The document provides an analysis of the target market, competitors, and marketing strategies for a proposed women's boutique. It analyzes the demographics, behaviors, and interests of the target market of women ages 35-50 in middle to upper-middle income brackets. Three main competitors are identified: Dillard's, Target, and a local boutique. Dillard's and Target have a larger customer base due to their national presence but carry a broader range of products. The local boutique has a loyal following but relies more on word-of-mouth. Marketing strategies analyzed include promotions, social media, and branding. A SWOT analysis compares the strengths, weaknesses, opportunities and threats faced by each competitor.
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At the beginning of the semester, our group was instructed to open a boutique
in Manhattan, KS that offers professional clothing items and caters to females
between the ages of 35 and 50 in the middle to middle-upper income class range.
Throughout the semester we researched our target market, competitors, and future
trends in order to thoroughly understand the direction of our overall business plan.
Using this research we created a branding package, merchandise assortment, a
marketing plan, a visual merchandising plan, and financial plans for our boutique.
The following report enccompasses all of our research and implementation of
activities for the successful opening and first year of business for our boutique.
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The analysis of our target market includes demographic, behavioristics, and
psychographic data.
Demographics
Consumers within our target market are females between 35 and 50 years old
and are mostly part of Generation X with a few stragglers in Generation Y. Most of
the consumers within our target market are married and the percentages of
households with children and without are fairly equal (The Nielsen Company, n.d).
These women are college graduates and have a combined household income between
$65,000 and $499,000. They generally have professional positions in fields such as
academia, medicine, science, and management. The consumers within our target
market comprise approximately six percent of the population in Manhattan, KS (U.S.
Census Bureau, 2011).
Behavioristics
The consumers within our target market can be characterized by several
different purchase occasions. These women may only purchase a large amount of
apparel goods once a season in order to update their wardrobe or as often as a few
purchases once a month. They may also purchase apparel goods intended as gifts or
make purchases while out shopping with friends. Consumers can be characterized by
one or more of these purchase occasions.
Our target market typically seeks a high level of customer service, which can
include personal shopping and a generous return policy. They also seek high quality
products at reasonable prices and will purchase products based on the perceived
status of that product. The usage rate of our intended consumer is heavy because
these women have positions at work which require professional dress and they most
likely work 40 plus hours a week. One of the persons that we interviewed said that
they typically spend around $70 for a pair of pants or a top and up to $150 for suit
pieces. They also said that they would “buy anything that fits nice, holds together
well, and is comfortable (A. Self, personal communication, March 20, 2016).”
The loyalty rate of our target market is medium because they will frequently
purchase the types of products that we will offer, but will still purchase from other
locations as well. The attitude towards professional clothing in general is indifferent.
This is due to the fact that this type of clothing is only worn at work so they see it as
a means to an end. In regards to fair trade apparel, our target consumer’s attitude is
positive because of the social implications of purchasing fair trade goods.
Lastly, consumers within our target market are interested in our product
because these products are items that they will use consistently. In regards to fair
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trade apparel, our consumer is aware as they know this type of product exists, but
may not purchase it it without further education. This will be one of our main
responsibilities in the beginning (G. Scott, personal communication, January 30,
2016).
Psychographics
The older half of our target market enjoys relaxing activities, such as reading
and gardening, but can often enjoy more adventurous hobbies like boating and
skiing. They like to watch the sci-fi channel and listen to the radio. The younger half
still enjoys drinking, dancing and going online. They enjoy socializing with their
peers on the weekends and forming a community. They enjoy fitness and travel.
Women aged 30-50, in the middle to middle-upper class are more likely to use
services like Hotels.com that figure stuff out for them. This implies that they like to
have things figured out for them by trustworthy sources. What this means for our
brand is that associates should pay close attention to customers, building loyalty and
assisting them with their purchases. For the future, the older portion of our target
market invests a lot of their money into savings bonds and money market funds. The
younger portion of our group tends to purchase more insurance for the future. They
tend to be a bit more on the conservative side when it comes to social issues (The
Nielsen Company, n.d).
After having three women that fit into our target market take the VALs survey
we got the results of two Achievers and one Thinker. Achievers put their family first,
and are committed to both their family unit and careers. By capitalizing on this
belief, we could utilize ethos and tie in the family factor with fair trade by making
them feel sympathetic towards the women and men who work in sweatshops. They
have full schedules, are hardworking and value technology that improves
productivity rather than leisure. They tend to follow the status quo and are very
affected by their peers’ activities.
Thinkers on the other hand, believe social conduct and obligation to be
synonymous. They do not make rash decisions, in fact they do a lot of planning and
researching before acting. This could be especially helpful to us as an opportunity to
educate them about fair trade. These consumers are not influenced by popular trends,
and tend to purchase proven products. For this reason, we would need to ensure that
there is a good portion of our products that are classic and extremely high quality as
something like this would appeal to Thinkers. Much like Achievers, Thinkers use
technology in a functional manner. They prefer traditional pursuits, so we would
have to make sure that our brand is not too “out there” for them (Strategic Business
Insights, n.d).
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We determined that our top competitors are Dillard’s, Target, and The
Boutique. We chose Dillard’s as one of our competitors because their target market
is similar to ours. Dillard’s carries brand and designer merchandise at a lower price.
Target is another competitor because they provide business casual clothing. In
addition, Target also offers shoes and jewelry; these are important items for our
target market. Women in our target market can easily go to Target and build their
entire outfit at once without visiting different stores. Lastly, we chose The Boutique
because they also offer professional clothes and they also target women between the
ages of 35 to 50 in the middle-to-middle upper class income range. An in-depth
competitor profile for these three businesses has been included as well as an overall
SWOT analysis.
Dillard’s
Competitor Profile.Dillard’s was founded in 1938 by William Dillard and
currently operates 270 locations in 30 states in the United States. The department
store is known for selling name-brand and private-label apparel merchandise for all
ages and genders plus home furnishings, but women’s apparel and jewelry account
for 40% of its sales. Dillard’s offers well priced national brands and has exclusive
lines such as Antonio Melanie, Gianni Bini, GB, Roundtree & York, and Daniel
Cremieux (Vault.com, n.d.).
Market Profile.Dillard’s primary target market are females in the middle and
upper-middle class income range who are between the ages of 25 to 50. Dillard’s
market share among department stores is 5.1%, lagging behind Macy’s, Sears, Kohl’s,
Nordstrom, and JCPenney (Bloomberg, 2016). Dillard’s has a high level of brand
awareness within the areas in which it operates. Customer loyalty is also high due to
its reasonably priced merchandise, store credit card and loyalty rewards. Dillard’s
marketing strategy includes offering a broad range of merchandise at varying price
points, regular sales promotions, and a growing e-commerce presence.
