Market Analysis
California State University Monterey Bay
BUS 306-01 Fundamentals of Marketing
Yannick Berchtold
Ashley Carrasco
Brittany Harden
Alexander Robinson
Joshua Tubridy
October 20, 2013
Fundamentals of Marketing
BUS 306-01
Table of Contents
Situation Analysis ....................................................................................................................................... 3
Market Summary......................................................................................................................................... 3
Geographics ................................................................................................................................................ 4
Demographics ............................................................................................................................................. 5
Behavior Factors/Psychographics ........................................................................................................... 6
Market Needs .............................................................................................................................................. 7
Market Trends ............................................................................................................................................. 7
Market Growth ............................................................................................................................................. 8
SWOT Analysis ........................................................................................................................................... 8
Strengths .................................................................................................................................................. 8
Weakness ................................................................................................................................................ 8
Opportunities ........................................................................................................................................... 9
Threat ....................................................................................................................................................... 9
Competition................................................................................................................................................ 10
Product Offering ........................................................................................................................................ 10
Keys to success ........................................................................................................................................ 11
Critical Issues ............................................................................................................................................ 12
References ................................................................................................................................................ 13
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Situation Analysis
In the market of goods that enable one to propulse and pull someone or
something, there are a variety of products such as elevators, vehicles, and other
engines. Especially in the sports branch a such goods are often used to propulse people
to a certain speed so that they can exercise their sport as they wish to. Now, the goods
offered for these sportsmen are very limited. For instance in Water Skiing, the goods
that are currently available to pull one over the water are either a powerful boat, jet ski or
a cable ski installation. Both of these goods are pricy and require at least one person to
drive or control the machine in order to pull the water skier over the water, and in
addition, “boats can be lots of work and require extreme care and regular maintenance”
(Bostain, 2013). For this reason, a product that would enable a person to activate such a
propulsion mechanism on one’s own is a great benefit for people that wish to do their
sport individually or do not have the financial resources to pay for the existing products.
Moreover, in the survey we conducted, 70.5 percent of the people that never have
engaged in any extreme sports are interested in doing so, and in addition, 77.3 percent
of those who do exercise extreme water sports would consider exercising those sports in
areas that are not accessible or prohibited to boats, if there was a product to enable
them to do so.
Our device would pull one by the rope from the shore, using a remote controlled,
Rider operated winch system, replicating how a boat pulls you forward. This means that
whoever wants to use it can do this individually without having to rely on someone else,
which is a great advantage compared to a cable ski installation, or other winch-type
devices currently available on the market. According to our survey, 52.2 percent of those
interested in extreme sports could not exercise such sports because they did not have
any means of propulsion, so our product can be desirable for this group of people.
Market Summary
There are several winch products that are in the same category of extreme sport
enabling devices such as a jetski. They range in price from 1900.00(the Pulldozer) to
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upwards of $3000.00.(the“Ridiculous” winch) currently there are four products to
compete with; the Pulldozer, the Ridiculous winch, the Grinch and the X-Hive. These
products are not nearly as expensive as a jetski but enable many of the same
watersport activities for their owners, namely the ability to wakeboard or wake skate as
well as surf, skim or waterski on any body of water. This is a great value to consumers
who enjoy the exhilaration of extreme water sports but abhor the costs associated with
boat/jetski ownership or rentals. The joys of Tow-In surfing have always been reserved
for professional surfers on the biggest breaks.
With our product everyone has the opportunity to tow-in to their own Teahupo’o
and get rides they never thought possible. The winch is not only for watersports this
family of products can be used in the facilitation of almost any sport where extra
propulsion is required like snowsports, skateboarding, rollerblades etc. With the addition
of these extra sport enhancing properties the target market increases significantly. There
currently is nothing in the winch device market that can be used and operated by just
one person. There is a significant evidence to suggest that the ability to be operated and
used by an individual would give our product a significant advantage over the
competition. Also potentially capturing the market share of the other winch products
because of our advantage of rider operation.
Geographics
Our product is a tool that helps facilitate extreme sports and is, therefore,
geographically focused around regions where those sports are frequently practiced.
Working on a global scale but with an initial focus on American markets, we are not
excluding any geographic areas but some are more marketable than others. For
instance, large metropolitan areas will not yield as high of a demand as more rural areas
or regions close to large bodies of water due to the nature of our product.
With our emphasis on extreme water sports, the geographic areas most important
include those which have easy access to lakes, rivers, beaches, etc. These regions
have the markets associated with our product as well as the natural environment
required for use of our product. Coastal areas allow for ocean riding and use of the
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winch from the beach. Lakes and rivers allow for a more traditional use and already
have a large market for the water sports we are targeting.
