Market Feasibility of Gravity Lights - Case Study Example

Market feasibility of Gravity Lights Customer Name: Lecturer Name: Date: 1. Executive Summary This report addressed market viability of Gravity lights a new product that is intended to be an alternative source of energy in areas with limited power supply. The target area for this new product which has already been launched in other regions that have no power access is camping and caravan sites. The product offers unique advantage as compared to other competing products. It is cheaper and uses no alternative energy sources such as solar, batteries and charging as other products require. 2. Description of current business Because of the paramount importance of energy in both developing and developed nations, alternative sources of power besides the main sources of power such as commercial power mains, solar, wind and nuclear in developed countries are always welcome. In essence, with the need to ensure minimal greenhouse emission, this desire has been growing even bigger with citizens and governments seeking alternative ways of power that have minimal or no effect on the climate. Cleaner energy sources are welcomed both in developing and developed worlds alike (Vyge 2012). Cleaner alternative sources of power such as the solar and wind energy still have limitations. Solar energy will demand the presence of the sun most part of the day and also require batteries to store the absorbed energy for usage at night or when the sun is temporarily barred by bad weather. On the other hand, the wind energy will demand a special location which is exposed to direct wind in order to function; it also demands the presence of backup power. Other electrical sources which store power are also demanding because they require regular charging and hence requiring nearness to mains power. As noted alternative sources of power especially to remote areas in Australia is still a problem, and hence a market gap that must be addressed (McQueen &Christina 2002). The business concept is therefore the introduction of Gravity lights. Manufacture and mass sale of gravity lights in the Australian market is the business concept that will be transferred oversees to Australia. Gravity lights essentially work by using gravity as the name suggest. The only source of energy in the production of gravity lights in a weight placed for a few seconds and the light last for about 30 minutes. Considering that the weight can be anything, this eliminates the restrictions given by alternative sources of power such as the solar, the wind energy and other alternative sources that demand charging from the mains power source, batteries and good weather. Gravity lights can therefore be used when there is a mains power outage, in remote areas such as camping sizes given its light weight and it is a good idea for energy sensitive individuals while it is by far cheaper than other alternative sources of energy such as wind and solar energy and it is more friendlier to nature as it emits now waste as compared to other alternatives. Gravity lights effectively solve the identified business problem and hence making it commercially viable. This business concept currently targets developing countries with minimal access to power, it gives alternative source of power to developed countries and especially regions with minimal or no power supply (McQueen &Christina 2002). 3. Description of new business including products and services The proposed product aims at providing cheaper alternative source of power to remote areas such as camping sites, areas affected by torrential rainfall that may result in power outage. There are a number of changes that will be made for the new market. These changes will focus on the Gravity lights as a source of cleaner and more cost effective alternative source of power to people in remote places such as camps. Unlike in their oversees market, in India and Africa where the product is being marketed as an alternative source of power to Kerosene lambs, the strategy will be different in Australia since most of the country is supplied by mains power (Schmidt & Calantone 2002, p.103). The main issue will thus be the focus on cleaner energy and alternative energy sources in remote areas such as camping sites and national reserves which have minimal power supply because of the terrain. Unlike the usual alternative sources of lights such as torches using small batteries and rechargeable torches among others, the alternative Gravity lights will provide another more reliable option since it does not require batteries or being charged. More so, they are also portable because of their weight and hence more convenient to individuals in remote areas (Pride, Hughes & Kapoor 2012). Because of the unique Australian market niche, the market strategy will also be different as it will target specific areas and specific market segment as compared to oversees market where the target clientele was the entire population as a result of minimal or no access to other major power sources. The Australian market will also demand a change of strategy; segmentation and product positioning will be useful in getting the attention of the required market segment. Micro marketing focusing on this unique market niche will be required. This is because it will be imperative for the business to clearly differentiate itself in its market niche. 