Business Analysis

Business analysis

Business analysis is defined by Kotler and Armstrong (2012) as a review of potential sales, costs and estimated profit from a new sports product/service. If the product is judged to be financially viable it can then be moved on to the next stage of the cycle, product development.

Armstrong, Kotler, Harker & Brennan (2009) state that an organisation can estimate future sales by looking at previous sales of similar products and by conducting market research to determine potential demand. The organisation can then go on to estimate potential costs and profit for the product/service by considering the costs of development, marketing and distribution and by considering the price the product will be sold at compared to the level of demand.

The Golf Club (2010) by RA Concepts used a business analysis to consider the stages discussed above. The organisation goes into great detail as to the potential demand for their product, especially with females, the targets for sales of their product and the future profitability. They state that they aim to provide 1% of the US market for Golf Putters and they aim to increase net profit to a stable and healthy level by the end of year 2. They aim to do this by targeting the female market as they believe the product they provide will appeal to females as it is customisable, lightweight and can be manufactured and delivered in just 3 days. 

The image below shows a graph of how the organisation predicts it will be in profit by month 5 of operations. This is based on projections estimating that RA Concepts will be able to control 2% of the female market and 1% of the overall market within the first year.

With regards to my product, The Cone King a business analysis shows that the demand for my product will be limited at first as it is not considered a necessity, more a luxury, this would lead to a high initial price but limited sales and therefore the profitability in its first year would be low. As the product got more exposure, through the marketing strategies such as sponsorship with high profile teams, more grassroots coaches would take on board the product with the aim of attaining 10% of the overall market by the end of the 3^rd year of trading.

According to a recent survey (Sport England, 2013), there are 1.8million people participating weekly in football alone, this shows the size of the target market and suggests that to even secure a small percentage of this market would be potentially profitable. This is a realistic aim as the similar products that already exist do not have the functionality of mine and therefore this is superior, for only a slight increase in price. This means that coaches will be willing to pay the higher price in order to improve their coaching experience.  

Reference list
Armstrong, G. Kotler, P. Harker, M. & Brennan, R. (2009) Marketing an Introduction. 1^st Edn. Essex: Pearson Education Limited. 

Kotler, P. and Armstrong, G. (2012). Principles of Marketing. England: Pearson Education Limited.

Sport England. (2013). Who plays sport? Available at: http://www.sportengland.org/research/who-plays-sport/ 

The Golf Club. (2010) Golf club manufacturer. Available at: http://www.bplans.com/golf_club_manufacturer_business_plan/market_analysis_summary_fc.php#.Uqmo1vRdWSo

Marketing Strategy & Development

 Marketing strategy and Development is the fourth stage of the NPD process. Marketing strategy helps the company to attain its overall strategic objectives by establishing who the target market is and how best to reach them (Kotler & Armstrong, 2008). The marketing strategy is split into four sections:

·         Market dominance –organisations are judged based on their market share or dominance of an industry. In each industry there is generally a leader, challengers and followers.  

·         Innovation strategies - deals with the firm’s rate of the new product development and business model innovation. This determines whether the company has a cutting edge product, whether they are just behind the innovators or are late followers.

·         Generic strategy framework – This considers aspects of the strategy such as product differentiation, market segmentation, and the competitive advantage the organisation will have with this product.

·         Growth strategies – looks at “How should the business grow?” This can be through horizontal integration, vertical integration, diversification or intensification.

The development stage discusses how the product will be developed for the market: the production of a prototype, how feasible the product is to manufacture and gaining government approvals if they are necessary.

An example of this is the document BskyB produced when they were introducing the innovative new product in Sky+ (Phillips, 2007). This financial appraisal assesses whether Sky+ would be a financially viable venture. After this, BskyB spoke of the industry and the market itself, by then producing a marketing strategy, depicting the price and marketing budget for Sky+. It also used the Rodgers Adoption Curve, showing where people would be in relation to when they would purchase this new product and at what price. An example of the Rogers Adoption Curve can be seen below (Fig. 1). Sky chose to introduce the product at a high price which meant that it was slowly adopted at first but when they dropped the price and increased their high profile advertising campaign the sales went up as Predicted.

