Economic Model

Example of a Country Club's Summary Income Statement

1. Answer the following questions about four elements of your firm's economic model:

Revenue Drivers

• Is there a wide variety of revenue drivers or only a few? wide variety! dues, golf, food & beverage, tennis, golf, fitness & aquatics, spa & salon, childcare and card play.
• Are prices negotiable? No
• How often do they change prices? Is it frequently (hourly, daily, weekly, or biweekly)? Moderately frequently (monthly, bimonthly)? Or rarely (semiannually, annually or longer)? Rarely, prices are reviewed annually during budgeting and changes are made at the start of each annual season
• Do they use bundling, market segmentation pricing, loyalty schemes, etc? I'm not sure, but I think it might be market segmentation pricing. For example within Food & Beverage we have several restaurants ranging from causal to formal with accompanying prices so the members can self-select to be customers of the desired price/restaurants.

Margins

• Are their margins relatively low (e.g., a grocery store) or high (e.g., a jewelry store)? Margins are low since we are a not for profit. In fact since dues are collected each year to effectively subsidize our prices, our budget reflects a target loss to hit for each department. However the organizational overall breaks close to even but to the good, and the more to the good the better.
• Do they offer highly customized services which allow me to charge significantly higher prices? We do offer highly customized services such as our catered events and our special requests for menu items in the restaurants given 24-hour notice, but we still follow our not for profit price formula to set the price.

Volumes

• Do they have significant capacity constraints? Absolutely, and they are based on the physical space of the facility. Just like any restaurant we can only sell as many tables as we have, just like a tennis court we can only have as many players as we have courts, the spa and salon is constrained by how many pedicure chairs we have, etc.
• Are they a relatively high, medium or low volume business? Every usage of the facility, even the no-charge included usage is a transaction in our point of sale system. Every meal is a transaction in the restaurant, every manicure is a transaction from the salon, etc. but also "free" usage of the gym is a $0 charge transaction to track customer usage. It feels like a high volume business.
• What is the quantity of items sold relative to the competition over a specific time period? We look at daily, weekly and monthly volume. Whether we are high, medium or low comparatively varies, we certainly don't compete with a national retailer like Target, but we are also defnitively busier than neighboring salons or tennis centers or residential country clubs. However, our retail spaces are small so clothing and equipment purchases are much lower than a neighboring retail store with more choices and the ability to offer steep discounts. Our season matches competitor seasons, so volume analysis stays comparable throughout the year. Of our 3,600 members we can have up to 1,200 (a third) come on property as customers in a typical day, and on special occasions and events much more.
• What is the average value of a transaction in the business and how does that fare against competition? I cannot get you this data.
• Do they offer highly customized services which decreases the volumes they can handle, or are their goods and services very standardized allowing them to increase volume? We offer both highly customized services and standardized services, but both are easily processed as part of our volume. We overcome slow downs in customization by making it standard to offer it, so everyone from line staff to managers are prepared to process the transaction.

Cost Structure

• What is the business’s proportion of fixed to variable costs? If they have a high fixed costs structure, they have high operating leverage which means it takes longer to reach breakeven, but once there, much more of your revenue flows straight to the bottom line. High operating leverage (high fixed costs) suggests a riskier venture, at least initially. Fixed costs are very high, anywhere from 50-66% of the a department's revenue, so profit margins are very low and breaking even is a big part of our financial analysis.
• Do they outsource so as to convert certain fixed costs into variable costs? No, outsourcing is not part of our model. We only outsource valet and housekeeping services, which are also essentially fixed. We need the whole building cleaned regularly, so that is fixed cost, and we make sure valet is available each day, so we can only vary it either by closing early if no customers dine late at the Club or by staffing up if we have a big event.

2. Draw conclusions on the attractiveness of the firm's combination of margins, volumes, operating leverage, and revenue drivers:

It's tough to determine the company's "attractiveness" since we are a not for profit. Definitely hitting target losses to "break even" or do better than breaking even are great financial benchmarks that mean we had a good year.  We focus on measuring our success by how happy our members are, so we do lots of surveys and collect constant feedback about member satisfaction, and talk less about how much money we are making. Managers have to keep an eye on both however because members may say they are happy but if they aren't using the Club, they aren't putting their money where their mouth is or voting with their feet!