Product/Service Profile.Dillard’s carries a wide range of merchandise
including designer and brand name products. It is not a discounted department store
but they are also not a luxury store, which puts them at a premium level. Dillard’s
carries merchandise for women, men, children, and accessories for the home. Some
of the brands carried by the department store include Anne Klein, Kenneth Cole New
York, and Fossil.
Dillard’s sells name-brand merchandise at discounted prices, which is a very
common strategy because it allows them to reach a wide a variety amount of
consumers. They also have regular sale promotions throughout the year.
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Merchandise can be purchased in store, on their website, and through an online
catalog which links to specific products on their website. Dillard’s has six distribution
centers that operate throughout the United States.
Marketing Strategies.Dillard’s primary methods of advertising include
television ads, circulars in newspapers and ads in women’s magazines. Dillard’s
regularly publishes financial information and information regarding charity donations
and makes them available to the public on their website. Sales associates at all
Dillard’s locations are trained to develop personal connections with their customers
and regularly engage in personal selling. Dillard’s offers special sales promotions
twice a year as well as other sales throughout the year.
Common themes seen in Dillard’s advertisements include showcasing their
apparel and home goods in real life situations. Advertisements in higher end
women’s magazines such as Vogue resemble high-fashion photo shoots. Dillard’s
uses social media to showcase certain products on a daily basis, promote sales, and
introduce new products. They also use social media to engage with customers when
they have questions or concerns. They are active on Twitter, Facebook, and
Instagram.
Target
Competitor Profile.George Dayton wanted to expand the Midwest markets so
after doing some research he purchased land and started a business under the name
Dayton Dry Goods Company. The first Target store was opened in 1962 in Roseville,
MN and the red and khaki uniforms began in 1993. There are currently about 1,792
Target stores located throughout the United States (Target Corporation, n.d).
One competitive advantage that Target has over other retailers is that it offers many
different product lines as well as clothing. For example, if one of our business
professionals needed to pick up other things such as dinner, bath towels or laundry
soap they can do so without have to go to multiple stores. Target is a convenient
one-stop shop.
Market Profile.Target markets to middle and upper middle class consumers.
These consumers are willing to spend the extra money at Target rather than
shopping at places such as Walmart. Target’s market shares in relation to its stock
price has been slightly unstable over the past year. As of February 4th, their stock
price experienced a six percent decrease (Yahoo Finance, 2016). Target’s market
share compared to other discount retailers and apparel companies such as GAP, JC
Penney, and Ross Stores is 5.83% (CSI Market, 2016).
In March of 2015, it was announced that the Target corporation was planning
on investing “more than $1 billion to improve its technology in an effort to
restructure and build on digital sales gains (Internet Retailer, 2015).” Thanks to large
growth in mobile traffic and a significant adoption of Target’s Cartwheel app, the
company has decided to focus more of their marketing efforts via digital channels.
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Product/Service Profile.Some of the products Target offers are clothing,
shoes, jewelry, home and patio furnishings, electronics, toys, movies, books, fitness
and sports equipment, beauty and health lines, and groceries. In regards to women’s
clothing, Target’s top brands are Merona, Mossimo, Mossimo Supply Co., and
Xhilaration. Top brands for more professional dresses are Melonie T and Spenser
Jeremy (Target Corporation, n.d). Some of the services that they offer are a
pharmacy; food court; baby, wedding and college registries. Target also has its own
application called Cartwheel in which customers can choose what they want to
purchase using their smartphone or tablet. Customers can also download coupons
directly to their account using the Cartwheel application. Target’s prices are similar to
its competitors such as Walmart, but compared to Dillard’s and The Boutique,
Target’s clothing is on the lower end of the pricing scale. Target tends to lure its
customers in by providing a better shopping experience in stores and online. Target
has brick-and-mortar stores as well as the ability to order online. Consumers have the
choice to pick up their orders in store or have it delivered. They currently have 37
distribution centers throughout the United States.
Marketing Strategies.Target targets middle class people who are looking for
good quality products and are willing to pay a little extra for those products. Target
has its known catch phrase “expect more, pay less” so this is exactly what people
would expect when shopping there. They use the red and white target symbol which
allows consumers to recognize it and associate back to Target. Television ads, media
ads and sponsorship are all things that have contributed to the success of Targets
advertising campaigns.
The Boutique
Competitor Profile.This locally owned Manhattan boutique has higher price
points with quality items to match. The store began as an extension and partner of
Borck Brothers, but has recently separated and opened an independent location off of
Poyntz. They target upper-middle class or upper class women who have the
expendable income to shop at these pieces. While most of the clothing comes from
smaller, independent lines, there are some designer pieces you might also find at a
high end department store like Neiman Marcus or Nordstrom. While a grand
majority of their merchandise is clothing, they also sell jewelry and skin care.
The Boutique is currently one of the only places in town to offer high end
clothing to older women. They also have a very distinct set of loyal customers who
shop there almost exclusively. You can shop The Boutique online through the website
www.shoptiques.com, which allows them to reach a wider market than if they were
solely brick and mortar.
Market Profile.The Boutique’s target market closely aligns with the target
market we were assigned. The associate on duty classified their consumers as
“mature” and “well off.” More specifically, their store targets women belonging to the
upper-middle class or upper class ranging in age from 30-65.
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According to associates who currently work at The Boutique, the retail store
has the unique advantage of having a very loyal following. While it’s not necessarily
a large loyal following, they do have a set of customers that buy 90% of their
clothing from The Boutique and have developed relationships with the owner and
associates. However, that being said, it does seem that The Boutique relies a lot on
walk-by customers and word of mouth marketing strategies. While they do have
social media accounts, when you google “The Boutique Manhattan, KS” one of their
competitors, Kieus pops up as the second result. So if they were to rely on SEO as
lead generation, it would not go so well (Downtown Manhattan Inc. (n.d.).
Manhattan being a smaller community seems to add to their success as far as brand
awareness goes.
Their main marketing strategy seems to be reaching out to their consumers via
social media (Twitter, Facebook, Instagram and Pinterest). This is how they
communicate new inventory and promotions to their customers.
