materials are the most expensive variable costs; as a result, a
very slight change in the price of any of these chemicals or plastics can have a large impact
on cartridge profit margins. Because the cartridge represents the majority of revenues,
these price changes can indeed negatively affect all of the financial statements. The
company currently plans to hedge prices with its suppliers in order to minimize this risk;
however, unexpected problems with one of the suppliers could hinder the organization’s
ability to maximize margins.
Cartridge Pricing
Another variable that can have a large effect on the health of the company is the cartridge
selling price. Because each cartridge has a low margin, a small change in the manufacturing
price can have an adverse effect on sales. If competition increases their cartridge margins
more effectively than BSure, forcing the company to cut its distribution costs, this will have

a negative impact on the company’s financials. BSure will minimize this risk by gaining
more purchasing power by years 3 and 4 when competition enters, by establishing
relationships with suppliers as price setters rather than price takers.
Repurchase Rate
BSure projects repurchase rates of cartridges to be 190 per person per year. Sensitivity
analysis concludes that the project NPV would be zero if the repurchase rate fell to 134.
This 29% drop is significant—if the product’s marketing strategy is not able to convince
peanut allergy sufferers to trust the Peanut Detective’s testing accuracy and promote repeat
usage, this decrease in repurchases could dampen financials. The organization must
therefore make certain that the Peanut Detective meets customer requirements so that
repeat purchases increase, thereby increasing cartridge sales.
Competition
An unexpected rise in competition in years 5 through 7 could have significant effects on
financial figures. A spike from 20% to 47% lost revenue from competing products will
result in a zero NPV. To hedge this risk, BSure will invest in design patents, making it
difficult for competition to make a product similar to the Peanut Detective.
Scenarios
Throughout this report, estimates have been discussed as to how BSure will grow, turn a
profit and then divide ever increasing returns to its shareholders. In addition, optimistic
and pessimistic company financials will be analyzed.
Optimistic Scenario
FE Exhibit 9: IRR & NPV for
Under the optimistic scenario BSure Diagnostic Optimistic, Base, and Pessimistic
Cases
Devices’ internal rate of return will be 105% and its net
present value will be $13.7 million (see FE Exhibit 9). IRR NPV
This leaves the investor with an IRR of 96% and an NPV Optimistic 105% $13.70M
of $8.1 million (see FE Exhibit 10). The reason for the Base 61% $4.73M
jump in both IRR and NPV in the optimistic scenario Pessimistic ‐14% ($1.89M)

is that the Peanut Detective will both increase store
FE Exhibit 10: IRR & NPV for Investors
penetration and retail acceptance. In the first few (Opt./Base/Pess.)
years retailers will be more willing to stock the IRR NPV
product on store shelves as they will have gained trust Optimistic 96% $8.06M
in the product quicker than expected. End users will Base 55% $2.60M
also trust the product more readily than expected and Pessimistic ‐18% ($1.47M)
repurchase rates will be higher than expected, from
37.5% to 45%. Furthermore, accounts receivable days will decrease from 40 days to 30
days as BSure Diagnostic Devices will have more purchasing power and retailers will want
to keep BSure’s business, so in turn will payback short term debts quicker. The company’s
accounts payable days will increase from 35 to 40 days because it will have stable
relationships with suppliers and they will allow the organization to pay back short term
debts at later dates.
Investors’ cash flows will remain negative until year 3, similar to the base scenario,
however by the end of year 3 cash outflows will be significantly increased, from $0.02
million to $0.7 million. Investments will be paid back to investors in exactly 3.0 years from
the initial investment date.
Pessimistic Scenario
Under the pessimistic scenario, BSure Diagnostic Devices’ net present value will be ‐$1.9
million and an internal rate of return of ‐14% (see FE Exhibit 9). This will leave investors
with an NPV of ‐$1.5 million and a loss of $1.4 million of their investment (see FE Exhibit
10). A positive point to note is that despite the negative IRR and NPV, cash flows will
become positive in year 4 and thus investors will be able to recoup some of their losses. In
this unlikely scenario, it is possible that Peanut Detective will not be easily trusted by store
retailers and thus there will be both a decrease in store penetration as well as acceptance.
This will be compounded by increased competition in year 3 and 4 that will take market
share at a more aggressive and faster rate than predicted. Furthermore, customer retention
will decline and this will affect the repurchase rate declining the holder rate from 37% to
30% and cartridge rate from 76% to 65%. While these numbers seem unfavorable to the
investor the chances of such an event occurring is very slight.

FE Exhibit 11: Cash Flows for Optimistic, Base and Pessimistic
Year 0 1 2 3 4 5 6 7+
Optimistic ($548K) ($540K) ($115K) $1,120K $3,090K $5,454K $8,369K $42,579K
Base ($548K) ($783K) ($629K) $36K $1,337K $1,765K $3,329K $20,460K
Pessim. ($548K) ($907K) ($1,007K) ($703K) $104K $213K $325K $950K

Investors will lose money if these unfavorable circumstances take shape and there seems
to be no positive outlook in the future barring significant events such as a major increase in
demand or an interested party acquiring the BSure brand and facilities. If these conditions
do take place, the company will cease operations and salvage equipment and raw materials
in order to payback investors.
Why Invest? 68

Why Invest?
When you invest in BSure Diagnostic Device’s Peanut Detective, you are investing in a
product that can potentially save lives. The product will satisfy an unmet need by
pioneering a new reaction prevention method for peanut allergy sufferers.
The investment does come with a fair amount of risk. The main revenue stream comes
from selling cartridges. The company’s margins are significantly lower on cartridges than
they are on holder units. Variable price fluctuations or a decreased cartridge distribution
price could put a significant strain on the operation.
However, with these risks come substantial financial rewards. If the product does indeed
follow estimated projections, investors will reap the majority of the benefits. The project’s
current IRR is high (61%), so it inherently allows for volatile deviations from estimates.
Beyond Year Seven
The long‐term effects of competition will begin to decrease demand starting in year 7. After
reaching peak demand levels, the Peanut Detective will be in the decline stage. At this point,
the product will have an estimated terminal value of $15.2 million (assuming a ‐10%
growth rate and a 25% demanded rate of return). The Peanut Detective itself will be
harvested while new spin‐off products such as the Tree Nut Detective and Egg Detective
(other top prominent food allergies) are developed and prepared for launch.
Conclusion
While there are definite risks in this investment, the upside exceedingly outweighs the
downside. Investing in the Peanut Detective is a great opportunity to profit from an
innovative product while improving the quality of life for millions of people.