4. Market feasibility Market for the product There is adequate market for the product, the rationale for this is because of the uniqueness of the product, Gravity lights provide an alternative source of energy which can be used to product light in places with minimal or no power connection. More so, the product targets a particular market segment and not the entire market, with thorough marketing micro-marketing strategies to this target group, the success of the product will be ensured throughout its product life cycle. The other reason why there is a potential market for the product is because the product is “green” with the sensitive nature of the target group such as the campers and people working in remote places, a green source of energy is highly welcomed (McQueen &Christina 2002). Secondary market research Based on secondary market research, According to Australian Bureau of Statistics (ABS) (2012) estimates the customer base to be 5.6 million, this is the total camping and Caravan in Australia, both domestic and international. Since all campers require sources of light, common sources such as lantern LED lamps require charging, use batteries and use batteries as fuel (McQueen &Christina 2002). This is a major disadvantage of available lamps and hence giving Gravity lights and edge in their market niche. In essence, secondary market research shows that there is adequate market for the products based on statistics, more so the products in the market are not as unique as Gravity Lights (Kothari 2008). Target segment The market segment for the product includes camping sites where there is limited access to commercial power, remote places where people visit for a short duration of time and hence no need permanent source of power. Given that many Australians like hiking and even exploring remote places such as caves which often require sources of light. Gravity lights provide the best alternative as compared to fires and other sources of light such as torches in these remote areas. Other areas that will be targeted includes region frequently affected by torrential rainfall that may hinder normal daily duties by interfering with power supply and areas prone to other natural disasters which often lead to power outage. Other segments are people with power conservation sensitivity, there are many Australians sensitive to the need to go green. Gravity lights will be the way to go for such people ( Loudon, Stevens, &  Wrenn 2005, p.2). Why people will buy the product There are a number of reasons why the target market segment will buy the product: Firstly Gravity lights are a cheaper source of power, Gravity lights do not require any additional batteries, or other solar equipments in order to operate, they do not also require the mains power to be charged as other traditional sources will require in order to conserve energy. They work almost for free with only a small attachment of weight for a few seconds and the device will emit light for up to 30 minutes. Because of the technology used, Gravity lights are capable of converting gravity pull as a result of the attached weight into light energy for usage in during the night or in dark places. With the increasing need to invent new and cleaner energy, Gravity lights came along as a strategic and much needed innovation in the industry sector. The fact that the product is “green” is a boost in itself since most other alternative products are not green and hence have less market potential as compare to Gravity lights. Customer behaviour According to Australian Bureau of Statistics (ABS) (2012) there is an increase in the number of camping and caravan in Australia over the few years, in 2011, there were 50,653 and this increased to 52,653 in 2012. More so, Caravanning and camping (2012) observes that Australia received both internal and external visitors, majority of them being domestic visitors. Statistically, overnight caravan trips of domestic visitors in 2010 was 727, 000, this figure increase in 2011 to 790,000. Nights in Caravan or camping for domestic visitors in 2010 was 4.8 million and slightly lower in 2011 with 4.6 million visitors. Domestic visitors averaged 80 % and 84 % respectively in 2010 and 2011 respectively. On the other hand, foreign visitor’s overnight trips were 57600 in 2010 and 57500 in 2011 respectively. Night camping in caravans was 0.8 million and 0.9 million in 2010 and 2011 respectively. The night Caravan and camping averaged 19% in both years. These statistics also show that domestic camping and caravan visitors are aged 35-39 years, this makes about 53 % of the visitors while international visitors are younger, mostly 35 and below make 53%. Based on this statistical finding, the target customer base is about 5.6 million, this is the total number of internal and external Caravan and camping visitors. With majority of the target segment aged between 35-39 years. According to Australian Bureau of Statistics (ABS) (2012) also shows that popular regions for caravan and camping are Broome with 12 %, Bunbury 10%, Agusta-Margaret River 7%. Notably domestic caravanning and camping visitors spend most of their night in regional Western Australia than majority of international visitors; common regions are Agusta-Margaret River, Busselton, Roebourne, Carnarvon and Exmouth. The buying patterns of individuals in camping sites is varied, they mostly buy products with additional advantage to their camping and expedition experience such as LED portable lanterns with a compass or any device which can offer unique advantage to their camping experience. This is a major merit for the Gravity lights since it has the right qualities for it to be visitors favourite, it uses natural energy and does not require charging or batteries as the LED portable lanterns require. How the product will be sold According to Blyth (2009) for a start, the product will be sold directly to the customers in strategic places such as camping sites or entrance points to camping sites. Effective sales people who are well trained to handle customers will be employed in order to clearly demonstrate the benefits of