Festrack:
Business

Market

A context analysis has been done regarding the market and competition. This gave us good insight into the future environment of Festrack. The financials and events were analysed before the Festracker was compared to the existing competitors. It could be concluded that the event market is increasing and that there is no product on the market that has the exact same functions as the Festracker. Some products are similar, but the Festracker stands out because of the tracking function.

Financial analysis
“The global events industry size was valued at $1.100 billion in 2018, and is expected to grow at a CAGR of 10,3% to reach $2.330 billion by 2026.” – (AMR, 2019)

“Revenue in the Music Events segment is expected to show an annual growth rate (CAGR 2020-2024) of 41,3%, resulting in a market volume of $30.129 by 2024.” – (Statista, 2019)

The global events industry has an increasing market. The concert and music festivals by corporate organisations have great potential for the launch of our product. The concert and music festivals are expected to have an increase in revenue (tickets, sponsorships, etc.) as well as the number and size of the events. According to research presented by Statistica, the revenue and users of music events in the Netherlands will keep increasing.

- The impact of the current corona crisis is expected to be recovered from in only a few years.
- The user rate is expected to steadily grow to 3,5 million users.
- The overall revenue is expected to increase with an annual growth rate of 39,9%.
- The average revenue per user, $162,68 in 2020, is expected to grow to $195,36 in 2024.

Event analysis
According to a study by marketing agency EM-cultuur, a total of 1.115 festivals were being organised in the Netherlands in 2019. These festivals have been approximated to attract a total of 19,5 million visitors (NLTimes, 2019).

The type of music events that are relevant for our product are outdoors, corporate organised festivals that cover a relative big terrain. An example is Lowlands, which is an annual 3-day festival in the Netherlands.

Competitive analysis
A wristband with useful functions that can be used at festivals is not a completely new concept of course. Our concept is a wristband with three main functions; find friends, contactless payment and the ability to open a locker. There will be competitive products that are already available. Wristbands that can be used as a payment method is an already existing concept. An example of this is the NFC wristband that is available for large events. Reasons that NFC wristbands are being used at an event are increased security of expenses, speed up lines and faster and easier payment.

Furthermore, there are waterproof NFC wristbands that are being used in swimming pools that can be used as keys for lockers. The production price of NFC wristbands is very low. These wristbands can be ordered for a price ranging from €0,03 - €0,50.

There are more advanced versions of the NFC wristband, such as the Sendrato wristbands. These wristbands also use NFC technology which can be used as a payment method, however the company Sendrato offers wristbands with more functionality focussed on event management ranging from music festivals, sports events or conferences. These wristbands have multiple functions that can be used for ticketing, access control, cashless payments, security and crowd control.

There are different versions of the Sendrato wristbands. The Smart Wristband edition is quite similar to our product, however it is mostly used to gather information from crowds of the event and use this data to create heat maps of the area for example. The advanced wristband of the Sendrato company is very similar to our product when looking at the functions. In the advanced wristband, which is used by staff members of events, there is technology integrated that can be used to track other staff members' wristbands. The Sendrato smart wristband edition does not only offer the same functions, it offers more. The wristband has a microphone, bluetooth, music recognition, and very accurate sensors. Because this product is more advanced, it is also more expensive. This is not fit for use at festivals, since this would become way too expensive.

Another product that offers similar functionality is the Lynq device. Lynq offers a product that is targeted at a different target group, but it has similar functions when it comes to finding friends. The product is aimed at travellers, snow sporters or hikers, but it can also be used at music festivals.

The product has a similar interface as our product. It is however designed as an advanced people compass, there is no NFC payment technology included. It is designed as a durable device and this results in a higher cost price. A pack of two costs around $249,-. The big advantage of this product is the reliable technology that is used to find other devices, because it does not need phones, networks, wifi or apps in order to work. It works from groups ranging from 2 to 12 people and has a range of 3 miles.

There are also existing apps that can be used to find friends using the GPS function on a smartphone. Apps like Glympse or Find My Friends offer the find your friends function for free. However, they are often not accurate enough to determine the actual location of friends on the size of a festival terrain. These apps are mostly focussed on finding people on a map.

An app to find your friends is easily downloadable on your smartphone. However, for festival visitors this can bring inconveniences. Firstly, all the members of the group need to download the app and have a charged phone with a GPS signal. Festivals often have a duration of an entire day or sometimes even multiple days. There is a high chance that the smartphone of at least one of the members of the group has an empty battery or other problems before the festival is over. Using the Festracker would eliminate that risk.

