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Case 6 The Beach Carrier

ENTREPRENEURSHIP Case Study Analysis


S.Shaharyar Husain Jaffari (9198) Naureen Ansari (8696) Anum Chhapra (8791) Farah Shahid (8919) Zainab Zuberi (9147)

THE BUSINESS
The Beach Carrier is a large and spacious bag with multiple

compartments and different sized pockets


The bag is large enough to accommodate items varying in

size
Items as big as a beach chair, ski boots or as small as a bottle

of sunscreen lotion can be accommodated in the bag


It is manufactured in light weight, tear-resistant and fade

proof fabric allowing it to dry quickly, hence making it ideal for outdoor activities and holiday destinations such as skiing or beaching

Contd
Another unique feature to this product is its portability and

feasibility of storing the beach carrier when it is not in use


It comes with an adjustable leather strap and it can be

folded into a 12X12 square for easy storage


The bag is 36X36 in size when unfolded for usage

OWNER'S PROFILE
Mary Ricci is a creative, optimistic, highly motivated and

enthusiastic individual who has a new product concept which she wants to introduce in the market
Mary Ricci, came up with this brilliant idea is highly

enthusiastic and looking forward to develop this product


Ricci seems to have all the necessary skill to be a successful

entrepreneur

Contd
Although she lacks the financial resources, she is adamant on

not licensing the pattern to another manufacturer or sell the product concept for a flat fee as she has faith in her product
She is aware of the potential profits of the idea, and wants to

keep the ownership confined to herself


Another reason for this unwillingness is because she intends

to maintain control and ownership over the product concept during the initial stages of market penetration of The Beach Carrier

THE MARKET BACKGROUND


Two major competitions

1- Caddy Sack : - Advertised as a backpack type product with enough capacity to keep a table and a small chair, along with pockets for towel and other various accessories - Available in three colors at a price of $16.95
2- Wonder Wheeler: - Has feature of wheels - Can be used as a grocery carrier - Has an enough capacity to keep cooler, multiple chairs and umbrella easily - Available at a price of $59.99

THE MARKET BACKGROUND


Mary commissioned a consulting company for the market

research regarding the various aspects of the product and the ideal target market , concluded that none of the product could be a threat to Ricci's idea later on a focus group was also conducted which concluded that the product should be modified and several consumer insights, valuable for Ricci was obtained
The research concluded the target market which was those

43.9% US adults who use suntans and sunscreens , out of this 43.9% , 57.8% are the females , they were considered to be the major purchasers of these bags , and they purchase it once in every 3 years , thus this year 1/3rd will probably buy these bags.

MARKET PROGRESS
The business has not taken off yet as the entrepreneur lacks financial

resources and start-up capital.


Current scenario of existing competition in the market it is feasible to say

that there is hope for this product concept as the existing products are either very limited in terms of space to accommodate extra accessories or they are too bulky in size along with being too expensive.
In addition to this, the Beach Carrier is manufactured in numerous colors

in both florescent and conservative color themes which offer the customers a great variety compared to what the existing competition offers.
It is therefore safe to say that the product has potential in terms of

progress as it suffices the needs of the gap where a spacious and durable bag in an affordable price range is required in various color themes.

MARKET PROGRESS
Falls within the convenient price range of $ 12.99-$14.99. Whereas

the competing products are both priced higher than the Beach Carrier at $16.95 and $59.99;
Moreover, the tables below show the market share, costing of the

product, along with the break even analysis of beach carrier at different retail prices:

Cont.
Unit Variable Cost ($) Materials Assembly 6.50 3.00 Selling Price/unit ($) 12.99 13.99 Contribution Margin ($) 2.99 3.99

Packaging
Total Unit VC

0.5
10

14.99

4.99

Fixed Costs Northeast ($) 25000 266 2500 27766 Midwest($) South ($) West ($) Total($)

Advertising
Warehousing Selling & Admin Total FC

25000
305 2500 27805

25000
372 2500 27872

25000
256 2500 27756

100000
1199 10000 111199

Break Even Analysis


Northeast $12.99 9286 Midwest 9299 0.25 6969 0.18 South 9322 0.20 6985 0.15 West 9283 0.29 6956 0.22

% of total market 0.28 $13,99 6959

% of total market 0.21

$14.99

5564

5572
0.15

5586
0.12

5562
0.17

% of total market 0.17

On the basis of above data we can assume that Ricci has to achieve only 1% of the total market in order to break even in the first year.