Appendices
General Appendices 69

Appendices
General Appendices
General Appendix 1: External Product Design
¾”
3”
Test Button
Eject Button
not shown
⅔” (on other side)
½”
Holder and 1 ¾”
Cartridge Cap Holder and
(Cartridge hidden) Cartridge
Cartridge

General Appendix 2: Internal Product Design
Peanut Proteins
Peanuts and peanut by‐products contain universal proteins called Ara H 1. This protein, also
known as an antigen or allergen, has a high resilience to heated environments and therefore can
survive normal cooking or baking temperatures.53 Ara H 1 can be found in common foods ranging
from cupcakes to soups. Even peanut residue on a dinner table can be effectively dangerous to
anyone who is sensitive enough to it.
Extraction
Ara H 1 is relatively easy to extract, even after having been processed. Peanut antigens are
particularly prone to a saline solution called NaCl—sodium chloride. Once this antigen has been
extracted, a widely used technique, called ELISA, which short for Enzyme‐Linked ImmunoSorbent
Assay, can be used to visually identify these proteins.54
ELISA
There are three main methods to ELISA; indirect, sandwich, and competitive. Due to procedural
restraints of indirect and sandwich methods, the Peanut Detective employs a variation of the
competitive technique. Essentially, this technique traps Ara H 1 and restricts it from proceeding
further. Once Ara H 1 is trapped, further steps can be to taken to quantify the presence of this
antigen.
Detecting Ara H 1
The competitive technique requires the use and preparation of three separate chemicals. The first
of these substances is called an antibody. Antibodies are cells that can be specially cultured to
locate and attach to Ara H 1. The next chemical required comes in a pair, enzymes and substrates.
These chemicals are useless without one another; enzymes react to substrates by releasing
energy. Depending on the type of enzyme and substrate used, this energy can be visible to the

53 Pomes, A, R Vinton, and M.d. Chapman. "Peanut Allergen (Ara H 1) Detection in Food Containing Chocolate." Journal of Food Protection 67 (2004):
793‐798.
54 Pomes, Anna, Ricki M. Helm, Gary A. Bannon, Wesley A. Burks, Amy Tsay, and Martin Chapman. "Monitoring Peanut Allergens in Food Products by
Measuring Ara H 1." Journal of Allergy and Clinical Immunology 111 (2003): 640‐645.
General Ap
ppendices 7
71

n
naked eye as
a a fluoresscent glow or color ch
hange. The last chemiical requireed is a supeer saline
e
extraction b
buffer, as exp
plained abo
ove.
P
Preparatio
on
B
Before any a
actual proceesses can occcur, these chemicals h
have to be p
prepared. Th
he phosphate saline
b
buffer has to
o be mixed w
with Ara H 1 specific antibodies. T
These antibo
odies have aan enzyme aattached
t
to it. Next, t
two cotton sstrips are required. Th
he first strip
p, seen in th
he diagram,, has more A
Ara H 1‐
s
specific anttibodies attaached to itt. The secon h substrate chemicals that are
nd strip is laced with
d
designed to react to enzzyme‐linked
d antibodiess.
P
Product Pa
arts
Inteernal External
Internal Prrocess Flow
w
T first steep (1) of prrocess is to press the ““Test” butto
The on. After prressing the “Test” buttton a pin
p
pierces the phosphate buffer/enzy
yme‐linked bag, as seen in step (2
2) of the pro
ocess diagram. As a

result, the solution within the bag flows through the tube and through the mesh. In step (3), the
solution dissolves the sample stuck on the mesh.
There are now two different scenarios.
Sample with Peanuts
If there are any antigens present, enzyme‐linked antibodies will attach to them. Step (4) is where
the solution/sample mix gets absorbed in the exposed strip. Assuming again the sample has Ara H
1, the enzyme‐linked antibodies will not advance beyond this strip. The rest of the solution then
moves onto step (5). Since the antigens, along with enzyme‐linked antibodies, were filtered in the
first strip, there will not be any kind of glow. In step (6) the optic reader analyzes the last strip for
signs of fluorescence. In this case there is no glow therefore indicating that the food does contain
traces of peanuts.
Sample without Peanuts
Assume now, that in step (3), the sample had no antigens. The solution with the sample dissolved
will continue to get absorbed by the first strip. However, since there is no Ara H 1 to become
attached, the enzyme‐linked antibody will make it to the last strip. In step (6) the optic reader
analyzes the last strip for signs of fluorescence. At this point, the enzyme‐linked antibody will
react with the substrate and release a fluorescent glow indicating that the food does not contain
traces of peanuts.
Visual Detection
The detection of fluorescence is fairly simple. It is a technology widely used among pregnancy
tests and other function‐similar applications.55 Optical sensors scan the last strip of the cartridge.
Even the minutest glow is detectable.

55 "Clear Blue ‐‐ How Pregnancy Tests Work." Clearblue. <http://www.clearblue.info/uk/NewDigitalPregnancyTest.cfm>
Marketing Ap
ppendices 7
73

M
Marketing Appendicces
M
MK Appendix
x 1: Segmentaation Tree
U.S. Population (30
01M)
No Food
Other Foo
od
Peanut Allergy Sufferers (3M) (8M)
Alle
ergy
(29
90M)
Mild Severe Reeaction to
Hives,, Vomiting, A
Anaphylaxis
n
Irritation Touch o
or Smell
if Ingested (2
i 2.5M)
(0.3M) (0.22M)
Children &
Adults
Teens
(1,625K)
(87
75K)

M
MK Appendix
x 2: Press Rele
ease
PRESS RELEA
P ASE For Rele
ease 9 a.m. ES
ST
Occtober 1, 200
07
C
Contact: (Press only)
Leora Kadisha
L
S
Senior Vice Pr
resident of M
Marketing
leora@bsured dd.com
Sure Diagnosttic Devices, In
BS nc. unveils Peeanut Detectiive
New Devicce that detectss peanut tracees in foods.
((LOUISVILLE, Kentucky – O October 1, 20007 ‐ BSure Diaggnostic Devicees, Inc.) Today
y, BSure Diagn
nostic Devicess,
Inc. introduced
d a preventatiive device meaant to detect p
peanuts in foo
od.
The device, slightly larger than a tube of

T o lipstick andd fit for a key
y chain, is meeant for thosee with peanu
ut
a
allergies. To teest foods, thee consumer brrushes the Peanut Detective over their food/liquid,
f annd pushes thee
T
Test button. Inn 45 seconds, the device will
w show, with h a green or red
r light, wheether there is a presence of
o
p
peanut in the c consumer’s fo ood. The holdeer expires everry six months through usagge.
““This is the peerfect productt for counseloors to carry arround with thhem at camp, teachers to hhave at schooll,
k
kids to have inn their pocketts, moms to haave in their baags. There’s n
nothing like th
his on the marrket and we‘ree
h
hoping it will b
be a big hit,” says Leora Kad
disha, Senior V
Vice Presidentt of Marketingg.
Key characteriistics include 99.99% accurracy, ability to test a large variety of foods, and a 45 seccond responsee
K
t
time. The Pean
nut Detective ccan be purchased at CVS, W Walgreens, Ritee Aid and www w.bsuredd.com m.
For more info
F ormation on t
the Peanut Detective and r
related products visit:
www..bsuredd.com
Marketing Ap
ppendices 7
74

M
MK Appendix
x 3: Instructio
on Manual Co
ontents
B
BSure Pean
nut Detecttive Instructions
W
What is the B
BSure Peanut Detective?
The BSure Pea
T anut Detective is a device thaat detects tracces of peanut iin foods and ccan be used to test food prio
or to
c
consumption.
T
The BSure Pea
anut Detective consists of a T
Test Holder an
nd a Test Carttridge
Instructions
1 Remove th
1) he Test Cartrid
dge from the ffoil wrapper.

