Mini factory marketing and roi
-
Upload
elaine-polvinen -
Category
Education
-
view
123 -
download
3
Transcript of Mini factory marketing and roi
Step One: The Market
Traditional retail store sales are built on serving the demographics of
the local store location. They must carry a wide range of products and
constantly promote price to compete with similar stores nearby. Their
key measurements of success are sales per square foot and gross
profit from volume.
Successful online stores are built on serving a specific customer
worldwide. They carry a targeted range of products with a specific
customer base. Their key measurements of success are gross profit
per item and frequency of return customer visit.
Retail sales target the neighborhood,
Online sales target the whole world…
The Market: Demography
Retail stores are built on communicating their sales proposition to the
general public and hoping that a segment of that audience is ready to
buy the item(s) that are in the promotion. This overkill is required
because they attract shoppers and then turn them into buyers.
Online stores are visited because the customer is searching for a
specific product. This product-based customer is looking for value and
quality they do not need conversion to become a buyer; they need to
find exactly what they want at a reasonable price.
Retail stores attract their customer
through advertising,
Online stores attract their customers
through product…
A retail apparel store must forecast its inventory well in advance. If the store
sells golf shirts it must also multiply the product by colors and sizes offered.
This requirement to predict the customer needs in advance creates a massive
supply to promote. Often price markdown is the only way to entice the
consumer to shop and then buy.
An online store using “Purchase Activated Manufacturing” (PAM) does not
forecast inventory. The unlimited selection of product range and the online
display of product choice from the virtual inventory are the keys to online
merchandising. Protecting the transaction margin is the overriding
mission of online marketing.
Retail Store: Supply and Demand
Online Store: Demand and Supply
Linking a Zero Inventory Production (ZIP) supply chain to a PAM selling
strategy creates the opportunity to produce a huge variety of products and
selling conditions. Since in the ZIP/PAM system product choice does not
create inventory risk, the proliferation of type, color, prints, features, fabric and
theme can be overwhelming. Enriching the online consumer experience and
providing an easy, organized selection process with a logical product offering
is critical.
The following Matrix tool is an excellent planning device to focus the product
offering.
Product selection should offer variety and
depth in every product category, while
protecting value and transaction
margin.
First: Choose the Styles
Second: Choose the White Fabric
Third: Choose the Theme, Print and Color
This Matrix has 1215 possible products… once the Matrix is
established, every block should be prioritized and preparation
started.
Product Matrix: Blanket
Projected Price & Costs
Retail Price COG Shipping GP License/Royalty Retail Site
Mini-Factory
Income Margin %
Retail Mfg. $32.00 $10.50 $3.00 $18.50 $1.92 $16.58 51.81%
Distribution Mfg. $32.00 $10.50 $3.00 $18.50 $1.92 $8.00 $8.58 26.81%
Product Matrix: Scarves
Retail Price COG Shipping GPLicense/Roya
ltyRetail Site
Mini-Factory
IncomeMargin %
Retail Mfg $42.00 $13.00 $3.00 $26.00 $2.52 $23.48 55.90%
Distribution Mfg $42.00 $13.00 $3.00 $26.00 $2.52 $10.50 $12.98 30.90%
Projected Price & Costs
Product Matrix: Sarong/Parea
Retail Price COG Shipping GP
License/Royalt
y Retail Site
Mini-Factory
Income Margin %
Retail Mfg $45.00 $13.00 $3.00 $29.00 $2.70 $26.30 58.44%
Distribution Mfg $45.00 $13.00 $3.00 $29.00 $2.70 $11.25 $15.05 33.44%
Projected Price & Costs
Product Matrix: Performance Jersey
Retail Price COG Shipping GPLicense/Royalt
yRetail Site
Mini-Factory
IncomeMargin %
Retail Mfg $45.00 $11.00 $3.00 $31.00 $2.70 $28.30 62.89%
Distribution Mfg $45.00 $11.00 $3.00 $31.00 $2.70 $11.25 $17.05 37.89%
Projected Price & Costs
Product Matrix: Designer Leggings
Retail Price COG Shipping GPLicense/Royalt
yRetail Site
Mini-Factory
IncomeMargin %
Retail Mfg $35.50 $9.50 $3.00 $23.00 $2.13 $20.87 58.79%
Distribution Mfg $35.50 $9.50 $3.00 $23.00 $2.13 $8.88 $12.00 33.79%
Projected Price & Costs
Product Matrix: Rash Guard
Projected Price & Costs
Retail Price COG Shipping GP License/Royalty Retail SiteMini-Factory
IncomeMargin %
Retail Mfg $60.00 $20.00 $3.00 $2.40 $1.20 $33.40 55.67%
Distribution Mfg $60.00 $20.00 $3.00 $2.40 $1.20 $12.00 $21.40 35.67%
Est. Mini-Factory Annual Income
Average Daily
Sale/Output in
Units
100 150 200 250 300 350 400 450 500
Leggings ($1,219,000) ($828,500) ($438,000) ($47,500) $343,000 $733,500 $1,124,000 $1,514,500 $1,905,000
Raglan Top ($1,010,000) ($515,000) ($20,000) $475,000 $970,000 $1,465,000 $1,960,000 $2,455,000 $2,950,000
Scarf ($1,076,000) ($614,000) ($152,000) $310,000 $772,000 $1,234,000 $1,696,000 $2,158,000 $2,620,000
Sarong/Cover-up ($1,010,000) ($515,000) ($20,000) $475,000 $970,000 $1,465,000 $1,960,000 $2,455,000 $2,950,000
Blanket ($1,296,000) ($944,000) ($592,000) ($240,000) $112,000 $464,000 $816,000 $1,168,000 $1,520,000
Rash Guard ($680,000) ($20,000) $640,000 $1,300,000 $1,960,000 $2,620,000 $3,280,000 $3,940,000 $4,600,000
Average Daily
Sale/Output in
Units
100 150 200 250 300 350 400 450 500
Leggings ($219,000) $171,500 $562,000 $952,500 $1,343,000 $1,733,500 $2,124,000 $2,514,500 $2,905,000
Raglan Top ($10,000) $485,000 $980,000 $1,475,000 $1,970,000 $2,465,000 $2,960,000 $3,455,000 $3,950,000
Scarf ($76,000) $386,000 $848,000 $1,310,000 $1,772,000 $2,234,000 $2,696,000 $3,158,000 $3,620,000
Sarong/Cover-up ($10,000) $485,000 $980,000 $1,475,000 $1,970,000 $2,465,000 $2,960,000 $3,455,000 $3,950,000
Blanket ($296,000) $56,000 $408,000 $760,000 $1,112,000 $1,464,000 $1,816,000 $2,168,000 $2,520,000
Rash Guard $320,000 $980,000 $1,640,000 $2,300,000 $2,960,000 $3,620,000 $4,280,000 $4,940,000 $5,600,000
Retail Net Pre Tax Income 1st Year
Including: Direct Cost of Goods, $1 Mil Cost of Factory, $1 Mil G&A Expense
Retail Net Pre Tax Income 2nd Year Including: COG, $1 Mil G&A Expense
Based on 220 days of Sales/Output