The main target market for the ‘Cone King’ cone collector is coaches and football clubs in the UK. This is because the product is specifically designed to aid them and because grassroots sports in the UK is a massive market with 7.3 million adults (16+) in England participating in moderate intensity level sport at least three times a week for 30 minutes or more (SRA, 2013). The product will be positioned in this market at a high price as there will be demand for the product from early adopters which will maximise potential profit. The product will be distributed through quality sports equipment websites such as ProDirect and ForSport which cater directly to the coaches at grass roots level as opposed to generic sports retailers like Sports Direct. This product will be a one-time purchase, however, due to the large target market in the UK and the potential to grow internationally the long term strategy would be expansion and potentially diversifying the product range if this product is successful.

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Reference List

Kotler, P. & Armstrong, G. (2008). Principles of Marketing. 12th edn. New Jersey: Pearson Prentice Hall

Phillips, C. (2007), ‘Innovation and new product development:  Sky+, a mini case study’, The Marketing Review, 7(4), pp. 313-323

Concept Development and Testing

Concept development and testing

What is it?

Concept development and testing follows idea generation and screening in the new product development cycle. A product concept is defined as a detailed version of a product idea that is stated in meaningful consumer terms (Kotler & Armstrong, 2012). After a product idea has been screened organisations look to test the concept with groups of their target market, they look to gather information on consumer reactions to a description of the product/service or to visual representations of the product (McDaniel, Lamb & Hair, 2011). Consumers are then asked questions on the product which help the organisation evaluate which concept has the biggest appeal in terms of potential sales (Kotler & Armstrong).

To the left is a product positioning map [See Fig.1]. This model shows where in the market a certain product would fall and this can lead on to show what the potential target market would be. This example provided is for cars. Showing the price of the car against the fuel economy provides us with which car would suit a different area of the market. 

Examples

One example of an organisation which has undertaken concept testing is Lycra, who undertook concept testing to evaluate customers wants with regard to new sport fibre clothing. Lycrca asked questions regarding interest in the product, how believable the organisations claims were, how different customers thought the product was and how much customers thought the product would cost, this allowed Lycra to evaluate possible consumer demand and purchase intention (Lycra 2008).

Another example of an organisation that developed a concept and tested it in research labs is Athletic Propulsion Labs, who claim to have made a basketball shoe that allows athletes to jump significantly higher (APL, 2011). This shoe was banned by the NBA, as it was judged to provide athletes with an ‘undue advantage’; the owners claim that this serves as proof that their products work. 

My Concept

Having established in the idea screening stage that my cone collecting idea was the one with the biggest potential I have chosen to take that forward to testing and concept development. The product name have been finalised as “Cone King”.

Concept A – Picks up cones and acts as a stand but does not distribute cones as this would cost more and be harder to develop.

Concept B – Picks up cones and distributes them, this costs more to develop but is a higher quality product with more uses.

Having tested both concept ideas with people in the industry, including teachers and coaches, it is apparent that nearly all people asked would prefer Concept B, even if it cost more money, as it has more uses and would improve the overall coaching experience vastly.

Reference List

APA, (2011) “About us” Available at: http://www.athleticpropulsionlabs.com/about.html (Accessed 24th November 2013)

Kotler, P.  & Armstrong, G. (2012) Principles of Marketing. 14th Edn. London: Pearson Education.

 Lycra (2008) “LYCRA SPORT Fabric”. Available at: http://www.lycra.com/g_en/webpage.aspx?id=963 (Accessed 24th November 2013)

Mcdaniel, C.D. Lamb, C.W. and Hair J.F. (2011) Introduction to Marketing. 11th Edn. Ohio: South-Western Cengage Learning.

Idea Screening

Stage Two: Idea Screening

What is idea screening?

Idea screening is the second stage of the NPD process which follows on from idea generation. (Kotler & Armstrong, 2008). According to Lamb, Hair & McDaniel (2009) screening is the first filter in the NPD process; they explain it as eliminating products/ ideas that aren’t consistent with the company’s new product strategy.  This is similar to Wafa, van Riel & Zuzuna’s (2011) thoughts; they say idea screening is the process of evaluating new ideas to select which ones are suitable for further development and to drop ideas that will probably not lead to successful products.

One of the most common methods used in the idea screening phase is a decision matrix (Akao, 1988).  The matrix helps organisations establish which product is the most efficient and whether or not it would fit into the current market. It uses an objective system weighting different criteria according to their perceived importance and then rating each product on how well it performs in that category; this allows most products to be dropped from the process (Akao, 1988).

Example of Idea Screening

One example of idea screening is by Adidas, the German Sports equipment manufacturer. They have created the lightest football boot in the world, the Adidas f50 (TechRadar, 2013). Adidas established through idea screening that there was both the technology and the market, to create a super light football boot. This market has come about because, according to them, players want an extra edge and if they can make lighter boots then it will make for faster players. They went about it by completely stripping down the boot to what is essential and leaving nothing else which resulted in a football boot weighing less than 100grams.