Halfway Reflection

1) Tenaciousness is a competency. What are the behaviors that you have used (or developed) to keep up with the requirements of this course?

The Webster definition of tenacious includes the phrase "not easily stopped or pulled apart." The assignment topics vary between your team's case, your employer, and general entrepreneurship studies. Naturally, you will find some assignments are more appealing than others (i.e. many people are afraid to talk to strangers). The professor has built in extra assignments to allow you to skip a couple of the assignments you find too challenging, frightening or are otherwise unable to do. However, you do not get to skip every assignment you don't want to do! The order in which you do assignments can affect how well you keep up with the requirements of the course. Productivity trainings vary in their recommendations to do the most appealing assignments first or last. In my case, when I cherrypicked the assignments I liked and did those first, it just built up the barrier between me and the remaining assignments. The more I procrastinated, the harder to was to do an assignment, until I found myself stressing to get them done last minute before the deadline.

To better keep up with the requirements of the course, I developed a "Get 'Er Done" attitude. I now do assignments in the order they were assigned. Not only did I keep up with requirements, but I found that I was working ahead. Working ahead is extremely helpful since it gives you flexibility in your schedule - you never know what will happen, you could be without internet, get sick, etc. and now you don't have to stress about meeting deadlines.

2) Tenaciousness is also about attitude. Talk about a moment or two when you felt like "giving up." What pulled you through? Do you feel like you've developed a tenacious attitude during the past two months? What experience or experiences most contributed to this?

Many of the assignments are not the typical ones of writing a paper or taking a quiz, but instead doing something like interviewing an entrepreneur or interviewing strangers. This immediately pushes against your comfort zone and for me created a feeling of "giving up" before even trying.

I spent days thinking about the assignment and who I should go talk to and what I should say, how I would record them, how I would upload a file, etc. Finally, the day it was due, which was also trash night, I rushed out to talk to some neighbors in our community. After talking to one neighbor who turns out didn't mind being interviewed for my school project, I was encouraged to go find two more neighboring strangers - who were just as nice and helpful! After uploading the files and writing my analysis, I realized I learned a lot - opposite of what I thought I would find - by talking to these people and it encouraged me. I think I spent more time worrying about the assignment than the assignment actual took if I had just pushed through and gotten it done.

"You have to let it all go, Neo, fear, doubt, and disbelief. Free your mind."

The next assignment required more thorough interviews and finding customers in a certain segment. I chose mothers for my segment and know very few young moms or if moms would think I am a total weirdo for coming up to talk to them. I again procrastinated and felt like "giving up," but I saw a classmate's post where she had already uploaded her interviews and talked about her positive experiencing asking strangers if she could interview them. This encouraged me to push through with my own assignment.

These types of assignments contributed to the procrastinated I discussed in the first section and my development of the tenacious "Get 'Er Done" attitude with assignments. (SEE ABOVE) Additionally, seeing other classmates work ahead and having the ability to look at their posts before doing my assignments encouraged me that these assignments are possible if you just - that's right - GET ER DONE!

3) Three tips. What are three tips you would offer next semester's student about (1) fostering the skills that support tenacity and (2) developing the 'tenacious mindset' ?

Fostering skills that support tenacity:
1. Don't procrastinate
2. Read your classmate's posts
3. Don't overthink it (it'll cause paralysis not action)

Developing the 'tenacious mindset':
1. Work ahead - if you're ahead of schedule you're on track with developing a tenacious mindset
2. You are the only thing in your way. Worrying about the assignment (worrying is different than analyzing) takes up more of your time than just doing it.
3. Embrace pushing your comfort zone as the way to learn and grow.

