Simplistic Labyrinth Design Studio has begun operations and has been well received.  Marketing is now critical for success and future profitability.  The studio offers a wide range of prototyping services for outdoor products.  The basic market need is a flexible design studio to generate fresh, new product designs. 

Market Summary

Simplistic Labyrinth possesses good information about the market and knows a great deal about the common attributes of our most prized and loyal customers.  Simplistic Labyrinth will leverage this information to better understand who is served, their specific needs, and how Simplistic Labyrinth can better communicate with them.

Market Analysis

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Market Demographics

The profile for Simplistic Labyrinth customers consists of the following geographic and demographic factors:

Geographics

• The immediate geographic area is the city of Portland, OR (and Vancouver, WA) with a population of well over one million people.
• A 100 mile geographic area is in need of our services.
• The geographic area can be enlarged to the entire country utilizing currently available technology which would allow Simplistic Labyrinth to serve any customer in the country.

Demographics

• Outdoor company with over $500,000 in sales a year.
• An entrepreneur with at least $75,000 to bring a design to market.
• Larger outdoor companies such as R.E.I or L.L. Bean who are in need of a design for their private label goods.
• The company is either too small to have their own in-house design studio, or too large to juggle small projects.

 

Market Needs

Simplistic Labyrinth is providing customers with a flexible prototyping design studio.  Simplistic seeks to fulfill the following benefits that are important to their customers:

• Selection. Simplistic offers a wide range of products and services, the only limit to selection is the customer's imagination.
• Accessibility. Simplistic operates out of their Portland-based space, but can ship anywhere, as well as provide services to customers throughout the United States.
• Customer Service. The customer will be impressed with the level of attention that they receive.
• Competitive Pricing. Simplistic's pricing structure is on par with other design studios.

Market Trends

The market trend for outdoor product manufacturers is outsourcing design and production work.  This trend is in response to the need to reduce overhead and up-front capital costs.  This trend can be successful if the company is careful in choosing a quality design studio to design their product.  Additionally, the company must be very watchful with the contacted producer to ensure that the goods are being made at the desired specifications.

By following the trend of outsourcing, companies are able to have a larger product offering without the traditional capital costs associated with the larger product line.

Market Growth

In 1999, the national outdoor product industry generated over $687 million dollars in sales.  Sales are estimated to grow at 5% for the next three years.  This growth can be attributed to a couple different factors. 

The first factor is America's newfound proclivity to exercise.  The new habit has fueled the outdoor industry as many people choose the woods as their venue for exercise.

An additional factor that is fueling growth is the general increase in popularity of outdoor activities such as hiking.  Most retailers have seen a 15% increase in sales for hiking-related products.  While a correlation to some other variable might be difficult to make for an explanation of the increase, the increase is nonetheless occurring.

SWOT Analysis

The following SWOT analysis captures key strengths and weaknesses within the company and describe the threats facing Simplistic Labyrinth.

Strengths

• Strong design background allowing Simplistic to offer prototypes for a wide range of products.
• The ability to design products for companies that are not local, leveraging current technology to provide this service.
• High customer loyalty.
• Flexible service offerings to meet any customer's needs.

Weaknesses

• Simplistic Labyrinth lacks brand equity.
• A limited marketing budget to develop brand awareness.
• The struggle to have business remain constantly busy.

Opportunities

• Growing market share with a significant percentage of the target market still not aware of Simplistic Labyrinth.
• Trends in the outdoor industry that will fuel growth for Simplistic Labyrinth.
• The ability to leverage accomplished jobs to attract new jobs.

Threats

• Competition from larger design studios that decide to go after smaller jobs.
• A slump in the economy that reduces companies plans for new products.

 

Competition

The competition includes the following:

• Local design firms. These firms, or more accurately "persons" are designers that would create a design or prototype for a local manufacturer or company.  There are not a lot of these organizations and they tend to be very local, usually not regional.  The local firm will also service an individual who has an idea for a custom project and needs someone to make a "one-off" copy.

• National designers. These organizations, like Simplistic Labyrinth will do design or prototypes on a national scale.  There are a large number of these organizations.

• Independent contractors. These people usually work through a word of mouth referral basis serving some of the smaller companies.  The independent contractors typically are doing designs/prototypes on a part-time basis. The independent contractors who begin to do this full time will lose their theoretical independent contractor status and create a design studio, generally regional or nationally as most local markets are not large enough to support a full time business.

• In-house solutions. These groups are part of a company that produces and sells the product, or sells an outsourced product with the designing done in house.

Service Offering

Simplistic Labyrinth Design Studio is a full-service design studio for outdoor gear.  Simplistic Labyrinth creates designs as per specifications given to them by a manufacturer as well as designs that were created independently of a request. 

Some of  Simplistic Labyrinth's designs have included a simple velcro watch band that is far more secure than traditional bands yet low profile, and insulated wine/beer bag that maintains the internal temperature made out of 1000 denier Cordura fabric for durability, simple shoe bags for securing and separating footwear within suitcases for travel, a water hydration pack for ultramarathon running, a bag for bicycling that mounts on top of a rear rack and is completely waterproof, a strap system for securing trekking poles together, bicycling messenger bags, and a slim line padded laptop computer case/envelope.  The design of the product is only limited by the clients willingness to pay.

Simplistic Labyrinth derives their revenue from license fees and prototyping fees.  The license fees will be the cost charged to the company to use the product for production.  This differs from a royalty because a license fee will be a one time fee for a set number of items in production.  A royalty is typically a per item fee.  The prototyping fees are the fees charged for the production of a prototype or working model.

Some of the items designed and produced by Simplistic Labyrinth will be patented, but only if 1) the design is novel enough to receive intelectual property protection, and 2) if the design is unique enough so that the patent is not easily avoided by changing a relatively insignificant part of the design.

Keys to Success

• Customer attention.
• Flexibility.
• Innovative and sound designs.

Critical Issues

Simplistic Labyrinth Design Studio is still in the speculative stage as a service provider.  Its critical issues are to continue to take a modest fiscal approach; expand at a reasonable rate, not for the sake of expansion itself, but because it is economically wise to. It also needs to continue to build brand awareness which will develop the customer base.

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