Product/Service Profile.The Boutique offers well known brands such as
Tribal, Joseph Ribkoff, Michael Stars, French Dressing, KUT from the Kloth, Blue
Pepper, Velvet Heart, Escapada, Foxcroft and Hobo according to their profile on
www.downtownmanhattanks.com (Downtown Manhattan Inc., n.d). While browsing,
consumers can also choose from Michael Kors and BCBG pieces.
The Boutique sells these pieces at market price, or just above it. They can do
this, because of the convenience they provide to the residents of Manhattan who
might otherwise have to shop online or travel to Kansas City to shop some of these
brands. The Boutique travels to different Market Centers to purchase their
merchandise. Additionally, they purchase some of their products from online
wholesalers.
Marketing Strategies.Social Media is The Boutique’s main channel of PR
and advertising. They communicate a lot of their messages through Twitter and
Facebook. Additionally, they post fliers and take out ads in local print media such as
the Manhattan magazine and The Mercury.
Ads are placed more around Holiday times such as Thanksgiving, Christmas,
and New Years, or in special events. Sales are mostly communicated through social
media, and are more often specialty promotions rather than percent off sales. For
example, in December they ran a promotion in which customers received a free
bracelet with a $50 purchase.
The Boutique’s Twitter and Facebook profiles are utilized mainly for
promotional communication of discounts and sales. While Instagram covers these
promotions, it is more commonly used to promote new merchandise within the store
in order to bring customers in.
SWOT Analysis
The following SWOT analysis is based from the view of our competitors.
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Strengths.Dillard’s and Target both have an established customer base
because they are nationally recognized brands. Due to their wide selection of apparel
items, customers are more likely to find items in their sizes when shopping at
Dillard’s and Target. Dillard’s also carries well known brands such as Jessica
Simpson, Calvin Klein, and Michael Kors, while The Boutique offers customers higher
end designer labels. The Boutique is known for it’s excellent customer service, which
encourages strong customer loyalty. All three retailers have a great reputation in
regards to customer service.
Weaknesses. Dillard’s and Target do not offer any fair trade apparel
products and their apparel selections do not offer a lot of variety. Dillard’s also
seems to have an overwhelming selection of apparel for women within our target
market. Due to their high frequency of sales promotions, Dillard’s can be perceived
as a discount store. The Boutique could utilize local advertising vehicles, such as
radio and newspaper ads, in order to increase their customer base. A recent visit to
their commerce sight hosted by shoptiques.com revealed that there was no inventory
available to purchase online.
Opportunities. Manhattan, KS is included in the list of 40 cities in the US
that will experience notable population growth within the next fourteen years
(Linneman, 2014). According to the report, the city of Manhattan is projected to
experience a 3.3 percent increase in population between the years 2013 and 2030.
According to the Bureau of Labor Statistics, the unemployment rate in Manhattan, KS
has been steadily decreasing over the past several months. It is currently at its lowest
of 2.6 percent, a rate that has not been reported in the last ten years (Bureau of
Labor Statistics, n.d).
Consumers are increasingly concerned about a company’s corporate social
responsibility (Vend, n.d). The lack of socially conscious apparel items in Manhattan,
KS is a huge opportunity that should be explored. Another opportunity within the
state of Kansas is the fact that a bill was signed into law in 2012 that exempts certain
types of small businesses (partnerships, LLCs, s-corporations, and sole
proprietorships) from having to pay state income taxes (Tax Foundation, n.d).
Threats. A large chunk of retail shopping occurs via physical locations but
online shopping can still be seen as a major threat to brick and mortar stores,
especially if options in these stores are limited. Another possible threat that relates to
consumer spending habits is the fact that Kansas Legislature increased the state’s
sales tax to 6.5 percent, a .35 percent increase, in July of 2015 (Kansas Department of
Revenue, 2015).
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What täsfa means to us, what we want it to mean to to our customer.
The name täsfa (pronounced tesfa) means hope in amharic, the language
spoken in Northern African countries like Ethiopia. (these countries are among the
countries from which the brands we use source their materials).
We want to bring hope to the Manhattan community by educating women of
our age group 30-50 middle, middle upper class to be more conscious about the
impact the fashion industry can have and how they can help.
From our target market research we learned that many women in our target
market do not necessarily care about the latest fashions, so what we want to do is
provide them with a place to buy classic, good quality pieces they can wear for many
years, and to give them a reason to keep coming back: helping others. This would
also encourage practicing sustainable fashion as opposed to fast fashion.
Typography
Typography used in logo and other promotional tools. Aesthetically we liked
the mix of using a sans serif font with a serif font for accent that’s easier to read. The
serif font is used for the store name and the sans serif font is used to communicate
the store tagline, “sustainable, stylish, sophisticated.” Both fonts were accessed from
dafont.com. The sans serif font (1.) is called “another shabby” and the serif font (2.)
is called “didot.”
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Color Palette
We chose these particular colors in our branding package in an effort to
encourage cohesiveness in our theme to remain very natural.
Logo
The tree represents the future of responsible fashion in Manhattan stemming
from the roots laid in place by Fair Trade opportunity that we are introducing
through our boutique.
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Fashion Trends
Fall 2016
We utilized WGSN for our research in regards to fashion trends for the A/W
16/17 season. We decided that all of the future fashion trends for our target
consumer would be under the macro trend, Elemental. This macro trend symbolizes
a need for simpler designs and a need for spirituality and self-love (WGSN, 2014).
Our target market are women of the age of 35-50 who are in the middle-upper class.
Based on our past research our target market are women who are married with or
without children, these women hold positions in professional fields. We felt that this
macro trend would resonate with our target market because these women are leading
very busy lives and have no need for pomp and circumstance in their attire. We came
to this conclusion because our target market tends to purchase trustworthy products
rather than following trends. They also require clothes that can be easily worn to
work and be comfortable as well.
Color.One of the trends within the overall Elemental trend relates to color.
The key colors within this macro trend are very subdued and earthy tones.
According to WGSN, “The palette sweeps from pale, breezy neutrals to heavier,
moody greys. It tugs between hard and soft, light and dark, creating a tension that is
bolstered by cold pastels and pearly metallic (WGSN, 2014).” Our target customer
will be drawn to these colors because they will appreciate their understated tones.
Since our target market are women in the age of 35-50 and they hold positions in the
professional field, they usually prefer soft colors for their work outfits. As mentioned
before, these are women who prefer clothes that can be easily worn and that can be
easily matched together.
