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Make a case analysis
Format to follow
I. Statement of the problem
II. Areas of consideration (SWOT)
III. Alternative courses of action
IV. Recommendation

DOORGUARD: TRYING TO MAKE A DENT IN THE MARKET

"Hey, Steven!"

Steven Harris looked up to see Todd Smith striding across the student parking lot at the University of South Carolina.

"Hello, Todd!" Steven responded as he finished locking his car door.

"Wow! Is this your car?" asked Todd, admiring the new red Mustang convertible.

 

"You've got it. That's one reason my summer was so good. This was the third year that I've worked with my brother's yard maintenance service in Myrtle Beach. Not only did I have a good time, but with the money I saved from the three summers I was able to buy this car."

 

"Tm impressed. I notice you parked way out here away from any other cars"

"You bet. It didn't make much difference with my old Chevy, but I sure don't want thoughtless people denting the sides of my new car. People really dented the sides of my old car, especially in these student parking lots with their narrow spaces."

 

"You know," added Todd, "there ought to be a law against banging doors into other people's cars. Or someone should come up with some way to protect car doors. Those rubber strips that manufacturers put on never seem to be in the right place."

 

"I agree," replied Steven, "or maybe cars should have a device that automatically dents the other car in return. Maybe that would make people more careful!"

 

Steven and Todd both laughed at the thought of such a device and began to dream up other wild ideas to solve the problem as they walked toward the registrar's office.

 

Over the next several days, Steven found himself thinking more and more about the problem of preventing side-panel damage. He had always been a tinkerer, and he had fairly well-developed mechanical instincts. With the job outlook for college graduates in the doldrums, an entrepreneurial venture began to look attractive.

 

 

Steven remembered one of his professors discussing the success of the people who had launched AutoShades, the cardboard panels used behind auto windshields to keep cars cool. AutoShades'

inventors had succeeded because their product really worked. Further, because they could print on the panels, companies could use the product as a sales- promotion tool. Steven believed that if he could design a device to protect car doors that also served an advertising function, he too could be successful. He began to think more seriously about developing such a product.

 

  

THE PRODUCT

Steven mentioned his project to a friend, a recent graduate with a degree in mechanical engineering. The engineer suggested a panel, perhaps made of rubber, that would have to be lightweight, impact-resistant, and waterproof.

 

After talking to numerous suppliers of resilient materials and visiting several trade shows, Steven found a unique foam that showed promise. Manufactured by a local firm, MiniCell 200 (M200) was lightweight, impact absorbent, and relatively thin (½ inch). The driver could roll it up for easy storage. M200 also had several drawbacks, however. It was expensive, could not be exposed to sunlight, and tore easily.

 

Steven thought he could resolve the problems by finding a fabric cover for the foam. He experimented with a material that had a sunlight blocker and high tear resistance, and came in a variety of colors. However, the material did not readily accept screen printing, an attribute that Steven believed to be necessary for the project's success. Steven discussed this problem with the

manufacturer. Several weeks later, the manufacturer had developed a new way to treat the material so that it accepted printing.

 

Having worked his way through the cover material issue, Steven began experimenting with methods for attaching the panel to a car. He knew ease of use would be critical to his product's success, as it had been for AutoShades. Steven finally decided to use magnets, which could be easily attached to the foam, making the product easy to use.

 

Steven also spent an entire afternoon selecting a name for the product. He evaluated several names, such as DoorGuard, Dent, DentGuard, AbsorbaDoor, and DoorMate. On pure instinct, he chose DoorGuard.

 

Steven now had a name, but he realized that he still did not have a complete product. If he used only the magnets to attach the product to a door, what would prevent someone from stealing the panels? After trying several unsuccessful theft-prevention ideas, Steven settled on a cable that attached to the foam panel. After attaching the DoorGuard panel to the door, the user would toss the other end of the cable inside the car, then close and lock the door. Anyone who tried to steal the device would tear the panel, making it useless.

