entrepreneurial businesses final project_final edition
TRANSCRIPT
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Final Project for Marketing, Advertising, and Sales Promotions for Entrepreneurial Businesses (X497.27) Spring 2014
Dan Mu, Mariana Alonso
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Executive Summary
● Kalifornia is a startup perfume company which selling LA style perfume to female customers
in United States. It will be launched on January, 1st, 2015. Our product objective is to generate
$2,000,000 in sales by the end of 2015. As a result, our price objective is to achieve 45% profit
margin by the end of 2015.
● Fragrance sales the previous year had benefited from higher-income shoppers who felt more
comfortable spending on others and themselves as the economy improved, but with no celebrity
must-have perfumes on the market in 2012, it suffered.
● In order to be competitive, we development design product lines which are more beautiful and
creative than others; we try to use various promotion methods to attract our potential customers
and increase our brand awareness. While we try to use innovative distribution channels to gain
more market share.
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Situation Analysis
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Market Demographics
Geographic:
● Lives in urban area
● Most of them are from big cities at west coast area
Demographics:
Age and Gender
● Female between ages 18 and 34 years old
Education Level
● High school to college degree or higher
Economic status
● Middle-income consumers who earns between $35,000 and
$70,000 annually
● If referring to a student who has no income currently, we
assume that she has a monthly budget on fashion shopping from
$100 to $500
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Psychographics:
• Values time and considers it their single most limited resource.
• Excited about accepting and using innovative ideas and products.
• Consistent Web users.
• Prefer the Internet over magazines and newspapers for information they trust.
• Increasing resources invested into beauty and c issues.
Behaviors:
• They are leaders in product selection and respond to the opinions of the “industry
experts” when making purchase decisions.
• They keep exercising every week; some of them are yogis and joggers.
• This group will first look to the Internet to acquire this information.
• They defend these decisions under most any circumstance and will adamantly “sell” those
that ask why they use the product or service and why they made the choice they did.
Market Demographics
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Marketing Persona
Meet Christina. She is 23 years old, college student. She is a
typical customer of NEW. To be on the cutting-edge of the fashion
trends, she has never satisfied with Amazon and eBay, even Gilt is
not her choice. Christina tends to find something different to label
herself.
Christina is an open minded, passionate, and optimistic
young woman. She is willing to share her moments to her friends. She
is expert at searching everything and she like to visit Pinterest,
Instagram and Tumblr...
Market Demographics
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● Companies today have a
CUSTOMER focus (or market
orientation). This implies that
the company focuses its
activities and products on
consumer demands.
.
● Market research for
competitors also is a key
factor in obtaining an
advantage over competitors
and is necessary in order to
determine market needs that
can and should be met.
● Market segmentation is the
division of the market or
population into subgroups with
similar motivation.
Market Needs
● With the appeal of niche fragrances in the
premium segment, affluent consumers appear
to have regained their interest in fragrances.
Premium niche fragrances that are sold in
limited distribution channels allow affluent
consumers to feel that they have made a discovery.
● There has been an explosion in the use of
scents beyond fine fragrances. As a result,
fragrances have lost their mystique and become
less “special” and commoditised.
● With more than 100 new launches of fragrances a
year, the glut of fragrances in the marketplace has
also created consumer confusion. The saturated
environment in fragrances has arguably contributed
to consumer confusion and apathy, making it very
difficult to make a brand stand out.
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Market Needs
Self-esteem
Unique Identity
Niche Market
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Market Trends
Social/Cultural trends A New Style of Fashion TrendCustomer Needs
Promising Individual Blogs Storytelling Content Sharing Era
● Young generation is used
to choose online
shopping
● They are willing to pay
more on differentiation
● marketing E-commerce
marketing is mature
● B2C model has developed
well
● Online shopping will
continue to grow
● Luxury good is not the only
option to be cool
● Independ Brand is the new
fashion.
● Celebrities outfit followers
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A new report by Global Industry Analysts expects the global fragrances and perfumes market to reach about $45.6 billion
by 2018, driven primarily by growth in under-penetrated emerging markets and innovative product launches as well as
relatively new growth areas such as men‟s fragrance.
According to the research report “Fragrances and Perfumes: A Global Strategic Business Report,” developed regions have
matured market profiles for fragrances and perfumes driven by the growing aging population, which uses perfumes and
fragrances less than younger groups. However, the report added that the “feel good factor” associated with fragrances and
perfumes coupled with increasing demand from young men and women, the men‟s fragrance segment, new product
innovation and growing popularity of celebrity fragrances are the major factors triggering growth in the maturing
markets.
By segment, women’s fragrance have been traditionally leading the overall market and is expected to continue to
generate strong demand over the coming years thanks to innovative products. Following the change in perceptions
towards the importance of male grooming and smelling good, the men‟s fragrance segment is expected to exhibit greater
growth than ever before. In addition, the growing importance of grooming among teenagers and young adults is also
expected to boost market prospects in the coming years.
