06 AUG 2O14

ENTREPRENEURSHIP ASSIGNMENT
R & R - C ase Study Anal y si s
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

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.

2. 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

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Finance to start the business

A high risk that the interest in Trivia games would die down
soon if new variants werent 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 didnt cover

3. 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

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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 Kaplans 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 %.

4. 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.
Reiss share of money is calculated as follows:
In $

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Revenue @ 12.5 per unit

Variable Costs
COGS @ 3.1 per unit
Ad Allowance @ 5%
Factor @ 1%
Royalty for Design @ 5%
TV Royalty @10 %
Sales commission @ 20%
Total Variable Costs
Contribution
Fixed Costs
Customized computer program
Design launch
Bad debts
Inventory disposal
Total Fixed Costs
PBT

7,250,000

Reiss share of Profits

Sales Commission @ 20 %
Sales Rep Commission
Total money made by Reiss

1,156,000
1,450,000
(507,500)
2,098,500

1,798,000
3,62,500
72,500
3,62,500
7,25,000
1,450,000
4,770,500
2,479,500
2,500
50,000
15,000
100,000
1,67,500
2,312,000

5. Why was Reiss so successful?

Reiss was successful in his venture as he had an excellent
understanding of the market and extensive experience in this
space. The major reasons being:
He had relevant knowledge, strong contacts and reach in
the industry by which he was able to print and manufacture
the game at the same cost as a big company where
economies of scale would come into picture.

Reiss was an opportunity finder where he would always find

the best way to do business in a different way and earned
profits in return.

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Reiss was passionate towards his idea of Trivia Game and

did everything he could to explore new methods to make it
successful.

His way of doing business was very motivating as he took

care of his suppliers by charging them full mark up and
encouraged sales representatives. He proved his trust on
Kaplan and TV Guide which made them ready to help him.
He was also able to build a loyal workforce as he would
always pay on time.

His creative ways of thinking helped him reduce cost using

the successful marketing plan devised by him.

He always kept a close watch on the changing market

dynamics and planned to introduce a new game WHOOZE
IT as he knew that Trivia would lose its popularity soon.

6. What was the breakeven for R&R, and what was it for a big
player like Parker Bros?
The fixed costs for developing Trivia game for R&R was $
50,000. Also some $ 30,000 was needed to finance the first
production run. R&R would break even at approximately $
80,000. On the other hand, Parker Bros. incurred fixed costs of
roughly $ 250,000 for design and development along with
advertising and promotion budget of at least $ 1,000,000. So
compared to R&R, Parker Bros would break even at a much
higher cost of $ 1,250,000.

7. What was the minimum Size of the market for TV guidetrivia game from TV Guide & R&R point of view?
According to TV guide and R&R point of view the minimum size
of the market for TV guide Trivia game is 34,000 units. This

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was based on the calculation of 0.2 % conversion of

approximately 17,000,000 copies of TV Guide magazines in
households.

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