Stage 5 - Business Analysis

Stage 5

Business Analysis

The fifth stage of the new product development process is the business analysis stage. It is described by Kotler et al. (2013, pg. 281) as ‘a review of the sales, costs and profit projections for a new product to find out whether they satisfy the company’s objectives’, and therefore this shows, that this stage is based around the financial side of the new concept. They also indicate that three key areas make up this stage, which are sales, costs and profit projections, and for any new concept you have to assess how each three will do. Firstly, Kotler et al. (2013, pg. 281) go on to say that ‘to estimate sales, the company might look at the sales history of similar products and conduct market surveys’; this will mean you can assess how successful the concept will be.  Secondly, costs will be vital because they will determine where you are placed in the market, the more expensive; the more high-end your product will be. Finally, profit projections will mean you can assess if the concept will be a worthwhile investment in both the short-term and long-term.

You can see the business analysis stage in the emergence of the International Premier Tennis League (IPTL) this year. The founder Mahesh Bhupathi, used cricket’s Indian Premier League as a model to see how his shorter format could be a success in the Asian market. He stated that ‘six years ago the IPL was launched (in India) and it has become a rousing success’. This shows an example of estimating sales by looking at a similar model. They also saw a chance to ‘tap the potentially enormous market in Asia’, therefore they identified that a concept such as this would have a huge demand and therefore sales of tickets and merchandise would be considerable. They also planned to have sponsors to pay the players’ salaries which had been planned to be between US$4m and US$10m.

In relation to the new concept of relay Formula One, it is believed that this has the potential to be profitable. James Allen of the Financial Times (2014) indicates that the decline in TV audience in Formula One is ‘estimated at 10 per cent’, therefore this shows that people are becoming uninterested and a new exciting concept may attract the viewer’s attention again. It is hoped to thus attract the already established Formula One teams, therefore they will have the cars already to race. Firstly, races will only be held within Europe, therefore travel costs will not be large, however, if the sport begins to grow, races will begin to take place further afield and more sponsors will need to be sought after. Ticket prices for the event will be considerably cheaper than that of Formula One, which again will attract people to the event. It costs approximately £170 pounds for general admission to the British Grand Prix, however, tickets for relay Formula One will be available for around £70, which will be considerably more attractive to the market.

Reference List

•  Allen, J. (2014) Inequalities and fall in TV audiences take their toll. Available at: http://im.ft-static.com/content/images/8449b0ec-5f18-11e4-a807-00144feabdc0.pdf (Accessed: 10 December 2014). 
•  Formula One (2014) Formula One Tickets. Available at: http://tickets.formula1.com/ (Accessed: 10 December 2014).
• Kotler, P. & Armstrong, G. & Harris, L. & Piercy, N. (2013) Principles of Marketing. (6^th edn) Harlow: Pearson.
• NDTV Sports (2013) Mahesh Bhupathi unveils plan for IPL-style tennis league. Available at: http://sports.ndtv.com/french-open-2013/news/208302-mahesh-bhupathi-unveils-plan-for-international-premier-tennis-league (Accessed: 10 December 2014).
• Pathak, H. (2014) The Coca-Cola IPTL: How and why did the revolutionary event come into being? Available at: http://essentiallysports.com/theorization-tee-itpl/ (Accessed: 10 December 2014).  

Stage 4 - Marketing Strategy and Development

Stage 4

Marketing Strategy and Development

The fourth stage of the new product development process is marketing strategy and development. Marketing Strategy is defined in the Business Dictionary (2014) as ‘strategy that combines all of its marketing goals into one comprehensive plan’. Therefore, in this stage you will analyse your preferred target market and assess how your new concept will be received in this market. Marketing strategy is also defined by Shankar and Carpenter (2012, pg. 1) as ‘a broad plan of managerial initiatives and activities relating an organisation to its customers and markets’, this means that you plan how you will introduce the concept  to the market and obtain the best long term outcome as possible.  The element of development is where you see if the concept is feasible in the long term with regards to areas such as manufacturing. Also, if needed a prototype of any new equipment needed in the new sport concept would be produced, to again, check if the concept will still work in practice. 

An example of a sporting product that has gone through this stage is the iGolf mobile app. In their marketing plan for the product, they go into detail on how and why they will market their application. They say that the main advantage of having the product will be to ‘lower golf scores’ but they also describe how their product will be different to others on the market through quantity of data, reliability and customer service. This shows they have gone to great lengths to market their product and show how it is different to other products in the market place. iGolf also produced a pricing strategy and planned where they would place themselves in the market, and they decided that with the already established database, they would be able to position themselves as a market leader.