2 Assemble the Test
2)
a) Find tthe arrow on tthe Test Holdeer
b) Line u
up both arrow ws
c) Insertt the Test Carttridge into thee Test Holder u
until it clicks iinto place

3 Remove th
3) he cap

4 Perform th
4) he test
a) Stick ttip of Testing Cartridge into
o desired food
d to get a samp
ple
b) Place cap back onto o Cartridge
c) Press “TEST” button n

5 Wait for th
5) he test to com
mplete.
Within 45 seconds a GRREEN or RED llight will appeear.
6 See your rresult
6)

The foo
od tested doess not contain The food DOES CONT TAIN peanuts. It
peanutss, with 99.99%
% accuracy. is not saafe for consum
mption by anyone
who maay experience an allergic
reactionn.
7 Dispose off the cartridgee
7)
a) You m
may now presss the Eject Buttton to removee the Test Cartridge
b) Your rresult will rem
main on the Diisplay for 15 m
minutes.

F
Further Infor
rmation
D
Disposing of yo
our Test Cartriidge
O
Once your resu
ult has been d
displayed, disp
pose of the Tesst Cartridge w
with your norm
mal household
d waste. To do this,
Marketing Appendices 75

press the Eject Button on the Test Holder. The Test Cartridge will automatically be released. When you eject the Test
Cartridge you may notice a color due to the chemical reaction that took place on the test strip. This must be
disregarded; only refer to the Green or Red indication light on the Test Holder.
Using the Test Holder Again
If you have bought a pack containing a Test Holder and more than one Test Cartridge, you can use the Test Holder
again. While testing the Test Holder may have been splashed with some of the previous food sample. Ensure that you
wipe it clean. A further test is not possible during the initial 15 minutes after the previous test was conducted. The
result from the previous test will remain lit for 15 minutes after the test was taken. When you are ready to use the
Test Holder again, repeat the instructions from step 1. Refill Test Cartridges are available for use with the Test Holder.
Frequently Asked Questions
1. How accurate is the BSure Peanut Detective?
The BSure Peanut Detective is 99.99% accurate in laboratory tests.
2. How does BSure Peanut Detective work?
Peanuts contain a universal protein called Ara H 1, which causes allergic reactions in sufferers. This protein, also
known as an antigen, can be detected using a highly sophisticated method called ELISA (enzyme‐linked
immunosorbent assay). When you swipe the cartridge over your sample and hit the “Test” button, in 45 seconds you
will receive a red or green light indicating the presence of Ara H 1 or not.
3. What might affect the accuracy of the result?
The food tested must have a high enough consistency to be sufficiently sampled by the cartridge’s metal mesh. If the
mesh does not pick up enough of the food, the test will result in an error and the red light will flash.
4. Can I use the Test Holder with any other Test Cartridge?
No. The Test Holder can only be used with the Test Cartridges made by BSure Diagnostic Devices Inc., specific to the
relevant food allergy.
5. I have used the Test, but no result has started flashing for over 45 seconds. What does this mean?
The test has not been performed correctly. The red light will start flashing, indicating an error, within 10 minutes of
testing.
6. What if the Test Holder gets wet?
Some splashing of food or liquid will not damage the Test Holder, but if it becomes very wet it may be damaged. If so,
both lights will start to flash indicating an error.
7. My result is still flashing. I have another Test Cartridge in the pack; can I insert this and do another test?
No. Wait until the light stops flashing before testing again. Please refer to ‘Using Test Holder again’.
The BSure Peanut Detective is specially designed for easy use at home, restaurants, day school etc. However, if you
have any questions about the Test, please call the BSure helpline at 1‐800‐2BE‐SURE 24 hours/ 7 days a week. Our
specially trained staff will be glad to give you confidential and helpful advice.
Disclaimer
The customer service phone number is 18002BESURE.
Visit us on the web at www.bsuredd.com.
Store at 36° 86°F (2°30°C). Do not freeze. Child safe. Do not use if foil containing test cartridge is damaged. Do not use
Test Cartridge past its expiration date.

Marketing Ap
ppendices 7
76

M
MK Appendix
x 4: Survey & Result Summ
mary
P
Peanut All ergy Surve
ey
We are studentts from Boston University and
W d are currently developing a new
n product id
dea. The inform
mation provided
d
b
below will be us sed for our research purposess and will allow w us to determiine what consumers desire fro om our productt.
A
All information will remain connfidential.
1) Who in yourr family has a p
1 peanut allergy
y? (Check all th
hat apply)
Myself (32.6%)
Spouse (1.4 4%)
Child/Childdren (66.9%)
Other (pleaase specify (4.5%%)
If you selectted other, pleasee specify:

2) How many c
2 children do you
u have with pe
eanut allergiess?
{ 1 (64.8%)
{ 2 (4.8%)
{ 3+ (0.3%)
{ None (30.1 1%)
3) What type of allergies do t
3 the members o of your househhold have?
Myself
M My sp
pouse Child/Children Otherr/Relative
Peanut 31.5% 1.4
4% 64.3% 5
5.6%
Tree nut 19.2% 1.7
7& 36.2% 3
3.6%
Dairy 3.1%
3 1.9
9% 13.1% 1
1.9%
Wheat 3.6%
3 0%
% 5%
% 6%
Soy 5.6%
5 0.8
8% 8.6
6% 1
1.1%
Egg 5% 0.3
3% 16.7% 1
1.9%
4) What sympttoms have you or others you've known exp
4 perienced from
m an allergic re
eaction?
Myself My spouse Child/Childrren Otheer/Relative
Shortness of breath 27% 1.1% 31.5% 4.7%
Hives 24.5% 2.2% 59.3% 6.4%
Vomiting 16.7% 0.8% 31.5% 3.9%
Anaphylaxxis (closing of throat) 27.9% 1.4& 28.1% 3.3%
Other 14.8% 3.6% 26.7% 2.2%
If you are not the individuall with the peanut allergy, pllease fill out th
he rest of the survey with rrespect to yourr
c
child or depend dent.
5) What products do you currently use to c
5 cope with allerrgic reactions? (Please check
k all that apply
y)
Antihistammines (83.6%) No one (1.9%)
Skin Ointmments (23.7%) Other (please spe
O ecify) (11.4%)
EpiPen (91.9%)