Textiles.The textile trends included within our chosen macro trend are
mostly wool blends, cashmere, satin, and open weave structures. According to
WGSN, “Cocooning volume creates a comforting sanctuary. Fabrics are dense and
multi-layered with tricot weave structures, multi-layered, honeycombs and intensely
thick cashmere ribs. Silvered yarns are embedded into the fabrics for a quiet sense of
luxury (WGSN, 2015).” We feel that these textiles will appeal to our target consumer
because they bring a sense of luxury to the particular clothing items that they will be
wearing. In addition, based on our past research, our target market are women who
are conservative in a way that they prefer simple styles but fashionable at the same
time. Our target consumer is also interested in apparel items that will offer a certain
level of status. The textiles and styles that we picked are relevant to our target market
because they are simple but fashionable at the same time.
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Macro Trends
Curated Products
Through our research we found that consumers are becoming overwhelmed
due to all of the choices that are being presented to them during a shopping
experience. According to the 2016 Retail Trends and Predictions report, “An
increasing number of retailers are learning that having more products won’t
necessarily win over customers. Shoppers these days are already overwhelmed with
too many choices, so widening your range can sometimes do more harm than good
(Vend, 2016).” Essentially, consumers are looking to simplify their shopping
experience and have been doing so via companies that will curate products for them
based on their personal preferences and past purchases.
When applying this trend to our company and our target consumer, we need
to be wary of purchasing too many products and ensure that each product we put
out on our sales floor serves a purpose for our customers. For example, we will put
out limited amount of merchandise in each department of our store, that way it will
be easier and comfortable for our customers to shop in our store. We believe that this
strategy will make our customers enjoy more the merchandise that we will be offering
without getting overwhelmed. After establishing a strong customer base, we may be
able to implement personal shopping services such as notifications in regards to new
arrivals from their favorite brand and/or preferred colors and styles.
Promote Transparency
An additional macro trend was found amongst Small Business Trend’s nine
retail trends for 2016. Out of these nine trends, we felt that Promote Transparency
would resonate most with our company and target market. This trend states, “Be
open with customers about your products and services, as well as how you use their
personal information (Small Business Trends, 2016).”
This trend is relevant to us because our company is going to be deeply rooted
in fair trade. We intend to be completely honest about our products in regards to
sourcing and production. A couple ideas involve our shopping bags and product
inserts. Not only will our shopping bags be made from recycled materials, but we
will also feature stories on the bags about people in our producing countries and how
our company has a positive impact on their lives. Product inserts will provide details
in regards to the production and supply chain process for that particular product.
This trend will also be a great opportunity for us to inform consumers in Manhattan,
KS about the factors of fair trade. Our main goal in our business is to inform and
change the shopping habit of consumers. We believe that by informing our customers
about the great benefits of fair trade, they will start shopping responsible.
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Insider Trading
Another macro trend we came across, titled Insider Trading, indicates that
consumers are becoming more concerned about where their products are coming
from. Based on past events involving inequality and job insecurity in developing
countries, consumers and brands have become more aware about these issues.
Nestlé’s slave labor that has occurred in their factories in Thailand, tainted meat in
China, and FIFA’s corruption have changed consumers’ behaviors toward those
brands. Many companies took awareness of these issues and took costly concrete
steps to support their initiatives (Trend Watching, 2016).
This specific trend is relevant to our business because we are focusing on fair
trade and sustainable products in developing countries. According to Trend
Watching, consumers are becoming more responsible in regards to buying sustainable
products. Our goal for our business is to inform and educate about the positive
impact that the fashion industry can have and how we can help developing countries
by buying responsibly and having sustainable goods available for our customers.
Micro Trends
90-Day Monthly Planned Spending Score
Shopping trends throughout the year in regards to planned spending tend to
follow a pattern and this pattern typically holds true year after year with only slight
variations. According to data compiled by the National Retail Federation (2016),
90-Day monthly planned spending for women’s dress clothing had the highest scores
during the months of March, May, and November for the year 2015. These months
most likely score higher due to beginning-of-the-season shopping tendencies. Similar
results can be seen for 2013 and 2014 with a few exceptions. There is also a visible
upward trend when looking at the data as a whole between January of 2013 through
January of 2016. This could be attributed to an increasing consumer confidence
index that has occurred over the last several years.
In relation to our company, this data tells us that we need to prepare for these
key shopping months by ensuring that we have enough product and that we have
the products that our customers will want during these specific periods. Our
customers will most likely expect us to have seasonally related new arrivals during
these periods and we must be able to give them what they want in order for our
company to remain profitable.
In addition we will use other strategic techniques to drive more customer
traffic in our store. For example, we will host a community event on our opening
day. We will take advantage of this event by informing consumers about fair trade.
Furthermore, we will keep in touch with our customers to build in customer loyalty.
We will send updates about our new product lines to our customer’s mail and we
will definitely engage with them in social media.
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Consumer Lifestyles in the U.S.
An additional micro trend is the use of social media among consumers within
our target market. Young adults, which are categorized as consumers ages 30 to 44,
“grew up while new digital technologies were being introduced and slowly made
available to consumers (Euromonitor International, 2015).” Most consumers within
this age range are online on a daily basis and use social media regularly. This age
group also had “81% reporting they had Facebook accounts in 2014. In addition,
54% had YouTube accounts, 57% Google+ accounts, 48% had Twitter accounts and
19% had Instagram accounts (Euromonitor International, 2015).”
This trend is going to be relevant to our company because it tells us that our
target consumer is actively engaging in social media. It also tells us which social
media sites our target consumer is most likely more active on. This information will
help shape our social media strategy and help us decide which social media platforms
to advertise with. We will also use radio advertising; according to previous research
with VALS they would most likely listen to the radio in prime times like their
commute to and from work or dropping kids off at school/picking them up. At last,
we will also utilize newspaper advertising and direct mail; based on past research on
VALS we believe that these advertising options will work with our target market.
Attitudes Towards Style and Jewelry
Another micro trend which has an effect on our company is related to
attitudes about watches and jewelry. According to Mintel’s analysis (2015), watches
and jewelry are usually nonessentials and consumers consider their purchases of
these accessories wisely. The majority of consumers within our target market usually
spend less than $100 on watches; many women are also more patient to wait for sales
than men. With the increased use of mobile phones for telling time, watches mainly
serve a fashion and style purpose for consumers.
This trend is very important for our company and target market because we
are planning to sell jewelry and watches to our customers. This data tells us that we
must be very cognizant about the intended purpose of a watch for our consumers
and keep that need in mind when buying such accessories for our retail store. We
also need to be aware of our consumer’s price and style preferences when it comes to
jewelry overall. This particular trend also helps us to understand our target market
by learning on how to incorporate the jewelry that we will be offering in our store
wisely and it will also help us on how to choose the prices of our jewelry in the store.