In the last blog, it was stated that questionnaires would be used to test how the new concept would be received on the market by both people that are already fans of motor racing, and people who aren’t. A marketing strategy has been developed and it has been decided that the new concept will be aimed at introducing new fans to not only Formula One, but other types of motor racing. At first it will be marketed as a short season appearing outside the already established Formula One season, to make sure it is available for as many people as possible to watch. It is planned that the short season and the short races will appeal to a wider audience and then in the future, the season will become longer if a fan base is developed. At this stage, no development is needed regarding the cars, because the teams will already be established in Formula One and they will be using the cars that were used in the previous season. With this being the case, the teams and sponsors will hopefully see this a new opportunity to invest in something that will grow over time.

Reference List  

• Business Dictionary (2014) Marketing Strategy. Available at:  http://www.businessdictionary.com/definition/marketing-strategy.html (Accessed: 2^nd December 2014).
•  Shankar, V. & Carpenter, G, S. (ed.) (2012) Handbook of Marketing Strategy. Cheltenham: Edward Elgar. 
• Zazo, A. (no date) iGolf Mobile Marketing Plan. San Diego, CA: L1 Technologies.  

Stage 3 - Concept Development and Testing

New Product Development Process

Stage 3 – Concept Development and Testing

The third stage of the new product development process is concept development and testing. The whole aim of this stage is to gather information and feedback on the concept from the general public and the market you will be entering into. Concept testing is defined in the Dictionary of Business and Management (2009) as ‘a technique used in marketing research to assess the reactions of consumers to a new product or a proposed change to an existing product’.  The best way to retrieve this information is by showing a picture or something that contains minimal information and note the reaction you get. This information can then be collated and then you will be able to see what impact this new sport concept will have on the market when it is put into action. At this stage, your idea is not final and any information received could be used to make improvements to your concept, which in the long term will have benefits to how successful the idea will be. Therefore, this stage is vital when assessing if your concept is going to be successful because if the consumers do not like the idea then they will not watch it meaning it will be a failure.

An example of concept testing and development, is seen in the emergence of Twenty 20 cricket. In 2003, the ECB’s head of marketing, Simon Robertson, commissioned a survey to see why people were not attending cricket anymore and part of this survey included the idea of a new format of cricket. When asked about the possible new format which was twenty 20, only a total of 34% expressed an interest, however, as Martin Williamson (2012) shows ‘of the 34% who expressed interest, most had never attended a county game’. Therefore due to this concept test of twenty 20 the ECB discovered that this format would be worth pursuing because it appealed to a new market and would reinvigorate cricket.  

  

As seen in the last blog, it was decided the concept that will be taken further is the idea of relay Formula One. In this stage, firstly, questionnaires will be made and then these can be asked at Formula One races and at events of similar formats, such as GP2 and Formula E. This way you will be able to see how the concept is received by fans of motor racing and see if they will take to the concept. After this you can take the questionnaire to the wider general public to see if they would be interested in watching the new concept. Even if the fans are not sure about the concept, if the wider general public begin to show an interest this would mean a new audience will be created for motor racing. Taking these questions to fans will mean that if they are not at first supportive you can ask what improvements can made to the concept to enhance it and to appeal to the wider audience.

Reference List

• Williamson, M. (2012) ‘Crash, bang and Pandora's Box is opened - The day the game of cricket was changed forever’, ESPN Cric info. [Online] Available at: http://www.espncricinfo.com/magazine/content/story/579245.html (Accessed: 25th November 2014).
•  Law, J. (ed.) (2009) The Dictionary of Business and Management. Oxford: Oxford University Press.

Stage 2 - Idea Screening

The New Product Development Process

Stage 2 – Idea Screening

The Second Stage of the New Product Development Process is Idea Screening. It is described by Scott Edgett (1999, pg.510) as ‘the initial go/no go decision where it was first decided to allocate funds to the proposed new product idea’. Therefore this shows that in this stage, you analyse the product or new sport format to decide whether it is a viable in both the short term and long term. You will try to assess the impact it will have on the current market and to assess if an investment in the product will show a return. Christopher Easingwood (1986, pg.273) indicates that ‘The new product concept would normally be evaluated by customer discussion groups’. This shows that it is important to go out and test the market to see how well your new concept would be taken to by the target market of the concept. You would also have to approach potential sponsors and investors to see if they would be interested in your new concept. At this stage you will also have to investigate how well a new concept of a sport would fit into the market at the minute as well because if the sport is already successful a new concept of the sport may not be appreciated. 

