Post on 05-Jan-2016
transcript
Daniel BrockmanErin DurlesserJessica Perez
Spring 2010
Objectives
Take the work of an artist, and find profitable ways to
grow her business and personal income.
Identify potential distribution channelsRecommend product extensions, updated
assortment and pricing options Evaluate revenue and profitability scenarios
Overview of a Microbusiness
Ema is an artistHer medium: Handbags • She prints unique images on fabric• Assembles collages of the images• Collage forms the surface of the bag
Each bag is original, one-of-a-kind, uniqueEma loves her work
Estimate of Current Business
Quantities: Produces one or 2 bags over a period of 3 or 4 daysDistribution: Personal website, art galleries and events Costs: Nearly match revenues. Insignificant profit.Price: Up to approximately USD 500 per handbag 2009 Estimates (no reliable records)Units 35 bagsRevenues USD 15,000Costs USD 12,000Profit USD 3,000
Current Customer Profile
Art Haute Couture
Volume Low
Margin Low
Full Cost High
Profit Low
Marketing Costs NA
Inventory Turn Rate Low
Product Assortment NA
Promotional Costs NA
Customer Demographics 35-65
Price Elasticity Low
Market Research
Marc by Marc Jacobs, I Heart Miss Marc Tee , 98.00 USDMARC by Marc Jacobs Miss
Marc Shopper, $148.00 USDMARC by Marc Jacobs Miss
Marc Mabel Tote, $188.00 USDCarlos Falchi Hand-Painted Python Clutch $965.00 USD
Conduct Broad Market Handbag Survey
Consider Potential Distribution Channels
Produce New Channel Profiles
Assess inventory levels/assortment within new distribution channels
Potential Distribution Channels
Department Stores
Trend Retailers
Museum Stores
Online Retailers
Luxury RetailersHigh-End
Department Stores
New Channel Profile• Museum Stores
Museum Stores Handbags Inventory
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
SFMOMA Museum Store
The Metropolitan Museum ofArt Store
New Channel Profile• Trend Retailer; i.e Urban Outfitters
Trend Retailer (Urban Outfitters) Handbags Inventory
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
New Distribution ChannelsMuseum Stores
Trend Retailers
Volume Med High
Margin Med Med
Full Cost Med+ Low
Profit Med High
Marketing Costs High Low
Inventory Turn Rate Low High
Product Assortment Tiered Tiered
Promotional Costs NA High
Customer Demographics 35< Teen+
Price Elasticity Low High
New Product OfferingMuseumStores
TrendRetailers
Assortment: 2-3 styles per seasonMid-cost materials and processes (quilted construction/design)Mid-cost artwork (craft focus)Specialty, weekend use (travel bags)No promotionsMid-level pricing
Assortment: 5-6 styles per seasonLow-cost base fabric (canvas)Low-cost artwork (screen prints)Functional, every-day use, trendyPromotionsCompetitive pricing
Financial AnalysisFinancials
Art Haute Couture Museum Stores Trend Assortment
MSRP $ 500.00 $ 155.00 $ 49.95
x Volume 78 800 5,200
Wholesale Price $ 76.50 $ 23.98
Full Cost $ 490.00 $ 41.95 $ 14.46
Product Cost $ 490.00 $ 23.00 $ 5.40
Screen Charge $ 3.20 $ 2.00
Pockets $ 3.00 $ 1.60
Finishing Costs $ 0.20 $ 0.15 Button/Zipper $ 1.00 $ 0.30 Freight 15% 15%Duty 8% 8%Marketing Costs 15% 0%Promotional Costs 0% 30%Margin - Retailer 2% 51% 52%Margin - WS n/a 45% 40%Rev $ $ 39,000.00 $ 61,200.00 $ 124,670.00 Profit $ $ 780.00 $ 27,638.40 $ 49,485.80
Pricing Structure
Pricing Structure
Profit Estimates
Profit Estimates
Recommendation
Art HauteCouture
Museum Stores
Trend Retailers
Product/Assortment
» Exclusive Design» High End
» 2-3 styles per season» Mid Level
» 5-6 styles per season» Low End
Price» Majority USD 500» 8% priced at USD 700
» USD 130 to 180 » USD 49.95