Business Analysis

The Business of Sport: W11007742 

Stage: Business Analysis 

Word count: 500

Armstrong, Kotler, Harker & Brennan (2009) state that the business analysis reviews sales, expected demand, costs, and estimated profit for a product or service. It is important for an organisation to have a structured business plan in order to run the business effectively identifying specific courses of action that may need to be taken to ensure the business runs effectively. (Lamb, Hair & McDaniel 2011). A business analysis consists of 5 sections; sales, market, demand projections, cost projections and competition.

A a business should conduct a sales estimation. Similar product sales figures of revenue and expenditure must be compared to create a sales forecast (Armstrong et al 2009) The forecasting allows the business to compare figures regularly to see how well the product is selling in comparison to the planned sales and revenue. (See appendix A)

The forecasting figures should reflect on the financial state of the market. The recent recession may impact some business as potential customers will have less disposable income to spend on luxury products. However this should not affect the Deep Heat Support Bandage because it is in a mass market and there is always going to be injured athletes, which means the product is always going to be needed, guaranteeing sales. Research shows that there has been a rise in sports injury cases by 14% in a year. (NHS, 2012) New research by Barclays Spaces for Sports has revealed that just under 30% of the nation pick up 22 million sporting injuries per year. 80% of which being a sprain or muscle pull (Barcalays, 2005) While research is limited on specific sports bandages, there is increasing applications in the treatment of minor-to-moderate injuries will boost global demand for sport bandages of 4.2% annually through 2013. (ReportLinker, 2012)

The growth of sales is higher than planned in the second month, however could be improve due to be firstly selling the product to different sports clubs as this is the trial period before the product is sold to retailers. Once the product has become recognised and successful in these firms hopefully connections with retailers such as ‘Sports Direct’ and ‘Boots’ will develop, helping secure a strong channel of distribution.

Production cost per bandage is just over £10, materials being approximately £8 and additional costs being around £2. (Appendix A) The selling price is £15, resulting in a total profit of £5.  Costs will be saved throughout the manufacturing process due to relatives being in the machinery business therefore the cost of use of machinery will be cheaper. A profit was made in the first two months means the product is being successfull.

The closest competitor is the ‘Homedics Ultimate Hot & Cold Therapy Wrap’ priced at £9.99. However this product does not have the deep heat thermal element and is not water resistance therefore not as durable. The wrap is also only eligible to buy on the internet, and not yet in retailers.  It must be taken into consideration companies may begin to copy the bandage idea, therefore the product must me constantly developed to best satisfy customers.

Appendix 

Appendix A:

The cash flow forecast shows the forecast for first two months for the ‘Deep Heat Support Bandage’, including all aspects of income and expenditure resulting in a profit  being made. The bandage will be sold for £15 with 2,000 being made per month for the duration of the first month. 

The Neuroprene material can be purchased in bulk, with 1.5mm doubles lined Neuroprene at £17.30 for 1000mm x1270mm which will make 3 bandages. The crystilized deep heat Supersaturated Solutioncan be made from a combination of deep heat and a hand warmer like product, total costs being £5 (deep heat £2, supersaturated solution £3), which will aid in making 3 bandages. Velcro will also need to be purchased as this will enable the bandage to adjustable aiding in maximum support to the injury. The total cost of the Velcro is £1.84 for 1m which will also make 3 bandages.  

The initial costs of the materials to make one bandage is £8.01. In order to make 2000 bandages for the first month the total expenditure will be £16,200. However the manufacturing of the product will also be additional costs, and the fixed asset is the start-up cost of the use of machinery to manufacture the product.

Costs will be saved throughout the manufacturing process due to relatives being in the machinery business therefore the cost of use of machinery will be cheaper. Decision to buy own machinery will be made on the progression of the product and how much revenue is left over to spend.

Although there seems to be an increase in the net cash flow for cash outgoings, this is because more products have been made. However it is not a total loss because each product sale is making a total profit of £5 resulting in a total profit of £12,500 being made in the first month however this does not include outgoings. It is a positive outcome that more products are being made as this means more sales have been granted, which will hopefully lead to distributing products to retailers in the next month.

The increase in sales in month 2, increases the sales revenue, resulting in profits gained. If this successful cycle continues  the business will be able to think about buying there own machinery and developing links with greater chains stores in order to maximize sales. It is important the company breaks even or makes additional profits in order to establish success.

