business context
I've been working on the business context research some. Here are some of the key points I think I should communicate to Best Buy.
1) You want to enter the compact fridge market. Then targeting college students is the way to go. They are the largest user group of compact fridges.
2) College students are spending a ton of money on their dorm rooms (you knows this, your competitors know this).
3) Many students aren't buying compact fridges. Intead they are renting them or inheriting them.
4) You need to offer a new and innovative mini-fridge that meets the needs of college students. This is a huge opportunity to offer more than just a small box that preserves food by extending the core offerings of the mini-fridge and connecting the fridge with other student-centered products you offer (or could offer), such as dorm kitchen products.
Here are some related facts and ideas in more detail:
Compact Fridge Market
+ 1,500,000 compact refrigerator units sold in U.S. in 2004 (~$75-100 million ?)
+ most users of compact fridges are college students
A mini-fridge targeted at college students is right on. The compact fridge has become a staple dorm room product. But, this size of this market alone may not justify you entering it without it being part of a larger strategy (?) ...
Spending by College Students in 2004
+ $2.6 billion on dorm room furnishings and $7.5 billion on consumer electronics
+ on average, $260.09 on dorm room furnishings and $509.14 on consumer electronics
This is good. Several articles suggest college students are continuing to spend more on furnishing their dorm rooms. This adds value to the mini-kitchen concept and also suggests that the design should perhaps pay attention to cosmetic features in addition to function. It also may be worth emphasizing to consumers that the space created by the mini-kitchen can also be used for products like TVs and game consoles, since these are so popular (especially at Best Buy).
Response by Retailers
+ Target sells dorm kitchen appliance packages that combine a mini refrigerator, hot pot, coffee maker and sandwich maker. Best Buy also sells TV, fridge and microwave packages.
+ The Container Store offer "dorm room experts" that give personalized storage tips over phone and post a recommended shopping list to secure site for you
+ Best Buy plans to showcase furnished dorm rooms at colleges, pitching sleek products that conserve space
Target is grouping products together to sell the mini-kitchen. Our product goes the next step and offers a cohesive structure to the mini-kitchen along with other useful features. This would be a great product to present at Best Buy's showcasings at colleges. Best Buy might want to develop the mini-kitchen concept further and offer a complete line of mini-kitchen appliances and accessories (e.g. hotplate, microwave, storage cart, tupperware, etc.). Best Buy could try to build a community around the mini-kitchen system (or more generally a dorm-room system) by suggesting configurations in the store or by offering local contests for "coolest dorm room". This could work to further promote the product and might also be an interesting source of research data. I might also want to try to tie "sleek" into the concept, especially since this is part of Best Buy's college strategy.
Alternatives to Buying Mini-Fridges
+ inheriting fridges
+ renting fridges
The mini-kitchen is in a good position to become the rental fridge that these rental companies purchase (right now it seems to be Microfridge which has an integrated microwave; if the microwave is on then the fridge is off and vice versa, so it uses the same power as a standard compact fridge...something to think about if you want to go after this market).
Since many students are inheriting their fridges from friends and family or renting them, Best Buy needs to offer a truly unique mini-fridge. They can continue to profit of them by selling accessories for their mini-kitchen fridge. They could also sell the same accessories for use with compact fridges by other brands. For example, the trays or platforms could be made so they fit with existing mini-fridges that Best Buy sells (an alternative to producing their own mini-fridge).
Other Markets
+ office
+ apartment
+ assisted living
Microfridge markets it 3-in-1 (freezer,fridge,microwave) appliance as a "refreshment center" for offices. Summit markets many of fridges for assisted living homes. Again, many aspects of the mini-kitchen are appropriate for these contexts. Removable containers would be handy for undercounter apartment fridges and assisted living homes. Stacking to make room for appliances (freezer,microwave,coffee maker) might be appropriate for the office refreshment center.
To do
1) What are the exact numbers on sales of compact fridges? Why can't I find them?
2) Is the compact market growing, shrinking or flat? My guess is slightly growing or flat. If this is true, I should especially emphasize the fact that spending by college students on dorm room products is rising and that we are offering more than a mini-fridge with the mini-kitchen.
3) Who are the potential competitors of the mini-kitchen fridge?
Sources:
http://www.acleareye.com/The%20McKinsey%20Quarterly_%20The%20Online%20Journal%20of%20McKinsey%20%20Co..pdf
http://www.businessweek.com/magazine/content/03_13/b3826123_mz033.htm
http://www.msnbc.msn.com/id/8884977/
1) You want to enter the compact fridge market. Then targeting college students is the way to go. They are the largest user group of compact fridges.
2) College students are spending a ton of money on their dorm rooms (you knows this, your competitors know this).
3) Many students aren't buying compact fridges. Intead they are renting them or inheriting them.
4) You need to offer a new and innovative mini-fridge that meets the needs of college students. This is a huge opportunity to offer more than just a small box that preserves food by extending the core offerings of the mini-fridge and connecting the fridge with other student-centered products you offer (or could offer), such as dorm kitchen products.
Here are some related facts and ideas in more detail:
Compact Fridge Market
+ 1,500,000 compact refrigerator units sold in U.S. in 2004 (~$75-100 million ?)