Market Growth
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SWOT Analysis
STRENGTHS
● Flexibility on R&D
● High quality products
● LA theme
● LA/California pride
OPPORTUNITIES
● Local business
● New generation self-esteem
● E-commerce is hot
● Self-identity
● Distribution channels‟ expansion
WEAKNESSES
• Not fully aware of the US target consumer
behavior and their preference
• Lack of cash
• Fledging distribution channel
• New brand in the fragrance market, no
brand awareness
THREATS
● Low barrier to entry
● A lot of competitors
● Current economy is not so good
● The perfume market is not thrive
● Marketing expense with expansion
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Competition
Company Lady Gaga Fume 212 Jo Malone Kalifornia
Women X X X X
City Theme X
Celebrities Elements X X
Local Manufactory X
Unique Identity X X X X
Product Lines X
Green (Replacement) X
Trending Elements X X X
Free return X X
Competitor Matrix
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Competition
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Services Offered
Value PropositionKalifornia offers not only perfume but also an attitude towards LA
style for female customers. It represents free and wild fashion style as
well as the spirit of California. Kalifornia is a great company to discover
the most exciting truth of your life. Kalifornia offers fresh, delicate, and
elegant perfumes to fulfill your dream.
Positioning Statement
California dream with Kalifornia
Customer Service(Trends Coach) + One Year “Style” Warranty
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Keys to Success
Unique Selling Proposition (USP): ● Kalifornia is a fruity fragrance combining LA style and attitude, it is for confident women who
like to live a glamour life
● Being a true Kalifornia is all about a Hollywood glamour’s life, a balance of party, friends and
connections. The Kalifornia bottle is an object of desire, refined and feminine in shape
Product: Elegant fragrance +LA Style
Price: Mid-upper range of the price
Promotion: Advertising Mix + Event+ Social Media+PR
Place: Online + Offline
Differentiation
on 4Ps:
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Bargaining Power of Supplies
Threats of New Entrants
Threats of Substitutes
Bargaining Power of Buyers
Rivalry Among Existing Competitors
•Hard to monitor the products quality
•Timeline of each product line
•Manufactory competition
•Instability of cost
•More choices,e.g. Dior, Chanel
•Price preference
•Distribution cost
•Creative industry grows
•Fixed cost on import products grows
•Diversity of rivals
•Brand identity
•More entrances
•Distribution channel
•Capital requirement
•More entrances
•Distribution channel
•Capital requirement
Critical Issues
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Market Strategy
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Kalifornia offers not only perfume but also an attitude towards LA style
for 18-34 years old female customers. It represents free and wild
fashion style as well as the spirit of California.
Kalifornia is aim to be a great company to discover the most exciting
truth of your life. Kalifornia offers fresh, delicate, and elegant perfumes
to fulfill your dream to differentiate its product and build brand
awareness among its potential customers.
Mission
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Sales Promotion Objectives
S.M.A.R.T.
Objectives
● To generate $3,600,000 in sales by the end of 2015 (0.03%
of market share)
● To achieve $2,160,000 gross profit by the end of 2015
(equals to 60% profit margin)
● Increase brand awareness from 0%-30% by various
promotions methods by the end of 2015
● Develop 4 more distribution channels and expand our
distribution to different states by the end of 2016
● To gain 0.06% market share for stationary by 2017
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Sales & Advertising Plan
MONTH PERIODS (WHOLE YEAR 2015) 1 2 3 4 5 6 7 8 9 10 11 12
Social Media(Facebook/Instagram/Vine etc.) X X X X X X X X X X X X
Beauty/ Fashion/Trends Magazine Advertising X X X X X X X
Website/Facebook/Email Advertising X X X X X X X X X X X X
PR Events with Samples or Bounce Back Card X X X X X
Seasonal Discount X X X X X X
In-store Education (Fashion Coach) X X X X X X
Long Term: Education+Brand Awareness
Short Term: Gain Profit
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Initial Investment: $2,500,000
Generating $3,600,000 in sales by the end of 2015 (0.03% of market share)
Achieving $2,160,000 gross profit by the end of 2015 (equals to 60% profit margin)
Achieving break even when selled 833 pieces perfume
Achieving a 10% growth in overall sales which means an extra $360,000 in revenue by
the end of 2016
Financial Objectives
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Girls/women, age 18-34, middle-high
income, urban, living in US, interested in
luxury, Hollywood and celebrities lifestyle, really
care about their appearances, follow the fashion
trends and consumes magazine about
celebrities..