The Festracker
It is clear now that there is already an existing market with comparable products. It is important that the Festracker stands out in order to make the PSS profitable. As discussed, there are a couple of existing products that can be used as alternatives. However, when we look at the market that we are trying to conquer, not many of these products are real dangerous competitors. The Lynq devices are for a different target group, and therefore too expensive. Smartphone applications are less reliable and can only cover some of the functions that we offer. The NFC wristbands, and especially the Sendrato wristbands, are the products that are the greatest competitors. They focus on the same target group and are already being used at festivals. However, the combination of all these functions into one multifunctional wristband distinguishes the Festracker from all these other products.

AMR (2019). Statistics on global events industry. Retrieved from:
https://www.alliedmarketresearch.com/events-industry-market

NLTimes (2019). Over 1,000 festivals in Netherlands this year. Retrieved from:
https://nltimes.nl/2019/04/29/1000-festivals-netherlands-year

Sendrato (2020). Retrieved from:
https://www.sendrato.com

Statistica (2019). Number of visitors Lowlands. Retrieved from:
https://www.statista.com/statistics/1065391/number-of-visitors-to-lowlands-festival-in-the-netherlands/

Statistica (2019). Statistics on music festival industry in the Netherlands. Retrieved from:
https://www.statista.com/outlook/273/144/music-events/netherlands#market-users

Wikipedia (2020). Area of festival terrain Walibi Holland. Retrieved from:
https://nl.wikipedia.org/wiki/Walibi_Holland

Development
The development of the PSS can be split up into two parts. First, the development of the product. Much thought was given to the functions of the product and how they can add value for the visitors, but also for the organisations. Then, the service was developed to complement the product. The service had to make sure that the product would reach its full potential.

The UI of the product was developed after the form factor of the product was clear. Designing for maintenance and end-of-life then became a priority, because it increases the value of a future investment drastically. The business details and the technical details were thought out, making everything about the PSS very clear within the team. Visualizing in 3D and making good infographics then became very important to make everything clear to people outside the team. As of now, the development of the PSS is at the prototype phase. To perfect the PSS, adjustments were constantly made to its design and its requirements. Going on with the prototype development, the design is still up for change. While the first part of the development process was done solely by the team, the complexity of the prototype might push us to start a collaboration.

Storage
A small warehouse needs to be rented. The largest festival in the Netherlands has about 220.000 visitors. However we will start with 50.000 wristbands, because otherwise it would get too expensive. Also, most of the festivals have less than 50.000 visitors. The rest of the inventory can then be used as spares. The wristbands need to be assembled and stored. The LED screens and the wristbands are going to be assembled beforehand and then the festrackers are going to be stored and transported in boxes with an estimation of 500 products per box with the dimensions 60 (l) x 40 (w) x 31 (h) centimeters. The storage room therefore only needs to be about 7 square meters in case 4 boxes are stacked on top of eachother. But the components of the service also have to be stored here. This includes the station, special exit gates, server infrastructure, PCs, scanners and maybe some means of transport. So in total, a storage room of an estimated 50 square meters is necessary.

Sales
An important part for generating revenue is to acquire cooperation contracts with organisations and facilitators. The PSS has to be sold to them before it can be implemented on the festivals they organize. Since Festrack is not a well known brand, these companies should be approached by Festrack. We should phone and mail all the organisations and facilitators that can potentially become clients of Festrack. The sales pitch of the PSS should be clear and convincing.

If the client is interested, a contract can be signed. The cooperation contract can be made according to the wishes of the client. If Festrack proves to be a success, the client can opt for an extension of the contract. A lawyer might be needed to draw up a standard contract. This contract can then be modified according to the wishes of the client. The most important collaboration for this process is the one with the client. Festrack will use collaborative selling, which recognizes the clients’ active and decisive role in the sales process. This role should be nurtured and the clients should be made aware of this. The clients will then realize that Festrack will try to find the right solution for them.

Any past and future clients should be kept up-to-date regarding any big developments within Festrack. This can be done by sending out a newsletter. Festivals often have yearly editions and missing out on one edition does not mean that Festrack should also miss out on the next edition. Festrack should be known by every organisation or facilitator and they must all be aware of the added value of the PSS. Relations with clients should be maintained. The customer service can play a part in this. An eye should be kept on competitors, since they might be able to replace us by approaching our clients. Offering promotions might help us to become more attractive to companies that are in doubt.

