Coloring lights: Developing and evaluating a business around an LED-based lighting product that can change colors uniformly

Abstract

An innovative product has been developed that brings together the technologies of LED-based lighting along with a touch sensitive control. Though each of these technologies has existed individually, the combination is unique. An entrepreneur was keen on setting up a product company based on this idea and this report tries to develop the most optimal business around this product. By evaluating the plan, it also makes a recommendation to the entrepreneur to go ahead with the proposed venture under certain conditions. Multiple ideas were developed initially using the product concept. These revolved primarily around decorative lighting such as mood lights, lighting in aquariums etc. and functional lighting such as traffic lights, lighting of parks etc. Ideas for a few entertainment products were also developed. It is preferable for a startup to start with a single big idea than to spread its resources pursuing multiple ideas and hence a screening process based on the attractiveness of the product and the size of the potential market was carried out. Finally, the mood lighting based products were chosen to be the most promising application of this product. A market survey was conducted to study the existing color changing and mood lighting products. During this survey, information about the buying patterns, the typical customers and the typical usage of the products was gathered. Once the features of the competitive products were identified, the features of our proposed product were refined and it was positioned to fill a gap where the market was found to be lacking. Single LED based lighting solutions and a superior touch-sensitive screen based remote appears to be the right product for the market. The LED market in India is in a very nascent stage and it is poised to grow rapidly over the coming years driven by decreasing prices and increasing focus on energy efficiency of the LED lamps. The potential customers were identified to be in the business segment and it is then proposed to target them through the influencers, who are the architects and interior designers. The main focus of the marketing effort would be in providing samples and demonstrations to these consultants through the direct selling technique. The financial statements for the most likely case were prepared and it was observed that the business earns a net profit of nearly 22 lakhs by the third year of operations. The venture would be asset light and the kind of returns it generates would surely not interest a venture capitalist. However, it is suggested that the entrepreneur can go ahead with this venture if he is interested in putting in his own money.