Business Analysis

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].