 

Steven believed he had now developed the perfect product. It absorbed impact from other car doors, resisted theft and water damage, stored easily in the trunk or back seat, and accepted screen printing.

 

 

EXHIBIT 1-1 Illustration of DoorGuard in Use

 

 

 

 

Steven next turned his attention to producing the new product. He knew that he did not have the time, experience, and money to make the product himself. As a result, he approached organizations like Jobs for the Handicapped and Goodwill Industries that might assemble products inexpensively. He eventually found an organization that could do everything needed to assemble and print one set of two panels.

 

Almost as an afterthought, Steven considered price. Based on a total cost of $14.74 per complete set of two panels, Steven used a 100 percent markup on cost (and a little psychological pricing) to arrive at a suggested retail price of $29.95 per set (See Exhibit 1-2). Now that he had designed, named, and priced the product, Steven considered what market he would attack.

 

 

EXHIBIT 1-2 DoorGuard Cost/Price

Cost per panel

M200 ½" 1' X 4' Panel                                 $ 2.90

Cover Material 1½ sq. yds.                         1.12

Magnets 3'                                                       .90

Cable 3'                                                         .45

Misc. (screen print, packaging)                    .50

Assembly                                                       1.50

Total Cost per Panel            7.37

 

Cost per set of two panels                                             $14.74

Retail price per set*                                                    $29.95

*100 percent markup on cost

 

 

THE MARKET

Steven knew that he should research the market potential, but believed that he had little basis for developing a reasonable estimate of DoorGuard's sales potential. Using secondary sources, he found that there were 122.8 million cars in use in the United States. Nearly 80 percent of these cars were at least three years old; 50 percent were at least six years old. Because there were no products comparable to DoorGuard on the market, Steven wasn't certain what portion of the car owners would purchase the new product. AutoShades appeared to be about the only close comparison, but there was a huge cost difference: AutoShades cost from $1.49 to $6.00. whereas DoorGuard would cost nearly $30.00 Many companies gave away sun shades as advertising specialties; few companies would do the same with DoorGuard.

 

Still, Steven believed that DoorGuard targeted a wide-open market. He knew that last year's new car sales in the United States totaled 9,853,000. Few new-car buyers purchased factory-installed body-protection packages. Steven felt that a person paying $15,000 or more for a car would pay a reasonable price to protect it. This helped to explain the success of AutoShades. Sales had started slowly for the initial sun shade-a piece of plain cardboard. But once the creators added graphics and messages to their products, AutoShades' sales heated up. Sales exceeded $20 million one year.

 

Steven dreamed about such spectacular sales results for DoorGuard. If he could capture just 5 percent of the new-car market, he would be selling nearly 500,000 sets. And sales to only 5 percent of the owners of the 122,800,000 cars on the road would generate sales of more than 6,100,000 DoorGuard sets. With such heady potential in mind, Steven began to think through the details of introducing DoorGuard.

 

 

 

THE MARKETING APPROACH

 

Steven considered three different approaches for distributing the product. First, Steven thought that he might interest a national retail chain, such as Sears or Kmart, in carrying the product--both had large auto-supply departments. When he considered catalog sales, two catalog companies came to mind as potential distributors--Sharper Image and Brookstone. These catalogs reached people who could afford to purchase DoorGuard. Finally, Steven considered selling direct to large companies such as R. I. Revnolds or Anheuser Busch who could offer the product as an advertising specialty or premium item. Steven wondered which of these distribution avenues would be best, or if he should consider others.

 

When Steven returned from class late one Thursday afternoon, he felt tired but excited. With the pressures and costs of his senior year, Steven's time and resources were scarce. Despite all of his development Work, DoorGuard was still just an idea. He realized that he had no concrete notion about how to proceed. He knew that DoorGuard could be a great product but now realized how complicated it would be to take the idea to the market. He pulled out his yellow legal pad and started a new list of things he needed to do on the project. He glanced out the window at his new car, parked in the far corner of the parking lot. Steven smiled to himself. "Still no dents," he thought, "and I'm going to keep it that way."