New product ideas that survive the initial
screening process move to the business analysis stage, where preliminary
figures for demand, cost, sales and profitability are calculated. (McDaniel, Lamb and Hair, 2011) At the end
of this stage, management should have a good understanding of the product’s
market potential. (McDaniel, Lamb and Hair, 2011)
|
Demand
|
Formats market potential and the
price/sales relationship.
|
|
Cost
|
Involves the total and per unit cost. Also
aims to reach the break-even point.
|
|
Sales
|
Trying to forecast the sales volume.
|
|
Profitability
|
Considers
the Gross profit and net profit (tax) of the product. However most of the
profit will be reinvested in the venue in order to generate growth.
|
Depending
on the type of product/service the sales rate will differ as seen in the fad, boom or seasonal
graphs below.
(Shank,
2002)
The Golf Club manufacturer RA in North Carolina uses the
four business analysis stages. Their main objectives are to increase net profit
percent of sales by year two and to acquire 1% of the sales across the US. (Software, 2014)
|
Demand
|
The primarily target market will be female
golfers because they are the fasts growing segment in the golf industry.
|
|
Cost
|
Cost
analysis tables shown in Appendix A.
|
|
Sales
|
featherweight
touch, different colors, and the personal touch.
competitive
edge is our high-technology design and manufacturing process
build long-term relationships with retail buyers
Competition
Callaway, Ping,
Taylormade, and Titleist.
|
|
Profitability
|
Profitability tables shown in Appendix B.
|
If Polf would be introduced into the market then the demand
needs to increase, therefore the consumers need to be manipulated. This could
be done by price promotions like 2 for 1 price. It is very important to create
a clear overview of the cost in the first years. In order to estimate when the
break-even point is and when we can make revenue. Once the format creates
revenue the shareholders can be paid back. Polf’s cost and profit table can be
found in appendix C. Which would lead us to the profitability of the sport. All
our calculations have been calculated a gross profit therefore the tax has not
been taken into account. But after we have taxed out gross profit to reach our
net profit this money will be reinvested into the format to crease more
awareness, increase demand and maintain our competitive advantage. Promoting
will be completed through the social media therefore there will be no extra
cost.
A very important aspect, which needs to be considered, is
the geographical location of the venue. It needs to be in an easily accessible
space, such as city center or close to public transport. Ideally it is located
in an area of high demand for this market.
The main competition will be pool venues and golf clubs, hence the Polf venue
should not be close to pool or golf venues. All these principals have an impact
on each other therefore it is very important to take them all into account.
Appendix A: Cost analysis
(Software, 2014)
(Software, 2014)
(Software, 2014)
Appendix
B: Profitability tables
(Software, 2014)
(Software, 2014)
Appendix
C:
Cost in producing and profitability:
|
Cost
(£)(first year)
|
Cost
2nd year
|
|
|
Venue
|
8500
|
8500
|
|
Equipment
(Only once)
|
7472
|
0
|
|
Adults
(+16)
|
43000
|
50000
|
|
Children
|
21900
|
25000
|
|
Electricity
light
|
240
|
240
|
|
Water
|
300
|
300
|
|
Security
(only once)
|
600
|
0
|
|
Heat
|
876
|
876
|
|
Staff
|
51100
|
51100
|
|
Gross
profit
|
-4188
|
13984
|
The numbers for the first year have been calculated as
following:
Equipment:
|
Equipment
|
Tables
|
Cue
|
Balls
|
Fabric
|
Styrofoam
|
|
Cost
(£)
|
7200
|
200
|
30
|
4
|
38
|
Adults (+16): £6 per adult and 20
adults per day
Children: £3 per child and 20
children per day
Staff: £7 per hour, 4 staff in
total and each staff works 5 hours a day.
References
Brierley,
M. (2013). Home. [online] UK Pool Tour. Available at:
http://ukpooltour.com/uk/ [Accessed 10 Dec. 2014].
Business
Analysis. (2014). Boundless. [online] Available at:
https://www.boundless.com/marketing/textbooks/boundless-marketing-textbook/products-9/new-product-development-71/business-analysis-356-1058/
[Accessed 10 Dec. 2014].
McDaniel,
C., Lamb, C. and Hair, J. (2011). Introduction to marketing. Mason,
Ohio: South-Western.
Software, P. (2014). Golf Club
Manufacturer Business Plan Sample - Executive Summary | Bplans. [online]
Bplans.com. Available at:
http://www.bplans.com/golf_club_manufacturer_business_plan/executive_summary_fc.php
[Accessed 10 Dec. 2014].
