Business Model
Contact info.
Marlen García Bustillos
Av. H. Colegio Militar 4700,
Nombre de Dios, 31300 Chihuahua, Chih.
1. Executive Summary.
2. Business description.
2.1 Company Description.
2.2 Mission statement.
2.3 Values and Vision.
2.4 Value proposition.
2.5 Goals and objectives.
2.6 Critical Success Factors.
2.7 Products and Services.
2.8 Unique Features of Proprietary Aspects.
3. The Market.
3.1. Industry Analysis.
3.2. Competitors Analysis
3.3. Market Segmentation.
3.4 Market Segmentation.
4. Marketing and sales.
4.1. Positioning Strategy
4.2. Marketing Strategy.
4.3. Product/Service Strategy
4.4. Pricing Strategy.
4.5. Distribution Channels.
4.6. Promotion and Advertising Strategy. 4.6.1. Promotion.
4.6.2. Advertising.
4.7. Sales Strategy.
5. Management.
5.1. Organization Chart.
6. Analysis of costs and finances.
7. References.
1. Executive Summary.
V-TION offers a biofungicide focused on the treatment and prevention of Verticillium wilt through three antifungal peptides as an active ingredient, which are AtPFN1, WAMP1B and PsDef1, which attack the morphology and pathogenicity of Verticillium dahliae. We propose a solution focused and based on the needs of the farmers. Thanks to our human practices we managed to validate that we were focusing on a real problem. Not only were economic factors considered for the creation of our product, but also the environmental, social and legal ones, that is, we propose a product that is mostly environmentally friendly, that solves the concerns that currently exist in our society, mainly in one of the most important sectors in the world which is the agricultural sector. In addition, we not only propose a solution to a major disease, but we are focused on one of the most important crops worldwide.
That is why we look for the opportunity to enter one of the largest and rising markets in the world, the agribusiness market. Our team addresses the need to control one of the most serious and least studied fungal diseases in the world. We analyzed our market and competition to develop our company and not only create a new product but continue researching and solving more diseases that afflict agriculture.
Likewise, the fundamental bases for our project were validated both with experts in the area of biotechnology and by people who are in constant contact with the problem. We take into account each contribution of these people and consider the possibility to continue validating with more people in the industry. The value proposition focuses on offering a biofungicide that helps cotton producers reduce economic losses, helps agronomists to provide good technical advice to their producers to avoid frustrations and generate a product of quality that leaves a good economic income. It is intended to help agricultural associations that want to increase national production to decrease the use of agrochemicals and obtain a more chemical-free and better-quality agricultural production.
After demonstrating the amount necessary for our proteins to inhibit Verticillium dahliae at a laboratory level we can present our project in a more formal way to obtain income through investors, associations or even the Mexican government. Our product is intended to be registered, approved and qualified for national and international sales. We know that Verticillium wilt is a worldwide disease and not only affects cotton but many other crops around the world. Our intention is to bring the proposed solution to reality, so we analyzed all possible aspects to consider to launch our product. The cost estimate is still preliminary, however, our market is sufficiently validated, and there is a reliable record that the market for agricultural bio-inputs is a sufficiently strong income opportunity.
2. Business description.
2.1 Company Description.
V-TION is a company interested in the development of agriculture worldwide through the use of biotechnology, dedicated to the national and international marketing of products specialized in diseases that afflict a wide variety of crops. Our product aims to be a direct way to attack Verticillium wilt and control the health of both agri-food and non- agri-food crops.
2.2 Mission statement.
Our mission is to provide an effective solution to one of the most important diseases that currently afflict agriculture through science, providing new knowledge and techniques to keep agricultural crops healthy internationally.
2.3 Values and Vision.
The company will become one of the most recognized companies of bioproducts for agriculture at the national level, then we will scale internationally providing a variety of specialized products in each disease of relevance in agriculture. The quality of our products will provide a quick and efficient solution, so that producers of both food and non- food crops will request more of our products; this in order to generate less expenses in agrochemicals, thereby protecting the health of our customers and their consumers by setting the difference in the use of biology for the care of our crops generating a culture of non-invasive protection.
Our values, ethical and professional principles by which we guide our work are quality; we present our work based on real and justified elements, solidarity; our company now all parts of the company are important, responsibility; for we consider ourselves a socially and environmentally committed company, especially because the basis of our problem is of environmental nature, originality; since what we do is relatively new in the market and we rely on our own ideas and respect; we consider everyone involved and consider their opinion for the good of all. 2.4 Value proposition.
