New product development is a complex and variable process. This flowchart provides a general macro view of the new product development process. Each decision and process step is an entire field of study onto itself with significant details and nuances beyond the scope of this flowchart. Please note, every decision and process step may require significant costs and expenses.
This process is applicable to many products. For example, in 1920, candy store owner Christian Kent Nelson, invented an ice cream brick with chocolate coating. Because he did not have the know-how or means to mass produce his invention, he secured an agreement with local chocolate producer Russell C. Stover, of Russell Stover Candies, to mass-produce them under the new trademarked name “Eskimo Pie”. The dessert was rebranded to Edy’s Pie in 2021, because the original name contained a derogatory term.
Welp, there’s no need to put lipstick on a pig. Today’s GDP data released by the US Bureau of Economic Analysis showed that real gross domestic product (GDP) decreased at an annual rate of 32.9 percent in the second quarter of 2020, according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 5.0 percent.
One thing I learned while working with my client KiloNiner several years ago is that pet products were largely recession-proof during the 2007-2009 recession. This is because people view their pets as family members so cutting back was avoided. There are many other businesses are that recession-proof as long as adjustments are made to accommodate social-distancing requirements:
Repair / maintenance services: People will still need their plumbing to work, their lights to turn on, and their car engines to run
Dry cleaning / laundry: Laundered clothing and materials will always be needed as long as people wear clothes and don’t have in-house machines. Dry cleaning for clothing might decline as formal wear is reduced but will not go away as people still wear jackets, etc. on occasion.
Professional services: Accountants, lawyers, and other administrative professionals still needed for the economy to run.
Funeral / Memorial services: A natural consequence of life is death. Particularly with the unsettlingly high mortality numbers associated with COVID-19, demand will likely be high for a very long time.
There are many more industries and even sectors/value-chain-links within floundering industries that are somewhat insulated from recessions. Your Startup Guru provides industry/market research as well as a wide range of other services for businesses to help navigate this turbulent economic climate. Contact us and let’s figure out a plan for you.
Businesses face difficult decisions every day about what direction to go. I was fortunate enough to help Eskenazi Health with a strategy analysis that involved an opportunity cost analysis and risk matrix to help their form their decision. Eskenazi Health is a comprehensive safety-net public health system with an acute-care hospital, a network of primary care centers, mental health services, community education programs, and many other services. Located in downtown Indianapolis, Eskenazi Health’s mission is to advocate, care, teach, and serve with special emphasis on the vulnerable populations of Marion County.
Excess inventory, cost management, and other issues are a reality for most businesses. When uncontrolled, a business can face inadequate cash reserves and even bankruptcy.
To mitigate these issues, proper industry and market research coupled with financial planning for contingencies is crucial for any business. Whether you’re in the ideation phase or are already up and running, knowing how much to allocate to the various activities a business engages in is difficult so contact me and let’s create a strategy that works for your business.
Shrink Wrap Pros is a commercial machinery wrap/sealing company based in Ventura, CA. Their customers require cars, boats, helicopters, etc. sealed in a polymer wrap.
I helped Shrink Wrap Pros expand with their enterprise and CRM software needs, including making the transition from Excel to Access. I also helped them improve their budgeting by refining their contribution margin calculations.
If you’re in Ventura and need any large item wrapped, give them a call!
Vestis Retail Group, the parent company of sports equipment and apparel stores Sport Chalet, Eastern Mountain Sports, and Bob’s Stores has filed for Chapter 11 bankruptcy protection today.
I don’t have the financials for Bob’s Stores or Eastern Mountain Sports, but if the numbers for them looks like that of Sport Chalet, it looks like it’s another victim of passing trends and Amazon. I wrote about the bankruptcy of Quiksilver and how it can save itself, and about Amazon‘s effect on Walmart.
Mountain sports presents another challenge above its sea-level cousin, surfing. It costs a LOT more money to go skiing. Skis, jacket, goggles, beanies, gas, food, etc. The list goes on and on. With the slow economic recovery putting Vestis’s holdings on a slower expansion pace, downsizing and keeping only strategic stores in wealthier markets would have slowed the cash flow hemorrhage. Another factor unique to snow sports is the abnormally warm winters with little snowfall. This climate factor greatly hurt sales.
Who knows what the boardroom meetings were like when CEO Mark Walsh, CFO Susan Riley, and others were meeting; nonetheless they should’ve listened to the decision-maker that had a closer eye on industry, market, and environmental trends.
In every business plan, I include industry and market analysis that covers the trends, threats, and emerging opportunities for every business.
One of the services we offer is strategy consulting. However, the name is quite vague so what is strategy consulting? It is a lot of things. It varies by the needs of the client. Some clients need help developing an overall strategy for the business.
Say they have a product but not much else. So they need everything from naming of their product, research on where to sell their product, team building, etc. Naming might require a psychographic analysis of branding.
If they are a little farther along, it can be an audit of what they’re already doing, or analysis of where to go next. A business might be looking at weighing the pros and cons of expanding to a new market, introducing a new product, do a product overhaul, etc. Product overhaul might require a net present value calculation of multiple alternatives.
Every situation is unique so contact us and let’s figure out what you need.
When you think of McDonald’s food you think of burgers. Maybe other things too but mainly burgers. However, back in the late-80s/early-90s the Golden Arches tried to expand into pizzas.
This was ultimately an unsuccessful expansion for reasons beyond a confusing palate. They failed because they expanded beyond their core competency: making hamburgers.
