MG7001 Development And Marketing Of The Recreational Boats For Entrepreneur Engineers

The objectives of this particular part of the project are to:

 

• Identify market opportunity
• Construct a strategy canvas which determines value profiles and aids in the final design specification
• Interpret in the light of human/machine interaction categories of control
around Anthropometry (physical size and human based interaction), Kinematics, Force and Work, Control and Information Transfer

• Manage the project via keeping meticulous records of essential data and deliverables

• Finance and cost the final product and develop a sales strategy (bearing in mind the water craft should be produced for less than $1500 NZ)

 

We are young entrepreneur engineers who will be running our own company AbEs. AbEs aims to be a pioneer specialist in modular recreational boating.

Available recreational boats in the market requires large storage space and vehicles that can accommodate its transportation. AbEs has come up with designs that takes recreational boating to the next level. With light weight, compact modular design that can be easily assembled with basic and simple mechanism, AbEs aims to set a new affordable market trend for all recreational boat users.

According to Maritime NZ data, an average of 1.3 million people uses about 960,000 recreational craft (about 60 % are kayaks, canoes and power boats under 6 m) yearly.

Given that a third of New Zealanders are involved in some forms of boating, the chart below shows the percentage of popularity for each recreational vessel. 

Figure 3 Most popular recreational vessels in New Zealand

From the data acquired, an estimation is made based on the popularity of the types of vessels owned by New Zealanders (Summary of Recreational Boating Research , 2016). 

Figure 4 Number of recreational vessels owned in New Zealand, 2013/14 & 2016

Vessel Category	Estimated number Owned
Kayak	328,484
Power boats 6m and under	255,488
Dinghy	164,242
Power boat over 6m	91,246
Sail boat 6m and under	54,747
Jet ski	36,498
Sail boat over 6m	36,498

Table 1 Estimated number of recreational vessels owned in New Zealand, by category

From statistics data above, we concluded that there is a high demand on recreational boats. Recreational boats, also known as a pleasure craft boats are designed for making the life on the water more enjoyable and fun. Due to multiple features and new innovations in designing boats and increasing the size of the boats, there is an increase in demand for recreational boat market (Leonetti, 2017)

Although the kayak craft is most popular recreational vessel, for the purpose of determining the market size we will be targeting the users of powerboat and jet ski categories as these categories have similar features that our boat has. We have come up with a hybrid design boat that will be suitable for the users of these two categories.

In New Zealand the average weight of male is 84.7 kilogram and 1.76 meter tall, whereas the average weight of female is 72.1 kilogram and 1.63 meter tall (Daley, 2013).

Our main business will be located in Wellington, New Zealand. We aim to expand all over New Zealand and globally in the near future.

The boat manufacturers available in the city, does not produce affordable and multipurpose designs with the ease to transport.

Unlike other boats in the market, our boats are designed to be lightweight and easy to assemble. This design allows for the advantage of minimal storage space and easy transportation. The highlight of our design features is that our boats can perform multi-purpose like fishing, sailing, cycling and other water activities.

The market strategy used on this business plan is a Blue Ocean Strategy.  In Blue Ocean, there are two sorts of oceans: ‘Red Ocean’ which states what the market already has; and ‘Blue Ocean’ represents inexistence industries. Thus, it is an anonymous market space (Kim & Mauborgne, 2005). For this business plan, we are focusing on a Blue Ocean Strategy as we are creating a new market space by which means there is no competitive industries. This will have potential in growth of the business as well as a high profit.

In order to identify Blue Ocean opportunities so that we can control untapped market which our competition is disregarding, we created a strategy canvas as shown below to differentiate our boat from other boats that are already available on the market.

Comparison between the competitors is a good way to compare our product with their in order to convince you (investor, bank, or costumers) why you should be part of our company.

	Our Company	Kiwi Boating Ltd	Osprette Company	MAC Company
Price	+2	-2	-2	-1
Quality	+2	+2	+2	+2
Service	+2	+2	+1	+1
Reliability	+2	+2	+2	+2
Innovation	+2	+1	+1	+1
Marketing	+2	+1	0	+1
Product Designs	+2	-1	+1	+1
Total	14	5	5	7

The scale:

+2 +1 0 -1 -2

Good between Bad

For the development of the marketing plan, it requires to identify the target market, thus, our main target market will be (Target Market, 2017):

• Sea sport enthusiasts
• Impulse spender
• Pleasure fishing
• New categories

Users:

• Singles
• Couples
• Young families

Based on our customer surveys, there is a high desire for purchasing our boat that possesses the following features:

• Reasonable price
• Occupies less space
• Very light
• Modular design
• Multitasking   
• Easy to carry on the top of the car.