Our company offers a biofungicide that helps cotton producers reduce economic losses and increase production per hectare. In addition, it helps the agronomists who want to give a good technical advice to their producers, it solves the frustrations of the producers and generates a quality product that leaves a good economic income. It is intended to help agricultural associations that want to increase national production to reduce the use of agrochemicals and obtain a more chemical-free and better-quality agricultural production. Our product is aimed at producers who are engaged in the production of large quantities of quality cotton which sell their production to large national and international textile companies, for whom the presence of Verticillium dahliae decreases production and quality.
2.5 Goals and objectives.
● An effective solution for the control of one of the most pathogenic diseases in both food crops and non-food crops; Verticillium dahliae. ● Reduce the use of agrochemicals in crops that damage the earth and the environment. ● Seek to generate a leading company in the production of products for the field. ● Avoid contamination of land and crops by Verticillium dahliae. ● Generate an environmentally responsible company. ● Implement a way to produce our active ingredient in a simpler and less expensive way. ● Ensure that our nanoencapsulation is equally effective at a lower amount of active ingredient. ● Optimize our product in most of the irrigation systems used today.
2.6 Critical Success Factors.
As a main factor we must gain the trust of our potential customers due to the importance of this in the field of inputs industry, in turn it is important to maintain a good relationship with our distributors and provide true and reliable information to technicians at the time of presenting the product. It is very important to have a good product distribution system as well as an adequate financing plan for the distributor and the quantity of product sold. In addition to correctly managing the resources of our company. As a company we are aware of both direct and indirect competition that we have in the market in which we want to enter. Most of our competitors are large companies that produce agrochemicals, our differentiating potential is that we focus on both the problem and the needs and opinions of the customer, we adapt our product to the needs.
2.7 Products and Services.
The product is intended for the prevention and treatment of Verticillium wilt one of the most pathogenic diseases in the cultivation of cotton, this disease greatly decreases the production and quality of cotton. We offer a nanoencapsulation product of three antifungal peptides that attack the morphology and pathogenicity of the fungus which is applied to the irrigation system valve by selecting the hectares planted with cotton. It is intended to create in presentations accessible to producers of 50 hectares up to thousands, in addition to ease of payment of the product through financing to distributors.
2.8 Unique Features of Proprietary Aspects.
Our company has unique properties, V-Tion is the only product specialized in the treatment of Verticillium wilt, our product is unique in its class, since the active ingredients are registered for the specific treatment and inhibition of V. dahliae. It is intended that our product is registered, approved and qualified for the cultivation of cotton which is not easily found in the market. The practicality of using V-Tion makes producers more accessible to use it, in addition our product is interested in caring for the environment, contributing to the reduction of chemicals in crops with the intention of preventing the release of pollutants in the air, and in order to obtain good quality products without having crops subject to excess chemicals.
3. The Market.
3.1. Industry Analysis
Among the various strategies to achieve sustainability, the idea of using agrochemicals that are more environmentally friendly stands out. One of the processes that grows rapidly is the obtaining of molecules or microorganisms of nature suitable for the defense of crops against pests and diseases or favor nutrition.
According to Pam Marrone, it costs about 250 to 500 million dollars to develop a new synthetic pesticide, and it takes 10 to 15 years to take it to the market. While the development of a new bio-consumption can take an investment of 50 thousand to 2 million dollars and its exit to the market can take 2 to 5 years. Besides, Hugo Grana and Juan Pablo Brichta affirm that, according to the main international consultants, the market for traditional pesticides grows 2% annually, bio-inputs grow at rates close to 15% annually. In 2018, the global biopesticide market is around 2,200 million dollars and by 2025 5,500 million dollars are estimated.1 Currently, in Mexico, there is no census of companies producing biofertilizers or biofungicides. The development of biofertilizers in Mexico is in the beginning stages with positive hopes, but the culture of use is not yet widely used. Every day the interest of the different sectors grows more to lower the costs of production and, on the other hand, the demand for foods free of organic chemicals is greater every day.
One of the current problems in the entry into the bio-input market is that there is no adequate regulation for these as specified in the technical consultation of our legal plan. 2 The fungal diseases in the crops are several, most of them are managed with resistant or tolerant varieties. This genetic measure was successful for several years and will continue to have several diseases controlled. However, in the last decade, some materials have lost that resistance. Also, some diseases that were not paid attention to, are diminishing the productive potential as is the case of V. dahliae.