+ most users of compact fridges are college students
A mini-fridge targeted at college students is right on. The compact fridge has become a staple dorm room product. But, this size of this market alone may not justify you entering it without it being part of a larger strategy (?) ...
Spending by College Students in 2004
+ $2.6 billion on dorm room furnishings and $7.5 billion on consumer electronics
+ on average, $260.09 on dorm room furnishings and $509.14 on consumer electronics
This is good. Several articles suggest college students are continuing to spend more on furnishing their dorm rooms. This adds value to the mini-kitchen concept and also suggests that the design should perhaps pay attention to cosmetic features in addition to function. It also may be worth emphasizing to consumers that the space created by the mini-kitchen can also be used for products like TVs and game consoles, since these are so popular (especially at Best Buy).
Response by Retailers
+ Target sells dorm kitchen appliance packages that combine a mini refrigerator, hot pot, coffee maker and sandwich maker. Best Buy also sells TV, fridge and microwave packages.
+ The Container Store offer "dorm room experts" that give personalized storage tips over phone and post a recommended shopping list to secure site for you
+ Best Buy plans to showcase furnished dorm rooms at colleges, pitching sleek products that conserve space
Target is grouping products together to sell the mini-kitchen. Our product goes the next step and offers a cohesive structure to the mini-kitchen along with other useful features. This would be a great product to present at Best Buy's showcasings at colleges. Best Buy might want to develop the mini-kitchen concept further and offer a complete line of mini-kitchen appliances and accessories (e.g. hotplate, microwave, storage cart, tupperware, etc.). Best Buy could try to build a community around the mini-kitchen system (or more generally a dorm-room system) by suggesting configurations in the store or by offering local contests for "coolest dorm room". This could work to further promote the product and might also be an interesting source of research data. I might also want to try to tie "sleek" into the concept, especially since this is part of Best Buy's college strategy.
Alternatives to Buying Mini-Fridges
+ inheriting fridges
+ renting fridges
The mini-kitchen is in a good position to become the rental fridge that these rental companies purchase (right now it seems to be Microfridge which has an integrated microwave; if the microwave is on then the fridge is off and vice versa, so it uses the same power as a standard compact fridge...something to think about if you want to go after this market).
Since many students are inheriting their fridges from friends and family or renting them, Best Buy needs to offer a truly unique mini-fridge. They can continue to profit of them by selling accessories for their mini-kitchen fridge. They could also sell the same accessories for use with compact fridges by other brands. For example, the trays or platforms could be made so they fit with existing mini-fridges that Best Buy sells (an alternative to producing their own mini-fridge).
Other Markets
+ office
+ apartment
+ assisted living
Microfridge markets it 3-in-1 (freezer,fridge,microwave) appliance as a "refreshment center" for offices. Summit markets many of fridges for assisted living homes. Again, many aspects of the mini-kitchen are appropriate for these contexts. Removable containers would be handy for undercounter apartment fridges and assisted living homes. Stacking to make room for appliances (freezer,microwave,coffee maker) might be appropriate for the office refreshment center.
To do
1) What are the exact numbers on sales of compact fridges? Why can't I find them?
2) Is the compact market growing, shrinking or flat? My guess is slightly growing or flat. If this is true, I should especially emphasize the fact that spending by college students on dorm room products is rising and that we are offering more than a mini-fridge with the mini-kitchen.
3) Who are the potential competitors of the mini-kitchen fridge?
Sources:
http://www.acleareye.com/The%20McKinsey%20Quarterly_%20The%20Online%20Journal%20of%20McKinsey%20%20Co..pdf
http://www.businessweek.com/magazine/content/03_13/b3826123_mz033.htm
http://www.msnbc.msn.com/id/8884977/
posted by jamesjpierce at 9:01 PM
1 Comments:
Hey James,
Simply put… nice work. You really cracked the business angle way more than Jon and I were expecting.
Also, you should congratulate yourself for the crisp points at the top, with the details fleshed out below. I think this is a huge breakthrough for you. You’ve finally been able to look at the data, wrestle it and extract the key points in a way that is simple and intuitive.
I think the story is good the way you have it presented. There are a few pieces here and you will need to concentrate now on how to weave this in to your overall narrative along with your concept.
#s 1 and 2 are more why I should even bother to listen to your product pitch. Why this market? Why this product? These should come earlier in your overall story.
#s 3 and 4 are more geared towards the “how” in both strategic execution and future potential. These should go more towards the end.
Don’t worry about exact numbers. Use the sales data with average price to determine a range. Pick a low number to be safe and make this the sales number. In other words ($75 million) with a small (approx.) after it.
Can you qualify this statement: Most users of compact fridges are college students.
Great competitive overview. If I were Best Buy, this is enough to understand the strategic opportunity and what competitors might be doing.
Don’t worry too much about potential competition of your concept. It would be good to understand who might be going this way, but it would be impossible to predict.
For the growing, shrinking flat question, can you chart sales of compact fridges over time?
All of these points are merely icing on the cake. You have done a ton of great work here, so I would spend the majority of your effort on weaving the story together rather than searching for more pieces.
Lucas
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