Target Markets
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Positioning
Fashion+
Fashion –
Price – Price +
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MARKETING MIX
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Marketing Mix-Product
1. Objective
Since the US market Annual US perfume industry sales revenue $5.2 billion,(suppose they have 45%
profit margin),1,160 perfume brands carried by US department stores in 2010. So the market size is
$12 billion. Our product objective is to generate $3,600,000 in sales by the end of 2015. (0.03% of
market share)
2. Strategy
Differentiated & Concentrated
3. Tactics
Features – Jasmine, Wood, White Water Lily, Tonka Bean, Pear
Style – Delicate. Joyous. Bold. Lovely Design – Combination of dream of LA and Hollywood
Branding – Kalifornia Packaging – White paper box with lace decoration
Warranty – One year warranty
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PACKAGE DESIGN BOTTLE DESIGN
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Marketing Mix-Price
1. Objectives
Since our product objective is to generate $3,600,000 in sales by the end of 2015, our price objective is
to achieve $2,160,000 gross profit by the end of 2015 (equals to achieve 60% profit margin)
2. Strategies
Market Skimming + Market-oriented Pricing
Kalifornia has unique product in the current market; so we use skimming price strategy to collect the
money as soon as possible; Setting a price based upon analysis and research compiled from the target
market. This means that marketers will set prices depending on the results from the research
3. Tactic
List Price: Retails $ 69.99(100ml)
Discount: 1) Quantity discount 2) Seasonal discount
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Marketing Mix - Promotion
1. Objective
Since our product objective is to generate $3,600,000 in sales by the end of 2015 and our product price is
$69.99, our mission is to sell 51,428 products in total. As a result, we need to get 25,714,285
(51,428*500) times of exposure in all kinds of media channels
2. Strategy
Using advertising mix, public relations, promotional programs, and events to attract our potential
customers
3. Tactics
Social Media
•Youtube
•Vine
Publicity/PR
•Fashion Magazines
•Beauty /Fashion Blogs
•Websites
•Celebrities
Advertising Mix
• Magazine Print Ads
•Google Ads
•Facebook Ads
•Email Push
•Bounce Back Card
Promotional Events
•LAX Airport Tax Free
Shop
•LA Film Festival
•LA Music Festival
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Kalifornia
LOS ANGELES
2014
MAGAZINE/PRINT AD DESIGN
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California dream with Kalifornia
California Dream with KaliforniaBOUNCE BACK CARD
SOCIAL MEDIA POSTS
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Marketing Mix-Place1. Objective
To accumulate 4-5 intermediaries between producers to consumer in our distribution channel
2. Strategy
Using a hybrid channel strategy for distribution
3. Tactics (Channel Design)
Agents/Brokers
Building sales representative team of 3 people for negotiating with retailers
Wholesalers
Establish agreements with wholesalers across Southwest to expand our current channels
Distributors
Establish agreements with those distributors who distribute products to Sephora, Ulta, Nordstrom‟s and other
perfume stores( LAX Airport) in LA in the first 12 months
Retailers
Establish agreements with distributors across Southwest for supplying inventory to retailers
Direct Distribution
Open official online store
Amazon/ Ulta store online
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Marketing Research
●Pretest & Posttest with Benchmark (Advertising & Sales)
●Qual & Quant Methods
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Marketing Research
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INTERNET STRATEGIES
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Facebook (1-2 posts/day)
•Good for conversation/ engagement
• Post promo videos.
• Promo pics.
Instagram/Pinterest (1 picture/day)
•Images of LA, quotes
• Our perfume Ad
• Promo pictures
• Pictures of customers with the perfume.
•Images of celebrities, quotes
Twitter (1-3 posts/day)•Direct conversation with the costumers.•Reply and RT costumer tweetsYoutube/Vine:•Release a „cool video‟ with diverse content once a weekContent could be, fragrance commercial, behind the scenes of photoshoot/commercial, promo videos.•Encourage customers to subscribe, embed, share, like and comment
Beauty/Fashion/Trends Blog (1 picture/day)
•Educate customer
Internet Strategy
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FINANCIALS
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Fixed Costs:
$3,800(warehouse) +,depreciation of its assets (25,000), + executive salaries ($ 30,000) =$ 58,800
Variable Costs:
(Material )$ 4 + (Factory Labor)$ 2+ (Sales Commissions)$1 = $ 7 per unit
Unit Price:
The perfume is priced at $69.99 each
Given this information, the breakeven point:
Fixed Costs/Price - Variable Costs
$58,800/$69.99 - $7= 833 units
Break-even Analysis
$
58,301
833
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Sales+Expense Forecast
Sales Forecast Expense Forecast
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CONTROLS
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Start by getting the Kalifornia name out there targeting opinion leader’s
(beauty, fashion bloggers/vloggers) providing samples and other promotional
material, they’ll tell their large clique of people about your product, who’ll tell
their large clique of people, and so on.
Product samples: We will offer free samples for customers on our website and
in your stores.
Ads on magazines: We will do ads on fashion/beauty magazines.
Call Up distributors like Sephora, Ulta..etc to sell our products at retail value
Implementation
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SIX MONTHS MARKETING MIX WITH BUYING CYCLE
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Marketing Organization
Kalifornia MKT Organzation
Strategic
Manager
Public Relations
Manager
Marketing
Research Team
Advertising/
Creative Team
CMO
Customer
Service/ Sales
Team
Product
Management
Mariana Alonso Dan MuDan Mu, Mariana Alonso
Dan Mu
Dan Mu, Mariana Alonso
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Re-structuring our marketing objectives+financial objectives
Focus on different target audience through consumer research
❏ Lower Prices
❏ Different distributors options
❏ See other promotions options/Focus on Sale Online
❏ Change products features
Contingency Plan
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Thank you!