6) Where you d
6 do currently pu urchase allerg
gy related prod ducts? (Please check all that apply)
Pharmacy (92.2%) Conveniencee Store (13.1%)
Doctor's Offfice (13.9%) Internet (5.3 3%)
None (1.9% %) Other (please specify) (5.3%)

7
7) How import
tant is it for you
u to detect traces of peanutss in foods? (1 =
= Not importan
nt, 5 = Very imp
portant)

{ 1 (0.8%) { 2 (0.6%) { 3 (2.8%) { 4 (5.4%) { 5 (90.4%)
8) What worries you most about your peanut allergy? (Please check all that apply)
Consequences of an allergic reaction (98.1%)
Embarrassment caused by an outbreak (11.7%)
Boredom from eating the same foods (14.5%)
My allergy does not worry me (1.9%)
9) How frequently do you eat outside of your home?
{ Frequently (8+ times a week) (8.1%)
{ Somewhat frequently (4‐7 times a week) (21.3%)
{ Not frequently (1‐3 times a week) (57.9%)
{ I never go out to eat (12.9%)
10) Does your allergy influence the frequency of eating outside of your home?
{ Yes (76.1%)
{ No (23.9%)
11) Where do you eat out most often?
{ Restaurants (47%) { Friend's house (4.3%)
{ Relative's house (14.3%) { School (24.6%)
{ Work (2%) { Other (please specify) (7.7%)
If you selected other, please specify:

Product Description
In development is a device that can accurately detect traces of peanuts in foods as a precautionary measure
for those who suffer from peanut allergies. The device, which would be slightly larger than a tube of lipstick
(and able to fit onto a keychain), would quickly identify peanut traces in foods after sticking the tip of the
device into the food. After less than a minute, a green or red light would indicate either no peanuts or
peanuts in the food, respectively, thereby avoiding an allergic reaction while still enabling people to try new
foods. This product would expire every six months through usage.
12) After reading the above description, how likely are you to buy this product?
{ Definitely would buy (43.1%)
{ Probably would buy (23.2%)
{ Maybe would buy (25.5%)
{ Probably would not buy (6.7%)
{ Definitely would not buy (1.4%)
13) Would the six month expiration on the holder deter you from buying this product?
{ Yes (55.3%)
{ No (35.4%)
{ Maybe (9.3%)
14) How much would you be willing to pay for this product?
{ $30‐39 (45%) { $40‐49 (20.6%) { $50‐59 (16%) { $60‐69 (4%) { $70+ (14.3%)
15) What is the maximum price you would pay for this product in dollars?
Mean = 69.28 Median = 50.00 Min = 10.00 Max = 999.99
16) Where would you use this product? (Please check all that apply)
Restaurants (91.1%) Friend's house (68.8%)
Relative's house (64.6%) School (62.4%)
Work (28.7%) Other (please specify) (12.8%)
If you selected other, please specify:

17) What attributes (listed on the right) would be the most important for this product to contain? (Rank by
importance, 1st = Most important, 6th = Least important)
1) Portability (14.1%)
2) Accuracy (28.7%)
3) Response Time (16.5%)

4) Ease of Use (17.5%)
5) Tests Large Variety of Foods (18.2%)
6) Appearance (5%)
18) How often would you expect to use this product on a weekly basis?
{ 5+ days a week (28.1%) { Less than once a week (15.4%)
{ 3‐4 days a week (27%) { I would not use this product (2.5%)
{ 1‐2 days a week (27%)
19) Would you feel uncomfortable using a peanut detection device in public?
{ Yes, I would only use it in private (3.1%)
{ Yes, but I would still use it (23.2%)
{ No, not at all (73.7%)
20) Which of the following attributes would increase the likeliness of your child using this product? (choose N/A
if not applicable)
{ Bright colors (9%)
{ Cartoon prints (9%)
{ My child would use it regardless (51.5%)
{ N/A (30.4%)
Cartridge Description
This product would require the use of disposable cartridges that would be inserted into the device because chemicals
involved are not reusable and each cartridge must remain sterile. The cartridge tip is what is actually inserted into the
food. Each cartridge could only be used one at a time, but they would be small enough that you can carry many at once.
21) How many cartridges would you want in a pack? (Based on usage)
{ 4 (10%)
{ 8 (19.4%)
{ 12 (28.8%)
{ 16+ (41.9%)
22) What is the maximum price you are willing to pay for a refill cartridge a.k.a per usage?
Mean (all responses) = 3.30 Median = 4.00 Min = 1.00 Max = 5.00
23) How interested are you in an "Automatic Refill Plan" where a certain amount of refills and a holder are sent
to you at intervals chosen by you through the company website?
{ I would use this plan for holder repurchasing (7.5%)
{ I would use this plan for cartridge repurchasing (10.4%)
{ I would use this plan for holder and cartridge repurchasing (31.7%)
{ I would prefer to buy this product through a store (50.4%)
24) Would you have more than one peanut detection device for multiple locations, such as one at home and one
in a child's backpack?
{ Yes (33%)
{ No (24.6%)
{ Maybe (42.4%)
The following questions are for statistical purposes only. Please fill them out for yourself, not for your child or
dependent.
25) Age
{ 18‐24 (22.9%) { 25‐34 (23.7%) { 35‐44 (42.4%) { 45‐54 (9.9%) { 55+ (1.1%)
26) Gender
{ Male (13.2%) { Female (86.8%)
27) Marital Status
{ Married (69.5%) { Divorced (2.8%) { Single (27.7%)
28) City and State

Thank you for participating in our survey. We greatly appreciate your input.
Marketing Ap
ppendices 79

M
MK Appendix
x 5: Online Po
ost‐Purchase Survey
P
Post Purch
hase Surveyy
1. Wheree did you purchaase the productt?
o CVS
o Walgreens
o Longs Drugsstore
o Rite Aid
o Internet
o Other ____________________________________

2. How d
did you hear abo
out the Peanut D Detective?
o Through a frriend
o Recommend ded through docctor/ allergist
o Advertisemeent
o Other ____________________________________

3. How saatisfied were yoou with the Pea
anut Detective product: (1 being the worst, 5 b
being the best)
1 2 3 4 5

4. Who b bought the prod duct?
______________________________

5. Who w was the productt purchased for??
______________________________

6. Would
d you purchase tthe product agaain?
o Yes
o No

7. Gender: Male Female

8. Age: _______


MK Appendix 6: Focus Group Summary
Focus Group 1
Date: February 11, 2007 Age of Participant: 18+, Independent
Time: 4:00 PM Location: Dexter Part, 175 Freeman St.
• Benadryl is not effective enough, usually takes 20 minutes before relief.
• Usually eat our everyday – checking pasta oil would be very helpful.
• Always concerned about a potential allergic reaction when eating out.
• Trust is a factor – if 99.99% is truly the accuracy rate then yes they would try the product.
• Would rather buy holder at a drug store – cartridges may be purchased on line.
• Liked BSure logo – very appealing.