My Idea

In order to ensure my products are screened objectively I used the decision matrix to assess my three ideas against each other. I used 6 criteria and weighted them accordingly with the feasibility of the idea being the most important factor and the time taken to develop the least important.

 

I established from the matrix that my cone collector/distributor was the best idea as it scored the highest weighted score and did particularly well when judged against the level of competition and the benefits to the customer. This is because there is no product like it and it is a product that would help coaches a lot. A close second in the ranking was my idea for a boot cleaner; however, the low scores in cost to develop and level of competition mean that I will drop this idea and continue with the cone collector.

Reference list

Akao, Y. (1988) 'Integrating Customer Requirements into Product Design', Quality Function Deployment, 1.

Hammedi, W., van Riel, A. C. R. and Sasovova, Z. (2011), ‘Antecedents and Consequences of Reflexivity in New Product Idea Screening.’  Journal of Product Innovation Management, 28: 662–679.

Kotler, P & Armstrong, G. (2008) Principles of Marketing. 12^th edn. Upper Saddle River, N.J: Pearson/Prentice Hall.

Lamb, C. Hair, J. McDaniel, C. (2009) Essentials of Marketing. Cengage Learning, Mason, OH.

Tech Radar, (2013) ‘Uncovered: the technology behind the impossibly light football boot’ Available at: http://www.techradar.com/news/world-of-tech/uncovered-yhe-technology-behind-the-impossibly-light-football-boot-1153914 Accessed on: 20/11/2013

 

Idea Generation

Idea Generation Blog

What is idea generation?
Idea generation is the process of generating, developing and realising new concepts and ideas whether they are developments on an existing product or new products entirely (Johnson, 2005). According to Lilien et al. (2002) the normal process for idea generation is to collect information on the needs of the customer by randomly selecting a group or choosing a typical set of customers. A new product can be generated out of the need for it or a product can create itself a new market and therefore create the need.

Examples of Idea Generation in sport

Hit Right Sensor

One example of a Sports Product that has been generated out of the need for better safety in sport is the HITRight Sensor from Helmet Halo Technologies which aims to make American Football safer for young players (Sport product review, 2013). The product was created in order to protect younger players in the tackle phase and remind them that you should always tackle with your head up in order to prevent concussions and neck injuries.  The product easily clips into the helmet and works by making a sharp noise in the player’s ear every time their head drops, this reminds them to “keep their head up”.


 

Another example of idea generation in sport is Airflow Tennis Racquet (Ideo, 2006). This tennis racquet was created by ideas company Ideo for the tennis organisation Head. Iit aims to appeal to the female recreational market. Ideo chose to create a racquet that had a large frame in order to provide the largest ‘sweet spot’ for developing players, however, they discovered through their research that a large frame is often frowned upon because it suggest the player is less skilled. In order to combat this they added concave sections and ‘wings’ in the body of the racquet so that it looks smaller than it actually is and therefore gives the impression of a better player.  

My ideas

My first idea for a new sporting product came from asking a sports coach what issues he faces when coaching football and other sports. He said that at the end of every session you have to go round the pitch bending over and picking up multiple cones when you just want to go home. The product I have devised would make this job a lot easier by picking up the cones without the need to bend over, therefore reducing time taken and improving efficiency. It would be a stand with adjustable heights that could click through the small hole in every cone when pushed through in order to pick them up quickly, it would also double up as a stand to hold the cones.

Another idea, developed out of the problem faced by footballers up and down the country, was a boot cleaner that could be used quickly after every game. It would be on a long adjustable pole that could fit into a boot bag and could be used whilst stood up to rub mud off boots.

Reference list

Ideo. (2006)  Airflow Tennis Racquet for Head.  Available at: http://www.ideo.com/work/airflow-tennis-racquet/ Accessed: 30/10/ 2013

Jonson, B. (2005) Design Ideation: the conceptual sketch in the digital age. Design Studies Vol 26 No 6 pp 613–624.

Lilien, G., Morrison, P., Searls, K., Sonnack, M. & Hippel, E., (2002) Performance Assessment of The Lead User Idea-Generation Process for New Product Development. Management Science Vol 48 No 8 pp 1042-1059.

Sport Product Review. (2013) Coach is in Your Ear. Available at: http://www.sportsproductreview.com/review/?currentPage=2  Accessed: 30/10/ 2013

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