Personal Shopping Assistant Presented By John Chang 4 15 03

Management Plan John Chang, Project Mgr • Timeline • Deliverables • Milestones 4/15/03 2

Management Plan Graphical Representation 4/15/03 3

Team Organization 4/15/03 4

Project Timeline 4/15/03 5

Research Plan Chris Mc. Kee, Research Mgr • Identify Problem Statement • Gather Data to Support Problem • Strategy – Contact The Virginian-Pilot’s Marketing Department – Conduct online data for Food Retail studies – Analyze gathered data – Compile data and format to support problem statement 4/15/03 6

Problem Statement Without innovative features and services, Farm Fresh is unable to differentiate itself from other grocers and compete against the supercenter giants like Wal-Mart 4/15/03 7

The Competition South Hampton Roads Market Year 2002 vs. 2001 Traditional Grocers Farm Fresh Be-Lo Food Lion Kroger Harris Teeter Wal-Mart Supercenter . 1% Sales Growth 5% Shopper Growth 3% 10% Primary Farm Fresh Shoppers 4% 4/15/03 Source: Food World, June 2001 and 2002 editions & The Scarborough Report, 2002 22. 5% 8

Goals • Farm Fresh – Integrate new and innovative technology – Help set them apart from other traditional grocery stores and compete against the Supercenter giants 4/15/03 • Shoppers – Provide a mobile, multi-featured, shopping assistance tool to enhance their shopping experience and increase customer satisfaction 9

Product Development Plan Kevin Jones, PD Mgr • • Identify Key Features Identify Competition Identify Risks (Mitigators) Identify Benefits 4/15/03 10

Product Description 4/15/03 11

Benefits • Shoppers – On-site assistance – Greater self-reliance – Faster Shopping • Retailers – Differentiate from competition – Increase Customer Satisfaction – Generate revenue – Data collection • More efficient • Comprehensive 4/15/03 12

• Theft Risks – Permanently Mounted • Damage – Rugged Materials • Reliability – Basic Features • Competition – Free Service to Shoppers • Reluctance to use – Technically Adverse – Easy to use – Privacy Concerns – Loyalty Programs 4/15/03 13

Marketing Plan Mattanyah Woodbury, Marketing Mgr • Identify Primary Market Farm Fresh Grocery Chain • Identify Secondary Market Farm Fresh shoppers, manufactures of products • Justification of Primary Market/Secondary Market Why the PSA is a good match for Farm Fresh Identify consumers needs and wants Identify Flagship Store (Gean Walter Market Place) • Strategy Survey Shoppers: Paper & Web 200 Survey Results Interviews of Farm Fresh Executives: Head of Consumer Affairs-Susan Mayo Store Director of Farm Fresh #40 - Terri Estill Store Director of Gean Walters - Colleen Mc. Cabe 4/15/03 14

Survey Results 200 Respondents 48% Male 52% Female 54% 18 -34 y. o. 30% 35 -54 y. o. 16% 55+ 47% Single 53% Married 67% Primary Shopper of Household 75% Other household members shopped 4/15/03 15

Identified Problems RESEARCH: Difficult to locate products SURVEY: 84% had difficulty in the past finding the products RESEARCH: Takes too long to get out of the store SURVEY: 85% would like to spend less time in the grocery store RESEARCH: Unsure of how much total will be SURVEY: 86% would find it beneficial to know running total as they shop RESEARCH: Deterioration in customer service SURVEY: 78% would like better customer service in grocery stores 4/15/03 Source: The American Customer Satisfaction Index The Food Industry Center's 2001 Supermarket Annual Report 16

Survey Results • • 95% Utilize the internet at least once a week 80% Use a Shopping List 77% Forgotten when they last bought an item • 72% Find it beneficial to have a map • 64% Use Coupons • 63% Do Not know Store Specials • 53% Use a technical device (computer, PDA, etc) • 47% Do Not believe items have accurate price labels 4/15/03 17

Survey Results • 70% Would use a technical device that would make shopping more convenient 4/15/03 18

Why Farm Fresh ? • • • Locally Headquartered 37 stores Total Sales: $420 Million Net Profit: $228 Million Innovative Technology Vision Statement: – Our goal is to serve the customer to our greatest ability Source: MEDIA GENERAL FINANCIAL SERVICES INC, 27 July 2002 4/15/03 19

Interview with Farm Fresh President • “…. if you don’t have any other way to differentiate yourself from the competition, other than claiming to be the lowest price, then all you’re saying is ‘Me, too. ’. . . ” • “…. you have to be able to save the customer both time and money and you have to make the customer feel good. ” • “…. you are going to continue to see opportunities for growth and what we are looking at today are. . . opportunities that may be out of the mainstream. ” 4/15/03 Source: Food World, June 2001 20

