Confidentiality Agreement
The undersigned reader acknowledges that the information provided by _______________ in this marketing plan is confidential; therefore, reader agrees not to disclose it without the express written permission of _______________. It is acknowledged by reader that information to be furnished in this marketing plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to _______________. Upon request, this document is to be immediately returned to _______________. ___________________ Signature ___________________ Name (typed or printed) ___________________ Date This is a marketing plan. It does not imply an offering of securities.
Ta b l e O f C o n t e n t s 1.0
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.0
Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.1 Market Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.1.1 Market Demographics . . . . . . . . . . . . . . . . . . . . . 2 2.1.2 Market Needs . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.1.3 Market Trends . . . . . . . . . . . . . . . . . . . . . . . . 3 2.1.4 Market Growth . . . . . . . . . . . . . . . . . . . . . . . . 3 2.2 SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.2.1 Strengths . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.2.2 Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.2.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.2.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.3 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.4 Product Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.5 Keys to Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.6 Critical Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.0
Marketing Strategy . . . . 3.1 Mission . . . . . . . 3.2 Marketing Objectives 3.3 Financial Objectives . 3.4 Target Markets . . . 3.5 Positioning . . . . . 3.6 Strategies . . . . . 3.7 Marketing Mix . . . . 3.8 Marketing Research .
4.0
Financials
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Nine Lives- An Outdoor Clothing & Gear Consignment Shop 1.0 Executive Summary Nine Lives--An Outdoor Clothing & Gear Consignment Store is a business in Eugene, Oregon. Nine Lives will be run by Jim Gearboy, a veteran of the outdoor industry. Jim is very familiar with the outdoor community in Eugene and has leveraged his regionally-specific industry insights into a niche store that has no direct competition but incredible demand. Through the use of a selection of used goods not replicated in the entire city, superior personal customer attention, and reasonable prices, Nine Lives will capitalize on this incredible opportunity. Jim has secured a location that offers very good foot traffic and easy accessibility. Jim will efficiently lay out the store to increase sales and give the customers the upmost in attention. This attention to detail, combined with Jim's passion and knowledge will make this store profitable quickly.
2.0 Situation Analysis Nine Lives is a start-up company. Marketing is critical to its success and future profitability. The store offers an extensive selection of used outdoor gear and clothing in a consignment arrangement. Nine Lives also has a limited selection of manufacturers closeouts. The basic market need is reasonably priced outdoor clothing and gear. Nine Lives is meeting this market need by offering primarily used items, discounted off the normal retail prices.
2.1 Market Summary Nine Lives possess good information about the market and knows a great deal about the common attributes of our most prized and loyal customers. Nine Lives will leverage this information to better understand who is served, their specific needs, and how Nine Lives can better communicate with them.
Nine Lives- An Outdoor Clothing & Gear Consignment Shop
Table 2.1: Target Market Forecast
Target Market Forecast Potential Customers Participants w/limited resources Gearheads Bargain hunters Total
Growth 9%
2001 27,014
2002 29,445
2003 32,095
2004 34,984
2005 38,133
CAGR 9.00%
8% 8% 8.53%
14,025 10,584 51,623
15,147 11,431 56,023
16,359 12,345 60,799
17,668 13,333 65,985
19,081 14,400 71,614
8.00% 8.00% 8.53%
2.1.1 Market Demographics The profile for Nine Lives' customer consists of the following geographic, demographic, and behavior factors. Geographic
• • •
The immediate geographic target is the city of Eugene with a population of 130,000. A 35 mile area is in need of the products. The total targeted population is 51,000.
Dem ographics
• Male and female. • Ages 17-50. • Students with limited financial resources. • Outdoor enthusiasts. • Deal seekers. B e h a v i o r Fa c t o r s
•
Enjoys spending time outside. Collects copious amounts of outdoor gear.
Nine Lives- An Outdoor Clothing & Gear Consignment Shop 2.1.3 Market Trends The market trend for outdoor gear and clothing is the ability to purchase products at discount prices. One way the trend has played out is the business model of selling closeout and last year model items. This trend has occurred in the last few years and it is a variant of the T.J. Maxx type business model where items are sold at discount prices. Examples of this business model in the outdoor industry are the websites of sierratradingpost.com or rei-outlet.com. These sites only sell discounted, new, outdoor gear. Nine Lives is different in that the bulk of their merchandise is used. This matters less as outdoor gear is typically based on utility instead of fashion.