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During our research we found that our target market prefers products of high
quality that they can use repeatedly. They also tend to work 40 or more hours a
week so their clothing options need to be comfortable and work appropriate. Based
on this information we chose specific styles, colors, prints, and fabrications of
merchandise using future trend research provided by WGSN. We also gathered
research by examining the websites and retail locations of our competitors, which are
Target, Dillard’s, and The Boutique. When deciding on the proportions of
merchandise for Fall 2016 and Spring 2017, we carefully considered what our target
market would be purchasing more of during a season and allocated our product
selections accordingly.
Brands
When deciding what brands to bring into our store, we thought it would be
ideal to bring in brands that our target market is aware of. Bringing in well-known
brands like Vince Camuto, Calvin Klein, and Tahari ASL will help establish a
familiarity for our consumers who might originally feel alienated by the idea of fair
trade. We also felt that because these brands offer apparel items that are of high
quality, our target market will be able to keep and utilize them for a substantial
amount of time instead of throwing them away after one season. Even though these
brands aren’t fair trade, they will offer our customers ways to practice sustainability.
These three brands will provide us with a selection of button-ups, blouses, jackets,
pants, and skirts for our merchandise assortment.
We will be sourcing all of our accessories, home décor, as well as a few select
clothing pieces from several different fair trade companies. For our Fall 16 and
Spring 17 assortment plans we have chosen four different fair trade wholesale
companies: Sobremesa by Greenheart Shop, Matr Boomie, Fair Indigo, and
Indigenous.
Sobremesa by Green Heart Shop offers products made by skilled artisans from
many different countries. This company offers many different brands that can be
purchased at wholesale. Their website indicates “We go out of our way to source
products and curate a collection that does as little harm as possible - to people,
communities, and the environment. All of the products we sell are fair trade,
eco-friendly, or carry a social mission” (Greenheart Shop, 2016, n.p.). We will be
selecting jewelry, handbags and other accessories from this wholesaler.
Matr Boomie provides artisan stories with their goods, which we felt would be
a good educational opportunity for our customers. We felt that we could display
these artisan stories with the products to explain where the goods come from and
whose lives the customers are affecting by choosing to shop responsibly. This brand
provides our boutique with a variety of merchandise to choose from and offers
merchandise within our price points (Matr Boomie, 2016).
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Fair Indigo is a company that provides us with a a lot of options for our
customers to shop responsibly including the use of recycled materials, organic and
vegan goods as well as fair trade products. Their selection of accessories, namely
jewelry and vegan leather products matched what we felt our target market is looking
for while blending well with our other merchandise selections (Fair Indigo, 2016).
Indigenous is another fair trade company that provides solely handmade goods.
Their transparent policies detail low impact dye, ethically responsible practices as well
as the use of organic and natural materials (Indigenous Design Corp., 2016).
Price Points
The price points for our classifications of merchandise was decided based on
the spending habits of our target market and the brands that we will be carrying.
Price points will vary based on brands and fabrications of our merchandise.
Fall 2016 Merchandise Assortment
Classification Sub
Classification
Percentage Price Points Corresponding
Image
Dresses - 15% Wrap 33% $75-125 Image 1
Sheath 33% $75-125 Image 2 and 3
A-Line 33% $75-125 Image 4
Tops - 30% Sweaters 30% $30-70 Image 5
Long-Sleeve
Button Downs
30% $30-70 Image 6
Blouses 40% $30-70 Image 7
Bottoms - 20% Pencil Skirt 25% $60-100 Image 8
Wide-Leg
Trousers
25% $60-100 Image 9
A-Line Skirt 25% $60-100 Image 10
Straight Leg
Pants
25% $60-100 Image 11
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Jackets - 15% Cardigans 25% $75-125 Image 12
Blazers 50% $75-125 Image 13
Trench Coat 25% $75-125 Image 14
Accessories - 10% Handbags 25% $75-250 Image 15
Necklaces 30% $30-60 Image 16
Earrings 20% $30-60 Image 17
Bracelets 10% $30-60 Image 18
Scarves 10% $30-60 Image 19
Tights 5% $30-60
Home Décor -
10%
Wall Art 60% $40-60 Image 20
Pillows/Throws 20% $20-40 Image 21 and 22
Jewelry Storage 20% $50-175 Image 23
Colors and Fabrications
Colors, prints, and textiles for our Fall 2016 apparel assortment were chosen
based on trend reports found on WGSN. Deep tones such as olive, maroon, dark
blue, golden yellow and deep red will be used across our apparel items. We will also
be carrying neutrals such as black, gray, white, cream and tan in order to establish a
basic selection of merchandise. We have chosen two prints for our clothing items
through our trend research as well.
The fabrications we will be buying for our Fall 2016 season include silk, linen,
cashmere, cotton, and polyester. Textile merchandise sourced from our fair trade
companies will have natural fibers such as organic cotton and will be dyed using
natural dyes. The following images give a representation of what styles, brands, and
colors our boutique will be carrying during the Fall 2016 season.
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Earrings 20% $30-60 Image 16
Home Décor - 10% Wall Art 60% $40-60 Image 17
Pillows/Throws 20% $20-40 Image 18 and 19
Jewelry Storage 20% $50-175 Image 20
Colors and Fabrications
Colors, prints, and textiles for our Spring 2017 apparel assortment were chosen
based on trend reports found on WGSN. Lighter colors such as coral, raspberry,
lavender, apricot, and pistachiowill be used across our apparel items. We will also be
carrying neutrals such as black, gray, white, cream and tan in order to establish a
basic selection of merchandise. We have chosen two prints for our clothing items
through our trend research as well.
The fabrications we will be buying for our Spring 2017 season include cotton
blends, linen, nylon, cotton, and polyester. Textile merchandise sourced from our fair
trade companies will have natural fibers such as organic cotton and will be dyed
using natural dyes. The following images give a representation of what styles,
brands, and colors our boutique will be carrying during the Spring 2017 season. As
you can see, most of our styles are the same as our Fall 2016 merchandise
assortment. Our merchandise will mainly differ on colors, prints, and fabrications
from season to season.
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All promotional and educational signage will be posted in frames around the
store and posted in plastic holdings atop racks.
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Over the course of our first year in business, our company plans to focus on
two specific objectives. Our first objective is to develop awareness in regards to our
apparel store among our target market within the community of Manhattan, KS. Our
second objective is to educate and increase awareness about fair trade practices within
the apparel industry with consumers in our target market.