Interviews with Farm Fresh Executives • “The President of the company always wants the company to be on the cutting edge of everything. ” – Terri Estill Store Director #40, 16 years in the field • “It would assist, as well as add to the shopping experience, . . . it would be a faster way to shop. ” – Susan Mayo, Head of Consumer Affairs • “No way, we would go with the PSA. . . because all customers do not own PDA’s and we would not want [shoppers] to be at a disadvantage. ” – Collen Mc. Cabe, Store Director Gean Walters, 14 yrs experience 4/15/03 21

Online Shopping & PSA Similar Features • • Personal shopping history Shopping list Running total Nutritional information Specialty ordering Data collection Store specials Free service 4/15/03 22

Added Features of PSA • • • Specialized Advertisement Precise Data Collection Enhances in-store shopping experience Coupon Scanning Product Locator Store Map 4/15/03 23

Technical Plan Cleveland Burnett, Technical Mgr • Identify General Technical Components • Identify Specific Components – Justification Criteria • Data-Flow Diagram • Interview Technical Experts – – 4/15/03 Tim Clark, Director of Retail Technologies at Farm Fresh Gary Kinsey, Director of Web Services at Farm Fresh Dr. Larry Wilson, Old Dominion University (Wireless Networks) Dr. Stephan Olariu, ODU (Mobile Computing, Wireless Networks) 24

Technical Layout (Unit) PC Tablet UNIT Scanner Network Interface • Touch Screen (Display/Input/Login) • X-Pilot Wireless Mobile Win. CE Tablet – CPU (Intel Strong ARM 1110) – OS (Windows CE 3. 0) – Hard Drive (20 Gig HD) – RAM (128 SDRAM) – Software (PSA Software) –Power Supply ( 4 -cell Li-ion Battery Pack) Power up to six hours • Scanner (Input) – Opticon MSH 220 “Smart” Wand • Network Client Device – Orinoco World PC Card 4/15/03 25

Technical Layout (System) Existing Customer Off-Site New Point of Sale Units Store’s Database Network Devices PSA Server Network Devices PSA WIRELESS ACCESS POINTS: Network Device – Symbol AP-4121 (Three access points) 4/15/03 © 2003 Symbol Technologies All Rights Reserved 26

Design Dimensions Scanner 6. 25 in 9. 5 in. 1. 65 in Display Weight: 2. 4 lbs 4/15/03 27

Data Flow Diagram Request A Feature Customer GUI translation To/from Data Feature displayed Data Wireless Transmission Requested Query Results 4/15/03 Store’s Database Data Request 28

Organizational Plan Jeremy Allen, Documentation Mgr • Identification of Required Staff – Skills by Task – Groups by Skills • Assignment of Tasks – To Individuals – Determine Length of Employment 4/15/03 29

Organization by Groups • Phase 0 Groups – – Marketing Technical CIS Project Support • Phase 1+ Groups – All Groups Active 4/15/03 30

Personnel Requirements • Project Manager • Marketing: – Marketing Manager – Researcher • Technical Analysis: – Technical Manager – Technical Analyst • CIS: – – – 4/15/03 CIS Manager Programmers (6) Hardware Engineers (2) Software Engineers (4) Support Specialists (2) • Project Support: – – Technical Writers (2) Financial Manager Accountant/Auditor Lawyer • Installation: – Installers (5) • Training/Support: – Training/Support Staff (5) 31

Daily Salaries by Title Bureau of Labor Statistics 4/15/03 32

Funding/Budget Plan Steve Eleyet, Financial Manager • Identify Funding Agency for SBIR – Identify Funding Limits, Timeline, Documentation Required • Identify Work Breakdown by Phase • Identify Budget by Phase – Utilize U. S. Labor Statistics & Product Pricing • Profit Projections for Production Out-Years 4/15/03 33

SBIR Funding - National Science Foundation • SBIR for NSF Topic: IT, subsection C 3 – Electronic Commerce and Collaboration – Customer Advising and Service – Marketing – Merging of E-Commerce with In-Store Shopping Experience Source: NSF SBIR Program Guide, NSF SBIR Topics 4/15/03 34

NSF SBIR Funding Amounts • Funds Provided Upon Acceptance – Phase 0 – Concept Development • $ 100, 000 for 6 months – Phase 1 – Proof of Concept • $ 500, 000 for 12 months • Additional $250, 000 for 12 months 4/15/03 35

SBIR Phase 0 4/15/03 36

SBIR Phase 1 4/15/03 37

SBIR Phase 2 4/15/03 38

Budget – Phase 0 Concept Development Project Initialization Marketing Plan Resource Assessment Feasibility Presentation Product Development Project Budget Milestone Presentation Funding/SBIR Proposal Legal Services Final Approval Presentation Website Development Total Phase 0 Costs 4/15/03 $ 7, 074 3, 230 1, 522 6, 786 6, 821 38, 023 6, 468 6, 476 1, 576 6, 468 14, 878 $ 99, 322 39

