The company has developed a strategy that will ensure the long-term growth and success of ReHabiliments in the apparel industry. This strategy will continue to evolve and initially includes:
The debut of the FUBU Corporation in 1992 was based upon the a slogan, "For Us, By Us" (FUBU), that expressed the founder's purpose of creating a line of popular clothing designed for African-Americans, by African-Americans. At the time of FUBU's inauguration, numerous clothiers were targeting black consumers for their urban wear; however, none of these companies was black-owned or operated. The company's earliest collection consisted of T-shirts, rugby shirts, hockey jerseys, and baseball caps, all embroidered with the FUBU logo. By 1999, the company reported an annual sales volume of $200 million from its menswear business and $150 million from its licenses. What had originally begun as a clothing line for African Americans had developed into a multi-cultural base of customers, all wearing FUBU's clothing.
The underlying foundation of ReHabiliments, and its clothing line is based upon the principle of harmony - harmony of thought, harmony of purpose, and harmony in humility. The company's name, ReHabiliments, and its clothing line, ReHabiliments Apparel, are competitive advantages in themselves. The name is not attached to any particular group of customers, which allows the company entry into different segments of the apparel industry. Another competitive advantage stems from ReHabiliments' partnership with the entertainment industry and the use of mainstream celebrities in advertising and promoting the company.
In a market where consumers are barraged by advertising and marketing campaigns delivering an onslaught of lifestyle and fashion messages, a brand name is a powerful weapon. Established brand names, with a quality image, make the consumer's shopping experience easier and faster. For manufacturers, brands build consumer loyalty, which translates into repeat business.
People want to think of themselves as belonging to a group that they admire or respect, and will dress as they think a member of that group would dress. Although they may believe their object is to reflect their individuality, the differences they stress in choosing a clothing style are really between their own chosen group, and all others.
The "message" of clothing is therefore directed primarily to its wearer. People associate the way they dress with the way they feel. For many individuals, their choice of clothing may not be the most becoming outfit they could wear; however, they are expressing their membership in a class of other people with whom they feel a connection, expressing it to themselves and to whomever may be looking.
ReHabiliments' marketing strategy is based on the following:
ReHabiliments' brand and marketing message are not directly attached to any particular group of customers, but rather to a diversified community of consumers who believe in humanitarianism and equal opportunities and choices for everyone. The company does not simply offer products that clothe the body, but rather products that clothe the soul - clothing that supports people, either directly or indirectly, through difficult situations.
The company's primary marketing strategy is to establish itself as the "Apparel Company of the Future." With management's deep roots in humanitarianism coupled with a firm belief in harmony and honesty in business and advertising, ReHabiliments will greatly increase the marketability of its apparel line.
ReHabiliments' pricing strategy remains competitive with all other high quality apparel companies , but offers much more in terms of meeting the company's mission and purpose for existing. As a general rule of thumb, 50% of each garment's cost is consumed in actual manufacturing, divided among labor and materials. The other 50% is allocated overhead and shipping expenses.* Average mark-up is 40% of cost.
Currently, all of the company's products are on target in price, as compared to other similar branded apparel. ReHabiliments with regularly monitor its operating expenses, delivery costs, cost of sales, trade discounts offered, damage allowance, hazards, and other variables to ensure that the company's pricing strategy remains competitive with industry standards and expectations.
*Note: overhead includes non-payroll operating expenses as well as purchase and replacement of production equipment, included here as part of start-up assets.
ReHabiliments' brand is a competitive advantage in itself, as it is not directly attached to any particular group of customers and allows entry into different segments of the apparel industry. In addition, the company has an established marketing strategy that relies upon celebrities, market specific advertising, product promotion, and "giveaways" that have established ReHabiliments' presence in the apparel industry.
ReHabiliments will depend upon several promotion strategies to reach new customers. These strategies include:
The primary distribution channel in the apparel industry is still the bricks and mortar store, augmented by catalogues and direct selling. The incredible success realized by other industries in Internet e-commerce has not followed into apparel. Existing limitations from product licensing and distribution agreements to fit and trial issues have stunted the growth of the industry in the Internet space. The most successful players tend to be those with a 'click and mortar' strategy such as The Gap, or those companies with a strong background in catalogues and direct selling such as Lands' End. The fit and trial issues and difficulties with color and texture perception on computer monitors, however, continue to be issues that keep Internet sales relatively low compared to the total market for companies. Another area to see some success is that of off-price and discount clearing houses like Bluefly. This is an example of how the inefficiencies of the existing industry model for apparel has spawned a whole new category of retail both on-line and off-line in factory outlets and clearing houses.
ReHabiliments has several potential methods of penetrating the Tri-State Area market. They are, from least resource-intensive to most resource intensive:
ReHabiliments will begin with options 1 and 2, above, and open a store when we have the available resources and growth to warrant it. For now, the company plans to use a direct sales force, the entertainment industry, retailers, and the Internet to reach its target markets. These channels are most appropriate because of time to market, reduced capital requirements, and fast access to established distribution channels.