Marketing Strategies
Outlined below are our strategies in regards to product, place, promotion, and
price.
Product Strategy
Product offerings in our boutique will consist of blouses, pants, skirts, dresses,
jackets, jewelry, handbags, scarves, and small home décor items. The majority of our
clothing will be from brands that our target market is very familiar with such as
Calvin Klein, Vince Camuto, and Tahari ASL. Some of our apparel items and all
accessories are going to be purchased from our fair trade companies.
Distribution Strategy
During our first year of business, our products will be sold exclusively in our
store. In the future we may decide to offer online shopping via a website and
shopping through Instagram. During our first year we would like to focus more on
bringing in local traffic to our boutique.
Promotional Strategy
In order to successfully achieve our objectives, we will utilize all aspects of the
promotional mix: personal selling, advertising, direct marketing, sales promotions,
and public relations.
Personal Selling.All personnel employed at our boutique will be properly
educated about the products that we will sell. Our retail associates will be able to
inform potential customers about the specific brands that we carry, how fair trade
impacts the apparel industry and workers employed by fair trade companies, and
where all of our products are made. This level of education amongst our associates
will help create awareness in regards to fair trade apparel. Sales associates will
accomplish this task by informing consumers about the products they have purchased
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at checkout both orally and by giving them pamphlets that explain more about the
organizations with which we work.
Advertising.We will use various forms of advertising to create awareness
about our brand and store, focusing more on social media advertising rather than
traditional forms due to our small budget. We will be using Facebook, Pinterest, and
Instagram to increase awareness in regards to special events, sales promotions, fair
trade, and the general products that we will be carrying. We had originally thought
we were going to include Twitter in our social media platforms, but because more
males tend to use Twitter than females (Pew Research, 2015), we ultimately decided
we did not have to utilize it to reach our desired audience. We will use radio and
newspaper advertising for our grand opening and semi-annual sales. Television
advertising will not be utilized in our first year due to the high cost.
Direct Marketing.Direct marketing will be used sparingly during our first
year due to its high cost. We will implement a direct marketing campaign to create
awareness about our grand opening. This direct marketing campaign will be targeted
towards consumers in Manhattan, KS that match our target market’s demographics.
We chose not to create a website or utilize an e-mail marketing service because of the
added expenses. After our first year of business, we may decide to implement these
strategies, depending on our net profit.
Sales Promotion.Sale promotions for certain product categories will occur
twice a month in order to create awareness about our product offerings. Throughout
the year we will also offer our customers who follow us on social media special
discounts on our products. We will also have semi-annual sales in order to move end
of season merchandise.
Public Relations.Public relations will be used primarily to inform the
community of Manhattan, KS about our brand and fair trade merchandise in general.
We will be hosting special events in our boutique which will be used to inform
potential customers about our brand and fair trade products.
Pricing Strategy
We will be using a value pricing strategy for all the products that we carry.
Due to the fact that most of our products will be benefitting fair trade workers, we
felt that this pricing strategy makes the most sense for our business.
Implementation
We have outlined below the specific activities that we will be using to achieve
our marketing objectives during our first year of operation. We have set a small
budget of $2000, most of which will most likely be spent on print and radio
advertising. Our 12-month marketing calendar is included in a separate file.
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Social Media
Facebook.Since Facebook is the most used social media platform with our
target market, we decided that we should use Facebook for most of our advertising
efforts (Pew Research, 2015). We will be using a variety of posts on Facebook, but
will stick to the same general schedule from month to month. We will create posts
that correspond with our monthly sales, semi-annual sales, and special events. Once
a month we will have a fair trade post that focuses on a specific company,
organization, or person involved in the fair trade apparel industry. During the
month of October, which is Fair Trade Month, we will have a higher rate of fair trade
related posts. Although not explicitly outlined in our 12-month marketing calendar,
we will also create posts that show our products in the store and styled outfits.
During our first year, we will most likely not be utilizing the paid advertising features
that Facebook offers due to our tight budget. We are hoping to reach 500 page likes
in our first year. We will achieve this by having signs on our cash wrap that will read
“like our Facebook page and receive an extra 10% off your purchase.”
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Instagram. Due to the more visual aspect of Instagram, our posts on this
platform will mainly feature interior photos of our store and pictures of our products.
We would like to achieve 500 followers in our first year. We will take individual
photos of new arrivals, photos of products that coincide with our monthly sales, and
photos of our store when we re-merchandise or receive new product. During the
month of October, we plan to feature a campaign that focuses on Fair Trade. We will
ask people to upload a photo of an empowering woman in their lives using a
designated hashtag and feature these photos on our Instagram page for the entire
month of October. At the end of the month we will donate a portion of our monthly
sales to a fair trade organization. We will also reward the top three posts with a $25
gift card to our store. The amount donated will depend on how many posts there
are.
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Pinterest.Pinterest will mainly be used to create boards that showcase our
products on a seasonal basis. We would like to reach 500 followers on this platform
in our first year. We intend to have boards for our clothing, accessories, and home
décor. We will also have special boards for Fair Trade month, holidays, and other
special occasions. New boards will be added when new merchandise is received
every season.
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Traditional Advertising
As stated previously, we will be using traditional forms of advertising sparingly
throughout the year. The main purpose of these advertising campaigns will be to
inform consumers about our store and our clearance sales.
Radio. Since our target market is very work and family oriented according to
previous research with VALS, we decided they would most likely listen to the radio
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in prime times like their commute to and from work or dropping kids off at
school/picking them up, which is generally during 7-9 AM, and 5-6 PM.
According News Generation (2015), Country and Religious radio is primarily
listened to by men and women over the age of 25, and women in our target market
ages 25-54 listen to Adult Contemporary stations. Additionally, we interviewed
women in our target market in Manhattan to ask them which stations they
specifically listened to and the previously mentioned stations were the most common.
Based on this research, we decided to purchase airtime from these stations in the
Manhattan, KS area: Country (104.7), Adult Contemporary/Soft Rock (102.5), and
Christian Contemporary (88.9).
We will be purchasing 30 second spots, which will cost $25 per spot. We intend to
have our spots run once in the morning and once in the evening during peak drive
times. We will run one ad within the course of our 12-month plan, which will be for
our grand opening event in August. We will consecutively run ads three days leading
up to our event. The entire cost of this campaign will be approximately $450.