Currently, very little is known about fungicides that help us prevent or cure fungal diseases. Assuming that, despite efforts in the management of phytopathogenic fungi, we lost only 5% of their damage; those losses would amount to 610,000 hectares. Now, being modest, if the investment per hectare were $ 763,358, the amount in money would be: $ 465,648,855.00. This assumption is below reality. If, as an example, we consider that we only invest $ 2,544.00 per hectare in the treatment of the sowing seed, that investment would cost $ 31,043,257.00. Adding losses and investment are $ 496,692,112.00. It is incredible that in the face of this great economic amount, attention is not paid to fungicides in extensive crops.3
3.2. Competitors Analysis
Thanks to the previous market analysis and the validation of the impact of our product we had the opportunity to clearly define our main competitors which are POINTER 250 SC, SPORTAK 45 CE and MANCOZEB 80 WP. The first two products are two fungicides used in cotton for the treatment of Verticillium wilt, these two fungicides are currently used as an alternative since they are not certified for use against Verticillium dahliae however it is the alternative found by Farmers currently for this serious disease in cotton. On the other hand, MANCOZEB is one of the few fungicides registered for use in cotton, however, this product is merely prevention, which gives our product a great advantage because it is prevention and treatment. V-TION considers POINTER to be our biggest competition since this product is the main option in the sights of domestic cotton producers when treating Verticillium wilt, it is also manufactured by the FMC corporation which is a recognized agribusiness producer Worldwide and has been present in Mexico since 1971, this company also has reliable products that our main clients already know and consider as a good option. However, we consider ourselves a company with a product with sufficient characteristics to compete in the market with these products.
3.3. Market Segmentation
Our market segment focuses on Mexico, mainly in the states of Chihuahua and Baja California, since they produce the highest percentage of cotton in the country, Chihuahua with 70.2% (look for an appointment) and Baja California with 15.6% of the National production4, especially in regions such as Janos, Ojinaga and Mexicali which have a climate that reaches 27 ° C suitable for accumulating the hours of heat that the cotton plant needs to develop. Cotton producing regions are generally found far from the urban area due to their large planting extent and the number of products they use. Our market focuses on distributors of agro-inputs that they sell to cotton producers between 30 and 60 years of age who have an average of 150 hectares of cotton sowing, which have an irrigation system on their plots, with an income Economic and average lifestyle.
Figure 1. Market segmentation diagram.
3.4. Market Size.
The preliminary evaluation of our market has shown the potential of V-Tion, our biofungicide.
Worldwide cotton production amounts to 26,000,000 tons every year. Mexico produces 490,420, from which Chihuahua produces 70.2%, this translates as 344,274.84 tons of cotton. These facts consider that its production is of 0.22 tons per hectare and that for every hectare, an average of 10 bales are harvested. With this information we defined our SAM with a production of 156,488.56 hectares in Chihuahua.
Based on the opinions and feedback from industry experts like the engineer Carlos Zabala, we propose a prince of $62 dlls for a bag with 500g of our product. This quantity was chosen because every hectare would need exactly one bag. Considering this proposed price and that our esteemed Assay Market if of 30% we would obtain a SOM of $2,910,687.28 dlls.
• Local Market Size: $2,910,687.28 • National Market Size: $4,146,278.18 • INT Market Size: $219,818,181.82
Figure 2. Market size diagram.
4. Marketing and sales.
4.1. Positioning Strategy
Our positioning strategy is to gain the trust of customers first by providing a free trial to demonstrate the efficiency of our product, as well as offering affordable payment plans for customers, as well as offering assemblies and presentations in the largest cotton- producing regions. from Chihuahua and Baja California. It has the advantage of having the support of several agronomists involved in the production of cotton, which will be used to generate confidence in the market and have direct communication with the producers. There will be direct contact with each of the distribution companies that we already know to start the distribution of our product with them, advertising will also be done through social networks and contact with potential customers will be established through a web page.
4.2. Marketing Strategy
Thanks to the fact that our team achieved an important validation concerning our fundamental hypotheses and thanks to the feedback received by professionals in the agricultural area, experts in phytopathology, technical advisors of cotton crops, agricultural producers and even associations integrated to the agricultural sector.
An important aspect of our business and marketing plan is knowing the key people and associations that we believe will be crucial to strengthen the foundations of our company. We consider the relationship between the customer and the seller to be of utmost importance, our distribution channel is sufficiently studied to know at least nationally how this market is managed. The contact with different associations such as the State Committee for plant health and the cotton product system opens the doors to the promotion of our solution at a higher level, in addition to helping us generate customer safety.
