Sports Medical Equipment Business Plan

The sporting goods market as whole and the market for baseball equipment are multi-billion and multi-million dollar markets respectively. The “Body Armor” represents a new sub catagory in the baseball products market. Currently, there are no competitive entries in this segment. The only other chest protectors are worn by catchers. We define our user as any batter and/or position player. The product is to be worn at all times beneath the uniform. The buyer is defined as the parent(s). The targeted consumer is the Mom, whom management feels will be more receptive to the safety/protection message.

Complete industry specific data on markets, sub-markets, categories, trends and demographics are available in trade industry reports. These reports are available for fees and with membership in trade organizations. The two most important industry trade groups are the Sporting Goods Manufacturers Association located in N. Palm Beach, Fla. and the National Sporting Goods Association located in Mount Prospect, Ill. The leading trade industry publication is Sporting Goods Business.

For the purpose of the test market, statistical market studies would not be valid. Our purpose is to prove salability. Market share numbers will be minute. With successful test marketing, Professional Athletic Equipment, Inc. will join these above named industry groups and utilize their data and research to project roll-out and expansion numbers.

4.1 Market Segmentation

As indicated, the product segment sought by Professional Athletic Equipment, Inc. is a new one. It can best be defined by the demographic of its targeted customer. Since we seek to serve youth baseball as the only commercially available permanent chest protection for position players the potential market size can be defined by its universe of participants.

In the latest survey of sports participation for boys ages 6 to 17 taken in 1994, 8.6 million participants played baseball. This compares to 14.6 million for basketball and 8.1 million for football. Little League Baseball headquartered in Williamsport, Pa. is the largest youth sports organization in the world with 2.9 million participants on 193,000 teams in 91 countries around the world. Additionally other local leagues sponsored by parks and recreation departments and other regional leagues and associations such as Dixie Baseball, Inc. and Youth Baseball Athletic League (YBAL) have many millions more participants.

Our market analysis is defined by potential users. Which media to utilize to cost effectively reach these users is the critical decision path. The universe of potential customers exceeds 8 million users. It is projected to grow only moderately each year. Although old customers will be replaced by new ones as they pass through the age demographic, it is impossible to estimate erosion from re-sale or re-use at this point. Management recognizes that a market exists for used sporting goods equipment.

The Market Analysis table, and the Potential Market pie chart illustrates our key customer segments. The “other” catagory is defined as a specific direct sales test with two leagues–one in Anytown and one in Anywhere.

We will concentrate heavily on the local, or Georgia market segment with direct marketing efforts. Any efforts in other market areas will be accomplished only by overlapping media that does not incur incremental cost. Examples are on-line marketing or infomercials run by design in other spot markets. With such a large potential market available, Professional Athletic Equipment, Inc. management is confident of the ability to sell products in the conservative numbers estimated by first year production availability.

4.2 Target Market Segment Strategy

By focusing our efforts on the parent(s) of youth baseball participants (primarily Moms), we can cost effectively (and editorially) convey our safety and protection message.

Certain media have already been discovered through research. The following print media and specialty publications have been identified:

1. Baseball Parent Magazine.
2. Sport Scene Magazine, published by the Consumer North American Youth Sports Institute.
3. Safety and Health, published by the National Safety Council.

In addition, there are Web sites and newsgroups that management has uncovered. Such as: rec.sport.baseball and alt.sports.baseball which can provide targeted e-mail opportunities. Two separate software programs have been identified: One that targets newsgroups for bulk e-mail, and another than conducts “on-line surveys” from identified groups. Both will be utilized in Professional Athletic Equipment, Inc.’s marketing efforts.

We have located Web sites and links to equipment purchase locations and on-line sporting goods malls as well as a flow of targeted customers. These include:

1. John Skilton’s baseball links (more than 50 links).
2. Society for American Baseball Research.
3. Baseball on the Net (mailing lists, newsgroups, commercial products, research).

A company in California called Focalink can provide World Wide Web advertising services with feedback and measured response.

While business on the Web is still in its infancy, the value as a marketing tool cannot be discounted and actual sales are expected to increase exponentially in the next three years.

The magazines and publications will offer exposure for education via PR and articles as well as a means to target media effectiveness in small numbers. The premise is: If you advertise to a highly selected target audience you prove salability and price point acceptance. Then you seek to extrapolate the results via broader based media.