Focus Group 2
Date: February 21, 2007 Age of Participant: Guardians of Dependents
Time: 11:00 AM Location: Boston University School of Management
• Always worried about an allergic reaction, especially when they are not present to watch their
child. (School, friend’s house, camp)
• Child carries an EpiPen in their backpack in case of an emergency. School nurse is notified of this
medication. Children have been taught which foods they should not eat.
• Trust is a major issue – However, if a product like this worked it would reduce anxiety.
• Needs to be kid friendly, easy to use is important – quick testing results, less than 2 minutes.
• Design needs – small enough to fit on a key chain.
• Lacking precautionary devices for food allergies.

Focus Group 3
Date: March 9, 2007 Age of Participant: 18+, Independent
Time: 2:00 PM Location: University of California, San Diego
• Main line of defense: EpiPen. Using it is a scary and painful experience.
• Trust factor – would it really work? Doubtful of product at first glance.
• Has to be small – it is embarrassing to be testing food in a restaurant.
• Always concerned about an allergic reaction when eating out.
• If this product came out, they would like to use it in restaurants.
• Logo response – They liked the logo BSure.
• Price – one individual was willing to pay up to $1000 for product. Another individual did not have
serious allergies and was not willing to spend more than $10.


MK Appendix 7: Marketing Budget Expenses
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

Push Strategy
Kits
Press Kits $208 $208 $208 $208 $208 $208 $208
Doctor Kits $118,258 $118,258 $118,258 $0 $0 $0 $0
Conferences
MDM East $2,835 $2,835 $0 $0 $0 $0 $0
FIME $0 $0 $7,000 $7,000 $7,000 $7,000 $7,000
Eastern Allergy $2,150 $2,150 $2,150 $2,150 $2,150 $2,150 $2,150
Pull Strategy
Magazine
WebMD $240,000 $306,000 $374,544 $445,707 $519,567 $596,204 $675,697
Health $0 $0 $353,736 $360,811 $460,034 $469,234 $478,619
Web
peanutallergy.com $24,000 $24,480 $24,970 $25,469 $25,978 $26,498 $27,028
allergykids.com $6,480 $6,610 $6,742 $6,877 $7,014 $7,154 $7,298
Other
Word of Mouth $0 $0 $0 $0 $0 $0 $0
Total Cost $393,930 $460,540 $887,607 $848,221 $1,021,951 $1,108,448 $1,198,000


MK Appendix 8: Base Case Sales Forecast
Year 1 2 3 4 5 6 7
Competition % 0% 0% 10% 15% 20% 20% 20%
Online Demand % 5% 8% 10% 13% 15% 18% 20%
Child, Teen Segment 875,000 918,750 964,688 1,012,922 1,063,568 1,116,746 1,172,584
Adult Segment 1,625,000 1,641,250 1,657,663 1,674,239 1,690,982 1,707,891 1,724,970
Total Segment Size 2,500,000 2,560,000 2,622,350 2,687,161 2,754,549 2,824,638 2,897,554
Purchase Intent 34% 843,250 863,488 884,519 906,379 929,110 952,750 977,345
ACV 3.15% 7.09% 18.46% 22.49% 23.99% 32.98% 33.98%
Awareness 7.28% 8.17% 11.50% 14.68% 17.63% 21.37% 27.66%
Initial Buyers 1,935 5,004 18,780 29,917 39,304 67,156 91,865
Holder
Repurchase Rate 37.5% 726 1,876 7,042 11,219 14,739 25,183 34,449
Repurchases/Year 1 726 1,876 7,042 11,219 14,739 25,183 34,449
Subtotal Holder Demand 2,661 6,880 25,822 41,136 54,043 92,339 126,314
Demand Lost (Competition) 0 0 2,582 6,170 10,809 18,468 25,263
Total Holder Demand 2,661 6,880 23,240 34,966 43,235 73,871 101,052
Target Retail Price 39% $41.99 $41.99 $41.99 $39.89 $37.90 $36.00 $34.20
Manufacture Price $30.21 $30.21 $30.21 $28.70 $27.26 $25.90 $24.61
Online Demand 133 516 2,324 4,371 6,485 12,927 20,210
Total Holder Retail Revenue $106,149.62 $267,225.77 $878,259.33 $1,220,450.07 $1,392,658.54 $2,194,049.90 $2,764,861.56
Total Holder Revenue $85,972.75 $229,503.45 $799,630.20 $1,177,803.30 $1,424,484.00 $2,378,681.09 $3,177,601.69
Cartridge
Repurchase Rate 76% 1,471 3,803 14,273 22,737 29,871 51,038 69,817
Repurchases/Year 190 279,456 722,529 2,711,792 4,320,043 5,675,539 9,697,290 13,265,316
Subtotal Cartridge Demand 281,391 727,533 2,730,572 4,349,960 5,714,844 9,764,445 13,357,182
Demand Lost (Competition) 0 0 273,057 652,494 1,142,969 1,952,889 2,671,436
Total Cartridge Demand 281,391 727,533 2,457,515 3,697,466 4,571,875 7,811,556 10,685,745
Target Retail Price 35% $3.65 $3.65 $3.65 $3.61 $3.58 $3.54 $3.51
Manufacture Price $2.70 $2.70 $2.70 $2.68 $2.65 $2.62 $2.60
Online Demand 14,070 54,565 245,751 462,183 685,781 1,367,022 2,137,149
Total Cartridge Retail Revenue $975,724 $2,456,332 $8,072,935 $11,690,694 $13,901,976 $22,823,906 $29,972,878
Total Cartridge Revenue $774,113 $2,018,667 $6,876,945 $10,329,873 $12,751,050 $21,748,031 $29,695,351
Total Retail Revenue $1,081,874 $2,723,558 $8,951,195 $12,911,144 $15,294,634 $25,017,956 $32,737,740
Total Revenue $860,085 $2,248,171 $7,676,575 $11,507,676 $14,175,534 $24,126,713 $32,872,953
Total Costs of Goods Sold $482,761 $1,222,252 $4,106,907 $6,125,518 $7,571,438 $13,043,251 $18,172,849
Gross Margin $377,324 $1,025,918 $3,569,668 $5,382,158 $6,604,095 $11,083,461 $14,700,104


MK Appendix 9: Online Rebate
MK Appendix 10: Introductory Advertisement

Marketing Ap
ppendices 84

M
MK Appendix
x 11: Web Com
mmercial Sto
oryboards & SSnapshots
T
TARGET: Pa
arents of Pe
eanutAllerrgic Childre
en and Tee
ens
*
* Image cred
dits: Getty Im
mages
T
TARGET: Fe
emale 18+ TARGE
ET: Male 18
8+

