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