4.3 Industry Analysis

The sporting goods industry as a whole remains healthy with annual growth between 5% and 10% Older sports, such as baseball, are experiencing flat to moderate growth when compared to other segments. The fastest growing sport is in-line skating. However, the over-all size of the baseball market and its volume of participants indicates to management that it could be receptive to a new product entry, particularly one that offers such an important potential benefit. It is not expected that major economic turns would have substantial effect on this market although they could effect discretionary spending for peripheral items. The “Body Armor” could suffer although it is expected sales slippage would occur in low-to-middle income groups. Higher income groups should remain the strongest base for sales.

4.3.1 Distribution Patterns

By far the dominate distribution channel for all sporting goods is retail, predominantly mass merchants and sporting goods super-stores. The barriers to entry into these channels are substantial, including media and marketing budgets, ability to supply product, “rent” for shelf space, and co-operative media and promotion budgets. Professional Athletic Equipment, Inc. will not have the capability to undertake the costs involved to go directly into retail stores. In addition, retail margins absorb 40% to 50% of sales price. Wholesale margins to the manufacturer are cut vs. other sales channels. Only volume sales can achieve desired returns to the manufacturer. Thus, retail sales will not be targeted by Professional Athletic Equipment, Inc. until year three of the plan with the possible exception of a limited test of a “truckload sale” concept.

We will pursue a “Multi-Channel Distribution” strategy of direct sales via differing media segments. These media segments will include targeted direct marketing via print, catalogue, TV shopping, on-line shopping malls, and possibly infomercial.

The measure of success in each of these channels will be the control of media cost vs. sales results.

4.3.2 Industry Participants

Major manufacturers and marketers of baseball equipment include Rawlings, Wilson, Mizuno, and others. Professional Athletic Equipment, Inc. management feels that these major players in the industry will not take significant notice of the sales and marketing activities of Professional Athletic Equipment, Inc. until such time as Professional Athletic Equipment, Inc. sales reach $10 to $20 million. That sales level marks the point at which a business is considered substantial enough for either competitive activity or acquisition. It is expected that Professional Athletic Equipment, Inc. will have a defendable patent position in its product but that cannot be assured at this time.

4.3.3 Main Competitors

There are none in our specific product catagory.

4.3.4 Competition and Buying Patterns

The single most important factor in our product is the bandwagon. The concept of “Critical Mass” is what Professional Athletic Equipment, Inc. must overcome. The rich get richer, and the poor poorer. However, there is still room for new products and new companies outside the main design types.

• In the main design types, market share generates more market share. Rawlings chest protectors for catchers, for example, may not be the best, but it is the market leader. More people know it better than any other brand. Most important, the retailers feature it. So it continues to dominate. Despite the existence of better products, it is the wisest choice for the buyer.
• Buyers want brand names. Quality of products is hard to measure. Brand names assure quality. However, brand names only operate in mainstream product types; there is room for smaller names with specific solutions that appeal to buyers.
• Buyers are willing to pay high prices for solutions that work. While competitors chip away at market leaders for lower prices, the leaders continue to command high prices.
• Channels discount heavily. Brand name, packaged goods become a commodity and are bought on price. Buyers will pay a heavy premium for Mizuno glove over a lesser-known knockoff, but they happily pay $25 in a discount store instead of $50 at a full-price retail store.
• There is no consensus about product copying. Estimates of its revenue impact vary from 10% to 60% of the theoretical revenue manufacturers would receive if copying were impossible. Illegal product copying is a fact of life that manufacturers live with because they have no other choice. There is evidence, however, that wholesale copying of Big Bertha Drivers and King Cobra irons helped those products build their market share leads, which became their key strengths.
• Impulse buying goes on with products below $100. Buyers have discovered products like stomach exercisers and kitchen tools that were low priced and extremely useful. There is more freedom in the lower end of the market.
• Distribution channels are clogged. Lack of channels are a serious barrier to industry growth. Wal-mart and Sports Authority stores are insufficient for the wealth of products available, and the constant flood of new products.
• Support becomes a serious factor at higher price levels. Companies that charge hundreds of dollars for widgets are expected to answer user questions. Those that don’t will suffer from bad reviews and poor word of mouth. However, neither Wilson nor Rawlings have had reputations for good support, and both are successful. Our product catagory will not require extensive support other than a product manual and a return/exchange procedure for defective merchandise.