Week Ten

Over the past week we have focused on a company that pitched their product on Shark Tank. This company is called Fresh Patch. They provide fresh patches of grass to customers in order for their dogs to use the bathroom and play on like they would outside when the outdoors is not available. The idea was created for customers who do not have a backyard, much like the creator of the product. Every two weeks a new patch of grass would be sent to the customer, as this product is mostly a subscription based product.

One aspect of Fresh Patch's marketing that we discussed in great detail was their target market. When we finished, we came up with a pretty full description of what Fresh Patch's customer would look like. They would be/have:

• pet owners
• limited access to grass
• living in urban areas
• busy
• an emotional connection

The emotional connection is extremely important for this product because if the owner does not feel guilty about not having space for their dog, they would not be willing to pay $25 every two weeks in order to bring in grass for them.

We also talked about the competition that Fresh Patch might have. One of their biggest competitors would be pee pads. Pee pads are pieces of fabric that are put on the floor in a home and used for the dog to go to the bathroom on.

Above is an image of a dog on a pee pad. Additionally, synthetic grass could be a competitor to Fresh Patch because it could be used in place of fresh grass. Finally, Fresh Patch has a patent on their grass patch which an undisclosed company was infringing on. This could also be a competitor if they figure out a way to get around the patent, or find another alternative to Fresh Patch.

We also focused on Fresh Patch's income statement. On Tuesday, we went over a basic income statement. This covered how much revenue the company made ($1,000,000) their costs of goods sold ($5/product), their variable costs (shipping-$11/product, average), gross profit (revenue minus variable costs and cost of goods sold), operating expenses (owners salary and website maintenance), and net income (gross profit minus operating expenses). At this time we also discussed Fresh Patch's break even point. The equation for break even point is below

BE=Operating Expenses/(price per product-(cost of goods sold + variable costs))

In order to break even, Fresh Patch would need to sell 7,222 units.

On Thursday, we focused on breaking down the income statement based on trial versus subscription users. At first, we assumed that trial users accounted for 75% of sales because they accounted for 75% of users. This led us to believe that the trial users provided the company with more money. However, a better assumption to be made would be that the trial users each only bought one unit of the 40,000 the company sold. This results in the subscription users accounting for most of the sales of Fresh Patch (96%). 

What I realized through this exercise was that what assumption you make about the market is important in your analysis. The assumption you make can effect the way you market your product to consumers so you have to be careful in making that assumption so you don't mislead yourself or your company. Thus, it would be important for Fresh Patch to focus on trying to convert some of the trial users to subscription users because the 550 trial users they have accounted for so much of their sales so far. 

We also furthered our discussion of pricing by applying some of the concepts of discounts to Fresh Patch. For example, we decided that in order to increase subscription use Fresh Patch could offer a discount on the product when bought as a subscription rather than individually. They could also discount the product in the summer when the weather is not so menacing and people would be less likely to keep their subscription. By discounting the price, Fresh Patch may be able to keep more subscription users over the summer months.

Lastly, we talked about the market size for Fresh Patch. Considering they have only had 2,200 people try their product and have made $1,000,000 in sales, Fresh Patch obviously has the ability to make a large amount of money. This is especially true considering there are over 400,000 people who fit Fresh Patch's target market living in the United States. We also decided that Fresh Patch could focus their marketing towards regions in the north such as Philadelphia, New York, Boston, and Chicago because they are the ones that will be effected by cold weather. The people living there might not want to take their dogs out when it's cold so Fresh Patch would be a great option.

Clearly, Fresh Patch has done some things right seeing as they have so much in sales. However, they could also improve on some aspects of their business in order to make more money. This includes reducing their shipping costs ($14 to the east coast) and increasing the number of trial users. Overall, I enjoyed looking at marketing through the Fresh Patch lens.

Until next week!

-Kristen