MK Appendix 12: Magazine Advertisements

* Image Credits: “Boys on a Tree” via LaSalle Council Boy Scouts of America

* Image Credits: “Cookies for Santa” via Microsoft Clipart
Op
perations Management Ap
ppendices 8
86

O
Operations
s Managem
ment Appe
endices
O
OM Appendix
x 1: House of Quality
Relationship Legend
9 Strongg P Peanut De.
3 Medium B Benadryl
1 Weak E EpiPeen Custtomer Perception
1 = worst 5 = best
1 2 3
3 4 5
Extremely High Accuracy 9 9 9 B E, P
Quick Respon
nse Time 8 9 1 1 3 1 B E P
Tests Large V
Variety of Foods 7 9 3 3 9 P
Easy to Use 6 1 1 9 9 E B, P
Safe for Child
dren 5 3 3 9 E B P
Portable 4 9 9 9 9 B E, P
Residue
No Leftover R 3 3 3 P
Easily Dispossable Tips 2 9 9 9 P
Long Productt Lifetime 1 3 3 1 1 E, P B
Importance W
Weighing Numb
ber 222 98 83 204 60 39 108 55
Red,
R
Target Value 5”
1.5 .5” ABS 3” .6” Grreen 1
O
OM Appendix
x 2: Organizattional Chart ((Year 1)
Pre
esident
$
$70K
Science
e
Sales Rep. Technoloogy Acco
ountant OM Manager IS Managerr
$45K Consultant $1
16/hr. $55K $60K
$35/hr..
Assem
mbly Customer
C Quality
Machinistt Jaanitor
Lin
ne Service Technician
n
$15/hr. $18K
$12.50/hr. $
$16.50/hr. $15/hr.

Operations Management Appendices 87

OM Appendix 3: Supplier Information
Component Supplier Location
Plastic Shell DA Pro Rubber Newburyport, MA
Circuit Board Holtek Semiconductor Davenport, FL
Holder
Optic Sensor Holtek Semiconductor Davenport, FL

Battery Dantona Battery Wantagh, NY
Packaging Multi Packaging Solutions Louisville, KY
Metal Mesh Sunny Metal Inc Fairborn, OH
Shell/Window DA Pro Rubber Newburyport, MA
Antibody AbD Serotec Raleigh, NC
Enzyme R&D Systems Minneapolis, MN
Cartridge
Substrate AbD Serotec Raleigh, NC

Buffer Fisher Chemicals Agawam, MA
Spring Murphy and Spring Palmyra, NJ
Pin W.H. Bagshaw Nashua, NH
O‐Ring Apple Rubber Products Lancaster, NY
Packaging Multi Packaging Solutions Louisville, KY
OM Appendix 4: Component Price Breaks
Holder Component Unit Cost (0‐100K) Unit Cost (100‐250K) Unit Cost (250K+)
Plastic Shell $0.5670 $0.5470 $0.5270
Circuit Board $0.8793 $0.8793 $0.8793
Battery $0.4000 $0.4000 $0.4000
Packaging $0.0700 $0.0650 $0.0600

Cartridge Component Unit Cost (0‐100K) Unit Cost (100‐250K) Unit Cost (250K +)
Metal Mesh $0.0019 $0.0019 $0.0019
Cotton Strip $0.0025 $0.0025 $0.0025
Plastic Shell $0.2406 $0.2106 $0.1906
Antibody $0.8000 $0.8000 $0.8000
Enzyme $0.2100 $0.2100 $0.2100
Substrate $0.2400 $0.2400 $0.2400
Buffer $0.0100 $0.0100 $0.0100
Spring $0.0500 $0.0450 $0.0400
Pin $0.0050 $0.0050 $0.0050
O‐Ring $0.1200 $0.1200 $0.1150
Packaging $0.0050 $0.0044 $0.0038

Operations Management Appendices 88

OM Appendix 5: Economic Order Quantities
Holder EOQ1 EOQ2 EOQ3 EOQ4 EOQ5 EOQ6 EOQ7

Plastic Shell 249 401 736 903 1,004 1,313 1,536
Circuit Board 249 401 736 903 1,004 1,313 1,536
Battery 249 401 736 903 1,004 1,313 1,536
Packaging 249 401 736 903 1,004 1,313 1,536

Cartridge EOQ1 EOQ2 EOQ3 EOQ4 EOQ5 EOQ6 EOQ7
Metal Mesh 18,830 30,277 55,646 68,255 75,898 99,210 116,035
Cotton Strip 18,830 30,277 55,646 68,255 75,898 99,210 116,035
Plastic Shell 18,830 100,000 250,000 250,000 250,000 250,000 250,000
Antibody 18,830 30,277 55,646 68,255 75,898 99,210 116,035
Enzyme 18,830 30,277 55,646 68,255 75,898 99,210 116,035
Substrate 18,830 30,277 55,646 68,255 75,898 99,210 116,035
Buffer 18,830 30,277 55,646 68,255 75,898 99,210 116,035
Spring 18,830 30,277 100,000 250,000 250,000 250,000 250,000
Pin 18,830 30,277 55,646 68,255 75,898 99,210 116,035
O‐Ring 18,830 30,277 55,646 68,255 75,898 99,210 250,000
Packaging 9,415 15,138 27,823 100,000 100,000 100,000 100,000

Information Systems Appendices 89

Information Systems Appendices
IS Appendix 1: Preliminary Operations/Manufacturing ERD

Data Dictionary Excerpt
Production Batch – one batch of product
• Type – holder, cartridge
• Status – work in process, finished inventory, sold
Equipment – one production machine
• Type – type and function of machine
• Location – where it is in the plant
• Training Required – level of employee training required
IS Appendix 2: Preliminary Data Flow Diagram


IS Appendix 3: Microsoft Dynamics GP Resources
Desired Report Samples
Dynamics GP Screenshot (note the MS Outlook similarity)


Dynamics GP Inventory Report (continued previous Appendix)
…
IS Appendix 4: peanutallergy.com Screenshots

Informatio
on Systems Ap
ppendices 92

IS Appendix 5
5: Website De
etails
Note: the web
N bsite may currently be
v p://peanut.nurik.net. Thee
visited at http
f
final web add dresses of thee website will
b
be www.bsur redd.com,
w
www.bsurecfp fpa.org, and
w
www.peanutd detective.com
m.

Home
(News && DocBlog)

BSure Prroducts
¾ Pean nut Detective
What is it?
W
How does it w
H work?
¾ Refilll Cartridgess

Online Store
¾ Indivvidual Itemss
¾ Subscriptions

My Account
¾ My Subscription ns
¾ Favorites
¾ My Story (Profile)

Commun nity
¾ Forums
¾ Stories, etc.

