Analysis
SmokeShield Industry by SmokeShield
-History and Background-Outdoor Living Industry-Macroenvironmental Forces-Pricing and Profits-
Donavan Davis
Sarah Lowery
Tyler Parker
Howard Rabin
Yang Yu
History and Background of SmokeShield by SmokeShield
SmokeShield believes in going the extra mile to offer only the finest firepit accessories to its customers. We
strive to become the number one leading seller in firepit accessories, and hope to become the place everyone turns
to in order to enhance their outdoor entertainment experience.
After analyzing the market we decided to focus on a product that will add more comfort ability and safety to
outdoor living. One major complaint among most homeowners had to do with the in ground installed firepits.
The smoke from the firepits would switch direction whenever the wind shifted, so guests sitting around the fire
would constantly have to change position with the wind as to not get smoke in their eyes and face. This of course
can become very inconvenient, so we have decided to develop the SmokeShield, a universal device that sits
atop any installed firepit and protects the guests sitting around the fire from the smoke.
The Outdoor Living Industry
Homeowners around the country have dreamed of designing their ultimate backyard paradise, complete with
luxurious in-ground swimming pools, decorative ponds filled with coy fish and lily pads, outdoor fireplaces, and
gourmet grills and bars carrying weatherized LCD televisions underneath extravagant gazebos. In 2004,
homeowners spent $3.7 billion on outdoor terraces and patios, a 366% increase since 1994. Also, the number of
people who are completing their patio with furniture, firepits, grills, and swimming pools is growing (32% in 2005
versus 42% in 2007 and 63% in 2009), according to a study by Hearth, Patio & Barbecue Association. Currently,
the outdoor living leisure lifestyle industry is a $6.2 billion dollar industry. Outdoor living no longer consists of
a few folding chairs and a picnic table, it means bringing all the comforts of indoor living, to the outdoors.
Macroenvironmental Forces
A major macroenvironmental force in this industry is the economy. During the home sales slump beginning in
2004, homeowners were forced to make their homes stand out if they wanted to sell. The easiest way to do this
was to improve the homes outdoor space. Even for homeowners not planning to sell their homes, increasing the
value of their home was becoming more important. Therefore, Americans began to spend billions each year in
creating the perfect outdoor living space. Another major macroenvironmental force in the industry is changes
in the cultural trends. Extravagant backyard living and landscaping became an increasingly popular trend; upper class
families began entertaining extended family and guests at home as vacationing and eating out became more and
more expensive. Such a backyard would be a simple way to show off social status, and peoples views of
themselves and others began playing a large role in the development of the industry. One last environmental force
that leads us to developing the product is the change in technology producing more fire proof and heat resistant
materials, specifically glass. This improvement will continuously decrease the cost of the product, ultimately
increasing profit.
Pricing, Profits, and Breakeven Analysis
For our two different sizes of 24 inches and 30 inches, the retailers will sell them for a price of $60 and $80,
respectively. We will sell these products to the retailers at 50% of those prices, $30 and $40. The variable costs for
each of them will be $18 and $24 which will give us a contribution margin of $12 and $16. Fixed costs will be
$280,000 total for both of the products. We expect to sell 15,000 units (+/- %5) for the 24 inch model and 9000
(+/- %10) for the 30 inch model. Approximately 62.5% ($175,000) of the overhead fixed costs will be attached to
the 24 inch model, while 37.5% ($105,000) to the larger 30 inch model. The approximate breakeven point for the
smaller model will be 14,485 units and 6,563 units for the larger model. At the unit sales projects we will make
$6,180 for the smaller model, and $38,992 on the larger model, for a combined profit of $45,172 (See Attached
Table).
With this, there is clear evidence that the industry of outdoor living is booming, and the SmokeShield is a one of
a kind product that will enhance the look, feel, safety and comfort ability of this type of lifestyle. The product
does not currently exist, and would be considered a complementary good with the purchase of in ground installed
firepits. The major competition for the SmokeShield and firepits in general is the newer (yet more expensive)
outdoor fireplaces, in which the fire is protected on three-sides with an installed chimney. The outdoor fireplaces
however are not typically used for entertaining purposes, as only a few people can sit in front of it at all times.
Because of the lack of direct competition, SmokeShield will gain significant market share in the industry during
the introduction and growth stages of the product life cycle.
Executive Summary
SmokeShield by SmokeShield
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Donavan Davis
Sarah Lowery
Tyler Parker
Howard Rabin
Yang Yu