References:

Armstrong, G., Kotler, P., Harker, M & Brennan, R (2009). Marketing an introduction, Pearson Education Limited: Essex

Buyometric. (2010). HoMedics Hot and Cold Therapy Elbow Wrap.Available: http://www.homedics.co.uk/uk/hot-and-cold-therapy-elbow-wrap.html. Last accessed 4th December 2012.

Lomo Industries Ltd. (2011). Neoprene Sheets. Available: http://www.ewetsuits.com/acatalog/Neoprene-Sheets.html. Last accessed 13th December 2012.

McDaniel, C & Lamb, C & Hair, J (2008). Introduction to marketing. London: Thomson Learning . p280-298.

unkown. (2005). Survey reveals sporting injury rate in the uk.Available: http://www.personal.barclays.co.uk/BRC1/jsp/brccontrol?task=popup1group&value=11147&target=_blank&site=pfs. Last accessed 10th December 2012.

Unkown. (2012). Muscle Strains and their Prevention. Available: http://www.physioroom.com/prevention/muscle_strains.php. Last accessed 4th December 2012.

 

http://www.google.co.uk/products/catalog?hl=en&sugexp=les%3B&gs_rn=0&gs_ri=hp&tok=gdodySc1RYpcz422iL3g9w&cp=7&gs_id=p&xhr=t&q=deep+heat&bav=on.2,or.r_gc.r_pw.r_cp.r_qf.&bvm=bv.1355272958,d.d2k&bpcl=39942515&biw=1366&bih=667&um=1&ie=UTF-8&cid=3626622367601457827&sa=X&ei=f53JULyXLOWI0AWixYCoCw&sqi=2&ved=0CFQQ8gIwAQ

 

http://www.google.co.uk/products/catalog?hl=en&q=hand+warmers&um=1&ie=UTF-8&cid=18076311365492

924257&sa=X&ei=nJ3JUPjCBo3D0AXY5YHIDw&ved=0CG0Q8wIwAQ

 

 http://www.amazon.co.uk/TRIXES-Adhesive-Sticky-Velcro-Strips/dp/B0098LT9Z4/ref=sr_1_7?ie=UTF8&qid=1355390857&sr=8-7

Market Strategy and Development

The Business of Sport: W11007742

Stage: Marketing strategy and development

Word count: 497

A marketing strategy is the logic behind how a business achieves its marketing objectives whilst identifying how customers will be satisfied in the chosen market. (Armstrong, Kotler, Harker & Brennan 2009) For a business to achieve specific aims it must consider the target market, positioning and sales within the first few years. It must outline perceived price and distribution and the planned long term sales and goals as these can all impact success. These are important in the marketing strategy stage as they allow the business to have benchmarks,  comparing and evaluating against competitors, ensuring the product is ready to be put into the market place.

Research has shown that the ‘Homedics elbow wrap’ is considered the closest competitor. (Buyomedic, 2010) However the bandage does not appear to have menthol heat in which the Deep heat support bandage provides.

The Deep Heat Support Bandage is situated in a mass market because although the product targets athletes, it can enter new markets by targeting non-athletes. While research is limited on specific sports bandages, there is increasing applications in the treatment of minor-to-moderate injuries will boost global demand for sport bandages 4.2% annually through 2013. (ReportLinker, 2012) Tendon/strain injuries are very popular injuries in the sports industry. (PhysioRoom, 2012) For example the PhysioRoom state in a survey of injuries at a professional football club, it was reported that 26.8% of all injuries involved muscles and tendons bandage will help support athletes injuries. There will always be injured athletes therefore there will always be a place in the market for the bandage.

The price of the bandage is approximately £15, which may vary due to the size of the product. The price is slightly higher than competitors due to the menthol heating included therefore more costly to manufacture. The bandage will be promoted in sports clubs and social networking . Information about the product will be received via newsletters and emails. If this is successful and the product receives positive feedback, the product will be promoted via web searches. The bandage will first be distributed at small retailers such as local athletic/football clubs in hope it will create revenue in order to expand to bigger firms such as ‘Sports Direct’ eventually marketing supermarkets and chain-stores. To achieve long term goals the product must create enough revenue in the first year to make a profit, resulting in the product selling in stores.

This development stage decides the growth of the product, this allows designers to makes a working prototype of the product, allowing the designers to see if the products manufacturing is realistic. (Lamb, Hair & McDaniel, 2008) During the development stage the ‘Ansoff’s Decision Matrix’ can be used which focuses on potential and present product through existing/new products, in existing new markets, emerging a four product marker combination. 

The product life cycle can also be used during the development stage, the products follows a sequence of stages including: introduction, growth, maturity, and sales decline.  It enables the business to see if the right decisions are being made at each stage which aids in the products success.