Breakeven Analysis aka Cost of Doing Business

Case Business Idea, Team Food Waste

• Customer downloads Food Forward app for Free (web version also available).
• After food purchase at a participating retailer (grocery stores like Publix and participating restaurants), scan the receipt's barcode into the app.
• The food items and their "best by" dates and "resell by" dates are uploaded into the app's data.
• Customer gets a reminder before food hits its "best by" dates (no inventory control just calendar information), which allows customer to remember to use up what's in the fridge or move it to the freezer to preserve it longer.
• Customer gets a reminder before food hits its "resell by" dates.
• To resell, customer brings the unused/unwanted foods back to the original store, for example when cleaning out the fridge to make a new grocery list for the week, instead of throwing the food away, return it for a coupon. If the food is in unused condition before "best by" dates it could be returned for full price. This model focuses on giving the customer a $1 coupon to the retailer in exchange for each pound of not-resellable-food.
• Food Forward drivers pick up the "food scraps" from the registered retailers, and the registered retailers can participate as well. (hotels, universities, etc.) OR the retailers may pay premiums to have their food waste hauled (i.e. Rutgers pays $30 per ton to a local farmer to haul away the scraps instead of paying the city $60 per ton for waste disposal)
• Food Forward reimburses the retailer $1 for every $1 coupon a customer redeems at the retailer.
• Food Forward separates the food scraps into animal feed, composting materials and pulping. Processes food material accordingly.
• Food Forward sells the food scraps to business customers at low price (animal scraps, composting, industrial uses, etc.) or sells pulp to bioenergy generators (such as anaerobic hybrid digester technology).

1) A list of all the costs that will go into the business. 

Variable Costs (weekly); $2.82/lb

• Coupon reimbursement (aka cost of buying the scraps): at $1/lb avg. $11,000/week (based on EPA data US wastes 22,000 lbs weekly)
• Driver Wages: avg. $18,000 ($1.6/lbs)
• Gas costs: avg. $2,500 ($.22/lb)
• Pulper energy cost: $0.0005/pound

Fixed Costs (weekly); $7,700

• Loan repayment for initial app development and pulper purchase: $300
• Admin Salaries: $6,250
• Marketing: $250
• Rent: $750
• Admin Costs: $50
• Truck maintenance: $100 (although increased sales is increased wear on the car)

2) Please identify a 'unit of analysis' for each revenue driver.

• Haul away: $0.015 per pound ($30 per ton) (approx 11,000 lbs per week)
• Pulper --> Pig Rancher Animal Feed: $0.01 per pound ($30 per ton) (approx 3,472 lbs per week)
• Pre-Pulp or Post-Pulp Fruits and Veggies --> Compost Material $0.012 per pound ($50 for 4,056 lbs)
• Pulper --> Sale to digesters for wastewater or manure treatment: $0.01 per pound ($30 per ton) (approx 3,472 lbs per week)

3) Please identify which costs will change in relation to sales volume (i.e., variable costs) and which costs will not change relative to volume (i.e., fixed costs).

See above.

4) Determine an appropriate price level for for each revenue driver. 

See above.

5) Calculate contributions margins per revenue driver

• Haul away without coupon CM = $0.015/lbs - $0.91 = -$0.895
• Haul away with coupon CM = $0.015/lb - 1.91/lb = -$1.895
• Pulped for Pig Feed or to Digester CM = $0.01/b - $0.9105 = -$0.9005
• Pulped for Compost CM = $0.012/b - $0.9105 = -$0.8985

6) Use the weighted average contribution margin technique to determine breakeven point in terms of units sold per revenue driver.

Haul away without coupon CM = -$0.895 (25%); BE = $1925/-$0.895

Haul away with coupon CM = -$1.895 (25%); BE = $1925/-$1.895 

Pulped for Pig Feed or to Digester CM  = -$0.9005 (31.5%) = $2425.5/-$0.9005

Pulped for Compost CM = -$0.8985 (18.5%) = $1424.5/-$0.8985

7) How many units of each revenue driver do we need sell to breakeven per month? Per week? Per day? 

See #8

8) Do you believe this is 'doable'? Why or why not?

Absolutely not possible, we lose money from the beginning!

Elevator Pitch No. 2

The feedback I worked on was incorporating how the company makes a profit.

Youtube link: https://youtu.be/isYCJAeji1U

Innovating The Mix

In this exercise, I'd like you to practice the entrepreneurial competency of "value creation" by reverse engineering your firm's existing product/service mix, evaluating the features and benefits of the items sold by your firm, and analyzing it using the 4-levels of a product/service

Specifically, here's what I'd like you to do:

1) Map out a product/service mix for your venture. Identify all of the revenue drivers, and identify the items under each revenue driver. If there are many, many items in a revenue driver, then you are welcome to indicate only categories of items.