Preparation
Just like the client, Festrack prepares for an upcoming festival. It is very important that there are enough products in stock to serve all of the visitors of the festival. Other maintenance than a simple battery exchange can be done in between festivals. Dirty bands can be cleaned and broken parts can be replaced so that the products can be reused again. Collaborations are needed to recycle broken parts that cannot be repaired.

The components of the service should be ready to perform. Preventive maintenance should be done to increase the reliability of the hardware. This will most likely be done by specialized companies. All of the physical components of the service must be mobile and ready to be installed at the festival.

Operation
When the client requests it, the station, special exit gates and server infrastructure need to be installed at the terrain. This will probably be one or two days before the festival starts. A check has to be done to make sure that the installed equipment works properly. At the day of the festival, the PCs and scanners will be installed at the appropriate locations. Besides the station, the bars and the top-up points also get PCs and scanners. This is needed to check and increase the amount of tokens on the wristbands. The station will be placed right next to the entrance and next to a top-up point. The visitor can then get the wristband directly after entering the festival and buy tokens at the top-up point. As always, the top-up points are taken care of by the client. The lockers will be provided by a specialized company, which Festrack will introduce to the client. As it is normal, the client pays for the installation of the lockers.

A day before the festival starts, the amount of wristbands required for the festival need to be determined and this amount needs to be transported to the festival terrain in vans. When the wristbands are delivered to the festival site, they go to the station, where festival visitors can pick them up. At the station, the wristbands are registered on the name and email address of the user. The station also has spare wristbands in case users need replacements. The station will always be manned to ensure that service can always be given. When the employees are not busy, they can replace batteries of empty wristbands. The users use and return the wristbands as mentioned before. Right after the festival, the entire PSS will be removed from the terrain. It can then be prepared and stored so that it will be ready for the next event.

Customer service
The PSS will be used by all of the festival visitors. They can all have questions about the use of the product. It is important that people that have questions have a place to ask them. The location where the visitors of the festival pick up their wristband is also available for questions when people have questions during the festival. If users have questions before or after the festival they can get in touch with the festival management or with us via our website. This same means of contact can also be used by clients with questions.
IDEFØ
IDEFØ was used to produce a model that represents the activities and processes that are necessary to make the venture viable. This model can be used to analyse the system and improve it. It can also be seen as a summary of the described logistics.

Solent Plastics (2020). Retrieved from:
https://www.solentplastics.co.uk/53-litre-heavy-duty-black-attached-lid-container-lidded-plastic-storage-box/

Future steps

Future steps
The next step should be to develop the PSS even further by making a working prototype. This will lead to more knowledge about the possibilities of the PSS. A working prototype can also help to persuade any investors. Without an investment, Festrack will not have enough money to start generating revenue. It is important to know how much money is needed and what the possible risks are.

Desired investment
With the savings of all team members together, the venture would still need about €780.000,- to succeed the first year. Costs can be limited by becoming inventive in finding cheaper solutions for the variables that make up the operating costs. Also, all of the variables in product costs and operating costs are high estimates. Both the product costs and the operating costs are very likely to be lower in reality. Despite the high needed investment, the venture could already make a profit in its first year. Possible investors should be made aware of this fact.

Possible risks
Since the wristbands are expensive to make, Festrack has to keep ownership over them. Losing to many wristbands directly results in a lower profit. It will therefore be important to find out how many wristbands will eventually get lost. It is also important to change the product when the business model demands this.

Making the venture as circular as possible is one of the goals. How this will eventually turn out is still a question. It will be difficult to only use environmentally friendly materials. To account for this, the materials should be used in a responsible way. This means they should be strong, reusable and recyclable. It will be a challenge to make the product circular in the way as described in the part about maintenance and end-of-life. The exact way of how the components of the PSS will be repaired, reused, refurbished, remanufactured and recycled still has to be determined. To get the cycles complete, Festrack will require partnerships. The wristband should also be assessed regarding its life cycle. This is important when validating how to improve it. Any improvements in quality will reduce the need for maintenance. The design of the PSS should make it easier to perform maintenance, since this will reduce the handling time. The design should make it easier to recover the value of the PSS and its components, since this will reduce the production costs. The risks regarding circularity are therefore in line with the risks of the venture.

Entering this market is risky, since the product is complex and a large number of users will be addressed from the start. A lot of wristbands are needed for a festival with 15.000 visitors and these wristbands should all function properly. This means that a substantial investment is needed, which is also a big risk. The venture is only at the beginning, but with a strong team of industrial designers, we believe that this can become a profitable business.