References

Armstrong, G., Kotler, P., Harker, M & Brennan, R (2009). Marketing an introduction, Pearson Education Limited: Essex

Buyometric. (2010). HoMedics Hot and Cold Therapy Elbow Wrap.Available: http://www.homedics.co.uk/uk/hot-and-cold-therapy-elbow-wrap.html. Last accessed 4th December 2012.

McDaniel, C & Lamb, C & Hair, J (2008). Introduction to marketing. London: Thomson Learning . p280-298.

Unkown. (2012). Muscle Strains and their Prevention. Available: http://www.physioroom.com/prevention/muscle_strains.php. Last accessed 4th December 2012.

Unkown. (2012). New market research report on wound management products. Available: http://www.news-medical.net/news/20100204/New-market-research-report-on-wound-management-products.aspx?page=2. Last accessed 4th December 2012.

Concept and Development Testing

The Business of Sport: W11007742

Stage: Concept Development and Testing

Word count: 497

Concept development is the third stage of the new product development; it is journey of the product before the finished product is available for buy. The concept development is used to test the success of the product, including different designs such as the physical appearance and different materials. (Armstrong, Kotler, Harker & Brennan 2009) The concept development process measures the consumer’s enthusiasm to a picture or written statement that’s been created about the product. (Lamb, Hair & McDaniel, 2008) It is essential the process adapts to the concepts in order for the manufacturing of the product to begin.

The ‘Deep Heat Bandage Support’ is currently in the concept development process. A visual portfolio should be created in order to show consumers the bandage appearance, how the bandage can be used and how it will benefit the customer. The benefits of the bandage are; it will be affordable. It will be reusable as the bandage generates menthol heat through exothermic crystallisation of supersaturated solutions. The bandage will be water-resistant therefore suitable for all athletes in all weather conditions. It benefits the consumer as it includes a heat menthol sensation providing adequate support, preventing further damage to the injury.

The concept development will be based on the material of the bandage whether it is made out of, Neoprene, Physicool, TubiGrip. Neoprene can be made water resistant therefore reusable whilst providing flexibility, resulting in the best possible comfort for the customer.

The concepts are then tested with potential customers; this is identified as concept testing. (Armstrong et al 2009) The customer’s reactions/responses help identify which concepts to develop further. The customer will be asked several questions about the product such as; did you understand the concept of the product? Did the bandage support your injury? Would you buy the product? (Armstrong et al 2009) By asking these questions the customers’ needs can be met, helping the product break into the correct market and reach its potential target audience.

Before the prototype is created there are still a number of questions to consider. For example;

Is there a gap in the market place? Yes, there is currently no evidence of an existing menthol heated support bandage in the market.

What is the perceived value? No more than £15. However, this will depend on the size of the bandage for example a knee support will be more costly than ankle support as it uses more materials.

Who is the target market? All athletes of all ages with injuries, however the product can also be aimed at non-athletes to widen the target market

Concept development and testing is used by organisations in the sport industry. FIFA used concept testing to evaluate the extent to see if footballs are in the exact same condition from the first to the last minute in a football game, testing was done under laboratory conditions (FIFA 2012).

The concept development and testing process outlines the best possible product, resulting in potentially being a profitable product in the market.

References:

Armstrong, G., Kotler, P., Harker, M & Brennan, R (2009). Marketing an introduction, Pearson Education Limited: Essex

FIFA (2012) FIFA QUALITY CONCEPT FOR FOOTBALLS. Available at: http://footballs.fifa.com/Quality-Concept (Accessed 23rd November 2012)

McDaniel, C & Lamb, C & Hair, J (2008). Introduction to marketing. London: Thomson Learning . p280-298.

11007742 - Assignment 2a - Idea Screening

The Business of Sport: W11007742

Stage: Idea Screening

Word count: 550

 

Developing new products that do well in the marketplace is a difficult task that requires company funds and dedicated resources. In order to establish a good idea, many ideas are passed through the first filter in the product development process.  This stage is identified as idea screening.