Budget – Phase 1 Prototype Development Indirect Costs Total Indirect Costs Direct Costs Contract Technical Support System Design Documentation Customer Training SBIR Phase 2 Proposal Employee Overhead 4, 561 5, 158 11, 876 3, 357 7, 829 60, 065 $ 92, 847 Prototype Construction Prototype Testing Total Direct Costs Total Phase 1 Prototype Development Costs 4/15/03 $ $ 98, 208 23, 160 $ 121, 367 $ 214, 214 40

Budget – Phase 2 Production Indirect Costs Acquire Sales Contracts Hire Personnel Customer Training Technical Support Overhead and Administrative $ Total Indirect Costs Direct Costs Acquire Materials System Production Systems Installation Testing Total Direct Costs Total Phase 2 Production Costs (37 Systems) 4/15/03 23, 742 14, 616 31, 810 100, 832 594, 519 $ 765, 520 $ 77, 552 306, 163 176, 070 23, 690 $ 583, 475 $ 1, 348, 995 41

Profit Projections Sales Price $ 49, 750 (20 PSA units with hardware and software) Number of Systems Total Revenue Production Costs x 37 $ 1, 840, 750 1, 348, 995 Profit $ 491, 755 Sales to Overcome Initial Development Costs 31. 8 systems Future Break-even Sales 8. 9 systems (After covering initial development costs) 4/15/03 42

Evaluation Plan • EVALUATE PLANS AT 6 MONTH & ONE YEAR MARKS – Research Plan – Product Development Plan – Marketing Plan – Technical Plan – Organizational Plan – Funding/Budget Plan 4/15/03 43

Evaluation by Research Plan • Research to determine if Problem Statement still exists • Gather Additional Data • Analyze and Compile New Data 4/15/03 44

Evaluation by Product Development Plan • • Conduct Surveys Gather usage data Identify use/need of features Identify New Competition/Track Current Competition • Evaluate Mitigators to identified Risks • Identify New Risks (Mitigators) 4/15/03 45

Evaluation by Marketing Plan • Conduct Surveys & Interviews with Executives • Gather Financial Data (Sales, Net Profit) • Evaluate On-line Shopping Feature 4/15/03 46

Evaluation by Technical Plan • Log maintenance and system failures • Add new features • Identify areas for training improvement 4/15/03 47

Evaluation by Organizational Plan • Evaluate efficiency of organization • Maintenance of outside contracts • Employee Evaluations 4/15/03 48

Evaluation by Funding/Budget Plan • • Evaluate SBIR process Continue SBIR funding Continue seeking Investment Capital Farm Fresh’s Return On Investment – utilizing advertising feature – utilizing data collection – analyze sales and profits 4/15/03 49

Questions ? ? ? 4/15/03 50

References 1 Food World, June 2002 The Scarborough Research Report, 2002 www. scarborough. com Progressive Grocer, December 2002 The American Customer Satisfaction Index http: //www. theacsi. org The Food Industry Center's 2001 Supermarket Annual Report http: //foodindustrycenter. umn. edu NSF SBIR Program Guide http: //www. eng. nsf. gov/sbirspecs/Program/program. htm NSF SBIR Topics http: //www. eng. nsf. gov/sbirspecs/IT/it. htm Bureau of Labor Statistics http: //www. bls. gov/oes/2001/oes_dl. htm Occupational Labor Rates for Virginia: Bureau of Labor Statistics, http: //www. bls. gov/oes/2001/oes_dl. htm General and Administrative Expenses from similar companies: Financial statement (2002) from PSC Inc. , retrieved from http: //biz, jahoo. com/fin/l/p/pscx. ob. html Financial statement from (2002) from Metrologic Instruments, Inc. , retrieved from http: //biz. yahoo. com/fin/l/m/mtlg. html Office supplies and multifunction printer www. staples. com Development software www. cdw. com Computer systems for development http: //configure. us. dell. com/dellstore 4/15/03 51

References 2 • • • Technical Interviews: Tim Clark, Director of Retail Technology at Farm Fresh Gary Kinsey Director of Web Services at Farm Fresh Dr. Larry Wilson, Associate Professor at ODU (area of research, Wireless Networks) Dr. Stephan Olariu, Associate Professor at ODU(area of research, Wireless Networks and Mobile Computing) User Operated Devices Touch screens Inc. (http: //www. touchscreens. com) Com. Ready. com (http: //www. comready. com/abxpilwirtab. html) • • • Barcode Scanners Register 5 http: //www. register 5. com/ • • • Wireless System Access Points Client Devices Register 5 http: //www. register 5. com/ 4/15/03 52

