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