Idea screening process involves shifting through ideas previously generated, examining the strength of the products, eliminating ideas that are inconsistent with the organisations new product strategy or inappropriate for other reasons. (McDaniel & Lamb & Hair, 2008) This enables companies to focus attention to more highly successful product ideas as pursuing non feasible ideas can be costly for organisations. Screening a new sports product idea involves answering important questions about the idea. The questions help determine the potential market for the product, how competitors will react to this new product, cost, quality, customer demand etc. (Armstrong & Kotler, 2009)

A screening checklist is essential during the Idea Screening stage; it identifies the general characteristics of new products. Some of these characteristic include; potential profit, size of target market, competitors and the level of risk. (Armstrong & Kotler, 2009)  When analysing the new product the Decision Matrix can be used by sports organisations. This evaluates, compares product ideas. Each product is given a score on an established rating scale depending upon the established criteria in which the product is judged. The product rating is then multiplied by the weighed criteria and the points are added. (Armstrong & Kotler, 2009)  
The product with the highest score may not necessarily be the chosen product; however it can help aid in the discussions which determines whether the product is going to be developed further. An example of a Decision Matrix is show in appendix A and B.

Research on new ideas previously generated shows the product, ‘Waterproof Socks.’ already exists the market, founded by ‘Sealskins.’ The customer demand for new waterproof socks would be low as SealSkins already sell a range of waterproof socks which are well manufactured, and satisfying to customers therefore no already meets the criteria, no further development can be made to the product. 

However there is currently no existing market for ‘Deep Heat Compression Bandage’. Research has shown Deep Heat and support bandages currently exist in the market as separate products, and there are similar products such as ‘Deep Heat Pads’ and area well known, and  popular amongst a wide range of customers. However there is no evidence of the two products combined, leaving a gap in the market for product resulting in no direct competitors.

The product would be beneficial and appealing to athletes, and others who suffer from muscular aches, sprains, and strains, resulting in a large target audience. The product is designed to protect and support, effectively relieving muscle pain, supporting the injury to which it is applied, without having to apply the cream/spray and the bandage separately.  It would be technically feasible to manufacture at a cheap cost, just a case of combining and developing the two existing products. The product would be affordable for customers and it would not date, meaning there is always a place in the market for it. It would satisfy customers in terms of quality, reliability and durability, not forgetting it would be convenient as it eliminates having to constantly apply the deep heat.

 

Appendices

Appendices A – Example of A Bike Decision

 

 



Appendix B – Example of a Decision Matrix Layout

References:

Kotler, P & Armstrong,G. (2012). New Product Development. In: Eric Svendsen Principles of Marketing. 14th ed. England: Pearson Education Limited. p282-290

McDaniel, C & Lamb, C & Hair, J (2008). Introduction to marketing. London: Thomson Learning . p280-298.

Nancy, R. (2004). Decision Matrix . Available: http://asq.org/learn-about-quality/decision-making-tools/overview/decision-matrix.html. Last accessed 19th November 2012.

NZIFST . (2010). PRODUCT IDEAS SCREENING. Available: http://www.nzifst.org.nz/creatingnewfoods/idea_generation6.htm. Last accessed 19th November 2012

11007742 - Assignment 2a: Idea Screening

The Business of Sport: W11007742

Stage: Idea Screening

Word count: 550

 

Developing new products that do well in the marketplace is a difficult task that requires company funds and dedicated resources. In order to establish a good idea, many ideas are passed through the first filter in the product development process.  This stage is identified as idea screening.

Idea screening process involves shifting through ideas previously generated, examining the strength of the products, eliminating ideas that are inconsistent with the organisations new product strategy or inappropriate for other reasons. (McDaniel & Lamb & Hair, 2008) This enables companies to focus attention to more highly successful product ideas as pursuing non feasible ideas can be costly for organisations. Screening a new sports product idea involves answering important questions about the idea. The questions help determine the potential market for the product, how competitors will react to this new product, cost, quality, customer demand etc. (Armstrong & Kotler, 2009)

A screening checklist is essential during the Idea Screening stage; it identifies the general characteristics of new products. Some of these characteristic include; potential profit, size of target market, competitors and the level of risk. (Armstrong & Kotler, 2009)  When analysing the new product the Decision Matrix can be used by sports organisations. This evaluates, compares product ideas. Each product is given a score on an established rating scale depending upon the established criteria in which the product is judged. The product rating is then multiplied by the weighed criteria and the points are added. (Armstrong & Kotler, 2009)  
The product with the highest score may not necessarily be the chosen product; however it can help aid in the discussions which determines whether the product is going to be developed further. An example of a Decision Matrix is show in appendix A and B.

Research on new ideas previously generated shows the product, ‘Waterproof Socks.’ already exists the market, founded by ‘Sealskins.’ The customer demand for new waterproof socks would be low as SealSkins already sell a range of waterproof socks which are well manufactured, and satisfying to customers therefore no already meets the criteria, no further development can be made to the product. 

