Business Analysis

Business Analysis

The business analysis stage is a detailed breakdown of costs of producing the sports products including market share forecasts, sales and profitability (Blakey, 2013). According to Queensland Government (2013), a new product that survives the screening stage of the New Product Development (NPD) Process, requires a ‘sophisticated and detailed business analysis.’ This stage determines costs whilst forecasting profits and sale volumes allowing inappropriate ideas that could lead to unnecessary costs eliminated.

The position of the product in the market can affect the cost of the product (Woodside et. al (1986). Product position is both an outcome of past relationship strategy and a resource for future strategy. Understanding this involves listing additional resources that are built through interaction with the market in previous stages.

At this stage, a prediction of future sales of a product over a specific period of time is based on the past performance of competitors products, current inflation, unemployment and interest rates as well as consumer spending patterns from an analysis of the market (Imber and Toffler, 2000). An established price is then based on the findings.

Examples in the Industry 

Columbia Sportswear Company (COLM) is one of the largest wholesalers or outdoor sportswear and equipment in the U.S. Its products are mostly sold in sports stores along with mid-tier department and online outlets - Outerwear (38.8%),  Footwear (17.2%) and Accessories and Equipment (6%) of total net sales (Wikinvest, 2013). 

In 2009 although Net sales increased by 5.6% to $1.2 billion, sales in the company's product categories Net income fell 29% to $67 million due to the recent economy consumers 'scaling back on camping vacations' leaving them vulnerable. However, Columbia's products costs are lower than competitors with Columbia's jackets costing $100-$250, while North Face costs $250- $500 (Wikinvest, 2013).

Main competition comes from its own clients as they prefer private labels wherever possible selling them at higher margins (North Face, Timberland and Patagonia). Columbia is continuously seeking to penetrate the market using new sales techniques in order to compete with this, tackling economic issues and competitors efforts (Wikinvest, 2013).

Another example is the RA Concepts Golf Club Manufacturer Plan (BP Plans, 2013).

Personal Product 

The athletic footwear industry saw positive growth in 2012, generating $13.8 billion in sales in 2012, an increase of over 4% compared to $13.2 billion in 2011 ( NPD Group, 2013, Figure 1).

Fig. 1

An estimated product price was established of £59.99 based upon Nike's manufacturing costs (Fig 2). According Team Sweat (2011) the prices have remained similar only increasing slightly due to  labour costs of $5 per day

Fig. 2 

The price is based on competitive prices in the industry being cheaper than other performance trainers  that range from £63.89 - £150 (Adidas and Nike 2013.) Figure 3 presents a study reiterating the price was chosen on 'Competition-based pricing' and is commonly adopted, shown to be more effective (Woodside et,al. 1986). 

Fig. 3

The following table in Figure 4 presents the potential profitability of the ReelFit Trainer:

Fig. 4

+Paul Blakey 

References

Imber, J., & Toffler, B. A. (2000). Dictionary of marketing terms.

Keady, J. (2011). Team Sweat: Jim Keady: Available at: http://www.teamsweat.org/?tag=jim-keady. [Cited on: 11/12/13].

NPD Group (2012). The NPD Group Reports Annual Athletic Footwear Sales are Up 4%: Available at: https://www.npd.com/wps/portal/npd/us/news/press-releases/the-npd-group-reports-annual-athletic-footwear-sales-up-4-precent/. [Cited on: 11/12/13].


Queensland Government (2013). Business Analysis of New Products: Available at: http://www.business.qld.gov.au/business/business-improvement/new-product-development/strategy-analysis-new-products [Cited on: 11/12/13]

Queensland Government (2013). Pricing Products and Services: Available at: ://www.business.qld.gov.au/business/running/marketing/pricing-products-services [Cited on: 11/12/13]

RA Concepts (2013). Golf Manufacturer Business Plan: Available at: http://www.bplans.com/golf_club_manufacturer_business_plan/executive_summary_fc.php#.UqlxbRa9ZUQ [Cited on: 11/12/13].

Summers, J., Gardiner, M., Lamb, C. W., Hair, J. F., & McDaniel, C. (2009). Essentials of marketing. Cengage Learning Australia.

Woodside, A. G., Liukko, T., Lehtonen, A., Moore, E. M. (1986). Advances in Business Marketing and Purchasing. Elsevier JAI.

Marketing Strategy and Development

Marketing Strategy and Development

Marketing strategy primarily deals with three forces, otherwise known as the Three C’s; the customer, the competition and the corporation. The process focuses on ways of which the corporation can differentiate itself effectively from its competitors, capitalizing on its strengths to deliver better product value to its customers (Juin, 2000). 

Product development is much more focused on the application of the technology in order to produce a specific product. To aid in the formulation of a new product application from emerging technologies, prototype construction in NDP projects allows this opportunity analysis, assessment of market attractiveness, market research and financial analysis to be taken place (Robert and Veryzer). This is known as a ‘formative prototype’ and is often built using a combination of existing systems and components to provide a platform for early applications of new and unproved technology.

Following this, in order to distinguish a price range for the product, it is vital that the identification of the product type is highlighted: 

Figure. 1

Example in the industry

BSkyB clearly identified there 'is a total market size for Sky Television of 25.4 million homes (Sky Merrill Lynch Presentation June 2007), 14 million of which have not taken up a Pay TV provider’ therefore allowing a significant growth opportunity of BSkyB’s core offer of digital television services.

BSkyB used an adaption of Baker (2007) Technology Adoption Curve launching the product to allow feedback from the early adopters prior to driving the product with a high profile marketing campaign (Ames 1970).

Fig. 2

Following this it was decided that it would accelerate the ‘roll-out’ of Sky+ by a new pricing model (£199, developing on from the high price of £300) advertising campaign focusing on control, simplicity and convenience (Sky Press Release, 2003). This allowed the product to be more affordable attracting a wider consumer market.