In general, male’s gender has a higher percentage of using/ possessing a recreational boat (58%) compared to the females (42%). Males comprise about 70% of sailboat users, 64% of powerboat and 57% of ‘other vessel’. In the other hand, kayak crafts are mainly comprised by females with 52%.

Approximately, 50% aged between 35 to 64 years old are recreational boaters. 47% of kayak users are between 18 to 34 years old and 46% are between 35 to 64 years. 58% of powerboat users and 53% of ‘other vessel’ users are between 35 to 64 years old. Whereas, 45% of sail boats users are between 35 to 64 years old.

Figure 6 Recreational boating community age profile

About 43% of recreational boaties live in the central/lower North Island, 27% in upper North Island and 30% in South Island (Summary of Recreational Boating Research , 2016).

The frequent customers complaints about the existing competitors in the market on their products are; relatively high price, lack of storage space, not lightweight and not multi-purpose.

AbEs Company weighs on these factors and came up with designs that will not only solve all these issues but also it would be a new innovation for recreational boat community. With our boat designs, the users no longer require a trailer to drag the boat around. We made it easy and non-taxing for users to carry the boat with them wherever and whenever they want. Moreover, the users are more likely to enjoy more than one activity in the water. To make things interesting, fun and simple, AbEs designs allows easy assembling of the joints parts of the boat.

Our top priority is the safety of the users; hence, we designed the boat in such way that is stable, strong and more importantly unsinkable. 

Our primary focus is on the quality of the boat we produce as well as the price. Since, there is no such competition yet on the market against us, we intend to sell our boat through quality and affordable price.

With our pricing, we think our customers will happy with it and also it will be a competitive with other boats.

Our product sales will be a ready flat pack modular recreational boat that comes with user manual and instructions. Every new product sold comes with 1 year warranty and optional warranty extension. The warranty would cover mechanical problems with exception to user negligence.

In order to connect with our customers all over the country in a short period of time with minimal cost, we will be using a variety of digital options for advertising our product.

We are intending to promote our product through these methods:

• Attending sport events that take place on beaches where we can demonstrate our boat.
• Getting people to try our boat on the beach by putting a sign on the street saying ‘Be in the water within a minute no trailer required’.
• Putting posters on the local campus and all around the boat shops.
• Placing our boat on the malls and airports as model.
• Getting students to promote our product as it will be a part of an assignment.
• Using social media and announce all the news on Facebook, Twitter, Instagram, and Snapchat.
• Giving away a free model in supermarket lucky draws.
• Using a reputable iconic person. 

AbEs Boat Company is a private corporation owned by two qualified with the bachelor engineering on mechanical major.and have a desire to run a business together.

The company was founded by Abdullah Marghalani and Esshaq Motawa (the owners) with equal shares.

Abdullah is the Business manager of the company as he has management experience being involved in similar projects. And also has more than 9 years’ experience in Business and retail.

Esshaq is the Design and Engineering Manager as he has more excellent design skills. He is responsible for the modelling and manufacturing of the designs.

With their expertise and good team work, they are looking to bring the operations of the business to profitability within its first year of business.

We are planning to have our business property in Wellington city as a starting point for us until our business grows and then we will franchise all over New Zealand. At the moment, we do not own a property therefore we will consider lease. As location is critical, we need to locate our property somewhere where parking is easily accessible.

To start out our business and with minimal budgets, the manufacturing of our boats will be outsourced. After our brand has successfully stabilized in the market, we will consider the manufacturing process internally.

We are aiming to produce a boat less than $3,000 and we sell it for $4500 (50 % gross profit per boat). The cost of the boat includes manufacturing cost, business premises, marketing, engineers’ wages and R & D. To reduce the cost and increase revenue at the start of the business, we shall forgo retailer.

what is the capacity compared with existing and forecasted demand?

who will be your suppliers? 

