Presentation Poster

Commercialisation

The final stage of the NPD process is the decision to market the product – Commercialisation.  This is often the most expensive stage of the NPD process and therefore it is important the test marketing results are analysed thoroughly prior to the decision to market the product.  This stage includes ordering production equipment and materials, initial production, distribution, sales force training and advertising the release to potential customers (McDaniel, Lamb & Hair, 2008). 

 

Trott (2008) states that successful entry to the market is dependent on a full marketing strategy.  Kotler and Keller (2012) agree and list the sequenced mix of marketing communication tools commercialisation relies on as being: 

·         When – the release date may be impacted by other products e.g. competitor’s products release dates.

·         Where – in which location will the product be released?

·         Who – which target market is the product focussed towards?

·         How – through which marketing activities is the product going to be advertised?

 

 

 

 

 

 

 

 

 

 

An example of a sports organisation going through the process of commercialisation is Rip Curl.  Rip Curl began manufacturing wetsuits in 1970 and in 2007 released the first ever heated wetsuit called the H-Bomb.  Rip Curl initially released the H-Bomb to the Northern Hemisphere specifically targeting young adult surfers.  As Rip Curl planned to release the H-Bomb to the Australian market in 2008, The Australian Institute of Commercialisation (AIC) assisted them with technological developments improving the wetsuit to have lower battery consumption and reduced heat loss.  In addition, the AIC have since aided Rip Curl in the improvement of wetsuits through introducing the company to research and technology providers.  These private organisation’s collaboration with Rip Curl has since provided a continuous development of production and manufacturing materials (Australian Innovation, 2010).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gymathlon is expected to be accepted quickly by gym users as it is hoped there will be an initial interest of participants testing themselves.  As Gymathlon is a franchise, the aim is to use success recorded during the test marketing stage to attract more franchisees.  The concept would hopefully be initially distributed in 10 franchises, as this enhances the competition.  Gymathlon’s production capabilities are dependent on the franchise facilities as around 5 staff would be trained to deliver the activity ensuring there will be no shortfall in instructors.  The price will be £20 and will be promoted through the franchisees and YouTube fitness video adverts in addition to be showcased at fitness events such as Triathlons.

Competitors for Gymathlon will be other fitness activities, however as shown in Appendix A, there is no very direct competition as other activities tend to be more regular, have a lower price and a lower physical benefit with the exception of a personal trainer which is a higher priced activity. The business analysis stage of the NPD process included projected income to show Gymathlon to become profitable in month 9 of trading.  Commercialisation was calculated to cost £12,430 based on the start-up of 10 gyms, this included training staff to deliver the activity, website and branding, promotional materials and legal fees. 

Appendix A

 

References

Australian Innovation (2010) Rip Curl a Commercialisation of the first ever power heated wet suit. Available at: http://www.ausinnovation.org/articles/rip-curl-a-commercialisation-of-the-first-ever-power-heated-wet-suit.html (Accessed: 4 February 2015).

Kotler, P. & Keller, K.L. (2012) Marketing Management. Global Edn. Harlow: Pearson Education.

McDaniel, C., Lamb, C.W. & Hair, J.F. (2011) Introduction to Marketing. 11th Edn. USA: South-Western Cengage Learning.

Trott, P. (2008) Innovation Management and New Product Development. 4th Edn. Edinburgh: Pearson Education.

Test Marketing

Test marketing is the limited introduction of a product and marketing programme with the aim of measuring potential customer’s reactions in a market situation (McDaniel, Lamb & Hair, 2011).  When devising a test marketing programme, aspects including what length of test to undertake, what information needs to be collected, how many and in which cities will the testing be carried out in and what action to take dependant on the feedback must be considered.  Kotler and Keller (2012) and McDaniel, Lamb and Hair (2011) stress the importance of selecting suitable location which reflect market conditions to test the product. 

Test marketing can be expensive and make competitors aware of the new product, allowing them time to launch a substitute product (Beech & Chadwick, 2007).  However, test marketing can provide feedback on sales potential, level of demand, effectiveness of some facets of the marketing mix and the need for any alterations (Kotler and Armstrong, 2012).  Trott (2008) states that this feedback is useful for the decision making of the future of the product, whether it will be dropped or continue on to the next stage of the NPD process.  

An example of test marketing for a sport product is Nike Free shoes.  Nike carefully devised the advertising and marketing campaigns to highlight the shoe’s unique features of allowing movement, flex and grip to help consumers build strength and train longer.  The test marketing involved initially launching the product with limited distribution through speciality running stores as well as directly to runners through mobile vans staffed by footwear experts at running events.  In addition, Nike aimed to introduce Nike Free as a new training concept by distributing the shoe to running coaches, physiotherapists and podiatrists.  The success of Nike Free test marketing led to a major advertising campaign and the shoes becoming available through general sporting goods stores (Australian Business Case Studies, 2014).  Nike’s Free running range has continued to develop and there are now 7 different types of Nike Free Run shoes (Nike, 2015).