For men, women, and children seeking clothing with style, selection, differentiation, and "substance," ReHabiliments offers a unique clothing line that is affordable, trendy, exclusive, and fashionable while meeting both the physical and emotional needs of the consumer. Unlike ReHabiliments' largest competitor, FUBU Corporation, the company offers affordable, trendy "ReHab Your Wardrobe-ReHab Your World" clothing that promotes the principle of harmony and dedicates a portion of the company's clothing proceeds towards ongoing humanitarian efforts.
ReHabiliments' sales team will be tasked with generating sales leads on a local, regional, and national basis. They will also be responsible for establishing connections with other wholesaler and retail outlets.
A key factor in the success of ReHabiliments will be its distribution. The company plans to use the following retail distribution channels:
Consumers buy apparel from a variety of retail outlets. In 1998, discount, off-price, and factory outlet stores accounted for 30% of apparel sales, specialty stores accounted for roughly 22%, department stores for 18%, and major chains for 17%, according to data from NPD Group Inc. The remaining 13% was sold through mail order and other means.
Differences exist in the distribution mix for men's, women's, and children's items. For example, more women's apparel is purchased in specialty and department stores than is the case for men's apparel. Men's apparel is more prevalent in discount stores and general merchandise chains. In the children's segment, a considerably higher portion of apparel is purchased in discount stores.
Catalogues are another important method of distribution. Consumers have less time to shop, and for some, catalogue shopping offers a more convenient and pleasant alternative. In 1996 (latest available) an estimated 13.3 billion direct mail catalogs were printed in the United States - more than 50 for every man, woman, and child in the nation. According to NPD Group, approximately 6% of apparel retail sales were through direct mail/catalogs in 1998, representing a 29% decline from 1997.
The distribution channel that has received the most attention recently is the Internet. Although it now represents only a small portion of apparel sales, this distribution channel has the most potential for growth. Consumers like the convenience of being able to shop from anywhere and at anytime they wish. Manufacturers with websites use them for marketing and informational purposes. With expected technological advances in hardware, software, and data pipelines in the future, shopping for apparel should gain popularity.
Currently, however, due to technological and infrastructure limitations, consumers are not fully satisfied with the speed, quality, security, and cost of Internet shopping. Another hindrance to wider acceptance is the fact that consumers cannot see and touch the product. Although some manufacturers have started to sell directly to consumers on the Internet, many of them are being cautious not to alienate their retail (brick-and-mortar) customers. ReHabiliments expects these issues will be resolved eventually, which will make the Internet an important method of distribution in the future.
The following table shows our projected yearly Sales revenues. Cost of Sales here represents only inventory purchases (including shipment of inventory from abroad); totals for labor, shipping, and overhead can be found in the Profit and Loss statement.
We anticipate moving a higher number of products through wholesale contracts with retailers, but the higher price we can charge with direct sales (Internet and, eventually, retail) means the revenue streams from these lines will be roughly equal. We are forecasting 50% of sales values on a cash basis, and 50% as accounts receivable.
ReHabiliments currently has strategic alliances with both Music Records and the Entertainment Group. These alliances are critical to the company's marketing strategy, as they provide the exposure for the company's apparel line and associate ReHabiliments' products with celebrities. Celebrities are valuable strategic allies, as they receive free apparel for their participation in interviews, concerts, and music videos.
Current and potential product line representation and advertising contracts are as follows:
In addition, ReHabiliments has a promotional collaboration with one of the hottest disc jockeys in America, "Degas VanGO." He travels throughout the world entertaining listeners, aged 13 to 40, on New York Radio 107.5 WBLC, FM. Degas VanGO has his own radio show and is very well known. He is well connected in the music industry, which is one of ReHabiliments' primary target market areas, and has used his connections to forge a relationship between ReHabiliments and Virgin Records America, Inc.
Through our affiliation with Degas VanGO, Virgin Records has allowed ReHabiliments to use their famous logo on promotional items, such as leather jackets, hats, and T-shirts. This affiliation sends a very powerful message to investors and customers alike.
ReHabiliments has the earning potential to become the fastest growing, most universally accepted clothing line since FUBU. The partnership with Degas VanGO is the golden key to countless hundreds of thousands of dollars in sales, as well as a direct promotional channel.
The following table lists important program milestones, with projected start and finish dates, the names of the individuals in charge of completing each milestone, and budgets for each milestone. The milestone schedule indicates the company's emphasis on planning and implementation of the business.
What the table doesn't show is the commitment behind each milestone. ReHabiliments' business plan includes complete provisions for plan-versus-actual analysis, and the company will hold monthly follow-up meetings with key management to discuss any variances and to plan a course of action to resolve those variances.