National: Biggest Threat To Traditional Grocers • By 2006, Wal-Mart’s total supermarket-type-merchandise sales will be one-fourth of the total volume of the supermarket industry • This means at least 1, 800 supermarkets must close over the next five to six years (annually, that translates to 350 to 400 store closures) • One in 18 supermarkets operating today will shut down to accommodate Wal-mart in the marketplace. In South Hampton Roads that equates to 9 stores shuttered Source: Progressive Grocer, December 2002 4/15/03 53

Internet Access & Usage Online/internet access used in past 30 days Age: 18 to 34 years old 39. 7 40. 3 35 to 54 years old 47. 7 47. 4 55 years old and over 12. 7 12. 3 1 to 2 persons 40. 2 39. 5 3 to 4 persons 44. 4 44. 5 Any child in household 47. 7 47. 9 Single 27. 5 28. 4 Married 61. 6 60. 6 < $50, 000 33. 6 32. 9 $50, 000 to $74, 999 26. 2 26. 0 $75, 000 to $149, 999 32. 6 33. 1 Household size: Marital status: Household income: 4/15/03 Source: U. S. Census Bureau, Statistical Abstract of the United States: 2000 54

Personnel Costs 4/15/03 55

Competition Matrix 4/15/03 X: standard O: optional F: future 56

Wal-Mart Food Sales South Hampton Roads: (SALES IN MILLION $$) 2000 Sales % growth 2001 Sales % growth 2002 Sales % growth Traditional Grocers/Food Retailers Sales in South HR $2063. 6 (1. 13%) $2101. 5 (1. 83%) $2166. 5 (3. 09%) Wal-Mart Sales in South HR $118. 4 (4. 31%) Wal-Mart’s sales growth has outpaced the growth of traditional grocers and other food retailers. 4/15/03 $142. 5 (20. 35%) $174. 5 (22. 45%) Wal-Mart’s pace of annual growth over 20% 57 Source: Food World June publications

Food World Reports *Note: 6 of the 8 Wal-Mart stores are Supercenters Wal-Mart’s astronomical growth took place at the cost of traditional grocers’ business. Source: Food World, June 2001 and 2002 editions 4/15/03 58

Food Stores Shopped Past Week % of South Hampton Roads Adults 2001 Wal-Mart Supercenter Harris Teeter Farm Fresh Food Lion Be-Lo/Fresh Pride 2002 % Change 27% 10% 56% 70% 8% 30% 12% 51% 64% 2% 3% 2% -5% -6% Wal-Mart Supercenter had the highest growth in weekly shoppers past year and it is feeding from the traditional Grocers’ business. Source: The Scarborough Report, 2002 “Hampton Roads alternate market, led by Wal-Mart, has continued to eat away at supermarket business and drive down prices in the region. ” Food World June 2002 4/15/03 59

Farm Fresh Primary Shoppers Shopped Past Week Harris Teeter Wal-Mart Supercenter Be-Lo/Fresh Pride Food Lion 2001 6% 19% 8% 70% 2002 12% 23% 5% 57% % Change 6% 4% -3% -13% Farm Fresh primary customers are less likely to shop at Food Lion and Be-Lo. However, more of the Farm Fresh primary customers are also now shopping at Wal-Mart Supercenter and Harris Teeter. Source: The Scarborough Report , 2002 4/15/03 60

Opportunity : Niche Market Source: The Scarborough Prime Next Report, March of 2002 and 2001 Farm Fresh can protect and further grow these niche customer segments. 4/15/03 61

2002 Scarborough Research Report 1 AREA: The Norfolk-Virginia Beach-Newport News DMA (Designated Market Area) PERIOD: April 2001 through March 2002 METHOD: Respondents selected by a random sampling procedure. Phase I: Telephone interviews. Phase II: Mailed self-completion questionnaire concerning shopping and purchasing behavior and television diary. A monetary incentive and a reminder mailing are used as prompts. SAMPLE: 2, 000 adult interviews balanced by age, sex, geography, race, household size, and education RELIABILITY: Statistical chances are 95 out of 100 that percentages in this survey will not vary by more than plus or minus 2. 2 percentage points from the findings of a complete census. 4/15/03 62

2002 Scarborough Research Report 2 AREA: The Norfolk-Virginia Beach-Newport News DMA (Designated Market Area) PERIOD: April 2000 through March 2001 METHOD: Respondents selected by a random sampling procedure. Phase I: Telephone interviews. Phase II: Mailed self-completion questionnaire concerning shopping and purchasing behavior and television diary. A monetary incentive and a reminder mailing are used as prompts. SAMPLE: 2, 000 adult interviews balanced by age, sex, geography, race, household size, and education RELIABILITY: Statistical chances are 95 out of 100 that percentages in this survey will not vary by more than plus or minus 2. 2 percentage points from the findings of a complete census. 4/15/03 63

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