As Gymathlon will start up available in only a select few Gym’s before growing as a franchise, the test marketing will be limited to four locations in the North of England over a period of six months.  Two gyms would conduct sales-wave research where following an initial free session, participants would be re-offered Gymathlon as well as other competitor activities at a reduced price on 5 different occasions, the aim of this would be to identify the level of satisfaction and repurchase (Kotler & Keller, 2012).  In the other two gyms, test markets would be used to gain feedback on consumer trends and demographics, the marketing mix, demand levels and any modifications which could improve the concept.  Following this test marketing, Gymathlon would aim to have positive results to attract more franchisees.  The activity would then be advertised through different channels to target markets through all Gymathlon providers, sales promotion, adverts before Youtube fitness videos, gym nutrition sales websites as well as being showcased at Triathlon events. 

 

References

Australian Business Case Studies Pty Ltd (2014) Nike: Product development from concept to customer – Ensuring correct positioning. Available at: http://www.afrbiz.com.au/case-studies/nike-developing-nike-free/Page-5.html (Accessed: 27 January 2015).

Beech, J.G. & Chadwick, S. (Eds). (2007) The Marketing of Sport. Pearson Education.

Kotler, P. & Armstrong, G. (2012) Principles of Marketing. 14th Edn. London: Pearson Education.

Kotler, P. & Keller, K.L. (2012) Marketing Management. Global Edn. Harlow: Pearson Education.

McDaniel, C.D., Lamb, C.W. & Hair, J.F. (2011) Introduction to Marketing. 11th Edn. Ohio: South-Western Cengage Learning.

Nike (2015) Nike Free Running. Available at: http://www.nike.com/gb/en_gb/c/innovation/free (Accessed: 27 January 2015).

Trott, P. (2008) Innovation Management and New Product Development. 4th Edn. Essex: Pearson Eductation.    

Product Development

Beech and Chadwick (2007) define the product development stage of the NPD process as the development of a product from an idea into a physical form to meet market demands.  The product development stage includes undertaking rigorous product testing to ensure the safety and effectiveness of the product (Kotler & Keller, 2012).  Baker and Hart (1999) note that these prototypes are often tested on potential customers to gain feedback which can be used to make any further alterations before the final product is produced.

For this stage to be effective in the overall NPD process, Kotler and Keller (2012) consider it necessary for it to include:

·         Construction and Packaging Decisions e.g. type/quality of materials, colour/size of product, method/cost/time of production and packaging material, functions, costs etc.

·         Branding Decisions e.g. name, image, exclusivity, trademark.

·         Positioning of the product – which market will the product be targeted towards, positioning against competitors.

·         Attitude and Usage Testing – are the consumer’s satisfied with the product? What are their perceptions?

 

 

An example of product development in the sports industry is Warrior Sports. Despite establishing their manufacturing brand through Ice Hockey and Lacrosse, Warrior Sports entered the football market in 2012 using sponsorship of Liverpool FC to increase their brand awareness (Warrior Sports, 2014). Vincent Kompany, who still endorses the brand, was spotted trialing their first prototype football boot.  The Warrior Sports Skreamer K-Lite boot is made out of kangaroo leather designed to be lightweight at just 192 grams to help the footballer run faster (Perkins, 2012).  

In 2008, Under Armour attempted to move from being a niche to a mainstream brand.  To do this, Under Armour released a range of cross trainer shoes therefore placing them in direct competition with Adidas and Nike.  This has been beneficial for Under Armour and resulted in growth which they built on in 2011 when the entered another new market for high performance running shoes (Kotler & Armstrong, 2012).

 

To convert the idea of Gymathlon into a physical form the activity must be constructed.  Gymathlon will use 6 different sections designed so that by the end of the session all muscle groups will have been utilised and the scores can then be entered onto a leaderboard to find the most complete athlete. Appendix A shows the components of each section.

As the concept is a service activity the only aspects of the packaging are the included benefits which include the opportunity for participants to test themselves and enter a leaderboard, a free t-shirt and the chance to win a prize.  The logo image for Gymathlon is shown in Appendix B, this name and logo will be exclusive to the franchises which offer the activity.  Appendix C is a perceptual map which indicates where Gymathlon will be positioned against competitor services.

To gain consumer perceptions of Gymathlon it will be trialled in a gym with the target market invited to try Gymathlon for free.  Participants will then be asked to complete the feedback form which will indicate consumer satisfaction.

 

Appendix A

 

Appendix B

 

Appendix C

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Baker, M. & Hart, S. (1999) Product Strategy and Management. Harlow: Prentice Hall.

Beech, J.G. & Chadwick, S. (2007) The Marketing of Sport. Harlow: Prentice Hall.