Market Forecast
80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0
Participants w/limited resources Gearheads Bargain hunters
Nine Lives- An Outdoor Clothing & Gear Consignment Shop
Target Market Growth 10.00% 5.00% 0.00%
2.2 SWOT Analysis The following SWOT analysis captures key strengths and weaknesses within the company and describe the threats facing Nine Lives.
2.2.1 Strengths
Nine Lives- An Outdoor Clothing & Gear Consignment Shop 2.2.3 Opportunities •
A growing market with a significant percentage of the target market still not aware of Nine Lives. • A growing market of people who have used equipment that they would like to sell. • Good margins and low overhead.
2.2.4 Threats • • • •
Competition from online discounters. The entrance into the Eugene market from an already existing used gear store. Inability to get sufficient inventory. Local retail competitors starting to sell significant quantities of closeouts.
2.3 Competition Currently, there are no true direct competitors in Eugene. There are two Oregon competitors that have very similar product offerings although one is a consignment shop and the other is a normal retailer. The normal retailer (they buy new and used equipment and sell it to the public) is located in Portland and is doing well, and the similar style consignment shop is located in Bend, another outdoor-friendly town, but with a much smaller population base (around 50,000 people instead of Eugene's 130,000 people) and they are also doing well. Nine Lives' competition is present in Eugene in the form of new, retail outdoor stores, such as R.E.I. and McKenzie Outfitters. These retailers have a wider selection of goods, but have normal retail prices and no used merchandise. Another form of competition is thrift stores that sell used clothing and equipment. The amount of decent used outdoor clothing and equipment floating around thrift stores is small and it is hit-or-
Nine Lives- An Outdoor Clothing & Gear Consignment Shop • • • • •
Kayaks. Roof racks. Canoes. GPS. Cookware and stoves, and much much more.
Nine Lives will sell the items on consignment, meaning Nine Lives will sell other owner's items and pay for them when sold. Typically the items on consignment will be used. They will also consist of new manufacturer's closeouts and seconds. This will only occur when the savings are large and the items are likely to be sold quickly. Nine Lives will be procuring the merchandise from a variety of sources: •
• • •
I n d i v i d u a l s : These people believe that it is preferable to receive something for their goods rather than packing them up to a thrift store. Alternatively, these people might want the newest generation piece of gear or clothing and the way they finance this desire is by selling off their old stuff. M a n u f a c t u r e r s : Sometimes the manufacturer will want to get rid of their inventory excess, whether because the merchandise is last year's model or they have an overstock. In any case, they may look to consignment shops to allow them to lower inventory. R e t a i l s t o r e c l o s e o u t s : Same rationale as the manufacturers. M a n u f a c t u r e r r e p r e s e n t a t i v e s : The representatives often have a large number of samples from many different manufacturers. After they no longer need the samples they will typically get rid of them as they serve little purpose to hold onto the samples.
2.5 Keys to Success The keys to success will be to constantly track and meet the market needs. Nine Lives will also:
Nine Lives- An Outdoor Clothing & Gear Consignment Shop 3.0 Marketing Strategy Nine Lives advertising budget is limited, so the advertising program will be fairly straightforward. Nine Lives will advertise in local outdoor magazines and journals, the local newspaper (Register Guard), and the student newspaper at the University of Oregon. Additionally, Nine Lives will advertise in the outdoor industry journal in hopes of attracting new sources of inventory.
3.1 Mission Nine Lives' mission is to provide the customer with quality outdoor clothing and gear at reasonable prices. We exist to attract and maintain customers. When we adhere to this maxim, everything else will fall into place. Our services will exceed the expectations of our customers.
3.2 Marketing Objectives • • •
Maintain positive, steady growth each month. Experience an increase in new customers who are turned into long-term customers. Increased visibility evidenced by an increase of new customers and people bringing in used equipment for consignment.
3.3 Financial Objectives • • •
A double digit growth rate for each future year. Reduce the variable costs associated with the per transaction expenses. Increase the profit margin.