There are also other geographic areas that are important to our product such as
more rural areas of the world that has the space for outdoor sports and activities. The
winch has multiple uses besides just for water sports, and consumers in these areas can
use it in more versatile ways. It can be used for snow sports, such as cross-country
skiing, or even for skateboarding which expands the geographic diversity for our
product. This creates markets in suburban areas where skaters could use it for extra
propulsion necessary for new tricks. Rural areas are also impacted by riders using it on
private lands or just more open areas. Whether it’s for private lakes/rivers, open fields,
hills/mountain slopes, or other terrain; the geographic area is important and allows for
versatile and creative use.
Demographics
Overall, our target market has a fairly general set of demographics. We serve a
variety of consumers worldwide ranging in age from 12-49 including members of both
Millennial and Generation X. This taps into very different kinds of markets that will help
maximize our potential output.
The Millennial Generation is our main focus and the group with the most interest in
our product. These consumers are young adults either finishing school or beginning their
careers. With over 80 million people in just the U.S. alone, they have the largest
population of any previous generation and are just beginning to enter the market as
large influencers. It’s also estimated that by year 2017, the millennials will have more
spending power than any other age group. (Hanson, 2013) This gives us a large pool of
potential customers as well as a good foothold in a huge developing market of
consumers. Their lifestyles most closely match the idea of having solo riders who are
looking for a way to partake in the extreme sports by themselves and for a lower cost.
The biggest difficulty with this group is their low, or lack of, non-disposable income. They
don’t have the extra funds to be spending on excessive wants due to the young stage of
their lives. However, this generation does control purchasing power of older generations.
Being the children or grandchildren of the Baby Boomers, they influence some of the
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spending habits of the older generation. This allows us to capitalize on the large buying
power of the Baby Boomers while still reaching out and satisfying the needs of a
younger generation. (Carmichael, 2011) Also, many times these individuals are alone
and can use the winch by themselves making it more convenient and accessible than
otherwise possible.
Generation X is also a very important demographic for us. These parents and
adults have more established lives and are in a more mature, stable time of their life.
This generation is important because families and parents are another group that can
benefit and use our product. It would be great for lower income families who want to
partake but can’t afford the expensive vehicles or toys. Also, higher income families or
individuals could use the product for vacations or buy them for the kids to use on their
own.
Our product appeals to many income levels as not only a cost reducer in
comparison to boats and other equipment, but also as a luxury to other who can afford
to buy them for everyday use or vacation accessories. It works well in both a family
setting and individual use and appeals to multiple genders, ages, races, and religions in
any occupation at any education level.
Behavior Factors/Psychographics
The main group we are targeting is active members in working-upper classes.
These consumers participate in the sports associated with our product and also have the
disposable income that allows them to purchase some amount of ‘wants’. The
combination of feasibility and This group contains the consumers who have the ability to
buy our product and also actively partakes enough to justify the purchase.
Within that group there are those who are looking for a new experience and are
ambitious in pushing the limits of their sport. These are the heavy users who will
purchase our product, not to replicate another sport, but to develop the use of our winch
for new and different experiences.
Another subgroup is the users who need a way to ride by themselves. Many
people don’t have access to boats or drivers that can adequately pull them. So, these
riders need our product to allow them to ride by themselves and would also be regular
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users that make it part of their lifestyle.
Market Needs
Extreme Sports are not for everyone, but we can fix that. The winch we have
created enables a wider variety of Segments to engage in extreme sports. Currently the
Segments who engage in extreme sports are blue bloods estates, god’s country,
boomtown singles, and a few others. We believe that with our product we can make
extreme sports available to more segments because of all the needs that we can fulfill.
The winch is remote controlled, portable, affordable, and can be used in most terrains.
By the winch being remote controlled and portable, the consumer can go out and
engage in activities such as wakeboarding in the river alone. You can also use the winch
for water skiing in the ocean if you do not have a boat. This satisfies the affordability
need. Many people cannot afford to purchase or rent a boat, but the winch makes it
possible for more people to participate in these sports.
Market Trends
While assessing market trends, we have discovered that extreme sports is a
quickly growing industry. Extreme sports began in the early 1990’s and have grown
immensely since. Along with the growth of these sports, the needs of services have
developed as well.
The Winter Olympics and X- games are very important in the growth of extreme
sports. Many people watch these events and sometimes discover new sports. Media
coverage of the Winter Olympics and X-games is a very important trend for us.
Television plays a critical role in the expansion of these sports. The coverage of these
events made it possible for the world to see all of these sports in action. When the
televising of these sports began many more people began to actively engage in them.
