Strategy and Implementation Summary
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:
- Focusing on target markets and aggressively marketing the full-range apparel collection as an alternative to existing clothing lines.
- Differentiating the company’s products through exclusiveness and brand awareness, thereby fulfilling the promise of “ReHab Your Wardrobe-ReHab Your World.”
- Developing partnerships with both industry leaders and competitors. In this manner, the company can neutralize its competitors by treating them as allies.
- Building a relationship-oriented business that fosters long-term seller/customer relationships, not “single-transaction” deals.
- Fostering social responsibility within the company through commitment to programs that transform the lives of the less fortunate. In support of this strategy, ReHabiliments donates 5% of all proceeds towards “Feed the Children” and other charities.
5.1 Competitive Edge
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.
5.2 Marketing Strategy
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:
- Product differentiation based upon “ReHab Your Wardrobe-ReHab Your World.”
- Building a relationship-oriented business.
- Fostering corporate social responsibility.
- Focusing on the diversified “communities” as the company’s target markets.
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.
5.2.1 Pricing Strategy
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.
5.2.2 Promotion Strategy
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:
- Advertising – ReHabiliments will utilize industry-wide apparel magazines and newsletters as primary sources of advertising.
- Magazines/Newsletters: Industry magazines and newsletters are considered to be effective advertising media because they consistently reach the company’s target markets. Because magazines and newsletters are tangible media, they help advertisers relate intangibles, such as believability, quality, and prestige. These types of media are non-intrusive, quiet, personal vehicles that usually have a long life. Their primary audiences pass them along to secondary readers, so that their reach builds over long periods of time, making them a long-term investment.
- Direct Mail – ReHabiliments will explore the benefits of incremental, coordinated, direct mail campaigns which ensure that the company’s advertising is:
- Targetable: When using direct mail, each customer is carefully selected. This enables ReHabiliments to “speak” to the customer in their own language and about their individual needs. In addition, the company can time its direct mail efforts to coincide with critical points in the customer’s buying cycle.
- Efficient: Direct mail ensures that ReHabiliments knows that every dollar spent is being directed at people who are genuine prospects for the company’s services.
- Flexible: Direct mail is capable of handling a variety of advertising or marketing tasks. In addition to being able to sell directly, it is a medium that can deliver a sample right to the customer regardless of whether the sample is an actual product or a demonstration of a product.
- Measurable: With a direct mail campaign, there is no guesswork when it comes to the results and virtually no waiting – when ReHabiliments has a winning product, management will know immediately!
- Accountable: As responses pour in, the value of the direct mail campaign speaks for itself.
- E-Mail – ReHabiliments’ e-mail campaign will extend the company’s marketing reach and visibility with minimal resource allocation. As ReHabiliments builds its customer database, it will gather e-mail addresses with opt-in permission to contact current customers and prospective customers via e-mail and other electronic means. Many of the benefits of a direct e-mail advertising campaign include:
- Great Direct Response Vehicle: If the customer is receiving the e-mail, the customer has already demonstrated his/her interest in the content they are receiving.
- Timely: E-Mail is the perfect tool for targeting specific dates.
- Placement: ReHabiliments’ advertising will have little competition.
- Media – ReHabiliments will initially develop a local media campaign, including radio and television, built around service innovation. This campaign will begin with a “Who We Are” statement and be supported by other advertisements that reinforce the company’s marketing message to consumers of casual, active, and sports apparel.
- Radio: One of radio’s greatest strengths is its ability to deliver a marketing message to a selective audience. The media is portable, free, and very accessible – at least one radio exists in most American homes. ReHabiliments’ radio campaigns include advertising with WMCA 570 and WWDJ 970, which are two of the largest radio stations.
- Television: Nearly 31% of total TV households watch prime-time television (ABC/NBC/CBS affiliates), a share change of 38.8% since 1985-1986. People spend more time with TV than with any other medium, which due to its sight and sound uniqueness, creates awareness, interest, and desire. Executed properly, ReHabiliments’ TV campaign will lend prestige and glamor to the company’s marketing message.
- Cable Television: Cable television service is available to 95% of all television households in the United States, and about two-thirds of all television households subscribe to it. Most of those systems offer at least 30 channels (57% have between 30-53 channels and 13% have 54 of more channels).
- Trade Shows/Trade Fairs – ReHabiliments will actively participate in industry and Chamber of Commerce trade shows to promote the company’s products. By taking advantage of trade show participation, the company enhances its opportunities to learn, grow, and connect with potential clients and other businesses in the apparel industry. Trade Shows/Fairs are a marketing tool for communication promoting dialogue between retailers and manufacturers and will allow the company to exploit its unique clothing line to a concentrated group of buyers.
5.2.3 Distribution Strategy
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:
- Sell directly to stores or contact buying offices to be placed on their lists.
- Present the company’s merchandise at trade shows or hire a sales representative.
- Open a store.
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.
5.2.4 Positioning Statement
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.
5.3 Sales Strategy
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:
- Supercenters, such as Wal-Mart
- Department Stores, such as Dillards and Foley’s
- Apparel Specialty Stores, such as The Gap
- Boutique Clothing Stores
- Internet Store
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.
5.3.1 Sales Forecast
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.
|Year 1||Year 2||Year 3|
|Direct Cost of Sales||Year 1||Year 2||Year 3|
|All Product Lines||$1,112,432||$1,991,187||$2,127,732|
|Subtotal Direct Cost of Sales||$1,112,432||$1,991,187||$2,127,732|
5.4 Strategic Alliances
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:
- Infinity Broadcasting
- WMCA 570 & 970 DJ
- Crystal Blue Media
- K’s Corporation, Japan
- Shop America Network, Inc.
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.
|Milestone||Start Date||End Date||Budget||Manager||Department|
|Develop Corporate Logo||3/1/2000||3/31/2000||$335||M. Culvert||Marketing|
|Subscribe to Relevant Industry Publications||1/1/2001||6/1/2001||$1,000||M. Culvert||Marketing|
|Research and Join Industry Associations||1/1/2001||12/31/2001||$2,000||M. Culvert||Marketing|
|Research Target Market and Identify Potential Customers||1/1/2003||12/1/2003||$0||M. Culvert||R&D|
|Develop Corporate Website||12/1/2003||2/1/2004||$5,000||M. Culvert||Marketing|
|Develop Business Plan||11/5/2003||2/28/2004||$850||M. Culvert||R&D|
|Hire Support Staff||3/1/2004||3/31/2004||$78,650||M. Culvert||Personnel|
|Secure Start-Up Investment||3/1/2004||3/31/2004||$0||M. Culvert||Finance|
|Establish Print Advertising Campaign (e.g., Newspaper, Industry Publications)||3/31/2004||4/30/2004||$35,000||M. Culvert||Advertising|
|Establish Media Advertising Campaign (e.g., Cable, TV, Radio)||3/31/2004||4/30/2004||$7,000||M. Culvert||Advertising|
|Establish Bookkeeping and Finance System||3/31/2004||4/30/2004||$1,000||M. Culvert||Finance|
|Hire Garment Production/Factory Staff||3/1/2004||5/1/2004||$196,282||M. Culvert||Personnel|
|Hire Corporate Officers||4/1/2004||6/1/2004||$136,946||M. Culvert||Personnel|
|Establish Internet Advertising||2/1/2004||6/1/2004||$0||M. Culvert||Advertising|