We take a step forward in the future of our company generating letters of intent to have a basis based on the principle of selling our product, we also propose the idea of partnering with the distributor Campos Agrícolas Unidos for the Buena Vista colony.
Our implementation plan suggests the following:
Incubator: We take as a strength that we are supported by NOVA ORION the business incubator that is implemented on our campus. The incubator has the Life Sciences area, as well as advisors both in the business area and in the development of the technical part which we consider to be a great opportunity for growth; we have the requirements to apply to the incubator, we also consider that our project is sufficiently developed.
Assemblies: As part of our sales strategy, our team plans to organize assemblies where the way our product works is presented in order to convince engineers and help them give better advice to the producers. We’ll start with producers in our state, taking advantage of the fact that Chihuahua is the largest cotton producer in Mexico and the headquarters of our company, then we plan to expand nationally and internationally.
We seek to give our client a way of acquiring the product which he is already familiar with and is the current method of diffusion for new products among cotton producers, agronomical engineers and agro-inputs distributors. The main benefit of this is that is a simple and conventional way of promoting the product among all of our potential customers.
Website: Our team will implement a new website that explains how our product works, promotes it and provides V-TION contact, this to be more accessible to customers and have a point of contact with more reach.
4.3. Product / Service Strategy
Our product is intended to facilitate the work of the producers and optimize the actions to keep the crops healthy, each comment of our potential clients was taken into consideration to solve their problem in an effective way, one of the potential comments in the development was the way of applying the product to crops; Thanks to that, our product was established as a wettable powder applicable to irrigation, which is an effective and easy to apply solution. Our company raises the possibility of continuing to innovate and generate more specialized products in diseases or even pests that affect both food and non-food crops currently, always considering the care of the environment and sustainability through the reduction of agrochemicals on earth.
The company will continue to innovate and research to generate a range of environmentally friendly products that help agriculture and its sustainability.
4.4. Pricing Strategy
Our main competitors POINTER and SPORTAK have a big difference between their prices. Due to our product’s classification as a biofungicide, not as a chemical-based fungicide, prices were compared with products based in biological parts. A cost analysis was established in terms of investment earnings and a market analysis to establish an estimated price and a market size. During the first years, payment facilities in contracts with distributors will be accessible and, as the company grows, we can include more stringent payment clauses and minimum purchases of the product large enough to continue growing.
Table 1. Competitive analysis.
4.5. Distribution Channels
Distribution channels should be classified according to their size, geographic coverage, and proposed market value. The agro-input distribution industry is a business that moves annual sales of approximately 2,000 MMUSD. A high percentage of agribusiness sales are made through distributors. Suppliers, especially those of products such as agrochemicals, incorporate agronomic technical advice. As a way of being able to compete in a better way, it has been decided to develop closeness mainly with farmers, which is based on personalized attention with agronomic advice at a very good technical level. On the other hand, credit is also a relevant variable in the business.5,6 Based on this, our company intends to deliver the product through an indirect channel and physically to the farmers through agro-input distributors. We would provide a way for our client to acquire the product with which he is already familiar. The client can have personalized advice on the use of our product since we will be in charge of properly informing the agronomists who work in the distributors about our product. As a company, we will have control of our customers due to our catalog of customers being divided into distributors and not producer by producer. This way we generate better customer service and better management for our company.
4.6. Promotion and Advertising Strategy.
4.6.1. Promotion
It is intended to promote the product through free trials with small doses to producers who attend our conferences and presentations. Agricultural technicians who moderate crops will be contacted and will be given a free trial to recommend it. More flexible payment plans will be offered to our frequent customers. This is done to create a bond of trust between us as a company and the customer.
4.6.2. Advertising
Our advertising strategy begins with the diffusion of the announcement of our product through local channels such as "Channel 28", social networks such as Facebook, Instagram and even ads on YouTube. In addition, we seek to establish contact with radio stations and magazines such as "Del Riego" to advertise our product. It is also planned to present the product in the main cotton colonies nationwide, and eventually expand our advertising internationally.