To establish our company, we are seeking to raise $200,000 from a bank loan. The loan agreement and interest rate will be discussed during the negotiation. The financing will be used on the following:

• Business premises (property rent, business consumables)
• Capital to purchase the initial inventories of materials for the boat manufacturing.
• Financing the first year of the operation.

The purpose of the break-even analysis is to work out the units to be sold either monthly or annually to cover the cost of the operation business (Berry, 2017).

This is the number of boats which have to be sold at a selling price of $4,500 before our business will start to make a profit.

Due to the lack of the data on the number sales of the recreational boat in New Zealand, we based our estimation on data from Maritime NZ statistics to estimate the number of boats we can sell in a year.

Based on the Maritime data in 2016, there are 960,000 recreation boats owned by New Zealanders. As our boat has similarity features with powerboat (under 6m) and Jet Ski, we can attract the same market. 

We are expecting the business potentially to grow at the start. Table below shows the expected financial over the three years.  

The project is about development and marketing of the recreational boats. The purpose of the project is the develop and plan a design for the recreational boat (LAMM)  that is multipurpose, lightweight, affordable, and modular in design as well as plan for the establishing of its market through selection of appropriate marketing and advertising strategy. The key needs of the boating enthusiasts and travels are good storage space, accommodation of the transportation modes, simple usage mechanism, and affordable price. These needs have to be fulfilled by the design that would be created in the development project. The needs of the travellers and potential users of the recreational boat present a great opportunity before the company to develop a product that can meet the needs and tap into a significant market that can get the company significant revenues in the coming years.

Recreational boat that is planned by the company would be unique as it is going to be used for multiple purposes unlike the existing power boats and kayaks that have limited functionalities. Multitasking is no doubt the need for time but at the same time, if a user or the recreational travellers want to be able to enjoy multiple activities, a compromise has to be made either with limitations on the activities participated in or with the increase in the budget spent for recreation. 

However, considering the general tendency of a traveller to curb down on the expenses involved in recreational activities, provision of the boat that provides multiple activities in the same price would always be attractive enough. Considering this potential market gain that the company can achieve, it is recommended that the company manufactures a unique boat concept and launches the same into the market. However, because of the strong presence of the existing players in the market, a very strong marketing would be needed to attract buyers and travellers to the boat ride. Thus, the project would involve identification of desired features and the development of the boat accordingly as well as marketing for the establishment of the brand in the market (GÖLPINAR, 2005). 

The project involves research on the needs of the development of the recreational boat as the key product, development of the product, and its marketing to establish the market for it in New Zealand. For this a variety of project management methodologies can be used out of which PMBOK approach is the most standard and flexible which is why the same can be chosen for the current project. As per this methodology, the project activities would be divided into five key phases that include: 

Initiation: Project initiation involves development of a project charter, its approval and identification of the project stakeholders. The project charter would contain the basic details of what the project is all about, who would be handling the project and what would be the outcome or business results of the venture planned. A business case would be highlighted in this charter that would be approved if justified as profitable for the company and feasible too. The financial calculations done on the expenses and the future predictions clearly suggest that the company can expect to gain significant profits within two years of the boats getting operational and thus, the idea of the development of the recreational boat and its market can be considered as both feasible and profitable for the company in the business case. 

Planning: In this phase, a plan would be developed for the development of the recreational boat and creation of the market for the same. The development of the boat would need an understanding of the market and the desired features such that the same can be appropriately selected for inclusion while getting the boats manufactured. The features that are found to be preferred by the customers of the recreational boat included large space for the storage on the boat, affordable pricing, easy to use features that can be easily understood also, inclusion of multiple features and facilities allowing multitasking such as fishing, sailing, and more such activities, and light weight body which makes the maintenance easy and travel faster. For the development of the market for this new product, the company would need to understand the consumer demographics and identify segments that would be targeted through specific marketing strategies (Rokes, 2011).

The marketing strategies of the company would have to be defined after having considerations of the operational and business capabilities of the company, their competition strengths and weaknesses, market demands, preferences, and usage patterns. Thus, for this, a research would be conducted on market, competition, and internal business to come up with the appropriate strategy for marketing and advertising of the business.  A major chunk of the marketing has been planned to include digital modes like social media and websites. However, local people using the boat would have to be approached through the use of traditional marketing. Thus, an integrated marketing plan including considerations of both traditional and new media would be developed and followed throughout the project for the establishment of the market for the new recreational boat. 