Firm's existing product/service mix is membership and operational revenue, the latter of which is composed of many many products (tennis, restaurants, golf, spa, salon, etc.) that are further broken into a product/service mix. I think the best to map out would be the Tennis department's product/service mix.

Tennis Department revenue drivers:

1. Tennis Membership, +$4,500 annual upcharge from basic membership for unlimited recreational play with other tennis members

2. Competitive team registration fee - interested players pay a $500 fee to join a team of their skill level and play home and away matches again neighboring clubs (team registration covers coach, county registration fee, home match hosting, etc.)

3. Private lessons - customers can pay the Tennis Professionals for 30-min, 1-hour or more 1:1 time to improve their tennis skills, scheduled at the customer's convenience and pro's availability

4. Retail products - clothes, equipment, bottled water, etc. sold in the Pro Shop; and stringing service is also available

5. Clinics (group lessons) - fee per person to join in a group lesson, pre-scheduled topics and date

6. Events - ticket sales for attendance at an event; events vary from spectator events to participation tournaments

7. Kids After School Tennis - cost for program participation, kids are divided by skill level to learn and practice tennis skills during after-school hours under Tennis Pro supervision

&

8. Kids School Break Camps - cost for program participation, kids are divided by skill level to learn and practice tennis skills during full or half-day on non-school days under Tennis Pro supervision

9. Guests - guest fee for bringing a guest, cost increases during peak times

2) On an item basis (or an item-category basis, if necessary), please identify the features and benefits.

• Tennis Membership - feature is cost-savings comparing annual buffet fee to per-usage fee; since non-tennis members are prohibited from using the tennis center the benefit of upgrading is your ability to play tennis with your friends and neighbors (it is an active tennis community so you are otherwise "left out")
• Competitive team registration fee - feature is competitive tennis play according to official rules with a coach assisting you; benefits are getting to know a small group of players very well (building friendships) and also being active by following through on commitment to tennis play/team
• Private lessons - feature is high-quality personalized teaching (former professional tennis players make up our teaching staff); benefit is improved tennis skills
• Retail products - feature is the item you needed (you bought water because you were thirsty, etc.); benefit is the convenience of getting what you need where you need it (in the pro shop along the tennis courts) and we have reduced prices (club is not-for-profit)
• Clinics (group lessons) - feature is affordable tennis lessons; benefit is improved tennis skills
• Events - feature is the pleasure of enjoying a tennis match as a spectator or participant; benefit is the convenience of these tennis events and programs at your home community and another benefit is getting to enjoy these things without planning it (or doing the dishes!)
• Kids After School Tennis - feature is keeping the kids occupied with a healthy sport until parents are off work and ready to be home with the kids; benefit is kids get tennis skills
• Kids School Break Camps - feature is keeping the kids occupied with a healthy sport until parents are off work and ready to be home with the kids; benefit is kids get tennis skills
• Guests - feature is that the member gets to bring a friend to play; benefit is having an expanded network of potential players to play tennis with/against

3) On an item basis (or an item-category basis, if necessary), please identify the major points of differentiation, relative to competitors' offerings. Please try to identify at least one point of differentiation on each level of the four levels (i.e., core, tangible, augmented, and communicated).

• Tennis Membership - (core) our community of tennis players is significantly younger than our competitors so members who join the Tennis Membership get a community of active tennis players; the other levels are not different
• Competitive team registration fee - (core) this matches the cost of our competitors' teams since we are participating in the same county league; however some clubs do internal leagues which are much less competitive; (actual product) we also have more team registered than other clubs so we can offer teams by skill level that are a much better fit to your skill level instead of a club with team teams that would have to move you to a better or worse skill level group just to put you on a team
• Private lessons - (core) matches the competitors; (actual product) our teaching professionals are of the highest quality, former professional players on the tour
• Retail products - (core) and (actual) are the same as competitors; (augmented) in many products we beat our competitors on price; our customers are also locked in to shopping at "their" club because they already paid to be a member here they want to support their club instead of a stand alone athletic store
• Clinics (group lessons) - (actual product) our teaching professionals are of the highest quality, former professional players on the tour
• Events - (core/augmented) events are exclusive to members only attendance; the core is only sold to a limited audience but the exclusivity is the augmentation; for the (actual product) we customize it to our members' wants/needs
• Kids After School Tennis - our community of tennis players includes many families so there is a large group of kids to build the program for (core) - driving down cost for participants - and other (actual product) differentiation, including increased offerings/availability, and creating specialized groups by skill level, improving quality of teaching; and our teaching professionals are of the highest quality, former professional players on the tour; the (augmentation) is parents getting a program to put their kids in
• Kids School Break Camps - our community of tennis players includes many families so there is a large group of kids to build the program for (core) - driving down cost for participants - and other (actual product) differentiation, including increased offerings/availability, and creating specialized groups by skill level, improving quality of teaching; and our teaching professionals are of the highest quality, former professional players on the tour; the (augmentation) is parents getting a program to put their kids in
• Guests - not differentiated from competitors on any level; the value for the guest depends on how much they really wanted to get in to try out our club!