the product to the customers and also be in a position to paint a clear picture of the product in order to arouse the emotions from the customer. This is important because having the right people at the right place will differentiate between success and the failure of the product especially in the initial phase. The other option will be getting the support of camping sites owners to display our products when they are receiving campers or other interest groups looking forward to spending their time in remote places for a considerable period of time. More so, the benefits of the product such as no additional source of energy storage such as batteries or a conducive weather will be needed in order for the product to work effectively. This is a major advantage because most campers will prefer energy sources with minimal restrictions in order for them to work throughout their stay in remote areas. Summary of two competitors 12 LED Portable Camping Camp Lantern Light Lamp with Compass is one of the most used source of light for campers, the product contains ultra bright LED light with 12 LED bulbs, the brightness of the light is adjustable, it is light in weight and good for camping and other outdoor activities because it has an LED life time of 100,000 hours. This product compared well with the Gravity lights in the sense that it has a longer LED life, portable and adjustable lights, however, Gravity lights still have a competitive advantage over this LED lantern light, Gravity lights have extended life time and do not have batteries as the LED does. The price ranges of Gravity lights and LED lantern lights averages on $5.9 without shipping expense, they are normally sold online, in ebay and amazon and shipped to the ordered location. This clearly gives the Gravity lights competitive advantage. The other product that competes with Gravity lights is Kovea Premium Titan Gas Lantern (Kl-K805) / Gas Lantern for camping and outdoor. This product is light in weight, normally sold with 2 free mantles and has a life time of 3 days with power. This product is however expensive, it costs $52.9 without shipping expense. More so, it is not recommended to use a gas lamp inside a tent because of safety measures. This makes it less advantageous for individuals looking forward to be enjoying their camping experience without interference. Gravity lights offer a much better alternative compare to the two identified products as a result of the competitive advantage that Gravity lights have. Business competitive advantage The business competitive advantage is mainly on the product and the market strategy that will be employed. The rationale for this is because Gravity lights offer unique alternative to the sources of power available for campers. Gravity lights do not require other power sources for charging as LED lantern lights will require, they do not need batteries to store power as other alternatives will require, they are also cheap, price ranging from $5 to $10 depending on incurred cost. Gravity lights are environmental friendly and considered green alternative sources of power. The market strategy to be employed will also be a competitive advantage, as compared to competing products which are mainly ordered online or acquired from distant shops, Gravity lights will be distributed in camping sites, this will add more value as the product has unique feature and easily available in regions with high number of campers such as are Agusta-Margaret River, Busselton, Roebourne, Carnarvon and Exmouth. 5. Commercial feasibility 500 SWOT analysis Strengths Gravity light is a unique product in the market and it is also best suited to the target market as an alternative source of power especially in remote areas with no mains connectivity. Gravity lights are cheap to acquire and do not need any additional devices such as batteries or conducive climate in order to work as compared to other alternative sources of power. Their manufacturing is also cheap and hence making it readily available for as low as $10. Gravity lights require no maintenance and additional reoccurring expenditure such as charging or buying new batteries in order for it to work. With the growing desire to adapt greener sources of power gravity lights provide an alternative and a 100% clean energy and hence a forward step towards future green energy. Weaknesses The product is still new in the industry and hence it might take considerable time for it to be a success. The initial cost if manufacturing and marketing might take time for it to fully break-even given the market volatility. Opportunities The energy sector is one of the most lucrative sectors in the world and hence a small innovation in this field can achieve unprecedented success within a short duration of time. Gravity light is a unique product which is well suited to the market segment. Effective promotional strategies can yield massive market share before other competitors respond to the threat. Threats Because of the simplicity of the technology used in the manufacturer of Gravity lights, product imitation by competitors is a real threat. The energy sector has a lot of potential and hence innovation. This implies that competitors can easily copy the technology and produce more creative products and hence cutting into the existing market niche. Budgeting The total amount require to set up the business is $USD 95,000 6. Overall Risks Major risks There are a number of risks that the product can face in the market; some of the major risks include slow sales as it is still a new product, increase in patent cost and other related government regulations, possibility of economic downfall which may hinder caravan and camping. These are some of the major risks that the business will have to