Execution: At this stage, the boat construction plan would be executed which would involve contracting with the manufacturer on the boat construction and the placement of orders with them considering the selected features. Once the boats are delivered by the manufacturer to the company, the company would have its branding done on the boat and would make it ready to launch in the market. In the meanwhile, the company would also execute the marketing plan that would include advertising and marketing communication to the public and nearby locals about the new boat. For both these activities to be completed, the company would need a workforce to be put in place (DoT, 2009).

However, as there is a limited permanent staff that can be involved in the management work, the company would need to either hire new staff or get the temporary contract workers to manage the business needs on the outsourcing basis. The company would hire the marketing service providers for handling branding and marketing activities of the business for the establishment of the market while the activities and output of these contractors would be monitored and reviewed by the owners of the organization. 

Project Monitoring and Control: Project would be monitored and controlled by the owners of the boating organization as they would be continuously tracking down the suppliers and contractors to review their work against the set plan. In case of any deviations from the decided schedule or in the quality deliverables, the owners would take action to get the work back on the track and ensure that the project is completed on time and within the allocated budget. For the monitoring of the project, the management would make use of some project management tools like the Gantt chart that would define the timelines and resource requirements throughout the complete project execution. 

Project Closure: At this stage, all the project activities would be completed including the development of the boat, launch of the recreational boat, and marketing of the same for establishment of the business. Once the completion of the project is marked and accepted by the project owners, the project would be considered as completed and would be officially closed with handover from all contractors and suppliers to the company management. 

For the development of the project, following steps were followed:

Market Identification: first the market and the capabilities of the organization was explored. ABEs is into manufacturing of recreational boats and it has an aim to build a design for the boat considering specific needs of travelers in terms of space, budget, and facilities.

To have an understanding of the market, AZ maritime data was explored through which were made some factual discoveries like

•    Average 1.3 million users used 960,000 recreational crafts in a year
•    Different categories of recreational maritime vehicles included power boat, kayak, Dinghy, Jet Ski, and Sail boats among which the power boats and kayak were found to be most popular

ABS is targeting the market with power boats and Jet Ski. Thus, in order to identify the needs of the market, features of these specific vehicles were considered. With the exploration of this data, the company would come up with a combined design that can serve the purpose of both power boats and jet ski’s. The resulting boat would have easy transportation and large storage while its specific design features include multi-purpose activities facilities like fishing, sailing, and cycling (Australia, 2005).

Market is also explored from the perspective of demographics of users including general population, recreational vessel users, and non-recreational vessel users. Males tend to use more of recreational power boats as compared to females. Out of 58% of male users, 70% used sailboats, 64% used powerboats and 27% use other vessels. Kayak is more popular with females as 52% of users are females. 50% of recreational boat users are between the age 35 and 64 while 29% are of age between 18 and 34, and remaining 21% are of age more than 65 years. 43% of boat users were from central and lower north island, 27% from upper North Island, and 30% are from South Island (Kalafatelis, 2015). 

Market Development: Once the features of the boat were finalized, the next step was exploration of the market and competition such that an appropriate strategy can be identified for targeting customers and promoting the brand products. For the creation of the new marketplace, blue ocean strategy would be used. The blue ocean strategy helps in establishing of a new market and in creation of differentiation in the market. A strategy canvas was developed with different brands identified along with the illustration of the differentiation between them in terms of features. The brands include Porta Bote, CraigCat, ABJET, Thunder Jet, Ventus Inflatable, and AE. The features of the boat brands include price, weight, size, strength, transportation, assembling, material, multitasking, speed, design, and stability.

Competitive Analysis: Further, the competition was analyzed considering operational and marketing factors including price, quality, service, reliability, innovation, marketing, and product design. The key competitors of ABE include Kiwi Boating, Osprette Company, and MAC Company. Each of these companies were rated along the identified factors and it was found that ABE stood ahead of competition when considering all the factors with total rating of 14.  

The project scope includes execution of different types of plans including ownership and management plan, operational plan, and financial plan.