Grand Opening Script: Do you want to be trendy, but need help putting stuff
together? Do you ever think about where the clothing you purchase comes from and
how it affects those involved in the process? Täsfa (pronounced tesfa) is a socially
and environmentally responsible boutique in Manhattan prepared to fulfill all of your
professional clothing needs. Come and join us at 530 S 3rd
St for an open house
celebrating our grand opening this Saturday, August 13. We’ll share with you how
you can be stylish, sophisticated and sustainable. We’d love to see you there!
Newspaper.For our newspaper advertising, we will be utilizing the
Manhattan Mercury. We intend to run an ad for our grand opening, our winter
clearance sale, and our summer clearance sale. In order to draw more attention, the
ad for our grand opening will be a three column awareness, full color ad. We will
run this ad in the Sunday edition the week before our grand opening. According to
Manhattan Mercury’s advertising rate card (n.d), this will cost us approximately
$150. The ads for our winter and summer clearance events will be two column
awareness ads and will be run on the Monday before these sales start. These will be
non-color ads with a simpler design. The approximate combined cost for these ads
will be $140.
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Direct Mail.We will be sending out a direct mail piece on the 1st
of August
in order to advertise our grand opening on August 13th
. Using Staples.com, we chose
2,357 addresses that match our target market’s income, age, and gender. This
campaign will cost $1,178.50, which includes printing, postage, and delivery.
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Public Relations
Press Releases.We will utilize press releases on two separate occasions. We
will be contacting Manhattan Magazine and request that they publish a small article
that features our boutique, specifically our assortment of Fair Trade merchandise.
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The Manhattan Magazine publishes a print and online edition once a quarter and we
are intending to be featured in the Fall Edition, which is published in September.
At the first of October, we will send out a press release to the Manhattan Mercury to
coincide with our Fair Trade Month promotions. This press release will talk about
Fair Trade practices and how our boutique sources the products that we carry.
Events. Our boutique will be hosting two major events during the first year.
The first event will be our grand opening on August 13th
. We will also be giving
away select merchandise and other door prizes. We will use this event to showcase
our selection of Fair Trade merchandise. Our second event, a Holiday Open House,
will be held the 1st
Saturday of December. This event will follow a similar format as
our grand opening, but we will be showcasing our home décor and accessories.
Evaluation
Our evaluation methods will be mainly focused on our social media activities.
We will utilize Facebook’s free analytical tools to monitor page likes and views, how
many people our posts are reaching and if people are engaging with our posts.
Pinterest also offers free analytical tools for business pages. We will use this free
service to monitor our progress with our boards and pins. Instagram does not
currently offer analytical tools, so we will utilize a third party company to analyze
our posts. Using these tools for our social media accounts will help us create
meaningful content for our target consumer by telling us what we are doing right
(and wrong) and allow us to perfect our social media strategies.
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Average Customers and Sales
When determining our monthly sales goals, we started by estimating how
many customers we would have for every hour and every day of the week that our
boutique will be open. We estimated that we would have between two to eight
customers an hour, depending on the hour and day of the week. For example, we
proposed that we would have more customers between the hours of 11 am and 2 pm
due to lunch breaks and more customers after 5 pm due to the end of the workday.
We also assumed that we would have more customers on the weekends.
Next, we estimated that the average dollar amount spent by each customer
would be approximately $95.00. We arrived at this figure by averaging our price
points for all of our product classifications. This average dollar amount aligns with
the purchasing behavior of our target market as several people that we interviewed
said they typically spend $70 to $150 per shopping trip.
We used this figure of $95.00 to calculate our daily sales based on the hourly
customers that we had previously estimated. After computing all daily totals, we
calculated our weekly total and used this to estimate our monthly, and finally a
six-month sales total. This six month sales total served as the basis for our six-month
dollar plans, which we used to calculate our planned sales per classification per
month per season.
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Six- Month Dollar Plans
In order to compute our monthly sales goals per classification, we first
computed the overall monthly sales goals for the seasons and then broke those
figures down by the merchandise classifications that we had previously determined
for our assortment plans. Monthly sales were proportioned using the six month sales
total that was previously computed. We gave each month a proportion of sales based
on how much business we thought we would receive during those months. Since
August will be our first month in business, we estimated that this month would have
the lowest sales, while November and December would have higher sales due to
holiday shopping. For the Spring financial plan, we assumed that we would have
higher sales during March and April as these are key shopping months for the spring
season in general. Sales for July are lower due to the end of the summer shopping
season and due to smaller population in Manhattan because of summer break.
Reductions for each month were based on our planned sales and promotions, as well
as markdowns and shrinkage. We will be having clearance sales in February and
July, so these months had higher reduction percentages.
Fall 2016 Financial Plans
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Spring 2017 Dollar Plans By Classification
Start-Up Costs
We began our research on startup expenses by reading an article titled “The
Cost of Starting Up a Retail Shop” by Darren Dahl. This article details Sharon
Munroe’s experience in opening a small boutique called Little Green Beans in Austin,
Texas (Dahl, 2011). While a lot of the expenses have changed with technology
advancements and price increases in items, the outline of what to plan for was
extremely helpful and included items we might have otherwise missed.
Property Expenses
The plan began with rent and operating costs, suggesting we plan for security
deposits for both rent and utilities. We e-mailed the landlord who informed us that
the security deposit would be one month’s rent or $2,850. We also included last
month’s rent in advance. As for the utilities deposit, we used a website calculator
called Con Edison Energy Calculator to figure what one month’s utilities would be
based off of the square footage of our store, how many lighting fixtures we are
planning on having, bathroom fixtures etc. This amount came to an estimated $451.
Location Improvement Costs
As for our outdoor signage we decided to do three-dimensional lettering signs,
one that will be visible from 3rd street and the other visible from Fort Riley Blvd. A
quote from Thomas Sign Co. in Manhattan, KS estimated the cost to be around
$4,500 for the two signs.
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Since we had no physical walls to tear down or build this was relatively low.
We decided on stained concrete as a cost effective, yet attractive flooring choice for
our location. Natalie’s cousin gave us an estimate for the stained concrete of $4 per
square foot, which calculates to $9,120.
In addition to the flooring, we included carpentry in our startup expenses as
we plan to have a contractor build our cash wrap and fitting rooms out of reclaimed
wood. We found a company out of Kansas City called Elmwood Reclaimed Timber
that sources the reclaimed wood for a customer and refurbishes it for use. The wood
we selected is called “Antique Heart Pine Rustic” and costs $60/sq. ft. After using
some of their calculations on their website and figuring the cash wrap, display tables
and fitting rooms, we estimated that we would need about 20 sq ft. of this wood,
costing us around $1200. We would avoid building/installation costs, because
Natalie’s husband is experienced in carpentry and would offer his services free of
charge.