face when making market venture. Major risks that the business faces Ten major risks that the business may face in the market include the following. I. Commercial viability of the product as the product is still new II. Intellectual property rights and Patent as well as government regulation restrictions III. Economic downtime that may impact on the sales as a result of the reduction on the number of visitors to camping areas (Keizer, Vos & Halman 2012). IV. The cost of mass production of these products, this will increase the risk of attaining break-even point. V. Marketing risk and consumer acceptance VI. Availability of effective distribution channels VII. Performance of the product in the market, if it will achieve better results than the existing products VIII. Competitors risks IX. Risk of product imitation and mass production X. Product technology risk ( Keizer, Vos & Halman 2012). How sensitive the business is for survival in the risk identified I. Commercial viability- extremely sensitive to the business because it determines the success of the product in the market II. Intellectual property rights and patents- sensitive because it determines the start success. III. Economic downtime- sensitive as sales will decline. IV. The cost of mass production of these products- sensitive as this will increase the risk of attaining break-even point. V. Marketing risk and consumer acceptance- very sensitive as it will differentiate between success and failure in the market. VI. Availability of effective distribution channels- sensitive because it is important for product distribution VII. Performance of the product in the market- sensitive because it determine if the product will achieve better results than the existing products (Keizer, Vos & Halman 2012). VIII. Competitors risks- very sensitive because it determines the product performance against existing competition (Keizer, Vos & Halman 2012). IX. Risk of product imitation and mass production- sensitive because it will lead to decline in sales as counterfeits are present. X. Product technology risk- not very sensitive as the technology has been tested elsewhere. How sensitive profits are to each risk identified I. Commercial viability- extremely sensitive because failure to succeed will reduce profits. II. Intellectual property rights and patents- not very sensitive III. Economic downtime- very sensitive as it will reduce sales and hence profits IV. The cost of mass production of these products- sensitive as it will increase cost and hence lessen profits( Keizer, Vos & Halman 2012). V. Marketing risk and consumer acceptance- very sensitive as it will determine sales turnover and hence profits. VI. Availability of effective distribution channels- sensitive because it determines if the product will get to the customer and hence make profits. VII. Performance of the product in the market- sensitive in the long run profit making. VIII. Competitor’s risks- very sensitive because it determines if competitors will cut on the sales and hence profits. IX. Risk of product imitation and mass production-very sensitive as it may result in profit reduction X. Product technology risk-sensitive as competitor technology may prove worth and hence reducing profits. Proposal to lessen risk XI. Commercial viability- increase marketing awareness campaign XII. Intellectual property rights and patents- ensure patenting. XIII. Economic downtime- ensure strategic positioning XIV. The costs of mass production of these products- take advantage of economies of scale. XV. Marketing risk and consumer acceptance- ensure effective marketing strategies XVI. Availability of effective distribution channels- seek alternative options XVII. Performance of the product in the market- Ensure product quality (Keizer, Vos & Halman 2012). XVIII. Competitor’s risks- Ensure thorough market research and marketing. XIX. Risk of product imitation and mass production- Ensure patent protection. XX. Product technology risk- ensure sustained product innovation (Keizer, Vos & Halman 2012). 7. Recommendations It is recommended to first conduct market research, establish regions with high customer targets and set and effective awareness campaign in those areas. Financial support is also important in order to take advantage of economies of scale; this will be catered for by the planned budget. A thorough SWOT analysis of competitors is required; this is because it will help the business clearly and strategically differentiate itself in its market niche using the understanding of the market. References Australian Bureau of Statistics (ABS) 2012, Cat. No.8635.0 Survey of Tourist Accommodation, Australia. Blyth,J 2009, Key Concepts in Marketing, SAGE New York, NY. PP.123-142. Carravaning and camping 2012, Tourism Research Australia National Visitor Survey (NVS) and International Visitor Survey (IVS) 2001-2011 (unpublished data) All figures refer to persons over the age of 15 years. Keizer, JA, Vos, JP & Halman, JIM 2012, Risks in New Product Development, Developing a Risk Reference Framework. Kothari, CR 2008, Research Methodology: Methods and Techniques, New Age International. London. Loudon, DL, Stevens, RE&  Wrenn, B 2005, Marketing Management: Text and Cases,: Routledge, Melbourne. PP. 2-6. McQueen, R &Christina, K 2002, Research methods for social science: a practical introduction, Prentice Hall, New Jersey. Pride, WM, Hughes, RJ & Kapoor, JR 2012, Foundations of Business, Cengage Learning, Sydney.pp.306-310. Schmidt, JF & Calantone, RJ 2002, Escalation of commitment during new product development, Journal of the Academy of Marketing Sciences, vol.30, no. pp. 103-118. Vyge, J 2012, The Dragons' Den Guide to Assessing Your Business Concept, John Wiley & Sons, Michigan. PP. 232. Read More