4) After looking at your product/service analysis, please evaluate how innovative it is -- in other words, how new and useful is your firm's product service mix relative to competitors.

Our product/service mix is NOT new or useful when compared to competitors. Our tennis center has the same offerings of any full service tennis center. However, we have three of the four surface types, which is rare that a tennis club in this area has such variety for players: red clay, green clay and hard surface.

What is unique about our tennis center is that it is in your home, i.e. our customers live here so the center is customized to their interests. Location, location, location!

5) For each item (or item-category), what is one thing you can do to enhance further differentiation? Again, please apply the four-levels framework to develop your suggestions. 

• Tennis Membership - I think we could add the remaining surface type, which would be a grass court; it has a LOT of cost to create and maintain so further analysis would be necessary (actual product)
• Competitive team registration fee - no ideas here, the game is so structured and regulated
• Private lessons - it is difficult to simulate doubles play or to coach while playing singles, so some new product that offers coaching while playing would be an innovation
• Retail products - offering a first-chance buy for our customers to get new products and equipment on the market (augmentation)
• Clinics (group lessons) - (actual product) our teaching professionals are of the highest quality, former professional players on the tour
• Events - continue to customize events to the customers' wants (their core value)
• Kids After School Tennis - continue to customize events to the customers' wants (their core value)
• Kids School Break Camps - continue to customize events to the customers' wants (their core value) and add more kid-friendly features such as arcade hours, swimming pool, etc. (actual product)
• Guests - no ideas here either...

Alternative & Post-Purchase Evaluation

Segment: the grocery shopper in a household of 3+, aka moms

1) Find three people who would fit that segment and arrange to interview them. 

Customer Interview 1: April, shopper for household of 7 (+2 pets)

Customer Interview 2: Jessica, shopper for household of 5

Customer Interview 3: Samantha, shopper for household of 3

3) Evaluating Alternatives. The outcome of this step is to produce a set of alternatives. Customers pick from among this set of alternatives. In this step, your job is to figure out how they do their picking. Does price matter the most? Does quality? Does style? Is there more than one factor that is important to your customer segment?

All the customers that I interviewed were focused on price. They focused on price to such an extent that they were willing to visit multiple store locations in order to get the best price. Therefore quality and convenience were not as important as price.

4) How/where do they buy? Elements of the actual transaction can help characterize your segment. Is your segment more likely to buy online or in a store? Are they more likely to use cash or will they finance the purchase? Etc. 

They all buy in actual stores for their groceries. Since they follow pricing trends, Target's deals or Winn-Dixie's deals attract them as customers. Target's credit card is especially interesting because they sell not just groceries but also all household items and offer 5% off, attracting shoppers AND card sales.

5) Post-purchase evaluation. What matters most to your customers when they think back on the 'rightness' of the purchase? What helps them determine the purchase was a good idea? What sorts of things make them think a purchase was a bad idea?

They all said "when everything is eaten," which is interesting because they are evaluating their purchases based on food waste but making purchasing decisions based on price!

6) Report the findings. Simply summarize your interviews. 

See notes above. Additionally, my customers are in a routine of shopping weekly and reviewing their fridge needs weekly. They buy the same stuff each week, so they have a baseline to tweak their purchases until they are buying "just right" amounts and type of groceries.

My customers did not feel they wasted food. They avoided food waste by using the freezer to extend the longevity of food - especially if they knew they were eating out instead of cooking at home - and by eating leftovers at work for their lunch breaks.