Nine Lives- An Outdoor Clothing & Gear Consignment Shop people are willing to make significantly less (relatively) than in Portland because quality of life is so important. With a large population of outdoor enthusiasts, particularly those that sacrifice financial gains for quality of life, Nine Lives has a large population base to draw off of. The University of Oregon is located in Eugene and has an active outdoor student body. Additionally, the university has a large Outdoor Program which will be a large source of buyers and sellers.
3.5 Positioning Nine Lives will position itself as a reasonably-priced outdoor gear and clothing retail store. Eugene consumers have a demand for discounted outdoor equipment. Nine Lives' positioning will leverage their competitive edge: •
A selection of used clothing and gear not replicated in the city. Although there are many different outdoor retailers in Eugene, there are none that sell used merchandise. Used merchandise can be up to 60% less expensive than the new counterpart, so there is definitely a draw to the product, particularly in a town where people enjoy their outdoor activities at the expense of making money.
•
Superior, personalized customer service. Although Nine Lives' product is used clothing and gear, there is no reason to assume that the patrons of a used store deserve any less quality of customer service that you would expect from a top shelf retailer. Even consignment shop retailers have expectations of high service. At Nine Lives the customer will be treated with very personalized service. It is not unusual that consignment shops have regulars who frequent often. With this in mind, Nine Lives will have a database of customers and purchasing history so when they enter the store the sale person will have very personal information about the customer.
Nine Lives- An Outdoor Clothing & Gear Consignment Shop 3.7 Marketing Mix Nine Lives' marketing mix is comprised of the following approaches to pricing, distribution, advertising and promotion, and customer service. • • • •
P r i c i n g : Nine Lives pricing will be based on a percentage system for the consignment items and standard keystoning for the new products. D i s t r i b u t i o n : All sales will take place in the retail space. A d v e r t i s i n g a n d p r o m o t i o n : The bulk of the advertising will be with the local outdoor journal, The Register Guard, the U of O student newspaper, and the Outdoor Industry Journal. C u s t o m e r s e r v i c e : Obsessive customer service is the mantra. Nine Lives' philosophy is whatever needs to be done to make the customer happy must occur, even at the expense of short-term profits. In the long term, this investment will pay off with a fiercly loyal customer base who is extremely vocal to their friends with referrals.
3.8 Marketing Research During the initial phase of the marketing plan development, several focus groups were held. These focus groups provided helpful insight into the decision making processes of outdoor enthusiasts. An additional source of dynamic market research is a feedback mechanism based on a suggestion card system. The suggestion card has several statements that customers are asked to rate in terms of a given scale. There are also several open ended questions that allow the customer to freely offer constructive criticism or praise. Nine Lives will work hard to implement reasonable suggestions in order to improve their service offerings as well as show their commitment to the customer that their suggestions are valued. The last source of market research is competitive analysis. Nine Lives will send people to local competitors to gain information about the service offerings.
Nine Lives- An Outdoor Clothing & Gear Consignment Shop 4.0 Financials This section will offer a financial overview of Nine Lives as it relates to the marketing activities. Nine Lives will address break-even analysis, sales forecasts, expenses forecasts, and how those link to the marketing strategy.
4.1 Break-even Analysis The Break-even Analysis indicates $16,000 be need in monthly revenue to reach the break-even point.
Break-even Analysis $8,000 $6,000 $4,000 $2,000 $0 ($2,000) ($4,000) ($6,000) ($8,000) $0
$5,328
$10,656
$15,984
$21,312
Monthly break-even point
$26,640
Nine Lives- An Outdoor Clothing & Gear Consignment Shop 4.2 Sales Forecast The first month will be used to get the store ready for business and there will be no sales activity. To prepare the store, display counters will be set up, as will all of the racks. Dressing rooms will then be built. Month two will mark when the store is officially open, and business will be slow. During month two Nine Lives will begin to build up inventory. This will be done through advertising in the local outdoor magazine/journal, as well as advertising at the University of Oregon, as well as through their Outdoor Program. Month four will finally have a decent amount of sales activity and it should steadily improve from there.
Monthly Sales Forecast
$100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0
Participants w/limited resources Gearheads Bargain hunters
Nine Lives- An Outdoor Clothing & Gear Consignment Shop 4.3 Expense Forecast Marketing expenses are to be budgeted so that they are high for the first five months and then trim down until the winter holiday season where they will spike again. During the second year, expenses will be higher during the winter holiday season as well as during the spring and fall, marking the beginning of the new sports/outdoor season.
