Apprentice series 8 episode 2 – “There’s no point doing Market research if we’re just going to ignore it.”

 

Week 2 in The Apprentice house and it’s the product design task.

This is one of the toughest tasks in the whole process. People train for years to get to grips with the principles of product design. Individual products can take months, or even years of development, before they even get off the drawing board. The suited-and-booted candidates, however, have 2 days to come up with an idea, get a prototype made and pitch it to retailers with decades of experience in the sector.

That’s what you call a tough gig. So it shouldn’t really be a surprise that the products for this task tend to be a bit, shall we say, crap.

And even though Shugsy said at the start of the show “it’s all about the product”, and the Splish Splash bath screen was clearly a terrible product. It was the process that let them down in the end.

Let’s quickly work out what the product design task process is (in simplified terms).

 

Idea > Research > Design and Specification > Pitch Development > Pitch

Things totally broke down for the girls after the research stage… BECAUSE THEY IGNORED WHAT THE RESEARCH TOLD THEM!

They started down the road of developing the tap cosy (appalling name, but I can actually see a market for the product). But because “taps are all different” Jane and Jenna decided to dump the idea that the market research told them would be popular, and develop the product that the market research told them was massively flawed.

Excellent thinking there, and it was a perfect management choice not to tell the sub-team that they are now working on the wrong product. Brilliant, Jane, brilliant.

So, they get the prototypes, and develop the pitch and decide to offer Amazon a deal based on an order of A MILLION UNITS!

“Well they’ve got 144 million customers, so they only need 1 out of every 144 to buy one, and that’s the stock all sold – easy!”

Ok, that’s not how it works. It’s not Amazon’s job to find customers for your product, it’s Amazon’s job to find products for their customers. The market size that they should have focussed on was the number of families in the UK with ‘bath-time’ aged kids.

From some hashed together searches on the internet, I reckon that would be a market of about 1.25 million (approx birth rate for 5 years divided by 2 and a bit to account for the fact that many families with a young child will have more than one young child).

So 1 in every 144 suddenly becomes 4 in every 5. You’d better have a good product for that sort of market penetration – and they really don’t have a good product.

And as Katie said after the pitch “That’s a £9,000,000 order – I don’t want to be laughed at”

But it wasn’t just the volume that was a problem, their prices were all over the place as well. Where did the idea of a 240% margin come from? If you’re buying at £9 and selling at £17.99 you’re making 8.99, which is a profit margin of about 50%.

A margin of 240% would be… mathematically impossible, because the whole point of a margin is that it is the proportion of total revenue, which by definition can’t be more than 100%.

They might have meant that the gross profit would be 240% the unit cost, which would be a very good deal for a retailer, but would also mean that the RRP was £30.60 not £17.99.

The numbers aren’t easy, but they are fundamental to running a profitable business. (This is probably the point in which someone in the comments points out how I’ve buggered up the numbers too, nicely invoking Muphry’s Law.)

 

I’m not letting the boys get away that easily though. The cracks are starting to show in Team Phoenix as the inevitable ‘sub-team feels sidelined’ theme rears it’s ugly head. Actually, that’s not fair, because when Ricky the Wrestler and the rest of the sub-team raised the issue, they did so with remarkable diplomacy. The problem was that team leader Azhar’s response was ‘Stop moaning. This is the product. Talking about what happened earlier today is a waste of time, just back me because I’m the project leader’. I predict that he’s not long for this process.

 

Coming up – It’s the food task. Jane runs a food manufacturing company, so if her team loses next week, her chances of staying are minuscule.

 

Who I’m keeping an eye on:

Do you know who started to impress me this week? Katie. She was calm, thoughtful, and businesslike throughout. And she stood her ground – even though she was ultimately ignored. On the boys team, Duane did a good job in product design, and Stephen’s pitch was focussed, targeted and well researched.

And who’s on borrowed time? As well as “I-lead-from-the-front Azhar”, the dim lightbulb that is Adam can’t have that much further to go, can he?

 

photo credit: tropical.pete via photopin cc