Difficulties Faced
Size of the bag is huge Inconvenient to carry Competition providing the feature of wheels is an attractive value

proposition

The potential market has not been selected properly for the following

reasons. 1- The age group is 18 to 44 16 to 60

Another reason was to base the sales of The Beach Carrier on the people who

use suntan or sunscreen lotions because not everyone who uses sunscreen is necessarily a regular beach visitor, people conscious about their complexion may fall in this category as well. eliminated the male population for the marketing research. (weak) 1- retired males like stay-at-home fathers 2- senior citizens like grandfathers

Assumption that only women purchase beach bags which completely

Initial Key Actions


Hiring a research agency and conducted research

- Formal research - Focus group

Strategy to market to both upscale and discounted stores like

Bloomingdales and Walmart etc .

Mail order options Internet i.e. Online sales She assumed that the profit margins would be higher along with

lower market risk associated , the mail-order strategy will be implemented nationally by using a rollout and through analyzing seasonal demand patterns , with three months interval the national market rollout will be achieved in 12 months.

Initial Key Actions


As far as the promotion of the beach carrier is concerned , it was promoted

in novelty and general interest mail order catalogs and special interest magazines to appeal boat owners and beach goers . the total cost including the material and assembling came out to be $10.00/unit after thorough analysis the mail order price was set at $12.99 to $14.99. the product will be produced at new England factory and no inventory cost would be charged in carrying the product to Ricci's garage or house. Also a $30,000 is the minimum amount she needs to set her fixed cost for the first phase of the mail order program. Other than this $250,000 has be to kept aside for advertising and selling expenses associated with the production of the new product.

Mary Ricci is an entrepreneur with an innovate product concept. Although

she lacks the financial resources needed to further the cause. She is an optimistic individual who has faith in her concept and so she is motivated not to compromise on the ownership and control of the product during the initial stages of market penetration. In order to finance her project, Mary Ricci could strike a partnership with close acquaintances who might be interested in investing in her proposal.

Alternative Business Proposal


Lack of funds Not to spend much on professional research Research among family and friends their views about the product

Incorporating the consumer insight into the product


Social Media Marketing tools like Facebook saving promotion

expenditure

Effective blog content to gather brand likeness


Consumer feedback Distribution at major retail stores and discounted houses

Contd
The product concept, of having a bag which can carry the basic

items required to spend a day on the beach, all in one place is unique as a whole. This allows it to be marketed in a specific way and cater to all those people who wish they had such a bag in which they could fit everything.

For this purpose, the first and foremost thing to do would be to

make a pre-feasibility report. This would include the following:

Product: Beach Bag Description-Multiple pockets, size 12x12 inch, light weight, made out of tear-resistant material, fade-proof. Available in florescent colors (yellow, pink, red, blue, green)

Contd
Target Audience: Adventurous, outdoorsy and energetic males and females aged between18-44. Price: Special introductory price scheme: buy 1 get 30% off on the other (for the first 2 months) Retail price: $14.99 Promotion: Fashion Magazines, Teen Magazines, Point of sales display, InStore promotion.

Contd
Place/Distribution: Inventory will be stored in the owners garage/store house at no cost.
Other than that, all goods will be manufactured at a local

factory and transported via vans to the store house. The customers will have an option of purchasing the product via online transaction or through cash-on-delivery. (social media marketing)

Financing: Short term loans (from friends and family), owners equity, sale of personal assets which are not needed.