What's Next? Week 12

Existing Market

The product I would plan on bringing to my business after I have established the exhaust systems would be a cold air intake system.  Customers want this because when it is combined with their new exhaust system, it will actually increase the overall performance of the car, not just make it sound better.  These air intake systems are much more affordable than the exhaust systems, around 200 dollars, which means that my customers will realize that since they already spent 1000 on the exhaust, they might as well spend the extra 200 to make it perform at a higher level. 

It was extremely difficult to find random people to interview that are part of my existing market, however one of my friends in the car modification scene was willing to let me interview him about the plan for my business.  Here is the audio interview.
https://youtu.be/BGtDYcnlaRQ

Customers want this because when it is combined with their new exhaust system, it will actually increase the overall performance of the car, not just make it sound better.  My market would still be similar, however car modifiers with more focus on performance would now be added as well.  These air intake systems or plenum spacers are much more affordable than the exhaust systems, around 100-200 dollars, which means that my customers will realize that since they already spent 1000 on the exhaust, they might as well spend the extra money to make it perform at a higher level. 

I think one of the biggest things towards initializing this growth would be to incentivize previous customers to buy my new product by offering a discount of 25%.  Whether it’s a cold air intake or plenum spacers like my friend mentioned would have to do with how difficult/costly it would be to build. This would allow me to recuperate the costs of manufacturing the new product, while also helping to advertise it for free.  The profit margin would not be huge but it is a sacrifice necessary to create growth. 

New Market

With my business being as specific as it is, it will be almost impossible to find an entirely new market because outside of people who modify cars, no one really knows too much about aftermarket performance car parts.  The only idea I have on this is to possibly go after the super rich car modifying market, where people spend hundreds of thousands of dollars on modifications.  Currently I am targeting the poor college-beginning career population so price was a huge point, but if I move on to a higher end market, the biggest point will be performance. 

This higher end market would mean that there would be much more R&D involved in the business, as high performance requires a great understanding of mechanical and materials engineering.  It would allow for a better product to be added to my product line, but would also help boost the performance of my lower end exhaust systems. 

Interviewing people for this section was more impossible than for the existing market as there is almost no one is Gainesville that is part of this new market.  In an attempt to get some sort of interview for this, I sent emails to a few high end car shops in Florida but I received no responses.  My only other idea was to do research on other high end exhaust system companies like Akrapovic and see what separates them from more standard companies. Here is a list of points I found that are similar to what I needed for the interviews:

-       Cost – High end exhaust can be almost 10 times more expensive than what I am currently making, and although this does not mean it needs to be necessarily 10 times the value, people still want something they feel will differentiate their cars with things such as carbon fiber and titanium exhaust tips.

-       Wide Product Line – In this market, I will need to design many different high quality exhaust systems for a much wider range of cars.  High end cars have very specifically designed exhaust systems which means that I would not be able to use similar designs in different cars. 

-       Sound – This market is all about what sounds the exhaust system can create. Because high end cars rev at a much higher RPM, drivers want their cars to sound as fast as possible, which means showing off the sounds of the engine that are created at higher RPM.

-       Weight – This market also desires a much lighter exhaust which will result in better performance. This would mean a greater importance on materials engineering so that we can find ways to make the exhaust system as light as possible. 

The most surprising part I found about this market was the amount of research and labor involved in designing exhaust systems for high end cars like a Lamborghini.  Because of the increased performance of the car already, so many more details need to be considered when designing the product just so that it works in the first place.  I also discovered that this market is a very hard one to get into, because it requires a much larger start-up cost for all of the research and high-tech equipment needed. 

An interesting point I discovered about this market is that although the performance needs to be increased, the price for this increases at a much higher ratio.  This means that the overall performance ratio is much lower than the price ratio between markets.  There is a much higher opportunity for profit in this market, but there is also a much larger chance of failure because of the high costs involved and the current market saturation.