Business Plan: Children’s Sport Watch
Executive Summary
The ‘KidsGo’ will not face any major competition at initial level because there is no company offering exact product. However, Ibitz is currently selling pedometer that monitors steps taken by the kids. User friendly, customize solutions for different needs, and accessibility to information through website are major advantages KidsGo watches have over competitors’ products. However, it is important for the company to keep introducing new functions, apps and other benefits in order to maintain competitive edge because there are high chances of technology imitation.
‘KidsGo’ will initially invest in marketing communication activities and establishing technical infrastructure, and hiring resources. The company will initially focus on marketing product by using cost-effective marketing tools in order to minimize the expenses and maximize the gain. The company is expecting to generate good business during initial two years of operation and will also achieve break-even point during 2nd year of operation.
Industrial Analysis and Trends
The industry of activity watches is a growing one. However, most of the activity watches are made and marketed for adults. This industry would be ideal to enter into now with this product because its not new, but just made for a different market. Porter has provided an effective five forces model to analyze business industry and trends.
Threat of Substitute (Low): Presently it is difficult to find any equipment that measure real time data related with the exercises performed through the day without making any extra effort. However, ‘KidsGo’ watch will face low of threat from the substitute such as weighing machine, all equipment that measure the calories burned in each session of exercises (Kotler & Keller).
Bargaining Power of Buyers (Low): ‘KidsGo’ watch is first of its kind of product in the market, therefore it is not possible for the buyers to bargain the prices of the products, and company can decide the price according to cost involve in development of the watches.
Bargaining Power of Suppliers (Moderate): ABC corporation will require procure specialize as well as general material for production if the watches. Bargaining power of technology suppliers will be high because there are few suppliers that offer quality technology and products. Bargaining power of suppliers offering general material will be low.
Barriers to Entry (High): Huge cost involve in development of new technology and creation of infrastructure make it difficult for small players to enter into the industry.
Industry Rivalry (Low): “’KidsGo’ is first mover in offering activity watch that helps in motivating children for exercise and managing their weight (Abrams).
Market Size
The activity watch is suitable for all children irrespective of their age group and gender. According to the data around 17 percent i.e. 12.7 million children and adolescent are facing obesity problem. The prevalence rate of obesity is very high in 6 to 11 and 12 to 19 years children who are main market for KidsGo activity watch. Out of 12.7 million 8.4 percent children are below 5 years who may be able to do exercise (Childhood Obesity Facts). Out of remaining 11.25 million children fifty percent children may not like to use KidsGo watches or any other products. 20 percent children may be using other methods for weight reduction. Therefore, 3.37 million customers are expected to be the main market for KidsGo activity watches. Children who wants to remain fit and prefer to monitor their daily routine are also a good market for the ‘KidsGo’ activity watches (Abrams).
Competitive Analysis
Presently there is only ibitz product that offers somewhat similar solutions but not the same solution. ibitz is a small wireless pedometer that watches kids steps, it only monitors the child’s steps. It also only syncs with certain devices making it more difficult for a lot of kids to use, whereas with my activity watch, kids can access their information through a website.
The Problem: Increasing number of children suffering from Obesity.
The Solution: KidsGo watch help parents to monitor activities or exercise done by their kids. The watch also encourage children to do activities by using interactive media, and cartoon characters.
Competitive Advantage: Stylish look, easy to use, customize solutions for different needs, and accessibility to information through website are major advantages KidsGo watches have over competitors’ products (Levitt). A comparative analysis of both product is presented in below table.
Strategic Positioning and Risk Assessment
‘KidsGo’ activity watch will uniquely position its watch in the market. ‘KidsGo’ watch offers a customize activity solution for your kids that not only encourage your kid for exercise but maintains online records of activities. Parents can get real time information about the activities performed by their kids through their cell phones or by using website. The risk associated with designing and marketing kid’s activity watches is low because market is growing and present number of competitors is almost nil. The company is first mover in bringing kid’s activity watch to the market. However, products offered by Ibitz will give good competition to ‘KidsGo’ activity watch. In present competitive market it is also easy to imitate technology, therefore, company will also face competition from the new entrants (Abrams).
Marketing Plan and Sales Strategy
Target Customers:
The target market for ‘KidsGo’ activity watch can be categorized into two large segments i.e. Parents and children. Children are the main target market because they are the end-users of the watches. Parents are also important target customer because they will be buying the products for their children. ‘KidsGo’ activity watch is suitable for all children irrespective of their age, gender, class, and ethnicity. The price of the product is also moderate, hence, all parents can afford it. The company is required to market its products in a manner to attract children and their parents. Marketing strategy will focus on developing promotional activities that develop an interest in children to use the watch. However, for parents company will develop informative advertisements to encourage them to buy the watch for their children.
The company has no prior base in the market and has limited budget for marketing communication activities. Therefore, at initial level company will use cost effective media tools to inform parents and attract children. Social media, interactive website, direct marketing, mass marketing, positive word-of-mouth and CSR activities will be used to develop a brand image. Personal selling can be used to inform parents about the benefits offered by KidsGo watches. Social media is also very effective tool with wide reach. Under social media, company will create webpage on Facebook, twitter, and Instagram. All accounts will inform customers about the benefits offered by activity watches and how KidsGo is superior from ibitz. The website of the company will be informative yet interactive where parents can gain information about the products and children can play with the games (Mullin).
