Marketing Strategy and Product Uniqueness of Jacuzzi - Case Study Example

Name Course Instructor Institution Date Table of Contents Introduction 2 Market Feasibility 3 Technical Feasibility 4 Financial Feasibility 5-7 Human Resource Management for the technical feasibility 8 References 8 Appendix………………………………………………………………………………………… 9 Introduction Increase in population has brought forth the demand for housing and social amenities.Large tracks of land which were once bushy are now in high demand for construction purposes. Thirst for land has led encroachment of land meant for recreational and agricultural purposes. From low income housing to high end housing, the real estate business has opened numerous opportunities for entrepreneurs. After conducting due diligence on the construction industry in Australia, Comfort Kick Limited identified a niche in selling and installation of Jacuzzis for the rising middle class in Australia’s construction industry. The Australian middle-class has catalyzed the demand for luxurious utilities in the construction industry. Access to financial services has increased the purchasing power of the Australian middle class thus a booming market for luxurious house utilities.Apart from the normal shower and bath-tub demand for Jacuzzi has recently been on the rise prompting Comfort Kick Limited to venture into the market. Jacuzzis require expertise to install, repair and maintain. The company intends to create a portfolio of catering for diverse client needs ranging from family and holiday makers. Comfort Kick intends to establish a show room to assist potential clients in making informed decisions about which type of Jacuzzi they wish to install in their homes. The company will offer a wide range of Jacuzzis; hot air bubble Jacuzzis and Hot Tub with different sizesto fit different number of people. Additionally, an online platform will be put in place to reach customers whom have limited time thus cannot make it to the companies show room to view the different types of Jacuzzis available.Corporate clients like hotels and holiday apartment companies will use the website to book for specialized show room sessions for negations and extensive viewing. Market Feasibility According to Powell 2015, sixty six percent of Australia’s population is made by middle class. With an average income of $998 per week, the demand for luxurious housing utilities like Jacuzzi has been on the rise thus the establishment of Comfort Kick Limited. Growth in the real estate market has also heavily contributed to the need for Jacuzzis in indoors platforms and back yard compounds of residential places. Australia’s real estate has over the years grown at a 30.9% rate (). With unemployment a rate at less than 10% newly employed and new weds provide a substantial market for land and housing (Powell). House construction automatically translates to potential market for Jacuzzi and Jacuzzi related services. Additionally, Australia is ranked among the best tourist destinations in the World thus the potential market for special amenities like Jacuzzis for holiday makers through installation on hotel rooms and outdoor Jacuzzi parlors. Marketing saturation of any particular product depends on how well established companies have a grasp of the current market share. Few markets maybe controlled by oligopolies which collaborate to lock potential competition. Fortunately for the indoor and outdoor decors in the Australian real estate market there are no restrictions on the entry level. One’s marketing strategy and product uniqueness is what gives their company an edge over the rest of the people in the market. Increase in population and economic growth and stability are indicators of a potential market in housing products industry. Currently the major market dominant company is Jacuzzi Hot Tubs. It was established in 1956 to cater for custom made hot tub Jacuzzis (jacuzzihottubs). Due to its long stay in the market, the company has managed to hive a substantial chunk of the market. However, they majorly deal with high end clients locking out the middle-class the Comfort Kick Limited is focused on catering for. As mentioned earlier in the introduction paragraph, Comfort Kick Limited did due diligence and established that the middle class in Australia presented opportunities for selling Jacuzzis. Access to financial services has been made efficient by the availability systems that work in collaboration to avail necessary information for credit seekers. Australia has a population of 23.13 million people with sixty six percent been the middle class ("Population Clock"). The real estate is growing at an annual rate of thirty percent, after research the company realized more a quarter of the growth rate was fueled by the middle class thus a potential of making 10 million sales per year. Among the external factors that one has to bear is government legislation and competition from established companies. Fortunately for Comfort Kick Limited the Australian government has setup systems to ensure startups register smoothly with minimal hurdles. A major part of the registration is done online reducing physical interaction with relevant authorities. The government also provides guidelines of business operation which assist minimizing conflict of interest within different government authorities. The major industry challenges Comfort Kick Limited will face are innovation and aggressive marketing by established companies. To counter well structured marketing used by other enterprises, the company will attract customers by offering competitive prices and link buyers whom intend to buy bulk Jacuzzis for commercial purposes with financial institutions that will facilitate the financing of the project. Currently there is no company that is linking restaurant buyers with financial institutions. This move will defiantly give the company an edge over the rest