The Beach Carrier is a new product concept developed by Mary Ricci. It is a large, lightweight, durable bag that is designed to carry everything required for a day at the beach, including a chair. The Beach Carrier can be folded down to a 12-inch by 12-inch square for easy storage when not in use. It comes with an adjustable strap and various-sized pockets for carrying all types of items to the beach or other outdoor activities (i.e. concerts, picnics, and barbecues).
Currently Mary Ricci does not have the capital to produce her newly designed beach carrier bag and has decided not to lease or sell the design to a manufacture for a flat fee.
The Beach Carrier possesses several strengths relative to competitive products in the market, including the following: 1. The overall product concept differentiates itself by being the only single bag that can carry all of the things needed for a day at the beach. 2. The Beach Carrier can be easily used and stored when not in use and it can be folded down to a 12-inch by 12-inch square.
3. The Beach Carrier is large and roomy and contains multiple compartments and different-sized pockets. It can accommodate carrying items varying in size from a bottle of sunscreen to a beach chair or ski boots. 4. It is manufactured in a lightweight, tear-resistant, fade-proof fabric that dries quickly and is suitable for various outdoor activities. 5. The Beach Carrier will be offered in a variety of fluorescent and conservative colors, where competitive products are only sold in three colors. 6. The selling price of the Beach Carrier will range from $12.99 to $14.99 versus a range of $16.95 to $59.99 for similar, competitive products. 7. Mary Ricci is very eager and can invest the time and effort into bringing the beach carrier bag to market correctly through the proper channels.
Some of the weaknesses of the Beach Carrier include the following: 1. The Beach Carrier is 36-inch by 36-inch when in use and this size was perceived to be much larger than necessary by many members of a focus group. 2. The Beach Carrier’s overall size may be more cumbersome to handle relative to its top two competitors, the “Caddy-Shack” and the “Wonder Wheeler”. 3. The Beach Carrier’s fluorescent color lessened the perceived quality and the bag is much larger than necessary based on the information derived from the test focus group.
The opportunities the Beach Carrier has includes the following: 1. The product has a large chance of gaining it’s expected market share and to penetrate the beach bag market by 1% in less than its first year in business. 2. The beach carrier’s competition have many weaknesses that Mary can leverage on and add into her business model to offset her strength’s The potential threat to the Beach Carrier bag is the market’s potential to purchase a new bag is every 3 years or 33% of purchasers will replace their bags.
The critical decisions that Mary Ricci needs to make are as follows: 1. Should Mary license the beach carrier bag at a flat rate which would be an advantage and allow the company to distribute the product nationally and internationally. The disadvantage here is that the ownership of the beach carrier bag would be transferred to the manufacturer and she would have less control of the entire product launch and many other key decisions that Mary seems to want to be a part of. 2. Should Mary apply for the $30,000 bank loan that she is considering? The advantage here is that Mary can immediately start production and begin working on her 1% market share goals with the beach carriers competitors.
She would also be able to maintain ownership of the beach carrier bag. The disadvantage here is that Mary will owe the bank a monthly payment, which makes the overall operations cost more. The bank might not also approve the $30,000 start up loan. Based on the two options I’ve compiled I would recommend that Mary Ricci go with option two and take the loan upfront as an opportunity investment and begin production on the beach carrier bag once it’s re-designed to capture the suggested features the focus group outlined.