As for lighting, we have decided to use the larger version of the Same Tree
Native Chandelier as a focal point over the cash wrap when the customers first walk
into the store. This costs $3,000. In addition, we planned for 13 track lights as well
as three lights each around the store above fixtures and wall displays. These cost
approximately $1,677 and we would source from the local Home Depot. Above the
fitting rooms we plan to have one small chandelier above each room also from Home
Depot for an estimated cost of $297. Lastly, we wanted a medium sized chandelier
above our sitting area to create a homier feel, costing us $312.99. All together lighting
adds up to $5,286.99.
Store fixtures would include different racks, both standing four ways and
attachments for the slat wall. We are sourcing our store fixtures from Store Supply
Warehouse. We planned on having four four-way racks, as well as U-Bars, waterfalls
and shelving for the slat walls. The four-way racks we chose are a brassy finish and
cost $64.00 per rack, planning for four of those adds up to $256, this amount
combined with the waterfalls, racks and u-bars ($86.70) for the slat walls adds up to
$342.70. The shelves are $8.50 a piece and we planned for 10, this way we could
have extra in case our visual merchandising changes with the season or we have
more merchandise at one time that better requires a shelf.
When planning the slat walls, we planned on ordering 14 seeing as they come
in 4x8 sections that we would need to trim down to fit our space. We chose the
natural warm cherry wood, so that they did not look quite so commercial while
remaining functional. Each 4x8 section costs $59.95 adding up to $839.30 for the
total slat wall costs.
For mannequins we plan on ordering six full mannequins and four half. While
we might not use all of them at once in the store, we figured it would be good to
have a few extra in the back just in case. The full fabric mannequins cost $34, and
the same half mannequins cost $20. This adds up to a total of $284 for mannequins.
In this section we also included hangers sourced from Store Supply Warehouse
as well. The hangers come in bundles of 50, and we plan on purchasing two different
types: dress and pant. We chose a natural bamboo to coincide with the natural theme
of our store and for extra sturdiness. The dress hangers are $45/bundle, of which we
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plan on purchasing four, and the pants hangers are $55/bundle of which we plan on
purchasing three. The total cost for our hangers will be $345.
Miscellaneous Expenses
The next set of expenses include association fees for the Manhattan Chamber of
Commerce and office/cleaning supplies. The Manhattan Chamber of Commerce
requires a one-time fee of $305, with a processing fee of $30. As for cleaning/office
supplies we estimated $100.
IT Expenses
When deciding on a P.O.S. system we did a lot of research and what we found
was among the most popular Shopkeep seemed to be the most recommended system.
Shopkeep has a retail package available for $1,218, which includes a cash drawer,
scanner, receipt printer, iPad enclosure and credit card reader. We would have to also
purchase an iPad air for $399. We felt this was the most convenient and simple way
to do a P.O.S system for a small business, especially after reading the success stories
on their website.
As for a computer for back office purposes we chose the cheapest desktop
bundle from Best Buy for $569.98 as well as a cheap color laser printer for $200,
also from Best Buy. Additionally, we chose two AT&T cordless phones (one for the
front, one for the back) for $65.99. We estimated telecom services such as a
modem/router to be around $100 based off of Dahl’s article.
Marketing Expenses
As for our marketing and public relations expenses, we included the legal
document fees (trademark of a fictitious name, LLP and Sign Permit), quotes from
Vista Print for business cards and letterheads, grand opening event costs (including
food, beverages and decorations) and grand opening advertising (including direct
mailers, radio ads and newspaper ads) for a grand total of $1,283.46. Also included
in this section are our indoor signage and décor. We estimated indoor signs and
décor, including a couch and end tables for the sitting area to be around $600. Our
total start-up costs will be $33.318.42.
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Cash Flow Statements
For our seasonal cash flow statements, expenses were broken down by fixed,
variable, and startup expenses. Fixed expenses include our monthly rent, utilities, a
monthly charge for the use of our POS system, insurance, accounting services, a loan
payment, and salaried wages. Monthly utility expenses were estimated using the
previously mentioned Con Edison Energy Calculator. We were given a quote for
basic liability insurance, which includes property and product damage, from
Insureon. The cost for accounting services was based on information from
Costhelper.com. According to their website, basic payroll accounting services would
cost $100-150 for a small business so we decided to assume the higher amount for
our business (Costhelper, 2016).
Since we were not given a starting capital dollar amount, we assumed that we
would have to take out a loan to cover our startup costs and operating expenses for
our first few months. Using Bankrate’s online loan calculator, we estimated that a
ten-year $100,000 loan would cause us to have a $1100 monthly loan payment
(bankrate.com, 2016). For the salaried wages, we decided that we would hire a
full-time salaried manager. This manager would be paid $30,000 a year.
Variable expenses include hourly wages, credit card processing fees, and
advertising. We will be hiring three part-time floor associates, one of whom will be a
key-holder. These associates will only be working 20 hours a week, with the
exception of our busier months in which they will work up to 30 hours a week. Our
key holder will be paid $9.00 an hour and the other associates will be paid $8.00 an
hour.
According to the Costhelper website, total fees for processing credit cards
in a store include a minimum fee, a monthly statement fee, discount rate, and a per
transaction fee. The article estimated that these fees in total would be about 7% of a
store’s total credit card sales (Costhelper, 2016). For our expenses, we estimated that
our fees would be 6% of our total sales to account for our cash only customers.
Advertising fees were based on the planned advertising outlined in our marketing
plan. The advertising for our grand opening is included in our start-up costs, so we
only accounted for our clearance advertisements for our monthly cash flows.
Even though we were instructed not to include purchases in our cash flow
statements, we did add them at the bottom just to see how our monthly purchases
would affect our monthly expenditures. Thanks to the initial loan we will be able to
experience positive cash flows during our first six months.
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Seasonal Income Statements
During our first six months of business our store will actually turn a profit of
$264,963.59. This is mainly due to a fairly low cost of goods sold, which allows us
to have a high gross profit. Our gross margin for the fall 2016 period is 73.79%,
which means that for every dollar that we make, we will keep about 74 cents. Even
though we had less expenses during the spring 2017 period, our profit is actually
lower than it was in the fall. This can be attributed to a higher cost of goods sold for
that period. Our gross profit margin for spring 2017 is 50.91%, which means that for
every dollar earned, we will keep about 51 cents.
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