R&r Case Analysis

ENTREPRENEURSHIP – ASSIGNMENT

R & R - Case Study Analysis

1. What factors created the opportunity?

Bob Reiss was well aware of the trend in the gaming industry and the potential which he could cater to. He realized that there was a demand for trivia games and that there was insufficient capacity to meet the demand to meet the upcoming season. With the video and computer games loosing popularity, he looked for a short-term potential that would be covered in a one year window of opportunity. He conceptualised the idea from one product market “Trivial Pursuit” and followed the trend to develop Trivia Inc. The success of Trivial Pursuit in the Canadian market was a major factor that created the opportunity as from his years of experience in selling games in US, sales here approximate 10 times of sales in Canada. This wide spread crowd he estimated would eventually create interest in Trivia games and build up the entire venture. Television being the source of idea he was sure to capture a significantly large market for his product as an average American family would watch over 7 hours of television per day.

1. What were the barriers and risks that Reiss had to overcome?

The major barriers and risks that Reiss had to overcome were:

• Minimal focus on mass-scale advertising and creating a brand image
• Competitors already selling Trivia games
• Finance to start the business
• A high risk that the interest in Trivia games would die down soon if new variants weren’t launched
• Formulating 6000 questions by himself
• TV Guide opted to be only the licensor
• Starting up a venture with low cost initially was a challenge
• Educating Venture Capitalists about the deal was a barrier in itself
• There was  a high risk to create a trivia category that Trivia Pursuit didn’t cover

1. How did he overcome them?

Reiss adopted various strategies to deal with the major challenges he faced during the planning and execution of the venture. The methods he adopted were:

• Two-tiered approach for advertising – Reiss distinguished between the mass merchandisers and the department/gift stores. The strategy was to quickly sell to upscale retailers who would establish a full retail-mark-up which were usually department stores. Reiss employed two different sets of reps for these channels. Cooperative ads was a powerful attraction for different buyers and the stores would be asked for minimum purchase orders instead of being charged for ads with their names in it.
• Teaming up with Kaplan – Reiss used his strong network to seek help from Kaplan who was his long-time friend and teaming up with him to secure a line of credit from him to purchase supplies for initial run. Kaplan would work on production and shipping with Reiss focus on marketing and selling the game.
• TV Guides association – Reiss was able to convince TV Guide to be a licensor and gave a contract to manufacture the game. Since TV Guide was the magazine which specialised in television coverage and was popular amongst the households in US, a strategic alliance with them in this form was positive for Reiss. He was also at ease preparing 6000 questions for the game as TV guides management insisted their employees develop each question for which they would be paid. In this way Reiss could focus on other developments of the venture.
• Cost Reduction – He employed various methodologies to reduce cost, firstly, the questions and answers were printed in books rather than cards. Through Kaplan’s connections, they were able to find good suppliers. Also their Just in Time concept and customized computer program helped them decrease their estimated costs by 30 %.

1. How much money was made by Reiss from the R&R VENTURE?

The Trivia Inc. venture would share profits among R&R and Kaplan, in which R&R would have the exclusive rights to market the game and would receive a commission of 20% of the whole sale price from which it would pay 7 % to sales rep. In net, Reiss would get 13 % of the whole sale price and 50% of the profits earned by Trivia Inc. Company.