Football Boots Database (2015) Vincent Kompany. Available at: http://www.footballbootsdb.com/player/Vincent-Kompany/5770 (Accessed: 21 January 2015).

Kotler, P. & Armstrong, G. (2012) Principles of Marketing. 14th edn. London: Pearson Education.

Kotler, P. & Keller, K.L. (2012) Marketing Management. Global Edn. Harlow: Pearson Education.

Perkins, B. (2012) Vincent Kompany Training in Warrior Sports Prototype Boot. Available at: http://soccerreviews.com/news/unreleased-warrior-sports-skreamer-klite/ (Accessed: 21 January 2015).

Warrior Sports (2014) About Warrior. Available at: http://sports.warrior.com/About-Us/about-us,en_GB,pg.html (Accessed: 21 January 2015).

Business Analysis

A business analysis is important in forecasting future performance and evaluating the new concept’s business potential (Palepu & Healy, 2008; Kotler & Armstrong, 2012).  Components included in the business analysis are demand, cost, sales and profitability projections (Kotler & Keller, 2012).  Kotler (2001) states the importance in researching these aspects to improve the accuracy of the predicted profitability of the concept.  By evaluating all the components in the business analysis it becomes easier to determine whether the concept will attain the objectives for the concept and the company’s overall objectives (Kotler & Armstrong, 2012).  Trott (2008) supports this and highlights that this stage can identify potential problems which halt the development process. 

To start-up operating as a golf club manufacturer RA Concepts wrote a business plan to secure financing.  Included in this was a market analysis showing the potential demand for the clubs in different market segments over five years.  There was also a detailed review of start-up costs and how the finance would be attained.  RA Concepts included sales forecasts for three years, particularly highlighting the expected growth in year 2 sales and a break-even analysis.  The plan concluded with graphs showing projected profit and loss and a balance sheet in attempt to convince the potential funders of the financial viability of the company (Bplans, 2014).

Gymathlon

Gymathlon would be a franchise with fitness centres using the trademark of Gymathlon and running the sessions.  To ensure good brand reputation quality control and training support would need to be provided.  The franchisee’s fees are shown in Appendix A.

Cost Projections

Appendix B is a table of start-up costs for 10 franchisees, showing the required investment as £12,430.  Appendix C shows a breakdown of expenditure over three years, including the need for an employee on an annual salary of £15,000 per 30 franchisees and an office after reaching 30 franchisees at a cost of £120 per calendar month per employee. 

Participation Cost

£20 per session, incentives include:

·         Opportunity for participants to test themselves and compete on a leader board with others (inter and intra gym, friendship groups, clubs etc.)

·         Prize

·         Free T-shirt (additional promotion through participants)

 

Demand Projection and Sales

Appendix D is a monthly sales forecast for year 1 in one franchisee, showing an average of 30 sales per month per franchisee.  Appendix E shows projected income through the franchisees and sponsorship.

Sponsorship

Gymathlon would aim to attract a sports nutrition brand such as Beast or Muscletech as a sponsor.  The sponsor would pay for the production of T-Shirts, contribute the prizes and pay £500 annual sponsorship fee for each 10 associated franchisees after an initial 10.

Profitability

Appendix E shows Gymathlon is forecast to return a £14,205 profit in Year 1.  The forecast also shows Gymathlon to be a relatively low risk investment as the initial start-up investment of £12,430 should be returned by Month 8.  This forecast encourages the continuation of the format development as it shows profits increasing each year as Gymathlon’s number of franchisees grows.

 

 

 

Appendix A – Franchisee’s Fees

Start-up fee (inc. initial training & advertising)	£500
Royalty (inc. continued support & training)	£150 per month
% of unit sales (inc. leader board access, t-shirts, prize)	10% - £2 per sale

 

Appendix B – Start-Up Costs

Patent	£230
Format Testing & Development	£200
Website, Branding & Promotion	£2000 per 10 gyms
Legal Fees	£10,000 per 10 gyms

 

Appendix C – Expenditure

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix D – Monthly Sales Forecast Year 1

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix E – Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix F – Profitability Projection

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Bplans (2014) RA Concepts Golf Club Manufacturer Business Plan. Available at: http://www.bplans.com/golf_club_manufacturer_business_plan/executive_summary_fc.php (Accessed: 10 December 2014).

GOV.UK (2014) Apply for a UK Patent. Available at: https://www.gov.uk/apply-for-a-patent (Accessed: 10 December 2014).

Kotler, P (2001) Marketing management. Millennium edn. Boston: Pearson Customer Publishing.

Kotler, P., & Armstrong, G. (2012) Principles of Marketing. 14th edn. London: Pearson Education.

Kotler, P., & Keller, K. (2012) Marketing Management. Global edn. Harlow: Pearson Education.