Personal Product Example 

It is estimated that the UK sportswear market grew in value by 5.4% in 2012, with sports clothing accounting for approximately 71% of total market value and sports footwear making up the remaining 29% (Report 2013). 

Figure 3 presents a personally analysed picture of the FootJoy ReelFit shoes that the product will be adapted from, highlighting points that will be marketed to the consumers and that will be developed in the prototype of the running shoe.

Fig. 3

It will be primarily released into the general sport market emphasising the element of the 'no laces' appeal that will specifically target gym-goers due to the 'less hassle' approach of no laces whilst being marketed to the Golfers who already positively use a similar product. This shoe will also be aimed at women, reflecting in bright colour schemes that will be made available (shown in figure 3, a personally drawn shoe that reflecting the prototype).

Fig. 3

The financial costs of shoes within the market range from £63.89 - £150 (Nike, 2013) with it only costing them $20 to make the shoe (Fig. 4.)

Fig. 4

The product will cost approximately £59.99 competing with Nike but still allowing a profit to be made. If sales are low the financial element will be re-evaluated accordingly based upon the 'Innovative' immediate consumers.


+Paul Blakey


References

Juin, S. С. (2000). ‘Marketing planning & strategy’. School of Business and Administration.

Veryzer, R. W., Robert,  (1998). ‘Discontinuous innovation and the new product development process.’ Journal of product innovation management, 15(4), 304-321.

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

Ames, B. (1970), ‘Trappings vs substance in industrial marketing’. Harvard Business Review: July-August, pp. 93-102.

Baker, M,. Hart, S., (2007), 'Product Strategy and Management'.  Harlow: Pearson Education Limited.

(2013) 'Sports Clothing & Footwear Market Report 2013'. Key Note Publications Ltd.

Nike Shoe Costs (2013). Available at: http://www-personal.umich.edu/~lormand/poli/nike/nike101-8.htm. [Cited on: 5/12/13]

Nike Bare Foot-like Running Shoes (2013). Available at: http://store.nike.com/gb/en_gb/pw/womens-barefoot-running-shoes/7ptZbhyZbrkZ8yzZ1jq?sortOrder=finalPrice|asc. [Cited on: 4/12/2013]

Concept Development and Testing

Concept Development and Testing

In recent years, due to the rapid change in customer needs therefore reflecting in a shorter product life cycle, adopting a more efficient and flexible approach for Product Concept Development has become imperative for a product to succeed (Chen, Khoo & Yan, 2005). The Product Concept holds that consumers will favour products that offer the most quality, performance and innovative features. This process aims to identify a marketing strategy that focuses on making product decisions that will reflect the criteria consumers are searching for (Amstrong and Harker, 2009).

Ultimately, the purpose of product conceptualisation is to realise a products position in the market allowing it to release effectively. Customer involvement especially in the early stages of product conceptualisation, plays an important role for a successful product (Chen, & Khoo, Yan 2002). A design team starts with exploring a combination of customer needs, corporate objectives, product ideas and related technological capabilities; then concluding the process with a set of product definition (Chen, Khoo, & Yan, 2000). 

Customers form expectations of products along with their values and satisfaction produced from them. According to Lamb, Hair and McDaniel (2009), a concept test is ‘a test to evaluate a new product or service idea.' Concept tests allow the marketer to put the development idea forward to the consumer using a number or tests such as questionnaires and interviews allowing a collection of feedback to be developed in order to develop a finalised product idea to move forward with.

Examples in the industry

The FIFA Quality Concept is a testing programme used to develop footballs for outdoor use, Futsal and beach sport. Each football is FIFA approved and inspected, finally getting granted a quality mark after each ball has gone through rigorous testing procedures (FIFA). Concept tests are carried out under laboratory conditions ‘subjecting them to even tougher conditions than they will probably ever endure in a normal game.’ Each ball has to undergo tests checking: weight, circumference, roundness, bounce, water absorption and loss of pressure (FIFA). These are all concepts that consumers feel are vital in the quality of a football.

Lycra is another organisation that has carried out concept testing evaluating the needs and wants of consumers in-regards to sports fibre clothing whilst reviewing their demands and purchasing intentions. This has allowed Lycra to constantly produces new products that have been adapted accordingly (Lycra, 2008). 

Personal Product Example

Following the Idea Screening phase, the adaption of the 'Reelfit' golf shoes as performance trainers appeared to appeal to the largest target market as well having the greatest potential profit possibilities. The developers therefore will target consumers who participate in running, using numerous questions to find out if the product appeals to them, if they have any intention of purchasing the product  and if they feel it would benefit them in comparison to competitive products. This will allow the business to re-evaluate the product, identifying its target market as well as customising a market strategy for the further stages of product development.

+Paul Blakey 

Word count: 493 words

References

Chen, C. H., Khoo, L. P., & Yan, W. (2005). PDCS—a product definition and customisation system for product concept development. Expert Systems with Applications, 28(3), 591-602.

Harker, M., & Armstrong, G. M. (2009). Marketing: an introduction. Pearson Education.

FIFA Quality Concept for Footballs: The Concept. Available at :http://footballs.fifa.com/Quality-Concept [Cited on: 25/11/2013]

Chen, C. -H., Khoo, L. P. & Yan, W (2000). An investigation to the elicitation of customer requirements using sorting techniques and fuzzy evaluation. Proceedings of the 6th Asia Pacific Management Conference (pp. 45–55), Tainan, Taiwan.

Lycra (2008). Lycra Sport Fabric. Available at: http://www.lycra.com/g_en/webpage.aspx?id=963. [Cited on: 27/11/2013.]