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]