of the companies. Assembly and sales of Jacuzzis is an expensive undertaking thus one of the major reasons why only a few companies are currently enjoying the lucrative market. Additionally, once an individual or hotel has bought the product, there are minimal chances that they will need another item. In majority of cases they ask for after sales services and repairs on self induced damages thus regular marketing and innovative trend is a sure to remain relevant in the competitive market. Furthermore, established real estate companies’ collaborate with established brands leading to few companies joining provision of house décor. Comfort Kick Limited has over this challenge by signing agreements with medium size real estate companies to solely market its products whenever they undertaking a project. Technical Feasibility Developing the technology for our Jacuzzis will be done by Comfort Kick’s Limited own design team. Due to the uniqueness of our design and the innovation that will go into it, it is best to keep the details within our boundaries to protect it from piracy and replication. Furthermore, in-house developed technology is easier to redesign and modify because it involves no bureaucracy for the redesign to be commissioned. After researching extensively, Comfort Kick Limited zeroed in on outsourcing the manufacture of its Jacuzzi units. The company went for outsourcing for the following reasons; it relieves itself from the stress associated with maintaining the manufacture systems thus more energy is dedicated towards sales and marketing analysis. Secondly, the cost of setting up a complete manufacturing system is usually a barrier to start-ups. By outsourcing the manufacturing of Jacuzzis, the company will have ample time to study consumer feedback. Due to the nature of the parties involved the real estate business, a combination of in-house and joint venture sales would widen client reach in the vast Jacuzzi market. Working with real estate agents and developers is a sure way of having first hand information of where potential markets are coming up. Furthermore, exhibitions conducted by house utilities seller are usually organized by real estate agents to market upcoming and existing projects thus the huge potential presented through working with real estate agents. Also, market trend data gathered by our business partners will be availed to our analyst for market survey purposes. Among the important resources that Comfort Kick Limited will require are; business premises to conduct day to day activities of running the company. Included in the premises will be office space, stationary and furniture. The company has set aside funds to cater for all office space requirements. Additionally, the most fundamentalresource will employees, the company has already identified and selective competent teams that will spear head the growth of the company to its target. Comfort Kick does not need raw materials for manufacture of its Jacuzzi because it will outsource manufacture and assembly activities to minimize capital outlay of machinery and human resource. Selection of suppliers will be executed later as the company gradually expands to new fields and diversifies its portfolio of product and service offering. Australia’s swimming pool and spa regulation require all pool set-ups to have barriers to prevent underage children from accessing the pool. This regulation applies to both commercial and home backyard pools. The regulation was passed into law after the Australian government realized that death related cases of children between the ages 0-5 years were majorly caused by drowning. Certifications for operating any kind of business in Australia are issue by both national and local governments. For spa pools like Jacuzzis, inspection of business premises has to done before the final certificate is issued for commencement of operation. Additionally, officials from the environment ministry have to access whether the damage caused by swimming pool construction is likely to cause any harm to the surrounding environment. Currently there are no moral or ethical issues associated with construction or sales of Jacuzzis. The only probable ethical issue would be how different age groups and genders are going use it at the same time. Jacuzzi owners and managers will best decide how to manage its accessibility. One of the major technological changes that are changing the Jacuzzi business is the use of recycled material for manufacture of parts of the Jacuzzi. Environmental bodies are advocating for companies that participate in use of recycled materials. To gain a substantial market share Comfort Kick will also use recycled material. Financial Feasibility In the current financial reports Jacuzzi Brands Inc. has total revenue of $1,435.582. In the current quarter the company has revenue of 6.9 percent indicating a decrease in the revenues by 0.6 percent as compared to the previous quarter of the last financial year. In Australia, the selling price of Jacuzzi Brands Inc. like the hot tub ranges from $5,000 to $8,000 but highly depends on quality as well as other factors that influence the cost structure of the product. The cost structure of Jacuzzi Brands like hot tubes includes the following cost estimates: expenses of the local materials and the transportation costs to and from the site, costs for the job cleanup as well as removal of the debris at the project completion. The costs to prepare the worksite for the hot tub installation and the labor setup time, minimum hourly as well as the mobilization time charges. In the previous financial year, Jacuzzi brands’ net sale totaled $313.1, and the cost of goods sold were $217.6 thus the contribution margin for the products were reported to be $19. The current financial reports of Jacuzzi brands’ net profit margin is 3.4 while its free cash flow margin-5 year AVG is 2.33 (Jacuzzi, 