The winch can be used with 3 out of 5 of the most popular extreme sports; inline
skating, snowboarding and skateboarding. If you cannot pick up enough speed, the
winch can pull you and increase your speed rapidly. This is perfect for inline skating and
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skateboarding. The winch can also be used for snowboarders who need to practice in a
more flat land. If there is not enough hills ride, you can just have the winch pull you on a
flat surface and practice tricks. Many other winch systems offer similar benefits, but the
benefit that makes the winch stand out is that is remote controlled. So anyone can do
this alone.
Market Growth
As extreme sports continue to grow so does the needs in services for them. There
are other products in market similar to our winch, but none like ours. Our winch stands
out by being remote controlled operated. The rider can now be the driver. This opens a
huge market for us. Our winch can be used by athletes that need to practice on their
own. Our product enables people all over to reach new possibilities, whether it be
reaching a new speed for a race or being able to wakeboard in the river.
SWOT Analysis
Strengths
When it comes to producing our winch I feel that there are strengths that we have
that can help us produce and market the product to potential consumers. One strength
that we have is the fact that the item can be made at a fairly cheap price and it was
made out of items that are easy to obtain. We currently have a working model for this
item already so when we try to market the item to consumers we have the ability to say
how it works, why it works and if there are going to be any problems because our
members actually use the product we are trying to market. Another strength about this
item is that our winch can be used on any place where water can be accumulated. It can
be used on a river , mountains, on a private lake and, or at any beach.
Weakness
A weakness that may occur when trying to market items like this is the fact that
there are already similar items like this on the market. The main idea about our product
is that is has the ability to be moved anywhere you want and that the rope used for the
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winch can be extended for consumers to have a chance to go out farther into the water.
Another weakness of this item is the fact that; once the winch is placed on the ground or
boat for use; it has to stay there for the product to fully function. The winch cannot be
moving back and forth from the water, the consumer must physically get out of the water
and move it themselves. A possible weakness of the product is the idea that some
consumers may see this item as a seasonal item. During summer months is main time
where people will most likely be interested in this product because the idea of "fun in the
sun" comes to many consumers minds. There are die hard water athletes that will put on
a water suit and continue to go out into the water during fall and winter season's, but the
about of consumer participants can drop.
Opportunities
An opportunity that our company has with this product is the fact that there is a
place in the market to advertise to those who specifically have large bodies of water on
or near their property. This winch can be used anywhere it can help create a niche
market for people that are willing to pay top dollar for personal use on their property.
Another opportunity that we our company has with this product is the possibility of
renting this product to a consumer. If a customer does not know how this product works
and or they are just visiting in a town close to a beach, they can try or use the product to
see how they like it. This option will give consumers the opportunity to participate in
watersports using our product without the hassle of taking it to and from every place they
go. This option gives the people who cannot afford it the option to use the item and also
gives consumers who would have never thought of the idea of purchasing a winch the
chance to experience the product.
Threat
The main threat that our company is able to foresee is the concept of regulatory
needs in public places such as a beach. When in use there will be a time where there
will be a long piece of rope crossing across the beach into the consumer in the water.
Beaches are considered to be a place to bring the family and some consumers may
think that is it dangerous for a child to be around such an item. If enough parents
complain about this product it may be regulated to a certain place on the beach to be
used that is away from the main beach area.
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Competition
There are 5 major competitors in the market of recreational winch devices. They
all offer essentially the same product with few minor differences mostly aesthetic
Pulldozer- Price is at the lower end of the scale. $1900.00. Offers the most basic
simplistic style of winch Xhive-Price- Is the Highest. Xhive puts advertisements in
popular wakeboarding and they don’t actually put their price out there in front. Like most
high end dealers.
Grinch- $2,394.00, Advertises in surfing and snowboarding magazines
Ridiculous Winch-$3,149.00 Advertise at board shows DIY- Home builders who opt to
build the device themselves are a significant threat to the market share. We wish to
capture some of this lost market share by offering components of our product to be
assembled by the user.
Product Offering
A machine for all your boarding applications: Wake/Surf/Skim/Snow.Winch
Systems are winches built to pull Wakeskaters, Wakeboarders,Snowboarders,
Surfers,Skimboarders and anyone else who needs to be pulled at high rates of speed.
- Consists of a frame, spool motor and rope.
- Max pull: For deep water starts is 300 lbs.
- Top speed: 25 to 30 MPH depending on size of rider.
- Frame: Powdercoated steel construction,hole mounts for staking or strapping to ground
- Spool: can hold up to 2,000 ft of high tension line.Includes 600 ft. of high tension line,
tow handle,
- Engine: 9HP Robin Subaru EX 27 with Tav2 torque converter for smooth starts and an
even pull.
