Sleepright - Download MS Word file

Martina Treacy was looking forward to spending Christmas with friends in the United States. The holiday was to combine some well-deserved relaxation with some serious shopping. Martina was expecting her first child in April and her friend Carmel had indicated that baby stores in Atlanta were amazing. She was right and Martina stocked up with all imaginable purchases suitable for a baby. With the help of two new suitcases the purchases were packed and transported back to Ireland.

At home friends and family were impressed with the array of shopping but were taken with one product in particular. The product was designed to secure a baby in the sleeping positions, recommended by the Sudden Infant Death Syndrome (SIDS) association, to help reduce the incidence of cot death. Many of her friends who were mothers themselves showed particular interest in this product, as one of the great fears of new parents is cot death. In 1999, on average one baby a week died of SIDS in Ireland. Not a lot is known about the cause but one of the main recommendations from medical experts is to ensure your child sleeps either on its side or back, but not on its stomach. This product ensures your baby stays in the chosen position throughout the night - hence its attraction.

THE PRODUCT

MARKET RESEARCH

First she established that there were no patents attached to the product. She found that it was a generic product in the U.S. with many different brands available. None of the products appeared to be patented. Happy that she was not infringing any international patent laws she proceeded with the market research. The product was made up of two foam panels covered with a lightweight printed material. The two sections were held together by Velcro strips. This design enabled the product to be adjusted to fit the baby as it grew. Starting with the product itself she approached some material suppliers who identified the external material as flannel. This was a very suitable material as the baby could breathe through it and it could be machine-washed and dried. The material would also accept print well. The foam panels were not as easy to deal with. However Martina had previously dealt with clients who manufactured mattress and she decided to approach them about the foam. She believed the foam used to make mattresses for baby’s cots would also be suitable for the inside of the product. They suggested fire retardant, 100% polyurethane foam, punched with holes. These holes would allow any fluid through and would also enable the baby to breathe through the material if necessary. The fact that these materials had long been accepted as safe for babies put Martina’s mind at rest in relation to product liability issues. The firm agreed to supply the foam panels cut to size as required. Martina also spoke to a fabric printer who agreed to print relatively short runs.

The main decision left was to assemble the product. This caused some concern, as Martina was reluctant to get an outside firm to do it, as they could easily copy the idea and run with it themselves. So she went to her sister, a domestic science teacher, and they decided to buy the materials and make the product at home until the brand was established in the market place. This would be possible, as the demand initially would be quite small. With an industrial quality sewing machine, an item would only take fifteen minutes to make. The process was simple and could be taught easily which would be helpful if extra seamstresses were needed at short notice. At this stage the materials and assembly costs were working out as follows:

Further costs including packaging, marketing and distribution needed to be added but Martina was quite happy at this stage as the product was retailing for $10.00 in the United States and would retail for approximately £13 - £15 in Ireland. Satisfied that there might be potential she set about researching the target market.

THE MARKET

According to the central statistics office 53,354 babies were born in Ireland in 1999. The figures had been stable over the previous few years. Of the 53,354 born, almost 20,000 were first born. This was important because once a parent had purchased the product they would not need to buy it again for a second child. So initially sales would be to the entire market but after a few years only mothers of first-born children would have demand for the product.

In terms of researching the target market Martina got permission from a number of baby stores to interview customers as they shopped. She interviewed one hundred mothers in various locations around the country. The research was very encouraging with 95% of those interviewed saying they would definitely buy the product if they had a small baby. They would pay approximately £14 for the product and would expect to buy it in stores that sold other baby products such as Mothercare and Roches Stores. The product appealed to women of all ages and from all income and education backgrounds. Most people could see no disadvantages and the main suggestions were to include modern cartoon characters on the material. Martina was particularly pleased with this last comment as it might mean repeat purchase for a second child i.e. changing the product to suit the new décor in the nursery. Martina also interviewed three commercial buyers, all of whom wanted to stock the product. Stores indicated they would charge a 100% mark-up.

Finally Martina got prices for packaging and explanatory leaflets which worked out at £1 per unit. To cut down on distribution costs the product would only be supplied to two multiples. These stores agreed to distribute the product to their various outlets Nation-wide. Martina would handle the drop off, to the central warehouses herself. The final cost now came to £ 4.80 per unit.

The final issue Martina thought about was the name of the product. After considering several options she decided on ‘Sleepright’ as it explained the purpose of the product at a glance. Also it was easy to remember. This would be important when faced with a minuscule marketing budget. Although there was currently no competition, Martina was aware of the need to build a brand in the short-term in order to create a defendable position later on.

Finally Martina had to take a hard look at the figures and to this end she asked an accountant friend to put together some tentative financial projections. With £5,000 of her own to invest, she had to decide whether or not to proceed with the venture.

QUESTIONS:

1. Compare Martina’s approach to the New Product Development process in the text.
   Is there any advice you could give her?
2. a: Draw up a research proposal to test the viability of this product in the consumer market
   b: Design a questionnaire that Martina could have used when undertaking her consumer research.
3. How should Martina go about marketing the product in its first Year? Assume a budget of £5000.

By Maura O Connell, Lecturer in Marketing and Entrepreneurship, School of Business, Institute of Technology, Blanchardstown.

This case looks at an Entrepreneurs approach to deciding whether or not to invest in a business opportunity.