Stage 5- Business Analysis

The New Product Development Process

Stage 5- Business Analysis

The New-Product Development Process (NPD) is outlined above by Kotler & Keller (2012).

Business analysis is a very important stage of the NPD process because it is the final stage of assessment before deciding whether or not to develop the idea into a product. The primary focus of this stage is to determine whether the product will be profitable or not. Therefore the business analysis stage “will help you determine the costs involved in your proposed NPD, and forecast the profits you may make from the product in future financial years. The costs of developing a product are substantial. Your business analysis will also help you eliminate inappropriate ideas and avoid unnecessary costs.” (Business.qld.gov.au, 2014).

Considerations in business analysis include; demand, cost, sales and profitability (Lamb, Hair & McDaniel, 2009).

Demand: This relates to the products market size and potential. Price/sales relationship: speed of sales growth, seasonality and rate of repurchase.

Cost: The cost to produce the product including start-up costs vs. running costs.

Sales: Forecast sales volume. The number of people expected to buy the product- market share.

Profitability: Time to recoup initial costs. This is a direct outcome of the considerations above.

Example of Business Analysis


Onez Sports Center is the name of a proposed futsal center located at the University Terengganu in Malaysia. Business analysis has been done for this futsal center; this analysis outlines the four considerations mentioned by (Lamb, Hair & McDaniel, 2009).

Demand	The target market is the students of the university. (10,000 students in total).
Cost	(See Appendix A for Breakdown of Operational Cost) Start-up costs RM85,000, operational costs RM14,395 pcm
Sales	Market share will be divided with the competitor (UMT court which provides free futsal services).
Profitability	The business analysis states that the facility will be profitable so the start-up and operational costs which is RM99,395 will be reimbursed.

Quick Baseball

In relation to my new sports format- Quick Baseball I have researched the considerations mentioned by (Lamb, Hair & McDaniel, 2009). 

For demand I have researched the current market size of Major League Baseball (MLB) whom will be my main competitor and hopefully Quick Baseball will have a similar market size to the MLB which is 5,293,083 on average for all teams in MLB. (Baseball-almanac.com, 2014).

The cost of attending a Quick Baseball game will be considerably lower than the cost to attend an MLB game. I plan to price tickets 40% cheaper than current prices for MLB. An average ticket prices will be $15.

In terms of sales; these low ticket prices should see similar attendance figures to MLB fixtures. Average attendance for the 2014 MLB season was 30,450. (ESPN.com, 2014) (See Appendix B for MLB attendance figures).


By taking cost and sales of Quick Baseball into account, it will be hugely profitable. 58 games will take place during the season. If attendance figures are the same as attendance figures for MLB $26491500 profit will be made through ticket sales alone.

500 Words

References

Baseball-almanac.com, (2014). Baseball Markets by Al Streit. [online] Available at: http://www.baseball-almanac.com/articles/baseball_markets.shtml [Accessed 4 Dec. 2014].

Business.qld.gov.au, (2014). Business analysis of new products | Queensland Government. [online] Available at: https://www.business.qld.gov.au/business/business-improvement/new-product-development/strategy-analysis-new-products [Accessed 4 Dec. 2014]

ESPN.com, (2014). 2014 MLB Attendance - Major League Baseball - ESPN. [online] Available at: http://espn.go.com/mlb/attendance [Accessed 4 Dec. 2014].

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

prezi.com, (2014). BUSINESS PROPOSAL : FUTSAL CENTER. [online] Available at: https://prezi.com/cgfym15tdfjx/business-proposal-futsal-center/ [Accessed 4 Dec. 2014].

Appendix

Appendix A- Breakdown of Cost, Onez Sports Centre

(Prezi.com, 2014)

Appendix B- MLB Attendance Figures

2014 Attendance		Home				Road			Overall
RK	TEAM	GMS	TOTAL	AVG	PCT	GMS	AVG	PCT	GMS	AVG	PCT
1	LA Dodgers	81	3,782,337	46,695	83.4	81	33,830	79.2	162	40,262	81.6
2	St. Louis	81	3,540,649	43,711	99.4	81	32,022	74.4	162	37,867	87.0
3	NY Yankees	80	3,401,624	42,520	85.7	81	35,512	85.2	161	38,994	85.5
4	San Francisco	81	3,368,697	41,588	99.2	81	32,936	72.7	162	37,262	85.5
5	LA Angels	81	3,095,935	38,221	84.2	80	28,174	65.1	161	33,229	74.9
6	Boston	81	2,956,089	36,494	98.5	81	31,867	73.6	162	34,181	85.1
7	Detroit	81	2,917,209	36,014	87.3	81	28,800	68.0	162	32,407	77.5
8	Milwaukee	81	2,797,384	34,535	82.4	81	32,328	75.6	162	33,432	79.0
9	Texas	81	2,718,733	33,564	68.3	81	27,155	64.3	162	30,360	66.4
10	Colorado	81	2,680,329	33,090	65.5	81	31,659	71.2	162	32,375	68.2
11	Chicago Cubs	81	2,652,113	32,742	79.6	81	33,096	76.4	162	32,919	77.9
12	Washington	81	2,579,389	31,844	76.7	81	29,864	68.8	162	30,854	72.6
13	Baltimore	80	2,464,473	30,805	67.8	81	29,671	70.4	161	30,235	69.0
14	Cincinnati	81	2,476,664	30,576	72.3	81	32,140	74.1	162	31,358	73.2
15	Pittsburgh	81	2,442,564	30,155	78.6	79	33,316	76.1	160	31,715	77.3
16	Philadelphia	81	2,423,852	29,924	68.6	81	31,136	71.1	162	30,530	69.9
17	Toronto	81	2,375,525	29,327	59.5	81	29,708	71.2	162	29,518	64.9
18	Atlanta	81	2,354,305	29,065	58.4	81	30,804	71.7	162	29,934	64.6
19	Minnesota	81	2,250,606	27,785	70.3	79	26,943	63.6	160	27,369	66.9
20	San Diego	81	2,195,373	27,103	63.5	80	32,877	72.0	161	29,972	67.8
21	NY Mets	80	2,148,808	26,860	64.3	81	32,217	73.4	161	29,555	69.0
22	Arizona	81	2,073,730	25,601	54.0	79	31,481	70.6	160	28,504	61.9
23	Seattle	81	2,064,334	25,485	53.2	80	28,158	66.3	161	26,813	59.3
24	Oakland	80	2,003,628	25,045	71.4	81	28,757	65.6	161	26,912	68.2
25	Kansas City	81	1,956,482	24,154	63.7	81	26,872	62.8	162	25,513	63.2
26	Houston	81	1,751,829	21,627	52.8	81	27,191	63.0	162	24,409	58.0
27	Miami	81	1,732,283	21,386	57.1	81	28,892	65.4	162	25,139	61.6
28	Chicago White Sox	79	1,650,821	20,896	51.5	81	28,519	66.7	160	24,755	59.4
29	Cleveland	78	1,437,393	18,428	42.4	81	29,107	68.9	159	23,868	55.7
30	Tampa Bay	81	1,446,464	17,857	52.4	81	28,685	65.8	162	23,271	59.9

*In recent years most cases of doubleheaders are split/day-night doubleheaders which means they have two gates/separate attendance figures. In these cases above they are true doubleheaders with only one attendance number. (ESPN.com, 2014)