However there is currently no existing market for ‘Deep Heat Compression Bandage’. Research has shown Deep Heat and support bandages currently exist in the market as separate products, and there are similar products such as ‘Deep Heat Pads’ and area well known, and  popular amongst a wide range of customers. However there is no evidence of the two products combined, leaving a gap in the market for product resulting in no direct competitors.

The product would be beneficial and appealing to athletes, and others who suffer from muscular aches, sprains, and strains, resulting in a large target audience. The product is designed to protect and support, effectively relieving muscle pain, supporting the injury to which it is applied, without having to apply the cream/spray and the bandage separately.  It would be technically feasible to manufacture at a cheap cost, just a case of combining and developing the two existing products. The product would be affordable for customers and it would not date, meaning there is always a place in the market for it. It would satisfy customers in terms of quality, reliability and durability, not forgetting it would be convenient as it eliminates the process of constantly applying Deep Heat.

 

Appendices

Appendix A – Example of A Bike Decision

 

 

 

Appendix B – Example of a Decision Matrix Layout

 

References:

Kotler, P & Armstrong,G. (2012). New Product Development. In: Eric Svendsen Principles of Marketing. 14th ed. England: Pearson Education Limited. p282-290

McDaniel, C & Lamb, C & Hair, J (2008). Introduction to marketing. London: Thomson Learning . p280-298.

Nancy, R. (2004). Decision Matrix . Available: http://asq.org/learn-about-quality/decision-making-tools/overview/decision-matrix.html. Last accessed 19th November 2012.

NZIFST . (2010). PRODUCT IDEAS SCREENING. Available: http://www.nzifst.org.nz/creatingnewfoods/idea_generation6.htm. Last accessed 19th November 2012

 

Idea Generation

The business of Sport: W11007742

Stage: Idea Generation

Word count: 500

To create successful new products it is important to understand the consumer’s markets and competitors by developing products that deliver superior value to its consumers. Kotler (2012) stresses the importance to carry out strong new product planning and set up a systematic customer driven new product development process for finding and growing new products.

Idea generation is the first stage of the product development process. The importance of the development process works as a first piece of the entrepreneurial jigsaw puzzle.(Bragg & Bragg 2005) During this stage many new ideas are generated to find a superior one, allowing you to use your creativity.(Bragg & Bragg, 2005). It is important to generate many different ideas as they aid towards modifying the route towards goals. Kotler (2012) suggests major sources of new product ideas include internal and external sources, including; customers competitors, distributors and suppliers.

Many new products develop from the products of the past, making improvements in quality; convenience, cost or variety. An example from the sports industry can be linked to under armour apparel. Kevin Plank, founder of under armour, initially developed the idea when he found the cotton T-shirt that he and the other players wore under their pads would be heavy, soaked with sweat, failing to hold the moisture. He believed the extra weight hampered performance. He came up with an idea for a lightweight, sweat-wicking synthetic T-shirt, which he originally made from fabric found in women’s undergarments.

Hawkeye is another example of how sports technology has been improved within the sports industry. Hawk-eye is the name of a line-calling system which traces a ball's trajectory and sends it to a virtual-reality machine. The Hawkeye system was invented by a young British computer expert Paul Hawkins, in which he first launched it in 2001. He used the hawk eye in television coverage of sporting events such as Test cricket, and it has now reached the stage of being used by officials in tennis to assist in adjudicating close line calls.

Idea generation is open to everyone to brainstorm new ideas; therefore as a sports management student I have devised a few of my own ideas which could potentially create entrepreneurial success.

§  All-in-one body armor for ice hockey –The all in one body armor would be easier and less time consuming for ice hockey players to protect themselves. The idea initially came from watching my brother play ice hockey and being aware of all the separate parts of armor they have to wear.

 

§  Waterproof Sports Socks – The sock would allow the consumer to wear them wherever and whenever you feel the need for waterproof, especially in outdoor sports. From experiencing working in an a fast paced events team ‘We’re a knock-out’, demonstrating different activities including water games means I have little time to change my socks for long periods of times throughout the day.

 

§  Eagle-Eye in Badminton – Being an experiences badminton player I have witnessed many disputes about line calls, a system similar to hawk eye would prevent the disputes.

 

 

 

References:

Bragg, A & Bragg, M (2005). Developing new business ideas. London: Pearson Education. P12-18

Kotler, P & Armstrong,G. (2012). New Product Development. In: Eric Svendsen Principles of Marketing. 14th ed. England: Pearson Education Limited. p282-290.

 

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