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.