    

An example of idea screening in action is the way the England and Wales Cricket Board (ECB) analysed how Twenty 20 cricket would affect the market. They discovered that two thirds of the population either hated cricket or had no interest in watching it. However, they discovered that over half of the survey approved the idea of the shorter format and Martin Williamson (2012) says the 34% of the people that approved the format had never attended a match. Therefore, the ECB spotted a new market they could exploit and Twenty 20 cricket has been a huge success.  

In the last blog, two new concepts of sports were discussed briefly and now in this blog we have analysed the two new concepts of golf and Formula One. To find out which idea would be best to pursue further through the new product development process and decision matrix was constructed and analysed against five options which were: entertainment value, the investment needed, chance of a participation boost, how popular the sport already is and how long the event would last.  When both concepts were analysed it was decided that the concept of a relay F1 event would be the best to pursue. In figure 1, we can see that it was believed that the F1 relay would be more entertaining because it would be a quicker format than already exists. However, it was also decided that the golf league had the best chance to increase participation due to golf being more accessible. The deciding factor though was how long the event would last and with the F1 relay being a short format there would be a bigger chance of people taking to the concept and watching it.  

Figure 1 – A Decision Matrix

Weight	5	8	4	3	1	21
	24%	38%	19%	14%	5%	100%
Option	Entertainment Value	Investment Needed in Project	Chance of a Participation Boost in the Sport	Popularity of the Sport	How long the event would last	Score
Golf league	50	30	20	75	25	39
Relay F1	85	25	10	50	70	42

Reference List

•  Easingwood, C, J. (1986) ‘New Product Development for Service Companies’, Journal of Product Innovation Management, 3(4), pg. 264-275. 
• Edgett, S, J. (1996) ‘The New Product Development Process for Commercial Financial Services’, Industrial Marketing Management, 25(6), pg. 507-515.   
• Williamson, M. (2012) ‘Crash, bang and Pandora's Box is opened - The day the game of cricket was changed forever’, ESPN Cric info. [Online] Available at: http://www.espncricinfo.com/magazine/content/story/579245.html (Accessed: 18^th November 2014) 

Idea Generation

Idea Generation

Idea Generation is the first stage in the eight stage New Product Development process. This process is vital within the sporting industry because of its ever changing nature and consumers are always demanding a new experience. Consumers may want a new innovation of an already established sport or just a completely new sport for them to enjoy. Established sports may have to create new interest due to declining numbers watching and participating, therefore sports governing bodies invest huge amounts of time and money into coming up with new bright ideas to reinvigorate the sport. The use of areas such as research and development can help show what the consumer wants most and how sports can provide this. Beech and Chadwick (2013) state that the idea ‘stage may well be the most critical stage’; this justifies the time and effort put into researching and coming up with new variations to attract attention within the sport.

Examples of where the idea generation stage has been a success is in T20 cricket. The England and Wales Cricket Board (ECB) had to come up with a new idea to reinvigorate the game due to reduced spectators and a lack of sponsorship. The idea was create a shorter and fast-moving new format to encourage younger people to come and watch the cricket again after being put off by the prolonged formats of the game. This made the game much more attractive for people and families to come and watch, therefore appealing to a wider audience. The first T20 game took place in 2003 and has since become a worldwide revelation. Leagues have been founded throughout the world from cricket-mad India to Canada. To see the success of this new format you only have to look at the Indian Premier League (IPL) and The Big Bash in Australia which both attract huge crowds and sponsorship from multi-national corporations such as KFC who sponsor the Big Bash. This new format has been very successful and has brought a huge amount of interest back to cricket.

Other sports are also investigating new ideas. A new format of golf is being thought of to get a larger interest in the game away from the four majors and the Ryder Cup. This new format will create a number of franchises around the world and auction off the world’s best players and then they will play in a league format. This will create interest in golf throughout the year and will give spectators a team to support and watch throughout the season in which the league would run.

Another idea is an F1 relay format where you could have different makes of car such as F1, GP 2 and other forms of racing cars all together in one event. Teams would have a choice of which car went at certain parts of the race and what driver raced when so it would be exciting new format.

Reference List

·         Beech, J. and Chadwick, S. (2013) The Business of Sport Management. 2^nd Edition. Harlow: Pearson

Test

Test