4.7. Sales Strategy
The sales will be made through direct contact, we will start with the main distributors of agricultural inputs in the state and with a year of trust with the producers we will expand nationally and later internationally. Given the law for the free sale certificate that exists in our country, the possibility of changing the formulation of our product in terms of inert ingredients is considered to adapt the product for international distribution. In addition, we will take advantage of the fact that a new law for pesticides is about to come out, so we hope to comply with it as well. We will seek to establish an annual sales contract with financing and credit lines with 60 to 90 days to make the payment. The price of the freight will not be included in the price of the product. An extra charge would be made for transport from our warehouse to the distributor's warehouse. It will be carried out with each distributor starting with “Agricultural fields united by the Buena Vista colony”, then we will expand nationally and internationally with recognized distributors such as YARA.
5. Management
5.1. Organizational Chart
Figure 3. Organizational Structure.
Our company's organization is based on a team structure. That means that each team is in charge of handling one of the main components that are necessary for maintaining the company's stability. Such components are research and development, marketing, legal and administrative divisions. Each area consists of a team leader, to whom team members must report their work. Once the work has been reported, the team leaders then meet with the board of directors to keep track of the advancements that have been made during a specific period. The important decisions are made in meetings with the leader of each team, CEO and the entire Board of Directors. 6. Cost and finance analysis.
An important part to enter the market is finance, our product has the advantage of being quite novel in the market, besides being unique in its class and having specificity in Verticillium dahliae in the cultivation of cotton. V-TION is aware that generating a product like this requires a strong investment, so a list was generated with the approximation of fixed and variable some costs needed to start as a company. Thanks to the comments of some experts, it was concluded that our product could be even more expensive than the competition and that would not significantly affect the sale of our product.
Table 2. Production costs.
Production costs Price (USD) Total costs
Variable Costs.
50L Bioreactor $10,000.00
Nanoencapsulation $4,500.00
Laboratory material (gloves, tubes, tips) $300.00
E. coli BL21 (DE3) $224.00
E. coli Shuffle T7 Express $547.00
LB medium $420.00
$15,991.00
Fixed costs.
-20 ° C Refrigerator $4,700.00
-80°C Refrigerator $7,530.00
Laboratory rent $9,000.00 Type II biological safety cabinets $9,830.00
Autoclaves $2,825.00
NanoDrop (to quantify protein) $9,550.00
Centrifugue $8,321.00
Renta de almacén $1,538.00
Empaque y etiquetado $757.00
$54,051.00
GIF
-20°C Refrigerator maintenance $400.00
-80°C Refrigerator Maintenance $500.00
Type II biological safety cabinets maintenance $200.00
Autoclave maintenance $100.00
NanoDrop maintenance $3,000.00
Centrifugue maintenance $2,300.00
Staff training $1,326.00
$7,826.00
Total $77,868.00
Given the amount necessary to cover the costs to launch a project of this magnitude, we plan to take our proposal to state contests with monetary prizes. One of our strongest opportunities is enter NOVA ORION, a business incubator, to achieve this goal. 7. References.
1. Vilella, F. (2019). El mercado de bioinsumos para el agro crece a tasas del 15% anual. Agricultores. Retrieved from: https://agriculturers.com/el-mercado-de- bioinsumos-para-el-agro-crece-a-tasas-del-15-anual/
2. Ceballos, Y. (2008). Oportunidades de mercado para agroinsumos orgánicos en México. Universidad Autónoma Agraria “Antonio Narro”. Retrieved from: http://repositorio.uaaan.mx:8080/xmlui/bitstream/handle/123456789/5202/T16910%2 0%20CEBALLOS%2c%20JALOMA%2c%20YESENIA%20TESIS.pdf?sequence=1&i sAllowed=y
3. Ponce, F. (2016). Los Fungicidas en cultivos extensivos. Intagri. Retrieved from: https://www.intagri.com/articulos/fitosanidad/los-fungicidas-en-cultivos-extensivos
4. Solleiro, J., Mejía, A. (2016). Cadena de valor en la producción de algodón en México: Los desafíos del mercado global. AMECIDER. Retrieved from: http://ru.iiec.unam.mx/3426/1/175-Solleiro-Mejia.pdf
5. Parraguez, C. (2017). Distribución de agroinsumos. Redagrícola. Retrieved from: www.redagricola.com/cl/distribucion-agroinsumos-consolidacion-la-industria/
6. INTAGRI. (2017). Metodología para la Venta de Agroinsumos. Serie Postcosecha y Comercialización Núm. 09. Artículos Técnicos de INTAGRI. México. 5 p. Retrieved from: https://www.intagri.com/articulos/poscosecha-comercializacion/metodologia- para-la-venta-de-agroinsumos