Monthly Expense Budget $1,200 $1,000 $800
Local outdoor magazine Register Guard
$600
U of O student newspaper $400
Industry journal
$200 $0 Jan Feb Mar Apr May Jun
Jul
Aug Sep Oct Nov Dec
Nine Lives- An Outdoor Clothing & Gear Consignment Shop 5.0 Controls The purpose of Nine Lives' marketing plan is to serve as a guide for the organization. The following areas will be monitored to gauge performance: • Revenue: monthly and annual. • Expenses: monthly and annual. • Repeat business. • Customer satisfaction.
5.1 Implementation The following milestones identify the key marketing programs. It is important to accomplish each one on time and on budget.
Table 5.1: Milestones
Milestones Milestone Marketing plan completion Advertising campaign #1 Advertising campaign #2 Totals
Plan
Start Date 1/1/01 3/1/99 3/1/99
End Date 4/1/01 4/1/99 4/1/99
Budget $4,000 $2,400 $6,400
Manager Jim Jim Jim
Department Marketing Marketing Marketing
5.2 Marketing Organization Jim is primarily responsible for marketing activities. This is in addition to his other responsibilities, and will depend on outside resources for graphic design work and creativity.
Appendix: Nine Lives- An Outdoor Clothing & Gear Consignment Shop Table 4.2 Sales Forecast
Sales Forecast Sales Participants w/limited resources Gearheads Bargain hunters Total Sales
Plan Jan $0 $0 $0 $0
Feb $4,125 $1,325 $1,300 $6,750
Mar $4,987 $1,514 $1,499 $8,000
Apr $7,845 $2,125 $2,147 $12,117
May $8,325 $2,514 $2,503 $13,342
Jun $9,458 $3,250 $3,215 $15,923
Jul $13,545 $4,654 $4,512 $22,711
Aug $14,995 $5,002 $5,000 $24,997
Sep $15,855 $6,511 $6,474 $28,840
Oct $17,458 $7,545 $7,454 $32,457
Nov $18,545 $7,254 $74,141 $99,940
Dec $20,014 $8,354 $8,325 $36,693
Direct Cost of Sales Participants w/limited resources Gearheads Bargain hunters Subtotal Cost of Sales
Jan $0 $0 $0 $0
Feb $2,063 $663 $650 $3,375
Mar $2,494 $757 $750 $4,000
Apr $3,923 $1,063 $1,074 $6,059
May $4,163 $1,257 $1,252 $6,671
Jun $4,729 $1,625 $1,608 $7,962
Jul $6,773 $2,327 $2,256 $11,356
Aug $7,498 $2,501 $2,500 $12,499
Sep $7,928 $3,256 $3,237 $14,420
Oct $8,729 $3,773 $3,727 $16,229
Nov $9,273 $3,627 $37,071 $49,970
Dec $10,007 $4,177 $4,163 $18,347
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Appendix: Nine Lives- An Outdoor Clothing & Gear Consignment Shop Table 4.3 Marketing Expense Budget
Marketing Expense Budget Local outdoor magazine Register Guard U of O student newspaper Industry journal Total Sales and Marketing Expenses Percent of Sales Contribution Margin Contribution Margin / Sales
Jan $200 $200 $200 $200 -----------$800 0.00% ($800) 0.00%
Feb $50 $50 $50 $50 -----------$200 2.96% $3,175 47.04%
Mar $100 $75 $125 $100 -----------$400 5.00% $3,600 45.00%
Apr $100 $100 $125 $100 -----------$425 3.51% $5,634 46.49%
May $300 $250 $325 $250 -----------$1,125 8.43% $5,546 41.57%
Jun $50 $50 $50 $50 -----------$200 1.26% $7,762 48.74%
Jul $50 $50 $50 $50 -----------$200 0.88% $11,156 49.12%
Aug $50 $50 $50 $50 -----------$200 0.80% $12,299 49.20%
Sep $200 $200 $200 $200 -----------$800 2.77% $13,620 47.23%
Oct $250 $225 $250 $250 -----------$975 3.00% $15,254 47.00%
Nov $200 $200 $200 $200 -----------$800 0.80% $49,170 49.20%
Dec $50 $50 $50 $50 -----------$200 0.55% $18,147 49.45%
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