7) Draw conclusions. Here's the part that you'll need to be able to talk about when we meet in class. Based on what you know about this segment and what you learned in your interviews, how would you succinctly describe this segment in terms of alternative evaluation, purchase decision, and post-purchase evaluation? 

Alternative evaluation: creates weekly list and cleans out fridge, weekly

Purchase decision: decides where to go to get best price for these items

Post-purchase evaluation: whether any food waste resulted

There are two big take-aways for me after these interviews:

1. As I said earlier there is a disconnect since the post-purchase decision is based on food waste but the original purchase decision was based on price.

2. The customers do not have a need despite data saying that US households have a significant amount of food waste. Perhaps this is the wrong segment?

My Customer's Avatar

My customer's avatar is: a female Democrat under the age of 40 who recycles.

My customer is a female Democrat under the age of 40 who recycles. She already cares about saving money and reducing her impact on the environment. She shops at thrift stores. She's busy with work and family commitments, including time for her personal interests which include: yoga, gardening and sharing interesting articles with friends. She is registered Democrat. She likes tea and/or coffee no matter the season, and especially with a book or board games. My customer isn't into glamorous appearances, she cares more about health and wellbeing on the inside than superficial appearances.

Additionally, because she typically shops organic and lives in urban areas, her grocery costs are higher and her food spoils more often, creating the most salient need for our product. The product appeals to her because she knows rationally it is a good idea, it is in line with her values and saves her valuable time. 

Many of these customers are also a parent and would identify as a "hipster mom." As a couple the parents enjoyed bike riding and now as a family they want to share the love of the outdoors with their kids, but the kids are still too little for much of a bike ride or hike. One or more of the parents may work in conservation or environmental fields.

What do you have in common with the customer avatar? If you have anything in common with the avatar, do you think that is a coincidence? Why?

I have a lot in common with the Avator (age, politics, hobbies, and environmental concerns). Its not a coincidence because I know myself the best and I would knowingly (or unknowingly) be shaping the design of the product to be "appealing," but what I think is appealing is representative of a customer like me.

Our Customers' Buying Process

1) Identify the (most important) segment: (from previous post)

There are two typical demographic parameter groups that are attracted to the country club’s product:
Segment 1: 70% of the customers are wealthy NY/NJ Jewish "young families" with school-age children or younger who reside year-round
Segment 2: the remaining 30% are wealthy, NY/NJ Jewish “snow bird” couples who live active lifestyles so do not want to be around “a bunch of old people”

The most valuable segment is the “young families” segment because there are more people in the household they will spend more at the club, i.e. each person will be enrolled in activities at the Club, dinner for a family is a higher check average than for a couple dining, etc. Moreover, older couples, even if involved in daily sports and activities, still tend to spend less while in retirement.

2) Conduct research. You can interview the people in the marketing department, talk with managers, rely on your own personal experience, interview customers, etc.

I told the General Manager about the assignment, and he told me to talk to our Direct of Membership and our Marketing Manager, who "know all about it" since it is key to performing their job functions. The marketing manager is responsible for targeting the desired customers and the Director of Membership is the one who interacts with customers to get the sale and builds relationships with the real estate agents.

3) Fill out the process. Simply describe each step of the process, just as you have done in the two "Case" exercises. 

[Need Recognition] The family finds out they have to relocate for work or they start their family so their need changes to either be near family or be in a family-oriented environment

 

[Information Search] The real estate agent assists with the information search. Most typically, we rely on the real estate agent to introduce the couple or family to the community. The club or the real estate agent can provide a tour of the club's facilities but only the agent can show the home. Whether we provide the club facilities tour or not, we are responsible for property always being "show-ready" and having up-to-date brochures of our property.

[Evaluation] They shop around before they buy because this is a big investment and life decision! We know that our potential customers go next door and look at the country club communities in the area. The real estate agent is going to show them all their options for the lifestyle they are looking for, and many are still in the same school zone. Shoppers need to know what each club offers and costs.

[Purchase] Our competitors are high quality clubs that have won the same quality awards that we have, but our product is differentiated as the "young club" so customers who decide to move in to our club are choosing based on community cultural fit. The ultimate decision of where to live is based most on how well the family feels they are a fit at the club than the house they are buying, since they have the financial ability to modify the home or demolish it to build the home they do want.