Resources
¾ Inforrmation
What is pean
W nut allergy?
Other guides
O s & links
¾ Copin ng Methodss
Products
P
Techniques
T


IS Appendix 6: Information System Cost Schedule (w/o IS Manager Salary)
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Core Software
Microsoft Dynamics GP $23,000 $5,658 $5,187 $6,601 $8,016 $9,430 $11,788 $14,145
JourneyTEAM Markup $17,250 $4,244 $3,890 $4,951 $6,012 $7,073 $8,841 $10,609
SQL Server 2005 Standard Ed. $2,505 $1,209 $1,047 $1,209 $1,371 $1,371 $1,695 $1,695
Core Hardware
Dell PowerEdge 2900 $5,900 ‐ ‐ $15,000 ‐ $25,000 ‐ $7,500
Dell PowerEdge SC1430 $2,900 ‐ ‐ ‐ ‐ $1,000 ‐ ‐
Dell Optiplex 320 Desktop $6,300 $1,800 $900 $1,800 $2,700 $2,700 $4,500 $4,500
Dell Latitude D620 Notebook $4,500 $1,500 ‐ $1,500 $1,500 $1,500 $4,500 $4,500
Support Hardware
Barcode Scanner $800 $320 $160 $320 $320 $320 $320 $320
Carroll Partner Phone System $2,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐
Linksys 10/100 16‐Port VPN Router $435 $435 $435 $435 $435 $435 $435 $435
300’ Belkin CAT5e Network Cable $250 $150 $100 $150 $150 $150 $150 $150
50’ Belkin CAT5e Network Cable $200 $75 $50 $75 $75 $75 $75 $75
APC Smart‐UPS 750VA $832 $416 $416 $416 $416 $416 $416 $416
Samsung ML‐2510 Printer $130 ‐ ‐ ‐ ‐ ‐ ‐ ‐
Xerox Phaser Color Multifunction $500 $500 $500 $500 $500 $500 $500 $500
Support Software
Exchange Server 2007 $1,369 $134 $67 $134 $201 $201 $335 $335
Adobe CS3 Web Premium $1,799 ‐ ‐ ‐ ‐ ‐ ‐ ‐
Mathematica 5.2 $1,880 ‐ ‐ ‐ ‐ ‐ ‐ ‐
Services & Resources
Website & Online Store Dev. $2,500 ‐ ‐ ‐ ‐ ‐ ‐ ‐
BellSouth (AT&T) DSL Internet $660 $1,320 $1,320 $1,320 $1,320 $1,320 $1,320 $1,320
BellSouth (AT&T) Local Phone $300 $600 $600 $600 $600 $600 $600 $600
BellSouth (AT&T) Long Distance $5,424 $10,848 $10,848 $10,848 $10,848 $10,848 $10,848 $10,848
ASPwebhosting.com $1,750 $3,100 $3,100 $3,100 $3,100 $3,100 $3,100 $3,100
LiveVault data backup $1,200 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400
Website Maintenance $1,800 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000
Total $86,184 $40,709 $37,019 $57,359 $45,963 $74,439 $57,822 $69,448

Finance Appendices 94

Finance Appendices
FE Appendix 1: Cash Flows & Returns

Initial Investment in ($127,459)
Fixed Assets
Net Income ($371,005) ($747,562) ($428,228) $806,233 $1,667,707 $2,162,703 $4,475,583 $6,463,256
+ Depreciation $0 $18,208 $18,208 $32,494 $46,780 $61,066 $71,429 $118,208
‐ ∆ Net Wkng. Cap. ($50,000) ($54,076) ($218,638) ($702,539) ($277,484) ($358,284) ($1,018,282) ($1,076,923)
‐ ∆ Fixed Assets $0 $0 $0 ($100,000) ($100,000) ($100,000) ($200,000) ($200,000)
Net Cash Flow ($421,005) ($783,430) ($628,658) $36,188 $1,337,002 $1,765,484 $3,328,730 $5,304,541
Terminal Value of Business $15,155,832
Growth rate of ‐10%

Returns NPV IRR

Project $4,730,587 61.33%
Investors $2,601,720 54.76%
Friends, Family and
$2,128,867 76.26%
Mgmt


FE Appendix 2: Income Statement

Total Units For Holder 0 2,661 6,880 23,239 34,965 43,234 73,871 101,051
Price Per Holder 30.21 30.21 30.21 28.70 27.26 25.90 24.61
Internet 41.99 41.99 41.99 39.89 37.90 36.00 34.20
Variable Cost (Holder) 8.88 8.61 8.66 8.75 8.80 8.85 8.88 8.91
Total Holder Sales $81,953 $213,916 $729,426 $1,052,372 $1,247,676 $2,043,858 $2,680,324
Total Units For Cartri. 0 281,391 727,533 2,457,515 3,697,466 4,571,875 7,811,556 10,685,745
Price Per Cartridge 2.70 2.70 2.70 2.68 2.65 2.62 2.60
Internet 3.65 3.65 3.65 3.61 3.58 3.54 3.51
Variable Cost (Cartri.) 1.70 1.63 1.63 1.64 1.65 1.65 1.65 1.65
Total Cartridge Sales $774,113 $2,018,667 $6,876,945 $10,329,873 $12,751,050 $21,748,031 $29,695,351
Total Sales $0 $856,066 $2,232,583 $7,606,370 $11,382,244 $13,998,725 $23,791,889 $32,375,676
Variable Cost (Holder) 0 22,924 59,600 203,311 307,676 382,715 656,079 900,622
Variable Cost (Cartri.) 0 459,020 1,187,952 4,039,053 6,083,286 7,529,966 12,879,988 17,639,118
Fixed Mfg. Costs 86,005 162,782 168,056 173,501 179,122 184,926 190,917 197,103
Total COGS 86,005.00 644,726 1,415,608 4,415,865 6,570,084 8,097,607 13,726,984 18,736,843
Gross Profit 211,340 816,975 3,190,505 4,812,160 5,901,119 10,064,905 13,638,833
Start‐Up Costs 371,005
Fixed Admin. Costs 546,764 766,455 926,683 1,137,648 1,213,597 1,425,723 1,550,531
Marketing Costs 393,930 460,540 887,607 848,221 1,021,951 1,108,448 1,198,000
Depreciation 18,208 18,208 32,494 46,780 61,066 71,429 118,208
Earnings Before Tax (371,005) (747,562) (428,228) 1,343,722 2,779,511 3,604,505 7,459,305 10,772,094
Taxes 0.0 0.0 0.0 537,489 1,111,804 1,441,802 2,983,722 4,308,837
Net Income ($371,005) ($747,562) ($428,228) $806,233 $1,667,706 $2,162,703 $4,475,583 $6,463,256
Other Ratios
COGS % of Sales 75% 63% 58% 64% 64% 63% 63%
Gross Margin 25% 37% 42% 47% 46% 46% 46%
Profit Margin ‐87.3% ‐19.2% 10.6% 16.1% 17.0% 20.6% 21.8%


