Cost Constraints
The only real constraint to do with cost is being able to cover all areas of cost within the business, this means will the price I have set my product at, and with the start up capital, will it be possible to cover all the costs for production and cost for potential development. However, the cost of other factors also need to be considered when launching a product and a plan of action must be in place to ensure all cost constraints are met, a few constraints that have to be dealt with internally are listed below;
Cost of raw materials; this obviously means the cost of everything I need to actually produce my football boots. I will have to purchase the majority of the good from differing suppliers which would again cost a fair amount of money. Considering I am using kangaroo leather for my football boot, it may take a lot of research to find suppliers that supply it in such large quantities; again this could end up costing a fair amount. After completing some rough research, I have figured out the cost of kangaroo leather can be anything over £500.
Marketing costs; the marketing side of setting up my business is obviously very important, and will need to be considered when analysing the costs of any business. For my product, I will advertise through the magazine four four two and sponsorship of a footballer/team. This is very ambitious and could cost a lot, however again I have conducted a small amount of research and found out the cost of a magazine page for advertising can be around £15,000, and this would include a full colour display and being in the magazine for a month. This does seem fairly large, and I will have to consider this and see if I can raise the capital before marketing the product through this media.
Transport costs; the cost of transport will only really be the cost of moving the football boots from production to the retail stores, I will have to pay the production line for production and obviously for petrol which could be anything over £1.20 per litre. This could again end up extremely expensive.
Administration costs; this cost will be actually owning and directing the organisation, therefore meaning I may need to may for property rental, employees etc. These costs can vary between businesses but again will need to be considered.
The external constraints for the cost of launching my product could purely be the competitors pricing, if the economy is in a sudden downfall, the competitors will obviously lower their prices thus becoming a constraint as I will to have to lower mine. Also, as I mentioned earlier; if the production costs do happen to increase, I may need to increase the cost of my product to still generate the sufficient revenue to still keep my business running. As I mentioned earlier I may have to pay the retail shops to actually ask them to sell the product, this again must be considered.
Political and Economic Factors
Politics and the economy can play a big part in the success of any business, and again will have to be considered and plans will have to be put in place to ensure my product is still successful. However, it is very hard to ‘fight’ against the economy therefore making it a constraint, as I will have to alter business plans to ensure my business is still okay to launch and does not go straight into decline. Most aspects of the marketing mix will again be affected by the political or economic constraints.
Political:
This mainly refers to the promotion side of the marketing mix and certain laws are around that do stop and regulate against differing methods of advertising and promotion. However, most of the regulations can change and alter between differing countries. For examples, in USA, health related advertising is highly regulated. But fortunately for my business, the only real regulations against advertising are that in the UK businesses may not advertise tobacco and in certain places Alcohol. This is obviously a benefit to me, and my advertising is for a football boot therefore I should be okay to promote the product in whichever way I like. Although, to be entirely safe and ensure I do not get fined the sum of £2500, I could always check with the Advertising Standards Authority to ensure my promotion methods are legally allowed.
Economic:
The economy will obviously be a very influential factor in the launching and running of my product. Firstly, the main factor in a business which the economy can become a constraint for is the exchange rates. Obviously, if a business is trading abroad with imports and exports, the exchange rates could become very influential. This obviously means that if the pound is strong against the dollar or euro, businesses in the UK will be more likely to trade and vice versa. However, for my product I am not looking to trade abroad initially, and do want to keep my product entirely sold in the UK, therefore the exchange rate will pose as less of a constraint. Another example of how the economy could be more of a constraint is that if we’re in a recession my customers will demand less, therefore I will be forced to supply less; this could be a huge disadvantage as I may loose profit. Also, if we are in inflation; I may be forced to increase my price which again could make demand fall, causing my profit to fall.
Legal Factors
For any new product being launched into a market, laws and regulations must be considered to ensure nothing is done illegally and your product reaches the market effectively. I will need to research laws in order to ensure my product is safe for my market, and I’ll need to carefully monitor the laws to ensure no new laws are brought out which could end up becoming a constraint for my business. I may need to legalise, documents and ensure all my promotion methods are legal and viable for launch. I will need to contact foreign and commonwealth office to ensure everything I am going to conduct is the legal way of doing so. I have included a screen shot of the website below, I will need to log on to this and fill and different forms to check my product is legal and ready to launch into the market.
After contacting the organisation, I can consider whether I will go ahead and promote my product at the specified price in the correct shops. Also, there are specific laws such as; laws of product liability I may have to adhere to, this means, that if my product does cause injury to anyone using it, I will be fully responsible. This obviously refers to the product side of the marketing mix, and I must realised that for a football boot, the risk of injury against an opponent is very likely; therefore to avoid this, I could design the studs in a way minimum damage is possible. Other laws, for employees to ensure satisfaction and safety are also to be considered for a business. In addition, health and safety is also a huge influence for any product launch; the place of launch, the product will need to be thoroughly checked again to ensure safety. These will all pose a very large constraint mainly internally, but laws against selling etc must be considered externally.
Environmental Factors
The final large constraint for a business is the differing environmental factors for a business; obviously the government sets up certain regulations against what you are and are not allowed to do and what affects the environment. Also, organisations such as Green peace will also have to be contacted or at least considered when promoting, producing and launching the product. Most of the constraints that are to do with the environment are obviously external but still can affect the business some of the most common constraints are mentioned and explained below:
Air pollution - some businesses release harmful gases into the atmosphere. People argue that air pollution head caused damage to the ozone layer and led to an increase in the number of children with asthma; however this is only really the larger businesses, although with my product I may need to produce at large quantities very quickly, this unfortunately could releases Co2 into the air. However, to counter this, governments offer tradable permits to actually control the amount of emissions released into the air, this again could end up being a further cost, however does deal with the constraint.
Noise pollution – this is often created by manufacturing and producing the goods, construction of buildings and the transporting of goods can disrupt people’s lives who have to put up with the noise, it is often down to the noise in the factories, this could not be not much of a constraint for my business, due to only a small place for production will be needed.
Water pollution – Some business, transport their waste into streams and rivers and it can often be a constraint for many businesses, however for my business the waste will be disposed properly and correctly to ensure the safety of the environment.
Traffic congestion - businesses transporting goods add to the volume of traffic on the roads which can lead to traffics jams, this will obviously occur with my business as it’s very hard to avoid this constraint, however if a route is planned successfully and I travel at a specific time, congestion could be avoided.
I feel all of these constraints could be seen as external and internal, as they are mostly to do with inside the business however affect the public outside the business. I also feel, the environmental constraints are only mainly based towards the production of the product and not so much the promotion or price.
Overall, I feel I have provided and collected sufficient evidence as to how differing constraints can affect my business.