Palepu, K., & Healy, P. (2008) Business Analysis and Valuation: Using Financial Statements (4). OH: Thompson Higher Education.

Trott, P (2008) Innovation management and new product development. 4th edn. Essex: Pearson Education.

 

 

 

 

Marketing Strategy and Development

A marketing strategy is created based on the product concept developed in the previous stage whereas market development consists of identifying new market segments and developing the marketing mix to help the product to grow (Kotler & Armstrong, 2012). 

Li (2000) highlights the importance of a marketing strategy in setting a structure and direction to the specific marketing activities for that product to aid it in meeting the set marketing objectives.  Kotler and Keller (2012) identified the following three main elements of a marketing strategy:

·      Target Market – Who the target market is and why, and what is the size, structure and characteristics of the market.

·      Initial Price, Distribution and Promotion – What will the price be and how will it be distributed and promoted.

·      Long Term Goals – What are the sales and profit goals and what is the long term marketing mix.

Prior to the release of a golf GPS application by iGolf, the organisation developed a marketing plan.  This included a market analysis identifying the broad target market as golfers who owned cellular phones.  Their plan included statistics collected from many different sources resulting in iGolf calculating an accurate target market size of 1.82 million. 

iGolf’s pricing strategy included a comparison of competitor’s prices and an explanation to their plan to set a premium price using brand reputation to target the product towards those looking for a quality product.  The promotional plan was aligned with past L1 Technologies products with a small percentage of the product development budget being spent on promotional activities.  In addition the plan included a sales strategy and six marketing objectives although these could be improved by making them SMART.

Gymathlon’s target market is regular gym users.  In England in 2008/09, 14.7% of the 60% of men and 13.4% of the 46% of women who take part in sport go to gym.  51% of fitness participants were men and 49% women, therefore the competition could potentially appeal to both genders.  Of those gym users participating in weight training 84% were men, taking this into account the women’s circuit could be adapted to make the sport more appealing to the female market (DCMS,2011).   

 

The product will be targeted towards those competing monthly and encouraging repeat sales making it a frequently purchased product, although some participants may purchase infrequently as a personal test. 

Gymathlon’s competition includes Personal Trainers and fitness classes, their prices are shown in Appendix A.  Using this information the price for a session of Gymathlon would be £20.00.  This takes into account the need for a referee to record scores and the cost of the use of facilities.  Although this is higher than other activities the opportunity to compete and test fitness with the opportunity to win should encourage sales. 

Distribution would be through leisure centres and the competition would be promoted through the centres as well as being showcased at events such as triathlons and other endurance competitions.  The long term aims include gaining enough participants to run competitions between different gyms and regions.

 

Appendix A

Activity	Price
Personal Trainer Session	£35.00
Yoga	£7.40
Gym Session	£6.70
Aquafit	£4.65
Swimming	£3.90
Krunch & Kore	£3.80
Boxercise	£3.50
Metafit	£3.00

 

 

 

 

 

References

BSmart Fitness (2013) ‘Membership, Fees, Prices and Pay as You Go’. Available at: http://www.b-smartfitness.co.uk/#!classes/c1yws (Accessed: 2 December 2014).

DCMS (2011) ‘Adult participation in Sport’. Available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/137986/tp-adult-participation-sport-analysis.pdf (Accessed: 2 December 2014).

Freedom Leisure (2014) ‘Woking Leisure Centre activity prices’. Available at: http://m.freedom-leisure.co.uk/centrepage.asp?section=871&sectionTitle=woking+leisure+centre+activity+prices (Accessed: 2 December 2014).

iGolf (2014) ‘Company Info’. Available at: https://www.igolf.com/#ft_companyInfo (Accessed: 2 December 2014).

Kelsey Kerridge (2014) ‘Fitness Classes’. Available at: http://www.kelseykerridge.co.uk/index.php?pageid=4007 (Accessed: 2 December 2014).

Kotler, P. & Armstrong, G. (2012) Principles of Marketing. 14th edn. London: Pearson Education.

Kotler, P. & Keller, K.L. (2012) A Framework for Marketing Management. 5th edn. Harlow: Pearson Education.

Li, S. (2000). ‘The development of a hybrid intelligent system for developing marketing strategy’. Decision Support Systems, 27(4), pp. 395-409.

Midlothian Council (2014) ‘Leisure Centre Prices’. Available at: http://www.midlothian.gov.uk/info/524/prices_and_memberships/690/leisure_centre_prices (Accessed: 2 December 2014).

Sport England (2014) ‘Who plays Sport?’. Available at: https://www.sportengland.org/research/who-plays-sport/by-sport/ (Accessed: 2 December 2014).

Studio Fitness NE Ltd (2014) ‘Membership’. Available at: http://www.studio-fitness.co.uk/membership.html (Accessed: 2 December 2014).