[Post-Purchase Evaluation] This goes on constantly while they live in the community. Every program they participate in, every time they eat at the restaurant, and every other product they buy, they evaluate whether they got their money's worth. They also visit the neighboring clubs as guests and as participants in our club's programs, such as our golf team playing against a neighboring club at their course. They are aware of what the other clubs have - the clubs they chose not to buy at - and want to make sure our community continues to be better than the evaluated alternatives. As club management we constantly collect member feedback and continue to use it to upgrade our facilities and modify our club products.

 

--> [Need Recognition] Something changes in the family that shifts their needs. The two most common reasons why our customers move out: (1) the adults enter into retirement planning and do not want the club lifestyle anymore, or (2) the family is required to relocate either due to work or to be near family elsewhere. Most our customers leave because of the first reason. As the kids grow up and move away, the parents are aging out of wanting to be committed to the high-cost environment of a residential country club and all the family-friendly activities that originally appealed to them for their children's benefit.

Portmanwho: Peakportation v. Unseuro

Step 1&2: Make your word and define it!

After staring at the front page of The Times of London for a couple days, here are some portmanteau words I came up with:

cheat + ticket = "chicket"
noun, a rip-off priced or structured ticket (but sounds like a ticket for women)

on + increases = "increases" 
noun, price increases that are paid forward in the process of making the product and ultimate result in a higher price to consumers

pharmaceutical + manufacturers = "pharmafacturers" 
noun, drug makers

pharmaceutical + succession = "pharmacession" 
noun, a meeting of drug companies

peak fares + deportation = "peakportation"
noun, the practice of charging higher transportation prices during higher demand times, such as Uber's and Lyft's

Step 3: Use this word repeatedly.

Of the words I created, I felt "peakportation" had the most promise since the practice of higher fares during peak demand times isn't new, but it is now commonly known, since Uber and Lyft have popularized peak fares.

Example: "Peakportation"

Step 4: Report people's responses to your new word. Importantly -- do people start to use your word? Do people cast scorn on your word? Do people laugh at your word? Let us know what happens.

We were traveling through European countries with convenient pedestrian paths and user-friendly metro systems, we didn't discuss or use uber much, but we did talk about transportation. When transportation came up I tried to work "peakportation" into the conversation and it did not catch on. One person commented, "that sounds like two words" insinuating "peak" or "peak fare" is shorter. It did NOT catch on and got some weird looks.

I realized then that the success of portmanteau words is in their efficiency of expressing an idea in less time or effort than the original way of expressing it. I would say "peakportation" was a failure at producing something new and useful.

Also, I would change the development method. I jotted down words from the paper and played around with combinations (similar to what you see above). So although "peakportation" looked good in writing, it didn't sound so good out loud (try saying it out loud now). It's a four-syllable word! Since I was going to use it in conversation, I should have used a verbal method to create and define my original word. "Chicket" for example sounds great and original, so I should have gone with that if I could think of a more useful definition for chicket.

------

Coincidentally....

A portmanteau word that came up organically on my trip to Europe and was both useful, fun, AND catchy was my word "unsureo."

unsure + Euro = unsureo, unseuro or unsur€   

noun, the currency accepted by a country, but you have not kept track of which currency it is

When I got to Zurich, I traded in my USD for currency to travel through Prague, Vienna, and Budapest. That's when I learned that I'd need three different currencies: Czech koruna, Euros in Austria, and Hungarian forint.

It was hard to tell the paper and coin monies apart, they all looked like Euros except for trying to determine whether it had the roman, Czech or Hungarian alphabet printed on it. I also wasn't sure whether a coin with a "5" on it meant 5 cents or 5 dollars in that currency. I felt very unsure about the value of the currency I was holding.

Now that I had Euros, I bought myself lunch at the Zurich airport and paid in Euros. They gave me my change in a different currency. When I asked what this new currency was, they told me it was Swiss Franc. I asked what Swiss Franc was, since I had assumed Switzerland took the Euro without bothering to look up Switzerland's currency! (Whoops) The agent slowly explained it to me: "It is Swiss Franc. You. Are. In. Switz. Er. Land." I said, yes, I know I am in Switzerland, but how can you have Swiss Franc but accept Euro? To that I got a shrug, they were used to it at the airport. Some businesses were happy to accept Euro, but others would not be.

