Lit Motors & A New Power in Personal Transport Case Study Jackson Wahl, Dhanush Madabusi & Scout Stohrer By submitting this deck of case slides, the members of our team affirm that we all participated in the analysis of the case and the creation of this document.
Analysis - Lit Motors: Customer Value Proposition Tech/Operations Management Go-To Market Plan ~ Overall STRONG: combines safety, ~ Low R&D: A lot of the new technology ~ Identified target customers: “Generation comfort, and space benefits of car with the involved in the C1 had already been Jones” and young urban professionals. speed, and maneuverability of a researched & developed for other ~ Built brand around target customers - motorcycle. More fuel efficient and innovations - like the segway. focused on creating lifestyle brand that economical than normal-sized vehicle. ~ Careful to respect and protect intellectual represents C1 as the “rolling iphone”. Offers older, former motorcyclists the ability property ~ Careful to avoid being thought of as a to commute to work in a suit. ~ Originally planned for production to take “geeky” brand (like segway). ~ Weakness: U.S drivers need a “Class M” place in U.S or Taiwan, and final assembly ~ Plan to distribute 70 C1s to be driven motorcycle license - requires passing test. to take place in country where it’s sold. around major cities, peaking the curiosity of ~ Prototyping suggested technology would other drivers who spot the new, chic be feasible vehicle. Quantitative Analysis: **Note The following assumptions made in Excel calculations: Assumed hiring/salaries for 40 people wouldn’t take place until after the trial year. Assumed 5000 units was a large enough volume of production to reduce cost per unit. Assumed growth and tax. - Lit Motors will be profitable in its second year. - In terms of picking a price point...based on survey that suggested 74% of target customers would buy the C1 at 12K and 56% of customers would buy the C1 at 24K, we would assume Lit Motors would sell 1.3x more units at 12k.
Analysis - A New Power in Personal Transport: Customer Value Proposition Tech/Operations Management Go-To Market Plan ~ Strengths: Provides cutting edge ~ High R&D cost: Lots of prototyping and ~ Primary plan is massive 3-month $3M innovation, incredible gas mileage and research went into creating most efficient mail-order marketing campaign. energy savings. Drivers as young as 14 model could use, meaning there is value for a ~Press advertising and television larger customer base. Much cheaper ~ Cars can be produced like appliances commercial advertisements used. options to conventional vehicles. rather than vehicles making it cheaper and faster ~Plan to use retail chains to sell vehicles, ~ Weakness: Younger drivers of the cars on the road will make them less safe. Safety is ~ Design of car made it so that extra battery ~Using franchises for vehicle maintenance, an issue with the smaller and more flimsy could be put on vehicle, more power and and battery purchases, spare parts, to car. range for user reduce cost to corporation. Quantitative Analysis: **Note The following assumptions made in Excel calculations: Assumed price of C5 car would remain $400 in 1985. Gain/Loss is a measure of selling current stock in 1984, and projected stock at assumed price in 1985. Since we were not given any more financial information about salaries or income from franchisees, analysis shows the results of the advertising campaign in 1984, and the net profit in 1985, assuming that each car would be sold at a 20% profit margin. In order to become profitable in 1985 at 20% margins, the company would need to keep SG&A and other costs below $6,002,800/
Recommendations Lit Motors A New Power in Personal Transport ● Increase Advertising Efforts on Target Audience ● Inspire Customer Confidence in the C5 ○ Lit Motors was able to determine a target audience of older ○ At the time of launch, Sir Clive needed to further explain the male motorcycle owners earning a salary above $100,000 C5 product to clarify customer misconceptions about its and urban professionals around the age of 30 purpose and production ○ Lit Motors can work to create as much brand exposure with ○ Through precise branding and advertising, the management these individuals as possible by their common interests in team can promote the C5 without confusion to more terms of stores and websites visited effectively capture the attention of consumers and investors ● Bring on Management Expertise ■ This will help to lower customer acquisition costs and ○ Kim is best suited in leading the company in terms of creation give Sir Clive and his team a better understanding of and innovation and should delegate management the customer response to the C5 responsibilities to more qualified individuals ● Refocus Research and Development ○ New team members can focus on technology and operations ○ To ensure future success and more effective advertising, Sir with the goal of increasing levels of manufacturing Clive and his team need to invest more time on solidifying its ■ This can also be accomplished with new leaders target market, product line, and customer value proposition competent in supply chain management ○ In doing so, Sir Clive and his team can create a product that ● Continue Development of Cargo Scooter satisfies a clear need of the customer ○ With proper delegation of work, Kim will free time to focus on ■ Remaining updated on changing legislations can also perfecting the Cargo Scooter and finding investors help development and possible customer acquisition ○ Revenue from the Cargo Scooter can be funneled to Lit ● Perform Product Testing with Potential Customers Motors to assist operations and increase overall margins ○ Determine if the product appeals to customers, compare ● Further Diversify C-1 from Competition possible price points, and eliminate safety concerns ○ Lit Motors faces competition from small cars, enclosed two- ○ Although the C5 follows all regulations, promoting a vehicle and three- wheelers, and motorcycles that requires no license or insurance with few precautionary ○ Lit Motors should to promote the advantages of C-1 through safety measures seems like a recipe for disaster advertising and better tailor their product for the needs of the Sir Clive and his team are far from being ready to advertise their product to consumer based on their competitor’s advantages both customers and investors. The team needs to construct a cohesive brand, Kim and his team have done well in terms of consumer, product, market, and finalize their product line, and solidify their intended market. In addition, the company analysis, setting up the venture on a trajectory for future success team should be clear on the amount of equity offered to potential investors and potential growth. Given our confidence in the team, its product line, and before accepting any funding. Given the number of concerns for the company, the projections for the company, we would invest in Lit Motors at this point. we would not invest in A New Power in Personal Transport at this point.
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