From an operational stand point hamburgers are different than pizzas. Making pizzas require different equipment and ingredients. One reason for McDonald’s profitability at relatively inexpensive pricing is due to cost efficiencies from economies of scale; every inch of a McDonald’s kitchen is optimized. Fry pans have a designated size that fit with the size of the patty, that are heat up at a certain rate. Pizzas don’t need frying pans. They need ovens. Ovens that are expensive to put into existing restaurants and take up valuable kitchen space. Pizzas also took longer to prepare than the fast food burger. People had to wait longer; an unusual thing for a fast food company to ask of their customers. Lastly, pizzas not fit through the drive through window as easily as a bag of burgers and fries.
They could’ve had success with pizzas if they approached it from a different angle. McDonald’s found success with a production expansion with the Egg McMuffin. Originally, skeptically received, breakfast is a McDonald’s staple now. Burgers are lunch thing, but they successfully introduced breakfast. Pizza is a dinner thing. Therefore, instead of pizzas, McDonald’s should have brought in pizza by the slice (a very well-known concept at pizzerias) or at least personal sized /small pizzas. A slice of pizza for lunch is not a foreign concept. An entire pizza for lunch is.
The difficulty in making and selling different types of food is probably why even large chain restaurants choose to differentiate different palates under different brands as Pizza Hut is doing with WingStreet and Carl’s Jr. with Green Burrito.
Now it will be harder to reintroduce pizzas because McDonald’s is busy rebranding itself to health with marginal success. Pizzas aren’t considered to be healthy. Nonetheless, it is not hitting their market value with a 5 year high at $118/share.
McDonald’s might set up for another go at extension but instead of a product extension (i.e. new product), they might go brand extension (i.e. new company). The popularity of fast casual dining such as Chipotle (before the e-coli debacle) and Blaze Pizza might be an attractive direction to expand McDonald’s.
Last week I highlighted aspects about Quiksilver’s bankruptcy. So this is what Quiksilver and other surf brands do should to save themselves.
Looks like the other big surf brand, Billabong is also hurting too with diminishing revenues and net losses from 2012 to 2014.
Recently Billabong also sold its other assets: DaKine, Swell.com and Surfstitch to enhance liquidity.
Billabong also thought about selling RVCA but didn’t. I’ll get to that in a bit.
As I discussed in my previous post, Quiksilver bankruptcy is partly due to surfing not being as cool as it used to be.
So what is cool?
If extreme sports was cool in the ’90s and ’00s, extreme athletics is cool now. MMA and CrossFit is cool.
In March 2015 WWE announced a 50/50 joint venture partnership with MMA brand, TapOut. Founded in 1997, the brand had $200 million in revenues in 2010. Later that year the founders sold it to Canadian company Authentic Brands Group LLC for an undisclosed sum.
CrossFit had 8,000 affiliates in October 2013. As of January 2014 the company had 9,000. In May 2014 it hit 10,000 affiliates.
As shown by strategyandanalytics.com’s graph featured in Fast Company’s article, CrossFit’s popularity growth is amazing.
Of course, most people don’t actually want to do WODs and armbars. They only want to dress like they do, much like surfing and snowboarding.
This is why it’s no coincidence that Reebok (doing well financially with 5% growth in 2014 and seven consecutive quarters of growth) has its hand in the UFC and CrossFit.
Under Armour is so popular. Under Armour which also makes products for MMA and CrossFit enthusiasts were named as one of the most valuable American brands by Fashionista and as one of the top 10 MMA brands by FightState.
Heck, even Adidas (Reebok’s parent company) makes judo gis!
But Reebok isn’t a surf brand!! Quiksilver isn’t an MMA/CrossFit brand!!!
So going back to RVCA. RVCA, is a popular surf brand that is also popular amongst the brazilian jiujitsu crowd with its sponsored athletes such as MMA star BJ Penn amongst BJJ stars. RVCA recently did a collaboration gi with uber popular gi brand Shoyoroll. Billabong decided to keep this brand.
As RVCA has shown, it is possible for a surf brand to do a brand extension into other lifestyle activities.
So what should Quiksilver do?
Change their marketing communications. Surf ads right now are blondes in exotic tropical locations. Unfortunately for Quiksilver and other surf brands is that demographics are changing: wealth discrepancy is large also Hispanics and Asians are the fastest-growing minorities in the US. This growing market segment might not have the money or time to travel to exotic destinations nor do they even look like a pro surfer such as Alana Blanchard.
So abandon their existing surf model? No, look at the other elements of surf. The aspects of the lifestyle that are more relatable to this large, young, and growing market segment:
Surf spots: Urban surf spots such as old Huntington Beach (it wasn’t always the gentrified “Surf City USA” it is now), Long Beach, Rockaway Beach NY, San Pedro, etc. Even urban Honolulu can be a little edgy.
Embrace their connections with the skate world.
Athletes: Add famous MMA and/or CrossFit athletes that also surf. Especially with the Reebok-UFC deal, lots of MMA fighters are looking for more sponsorship money. UFC middleweight contender Luke Rockhold surfs in Santa Cruz.
Other lifestyle images: Tattoos and asphalt instead of sunsets and palm trees, turntables instead of ukeleles.
Diversify: Buy or strategic partnership with boxing/muay Thai brand Fairtex/etc. or Brazilian jiujitsu brand Gameness/etc.