Market Analysis

Result: Successful product launch with strong market reception and financial profile that both increased revenue as well as improved overall company profitability.

What is the market size? How can we capture enough market share to make a compelling return on our investment? How much should we invest into this business?

Company A is looking to expand their product line into the mountain bike space. They are unsure of the opportunity size, the long term outlook, if it would be worth the cost to invest in building product to take market share and how much they should invest in the space.

By researching market statistics around number of participants in the bike space, mountain specific hardgoods purchases, and gender breakdown, I determined that the market for mountain bike was worth about $1B - $1.5B. Targeting 7.5% market share in 5 years with 68% Gross Margin and 10% Net Income creates an opportunity valued at around $75M.

Once we determined the opportunity value, we defined a long term product roadmap that would allow us to capture 7.5% market share in 5 years. We then set investment parameters to build, market and sell that product line.

During product line creation we used the financial parameters as guideposts for product pricing, gross margin targets and inventory related purchases. Once the line was launched, we tracked sales to ensure our product roadmap would achieve our targets. We also ensured the investment in inventory and marketing/sales efforts remained in line with the timing of sales.