The Deal Killer and the Big Bets

In this article, I will identify the deal killer--i.e. variable that is likely to prove fatal to the venture--and the big bets--i.e. the key drivers of success--of the raincoat venture in Jakarta.

The Deal Killer: Patent violation

The fact that we will be able to outsource our production process means that rain suit doesn't require sophisticated technology to be made. Thus, our ability to maintain the uniqueness of our product through patents is crucial for our profitability. We need to manage two factors that will likely to increase this risk.

First, even though the laws related to intellectual property rights in Indonesia have existed since the Dutch colonialism in 1844, its enforcement is far from meaningful. The most recent regulation related to IP was ratified under the Copyright Law No. 19/2002. Sadly, fake products can still easily be found in many places, such as Tanah Abang and Pasar Senen in Jakarta or Cihampelas, Bandung. Consumers are fully aware that they buy counterfeited products, but as one of them said, "I know it's fake, but I like the design." Not only the design that matters; a counterfeited branded product may cost around one tenth of the original one, depending on the quality. (See this article)

Second, in order to minimize investments, our production process will be outsourced to a local manufacturer, at least in the initial stage. This strategy may backfire as the manufacturer could copy the design if they see our rain suit gains popularity. I think the first and foremost precautionary action is establishing a binding contract with a reliable manufacturer that stipulates certain conditions to avoid the production of our design without our consent. Nevertheless, establishing a contract is sometimes insufficient given the uncertainty of law enforcement. We also need to build a good relationship with them to build trust and mutual understanding, to prevent them violating the contract. This is why we need to have someone to manage the relationship with our manufacturer.

The Big Bets

The right design

Our product’s selling point relies largely on good design. We have identified several features that have to be included, such as waterproof materials, more space for luggage, comfortability and style. However, we need to test whether our assumptions reflect customer’s true preference. In the last meeting, Dan came up with an excellent idea of using conjoint analysis to test these assumptions. The idea is clear enough: we ask potential customers about the values of certain features for them. However, the implementation might be much more cumbersome as there might be limitations of describing subtle features through pictures and letters. Despite some of the drawbacks, conducting a research is much better in order to be more focused on which features should be developed further.

Targeted marketing efforts

Until recently, motorcyclists have never noticed much difference in different rain suit brands. They perceive almost all (low-cost) rain suit brands as having the same quality, hence creating the generic rain suit market. They buy a rain suit for its functionality, not design. The more fashionable ones (in the premium rain suit market) are less popular, given the big price gap. We can differentiate our rain suit through marketing efforts that emphasize on “value rain suit,” and build customer awareness on our brand name. How do we capture their awareness? It’s similar to the story of Mercedes-Benz and Lexus. They both might have the same quality, but car enthusiasts perceive Mercedes-Benz of higher value from better positioning. We build customer perception through our sales force, pamphlets, and online blogs. We can spread the efforts by giving free samples to motorcycle enthusiasts and free online consultations. So far, none of the established competitors I know have done these kinds of effort.



The rain suit market in Indonesia poses not only big opportunities, but also certain threats to us. The huge and growing market of motorcyclists can translate into profits for ventures in motorcycle and motorcycle accessories. However, the uncertainty in law enforcements may prove fatal and threaten our financial sustainability. We need to manage this risk by establishing a binding contract with a reliable manufacturer and build a good relationship with them. Not least, I think the key factors of success in this market are creating a design that meets customer's needs and running targeted marketing efforts.