While in Prague or Budapest, some stores were able to accept the Euro but others would accept only the local currency. Hungary and Czech Republic are both part of the EU but not the EEA, so it made sense they would accept Euro sometimes, but it made it stranger that Switzerland - which is not part of the EU nor the EEA - would accept Euro at their airport.

While walking around Prague, the guide said that Czech Republic is part of EU but is unsure if they want to adopt the Euro because they do not want to become Greece. I commented that Czech Republic accepts the "unsureo" (which I had just been using in my head until then) and the group immediately adopted the term.

It helped expressed the idea that we had such confusion and discomfort around the changing accepted currency depending on the business we patroned and using four different currencies in one week. I am not sure how I'd spell it since it came up naturally it sounds great in conversation but looks weird written for the first time in this post. Since it caught on though, I'd say the unsur€ was some creativity!

Elevator Pitch No. 1

Hello, potential customer:

Elevator Pitch Audio File

https://drive.google.com/open?id=0B6o8JktGC3lhZmhjcmZYOWtDZ28

PS: The refund is a joke because it's free... get it?

Elevator Pitch Video File:

My Firm's Market and Segments

My Firm: Luxury residential Country Club in Boca Raton

ID the Market - Drop the Pin

At a residential country club, the market has a geographic boundary. The houses are located within an 830-acre property, so customers are located within that range. But for a new person to move in, they would not already be living there, so the potential customers are technically outside of the 830-acre range. The community is known for being the “young club” with average age 49 for adults and one third of its 3,600 residents being children.

ID the Market - Demographic Parameters

The club membership is very expensive, involving several required and recurring payment types, and therefore is only affordable to the very wealthy demographic segment. Beyond that, no other demographic segment is not a potential customer. Housing regulations prevent discrimination, but since “birds of a feather flock together,” I think the existing majority demographic parameters will persist (young families will attract those of similar age, the majority Jewish presence will attract more of the same religion, etc.).

ID the Market - More Than One Market?

I feel there is only one market the product sells in, but there are definitely two segments, which could be viewed as separate markets if desired.

ID the Segments

Since any potential new customers come from out of the area, we only run limited advertising, and it is focused in the luxury magazines circulating in New York and New Jersey, since most of our current residents have roots there and “birds of a feather” make our advertising dollars more appeal. Our other marketing efforts rely on earning recognition and awards within our industry, for example national awards that recognize the best 5% of private clubs in America. This ranking and distinction is critical because our residents sell their homes the usual way, on the real estate market. Target customers who are used to a similar lifestyle outside of Florida but have relocated to South Florida will ask a real estate agent to find them the desired lifestyle here.  Real estate agents can look at available listings and see if there are any homes for sale in the best residential country clubs in the area, including ours. Real estate agents can bring their clients to visit both the house and the country club, since buying a home in the community has a mandatory club membership and therefore comes with the community’s lifestyle.

ID the Segments - Prototypical Customers

There are two typical demographic parameter groups that are attracted to the country club’s product:

Segment 1: 70% of the customers are wealthy NY/NJ Jewish families with school-age children or younger who reside year-round

Segment 2: the remaining 30% are wealthy, NY/NJ Jewish “snow bird” couples who live active lifestyles so do not want to be around “a bunch of old people”

ID the Segments - Which is most valuable?

The most valuable segment is the “young families” segment because there are more people in the household they will spend more at the club, i.e. each person will be enrolled in activities at the Club, dinner for a family is a higher check average than for a couple dining, etc. Moreover, older couples, even if involved in daily sports and activities, still tend to spend less while in retirement.

ID the Segments - How do we target both segments? How does our product fit the needs of both segments?

It’s ironic how the same product “being the young club” meets the needs of both the young families and the old couples. The old couples don’t want to feel old so they live somewhere with young people, but the young people are necessary or else it wouldn’t be a club full of young people! Residents do seem to “age out” of the community as some point, wanting to downsize in home/community/commitments/spending. This creates a natural amount of turnover to bring in the prototypical customers to replace those becoming a-typical.