Advertisement on television and print media will also be used to promote the brand. However, the frequency of advertisement will be very less. Company will select kids and carton channels to advertise its products to children, and advertisement in newspaper to inform parents about the product. Positive word-of-mouth will gain popularity only when product will be launched in the market and customer will start using it. The company will also use direct email to the children and parents (Mullin). Link provided in the mail will direct customers to the company’s website. Marketing communication message that will be used by the company is:
For children: wants to be fit & healthy, KidsGo activity watch is just designed for you.
For Parents: A customize solution that monitors and maintain exercise records of your kid on website, to keep your kids healthy.
Operation Plan
The company will involve in designing and marketing KidsGo activity watches. Manufacturing of the watches will be outsourced to an external manufacturer. Company will require team of designer and engineers for website designing & development, product designing, daily update and Research & development activities. Technical staff will identify manufacturer of the watches and suppliers for supply of raw materials. Marketing team will be responsible for distribution, promotion, sales and after sales service of the watches. At initial level company will not recruit large team, only few members will be responsible for multiple responsibilities (Kotler & Keller).
Manufacturing of the products can be done from the manufacturers located in developing country such as China, India or Indonesia. Selection of suppliers will be performed by comparing quality, experience, past record, and cost offered by the suppliers. Company will also consider supply chain effectiveness while selection of suppliers and manufacturer. After selection of business partners, company will focus on improving supply chain effectiveness and logistics management. The company will develop marketing communication plan before launch of the product and product will be launched in the market with some inaugural discount. AT initial level company will not sale its product from the website, but it will be done in near future.
Key business milestones that will be achieved by the company by specified date.
Technology Plan
Technology will play an important role in the success of ‘KidsGo’ activity watch. Technology will be required at all major phases starting from design and development of the product and related apps, development of interactive website, daily maintenance of the website and monitoring of smooth operation of all products. The focus of activity watch is on generating real time, and detailed information on the exercise performed by the children. Therefore, it is important for company to keep its technology and server up and running 24x7. Company will hire special team of 5 technical professionals who will be dedicated to take care of technical activities at the company. The team will consist two professional expert in designing and developing activity watch, one professional for web designing, and two experts for information management and to perform daily site update. Research and development will also be on top priority of the company because, it is easy for competitors to imitate technology. Addition of new apps, technology or feature will help company in maintaining competitive advantage and to attract new customers (Abrams).
Management and Organization
Initially the team will be small and all people will be directly communicating with the founder and CEO of the company, hence, the organization structure will be flatter and decentralize. The detail of key personals are as follow:
Ms. Rossy Paul: A financial expert with 2 year knowledge of the field. She will take care of all financial activities in the organization.
Three experts at initial level will manage all employees. Other services such as HR and legal can be outsourced at initial level.
Financial Plan
Financial Planning will help company in understanding possibility of the business success and business performance during initial years of operations. ‘KidsGo’ is required to invest money in developing technical infrastructure, design & development of the watches, hiring staff, procurement of the furniture, office equipment, marketing activities and human resource management.
The financial details of the KidsGo are as follow:
Sales and Revenue Forecast:
Few assumptions that are made during above forecast:
- Growth of business @ 33 percent during first year and @ 50 percent during 3rd year because initially company will launch product in few states which will grow further to all states across the country.
- Product price will increase during third year due to inflation.
- Operational expenses will increase @ 5 percent every year.
Break-even Analysis:
Break-even analysis shows the year or point when company will recover all expenses and fixed cost of the business and will start making profit. The below table is showing that company will achieve its break-even point during 2nd year of operation.
Break-Even Graph
Business Expansion
‘KidsGo’ can extend its business in international market. Presently there is no company developing and selling kids’ sport watches, hence, the market of kids sport watches is unexplored and untapped. The company can gain first mover advantages by launching its products in different foreign markets depending upon the size of potential market. The company can also expand its business by expanding width and depth of existing product or by launching new products in present market.
Exit Strategy
There are various strategies that a company can adopt to exit from the market. However, it is important that the company select suitable strategy to exit from the market in order to recover the maximum cost invested in establishing the business. Merger and acquisition could be a strategy that company can adopt in case company does not make profit. Selling assets to a buyer can also be good strategy if company does not earn any brand name, because in absence of brand name, it will be difficult to find a suitable company for merger & acquisition.
Works Cited
Abrams, Rhonda M. The Successful Business Plan: Secrets & Strategies. California: The Planning Shop, 2003. Print.
"Childhood Obesity Facts." 2012. cdc.gov. Electronic. 10 November 2014.
Levitt, T. "Marketing Success through Differetiation - of Anything." Harvard Business Review (1980): 83-91. Print.
Mullin, R. Sales Promotion: How to Create, Implement and Integrate Campaigns That Really Work. London: Kogan Page Publishers, 2010. Print.
P. Kotler & K. Keller. Marketing Management. London: Prentice Hall, 2011. Print.