2016). The start-up expenses of the company depend on the size, quality, model and the costs ranges from $1,000 to $14,000 for a Jacuzzi tub. The showers usually range from $800 to $5,000. The prices for good quality for 60*60*30-inch deep whirlpool Jacuzzi inclusive of the multiple massage jets as well as handheld showerhead varies from $1,300. A 54*54*24-inch corner Jacuzzi tub ranges from $1,000. The company’s larger and more elaborate models inclusive of the assets like contoured backrests, chromatherapy, sculpted armrests, illumatherapy lights, digital controls, slip-resistant bottoms, handheld shower heads, wave pulse controls and the multiple adjustable jets usually ranges from $13,000 and up. Jacuzzi has professional electricians, experienced plumber or the general contractors who undertake the aspects of the project. The company’s interest per capital invested is 4.2 therefore for every dollar that the company invests in its capital employed it makes 20 cents of profits. Its working capital is 1.6 indicating that Jacuzzi brands Inc. Is running efficiently and can be able to cover its current debt properly. Its acid test ratio is 1.4 stating that the company can be able to extend its financial obligations by selling its financial assets. The company’s current ratio is 2.4 indicating that the firm can meet its obligations. The company’s Gearing Ratio is 1.17, and this is considered risk as the enterprise is using high debt to finance its operations thus facing very high financial risks. Altman's Z-Score Ratio for Jacuzzi brands Inc. is 1.71 and since this is below 1.8 there is a strong possibility that the company may be declared bankrupt. Jacuzzi brands Inc. uses both the equity and debt as its source of finance, but it has relied more on debt as its source of finance. The gross margin of the company indicates that the venture is attractive as it is more than 30% while the return on investment shows that the venture is profitable to the enterprise. Jacuzzi brands Inc. cash flow margin is 0.66 indicating that the firm is generating a positive cash flow, and therefore, it raises money through its investment (Jacuzzi, 2016). Human Resource Management for the technical feasibility The human resource professionals are expected to take part in executive level where more project management skills and processes become crucial tools in seeing the Jacuzzi Brands Inc. strategic talent as well as management objectives. When the training and implementation of project management principles and processes are employed, the organization is able to achieve: A clears and precise communication process The employees are able to understand their performance expectations There is vertical alignment of human resources that enables achievement of goals and objectives The organization is able to achieve overall productivity The human resource projects often involve the aspects of an organization as well as its departments. Human resource project managers are expected to portray skill in leadership, organization, understanding the major aspect of project management, and planning. These skills are helpful in increasing the efficiency of Jacuzzi Brand Inc. human resource department, development of staff, as well provision of additional level of credibility within the business. In the current economy, it is crucial to find the right employee. The leaders of Jacuzzi Brand Inc. views hiring the right employees as an investment as they cannot afford to lose time or money. To find the right employees, it is important to check the following: Competency The employees should be capable The employees should be committed to their tasks The employees should be compatible with their fellow employees The employees should be compensated for their work fairly. Every employee should get their fare pay for extra hours they decide to work. This way, they will be motivated to do their tasks as required by the company. Employee compensation is composed of much more than just their salary as there are other costs that needs to be incorporated into the payroll budget. Employees should also have retreats once in a while as this improves their morale. The employees should also have trainings to keep them informed of new or changed goals of the organization. References Jacuzzihottubs,. "Jacuzzi® Hot Tubs – Hot Tubs, Hot Tub Spas, And Accessories". Jacuzzi Hot Tubs Australia. N.p., 2016. Web. 16 May 2016. "Population Clock". Abs.gov.au. N.p., 2016. Web. 16 May 2016. Powell, Rose. "Australia's Middle Class No Longer The World's Wealthiest". The Sydney Morning Herald. N.p., 2015. Web. 16 May 2016. Jacuzzi. (2016). Retrieved May 11, 2016, from http://www.advfn.com/stock-market/NYSE/JJZ/financials Appendix a The Jacuzzi Brand Inc. has the Jacuzzi Brand Inc. has start-up expenditures and expenses that are prepared by the leaders so as to make sure that the company is making profits at all times. The expenditure is based on different resources that the company requires for smooth running. Such resources include: Total cost of item Land Capital equipment Computers Beginning inventory Start-up supplies License and permits to enable them to conduct their day to day activities. Leasehold Improvements Utility hookups& Installation Advertising (Preopening) Insurance Other expenditures Other than the expenditure highlighted above, the Jacuzzi Brand Inc. also has expenses that are to be included in their expenditure and are included in the start-up operating expenses. They include: The estimated total of cash for a given number of months Item monthly expense Owners salary Employees wages and salaries Rent Promotion expenses Supplies and postage Vehicle Expenses Telephone Travel Interest Maintenance Other expenses Total Cash Required to Cover Operating Expenses Plus: Total One-Time Cash Requirements (Previous Table) Add 10% Safety Factor Total Cash Required for Start-up Read More