Marketing Plan Development: For the development of the marketing plan, the first step would be to identify the target market. The target market includes people who are sea sports enthusiasts, impulse spenders, pleasure fishers, and other users including singles, couples, and families. These consumers were found to be enthusiastic about some specific features of the boat including pricing, space, weight, design, carry on, and multitasking features. The marketing plan would involve the following considerations:

Product Offering: The customers of competition complain about lack of space for storage, higher pricing, heavy weight, and lack of facilities. Considering these needs of the customers, ABE company has planned to build a recreational boat with desired features including light weight material, multipurpose application, greater storage space, and affordable pricing. The boat would be easy to assemble and would have interesting and fun activities. Further, the boat is made more stable and stronger.

Sales Strategy: The recreational boat is provided with the instructions and user manual for every product sold along with a year warranty covering mechanical issues and an option for its extension. The sales people would have to be assigned the work of going to the potential clients and explaining them how the boat works and how it is a unique product different from those existing in the market. The sales workforce would get the appreciation for making goods sales in the form of commissions for the achievement of goals beyond the regular sales targets.

Advertising and Promotion Strategy: Digital advertising would be used as the primary mode for the promotion of the product at minimal cost. Other methods would also be used for promotion including boat demonstration in sports events, boat trial at the beach, posters in the local campus, boat display at malls and airports, student promotion, social media announcements, and supermarket lucky draws. The demonstration of the boat at a sporting event that is already happening in the area would give the maximum exposure to the company as the event would attract many visitors as well as enthusiasts in large numbers. Boat display at malls and airports is likely to get many footfalls from the general public that would get to know about the boat which would likely attract them to the venue later for using the recreational boats. However, mall displays can be very expensive for the company and thus, can only be done for a limited duration. Thus, it is recommended that the company makes this mall launch in the season when most public footfall is expected such as the occasion of Christmas or new year. Social Media would be one way that would be cheapest and would get the maximum exposure to the company. For this, the company would create social media fan pages for the new product online and would run marketing campaigns to attract visitors to those pages. The visitors would be engaged on these pages through interesting reads and pictures of the boat as well as event such that they would get the feel of the experience which can encourage them to come to the boat for a ride. Social Media marketing can be a cost effective and effective way in which the marketing of the boat can be done at a larger scale reaching out to the people who are not from the location. This can include the world travelers who visit the places for leisure or recreation. Major platforms that the company would be using for the digital marketing include Facebook, Twitter, Instagram, Hubspot, Pinterest, and official blogs of the company. 

The project scope also includes execution of different types of plans including ownership and management plan, operational plan, and financial plan.

Management Plan: AbEs Boat Company is run by two BE mechanical graduates named Abdullah Marghalani and Esshaq Motawa who are running the company with equal partnership. Abdullah carries a management experience of 9 years in retail and business management while Esshaq is an expert as the Design and Engineering Manager and is going to manage design modelling and manufacturing.

Operating Plan: The first step would be to purchase a business property for the project in Wellington and then the company would spread through a franchisee network across New Zealand.  To keep the operational financially feasible for the company, the manufacturing of boats would be outsourced initially.

Financial Plan: A bank loan of $200,000 would be raised for getting business premises, purchasing inventories, and financing the first year of operations.

The company has planned to manufacture a recreational boat based on the needs of the market and launch the same with efforts put into market establishment. It has been found that the business plan is feasible due to certain factors like an absence of such an offer for recreational users from existing service providers, increasing discomfort in users against the costs and lack of flexibility in existing services, willingness of the travellers to spend more and more on recreation, and the internal capabilities of the organization in terms of achieving the results. The owners of the company have sufficient knowledge and experience of handling such a business and a feasible plan has been made that would get the positive revenues within the first two years of the launch of the boat. Thus, the company have go ahead with its plan to get the boats constructed from manufacturers and launch them in the market. In the future, when the company starts to gain good profits from operations, new boats manufactured internally can also be introduced to reduce outsourcing costs as well as boost the market with more sales.  

Australia, C. o. (2005). National Standard for The Australian Builders Plate for Recreational Boats . Australian Transport Council .

DoT. (2009). Guidelines for the design of boat launching facilities. DoT.

GÖLPINAR, S. (2005). COMPARATIVE ANALYSIS OF MATERIALS IN RECREATIONAL BOAT DESIGN: FIBER REINFORCED PLASTIC BOAT IN SERIAL PRODUCTION. 

Kalafatelis, E. (2015). Rates of Participation in Recreational Boating . Maritime New Zealand .

Rokes, D. (2011). National Recreational 2011 Boating Survey. USCG Boating.