FE Appendix 3: Balance Sheet

Minimum Cash Balance 50,000 59,925 156,281 532,446 723,091 892,573 1,522,362 2,078,675
Accounts Receivable 0 93,815 244,667 833,575 1,132,041 1,397,375 2,383,346 3,254,285
Raw Materials Inventory 0 10,162 52,346 65,230 51,634 115,754 36,088 147,100
Finished Goods Inventory 0 1,997 5,163 17,442 25,979 31,802 53,794 72,851
Current Assets 50,000 165,899 458,457 1,448,692 1,932,745 2,437,504 3,995,590 5,552,911
Gross Fixed Assets 127,459 127,459 127,459 227,459 327,459 427,459 627,459 827,459
Depreciation 0 18,208 36,417 68,911 115,691 176,756 248,185 366,393
Net Fixed Assets 127,459 109,251 91,042 158,548 211,768 250,703 379,274 461,066
Total Assets $177,459 $275,150 $549,499 $1,607,240 $2,144,514 $2,688,207 $4,374,864 $6,013,976
Accounts Payable 0 61,363 135,268 422,949 629,502 775,960 1,315,746 1,796,126
Current Liabilities 0 61,363 135,268 422,949 629,502 775,960 1,315,746 1,796,126
Paid in Capital $542,784 $1,321,874 $1,945,591 $1,945,591 $1,945,591 $1,945,591 $1,945,591 $1,945,591
Retained Earnings (365,325) (1,108,087) (1,531,360) (722,057) 317,395 1,734,765 4,987,411 9,845,960
Dividends (Cumulative) 0 0 0 39,242 747,975 1,768,109 3,873,885 7,573,701
Total Equity 177,459 213,787 414,231 1,184,292 1,515,012 1,912,247 3,059,117 4,217,850
Total Liabilities and Equity $177,459 $275,150 $549,499 $1,607,240 $2,144,514 $2,688,207 $4,374,864 $6,013,976
Net Working Capital Balance 50,000 104,536 323,189 1,025,744 1,303,244 1,661,544 2,679,843 3,756,784

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2007

A device that detects peanut traces in foods,

SM 323 Spring 2007

EpiPen Benadryl TNX‐901 Caalamine Lotio

Speed Fasst Slow Slow Slow

Holder Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

Cartridges Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

ACV 3.15% 7.09% 18.46% 22.49% 23.99% 32.98% 33.98%

Holder units 2,661 6,880 23,240 34,966 43,235 73,871 101,052

Cartridge 281,391 727,533 2,457,515 3,697,466 4,571,875 7,811,556 10,685,745

30 Dayys 10 Days 8 Days 7 Daays 3

10 Attach TTop Half of Shell cycle time of 50 seconds (seee OM Exhib

present from year 1 on, which

the costts associateed with baacklogs due to mach

Consumers will go to www.bsuredd.com and select the amount of holders and cartridges

System Selection Reasons for Selection Feature Highlights

BSure Industry Roche Abbott

Legend Cartridge Chemicals Other

The device, slightly larger than a tube of

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

Optic Sensor Holtek Semiconductor Davenport, FL

Substrate AbD Serotec Raleigh, NC

Plastic Shell $0.5670 $0.5470 $0.5270

Circuit Board $0.8793 $0.8793 $0.8793

Battery $0.4000 $0.4000 $0.4000

Packaging $0.0700 $0.0650 $0.0600

Metal Mesh $0.0019 $0.0019 $0.0019

Cotton Strip $0.0025 $0.0025 $0.0025

Plastic Shell $0.2406 $0.2106 $0.1906

Antibody $0.8000 $0.8000 $0.8000

Enzyme $0.2100 $0.2100 $0.2100

Substrate $0.2400 $0.2400 $0.2400

Buffer $0.0100 $0.0100 $0.0100

Spring $0.0500 $0.0450 $0.0400

Pin $0.0050 $0.0050 $0.0050

O‐Ring $0.1200 $0.1200 $0.1150

Packaging $0.0050 $0.0044 $0.0038

Holder EOQ1 EOQ2 EOQ3 EOQ4 EOQ5 EOQ6 EOQ7

Microsoft Dynamics GP $23,000 $5,658 $5,187 $6,601 $8,016 $9,430 $11,788 $14,145

JourneyTEAM Markup $17,250 $4,244 $3,890 $4,951 $6,012 $7,073 $8,841 $10,609

SQL Server 2005 Standard Ed. $2,505 $1,209 $1,047 $1,209 $1,371 $1,371 $1,695 $1,695

Dell PowerEdge 2900 $5,900 ‐ ‐ $15,000 ‐ $25,000 ‐ $7,500

Dell PowerEdge SC1430 $2,900 ‐ ‐ ‐ ‐ $1,000 ‐ ‐

Dell Optiplex 320 Desktop $6,300 $1,800 $900 $1,800 $2,700 $2,700 $4,500 $4,500

Dell Latitude D620 Notebook $4,500 $1,500 ‐ $1,500 $1,500 $1,500 $4,500 $4,500

Barcode Scanner $800 $320 $160 $320 $320 $320 $320 $320

Carroll Partner Phone System $2,000 ‐ ‐ ‐ ‐ ‐ ‐ ‐

Linksys 10/100 16‐Port VPN Router $435 $435 $435 $435 $435 $435 $435 $435

300’ Belkin CAT5e Network Cable $250 $150 $100 $150 $150 $150 $150 $150

50’ Belkin CAT5e Network Cable $200 $75 $50 $75 $75 $75 $75 $75

APC Smart‐UPS 750VA $832 $416 $416 $416 $416 $416 $416 $416

Samsung ML‐2510 Printer $130 ‐ ‐ ‐ ‐ ‐ ‐ ‐

Xerox Phaser Color Multifunction $500 $500 $500 $500 $500 $500 $500 $500

Exchange Server 2007 $1,369 $134 $67 $134 $201 $201 $335 $335

Adobe CS3 Web Premium $1,799 ‐ ‐ ‐ ‐ ‐ ‐ ‐

Mathematica 5.2 $1,880 ‐ ‐ ‐ ‐ ‐ ‐ ‐

Website & Online Store Dev. $2,500 ‐ ‐ ‐ ‐ ‐ ‐ ‐

BellSouth (AT&T) DSL Internet $660 $1,320 $1,320 $1,320 $1,320 $1,320 $1,320 $1,320

BellSouth (AT&T) Local Phone $300 $600 $600 $600 $600 $600 $600 $600

BellSouth (AT&T) Long Distance $5,424 $10,848 $10,848 $10,848 $10,848 $10,848 $10,848 $10,848

ASPwebhosting.com $1,750 $3,100 $3,100 $3,100 $3,100 $3,100 $3,100 $3,100

LiveVault data backup $1,200 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400 $2,400