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.