- Starter type: Recoil.
Mobility: attached wheels and detachable dolly cart for easy positioning and transport.
Sharp remote control (attached to handle) and servo motor (mounted to throttle) controls
allow for one man operation.
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Keys to success
According to the data from the Leisure Trends Group (Mintel Group, 2011), 118
million people of at least 6 years of age have practiced extreme sports at least once in
2009, and sales of extreme sports products has increased by 8.8 percent in 2010. This
shows that the extreme sports market, including water ski, snowboarding, and others,
has a lot of potential for attracting consumers of our product.
Our market success depends on how much our self-conducted product is desired.
A big advantage of our product could be the convenience of being able to install our
device with less outlay than it is required for the competitive goods. Furthermore, the
price is a very important factor that can be essential for the competitive advantage of our
product as it is more affordable than the other products. In addition, our product is
usable in places where other are impossible or very difficult to use, such as waters that
are inaccessible for boats. Moreover, our device is the only device that enables the user
to activate the mechanism with a remote control so that for example a wake boarder can
get in position and all he or she has to do is push the button for the propulsion to start.
This feature of our product makes it by far more convenient for the user than any other
product.
Because of the advantages of our product, we hope that it will become a trend and
on one side attract the users using the substitutes of our product to our product, and on
the other hand acquire new consumers that did not have a suitable towing device so far.
Moreover, many lower income consumers can be targeted because of our considerably
lower price offering.
One big vision we have is that our product will reach over to other kind of
consumers that will use it for a partially or even totally different purpose such as in the
construction work areas. In addition, expanding abroad could be a very lucrative
business, especially in landlocked countries with many rivers and lakes and/or
mountains, such as Switzerland, where a pulling device as convenient as ours can be a
great success.
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Critical Issues
A critical point is that our product, being a consumer want, can turn into a luxury
good and be less and less affordable in the future because it is known that the income
distribution has “created a tiered market” (Kotler & Armstrong, 2014, p. 82). The middle
class is shrinking, the lower classes remain poor (Kotler & Armstrong, 2014, p. 82), and
the median income has been decreasing since the Recession starting in 2007 (Gongloff,
2013). This means that fewer people will be able to spend their money on expensive
sports equipment and its’ complements. Thus, this continuous shift in income can
become a threat the extreme sports markets, including our product.
Moreover, another issue can be new competitors entering the market with similar
products, especially if those are more efficient and powerful than our’s and have the
same price class or are cheaper. For this reason it is crucial to keep up with
technological changes and to offer state of the art machinery to achieve high customer
satisfaction. In addition, if substitutes of our product, such as boats and cable ski
installations, were to become more affordable a part of our customers might turn back to
those substitutes. This leads to a further problematic point, the perception that the target
population has of our product. One might have the opinion that a towing machine,
operating from the shore, does not provide the same sensation as the traditional boat
does. As a result, this type of thinking can make a person reluctant to purchase our
product.
Changes in laws concerning the use of any machinery in certain natural areas can
become a major issue because if the use of our product would become prohibited in
those areas, future sales will drop and previous customers might return the device and
ask for refunds. Furthermore, lawsuits for any injuries and accidents incurred while using
our product can be a tremendous financial burden and possibly force the business to
foreclosure. That is why the legal aspect must be carefully examined and waivers of
liability as well as warnings must be highly visible and clearly stated to the consumer.
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References
Bostain, J. (2013). Tips on Buying a Boat Suitable for Boat-Towed Water Sports.
Retrieved from http://waterski.about.com/od/boats/a/buying_a_boat.htm
Carmichael, M. (2011, June 07). Stat of the Day: How Millennials Affect Boomer
Spending. Retrieved from http://adage.com/article/adagestat/stat-day-millennials-impactboomer-spending/228539/
Gongloff, M. (2013, September 17). Median Income Falls For 5th Year, Inequality At
Record High. Retrieved from http://www.huffingtonpost.com/2013/09/17/median-incomefalls-inequality_n_3941514.html
Hanson Dodge Creative. (2013, June 18). Millennials – 80 Million Strong and Ready to
Spend.
Retrieved from http://research.hansondodge.com/education/2013/06/28/millennials-80million-strong-ready-to-spend/
Mintel Group Ltd. (2011, March). Action and Extreme Sports.
Retrieved from http://store.mintel.com/action-and-extreme-sports-us-march-2011
Kotler, P. and Armstrong, G. Principles of Marketing. (2014) (15th ed). Upper Saddle
River, NJ: Prentice Hall
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