i. EXECUTIVE SUMMARY
It’ll be Denim is an organic denim clothing line headquartered in Uk that currently focuses exclusively on locally producing a slim fit, straight fit, and regular fit line of jeans for men and women. Founded by Elena Horowitz, a retail industry veteran with experiences at JCrew, the Gap, and Levi’s, and James Foster, a serial entrepreneur, the duo is out to bring socially conscious fashion to the masses. Currently selling online and through partnerships with a handful of local boutiques in uk, the company is projecting to sell upwards of $400,000 in year 1 and reaching $750,000 in 3 years. Plans for expansion include setting up distribution and manufacturing relationships in New York, another fashion centric goldmine where the company aims to gain greater market penetration. With an emphasis on environmentally responsible fashion, I’ll Be Denim will also be starting a jeans recycling program where consumers will be able to ship or drop off old pairs of jeans and have them used in the manufacturing process for new ones.
Industry research has found that US consumers own on average 7 pairs of jeans and stick to one brand based one one important variable, fit. Given that statistic the company’s designs center around providing the best fit, with a tagline of “denim so good, you’ll never take your clothes off”. To further take advantage of this insight, I’ll Be Denim will be launching a custom tailor option where users will be able to request custom fit jeans through an online portal. The primary competition comes from three foreign brands namely Kuyichi, Hiut Denim, and Nudie Jeans, all which have been committed to sustainable fashion since the onset and are huge advocates for the organic cotton movement. The brand value proposition and differentiation will come from being an American brand with images of patriotism and ruggedness that shows both fashion forward thinking and a concern for the environment.
Primary means of marketing will be online through analytic-driven approaches like SEO and paid search, in addition to capitalizing on social channels like Instagram, Facebook, Twitter, and Pinterest. User generated content and engagement will be key as product pages will include Instagram photos and promote consumer pride in our products. The organic cotton will be sourced from two mills, one based in Turkey and the other in Japan where it will be transformed to denim and dyed in natural indigo colors and shipped to our manufacturing and shipping partner DenimsR’Us in LA. Day to day operations are handled through an office in LA with a second office in New York to be opened in a years time. The company has been funded through the two founders, their family and friends, alongside some private investment.
The company is a completely fictional organic denim and apparel company, however, we make sure the industry research is grounded in real world numbers as much as possible. ii. Situation analysis
I’LL BE DENIM OBJECTIVES
IV. Objectives (financial, marketing, societal)
I’ll Be Denim is currently selling denim jeans online through its Shopify ecommerce store shipping primarily within Southern California with market penetration in New York, another in addition to sporadic orders north of the border to Canada in Toronto and Montreal. It also currently partners with two local fashion boutique stores focused on selling eco-friendly apparel that looks and feels good. The company is laser-focused on growing its sales and operations as broken down in the two phases listed below: PHASE I (NEXT 6 MONTHS)
Increase online sales by 20 percent by end of year through influencer and social media marketing tactics Partner with 3 additional local high-end fashion boutiques with shared values as distribution channels Increase online social presence on Facebook, Twitter, Instagram, and Pinterest by 30 percent Build out a “custom apparel” line of the business giving online consumers the ability to create their own denim jeans and jackets PHASE II (NEXT 12 MONTHS)
Explore possibility of brick-and-mortar operations through testing pop-up stores in LA region Create strategic partnerships with local fashion boutiques in New York for distribution in the area Scope out local manufacturers in New York area for quality production with aim of opening operations for denim jackets as the next product line and increased delivery within region Initiate a jean recycling program whereby consumers will be able to deposit their denim and have them be reused in the creation of new jeans
Elena Horowitz is an award-winning fashion designer who graduated from the Rhode Island School of Design and worked at top retail brands like J Crew, the GAP, and Levi’s for the past 15 years. Fed up with the lack of speed with which most retail brands were moving towards embracing eco-friendly means of production, she decided to quit her job and start I’ll Be Denim. She serves as Chief Design Officer (CDO) and works with partner manufacturers to ensure quality of product. James Foster dropped out of the University of Berkeley after finding success with his first online store selling fertilizer and garden equipment with his college roommate. After successfully exiting the company, he went on to hold operational positions in management for a slew of ecommerce companies before meeting Elena at a party and hitting it off. The two discussed their guilt over buying from traditional fashion brands and decided to combine forces to launch their own label. He serves as the Chief Executive Officer (CEO) and oversees all supplier relationships, business logistics and strategic partnerships.
I’ll Be Denim is a denim clothing line based out of Los Angeles focused on bringing the highest quality organic denim wear to North America. Founded by reputable designer Elena Horowitz and business partner James Foster in October, 2012 with the duo having gone from a small basement operation in Elena’s home to successfully launching their online store and scaling their operations. After both founders worked for several years in the retail and fashion industries respectively, one thing became increasingly clear to both of them, the industry is in the midst of a deep moral and ethical crisis. With cheap labour being continuously exploited with abysmal working condition overseas and traditionally manufactured cotton using upwards of 25 percent of the world’s entire agrochemicals consisting of unimaginable amounts of insecticides and pesticides, Elena and James decided enough is enough.
The duo’s vision for I’ll Be Denim is simple, fashionable denim wear made with organic materials that’s manufactured locally and created with the intent to make the fit so comfortable that you’ll never want to take their clothes off. To achieve such a grand vision, the company is committed to providing the best in class customer service in addition to working with only the most detail oriented local manufacturers and promoting eco-friendly fashion to the mainstream. The guiding values and principles for the company are “guilt-free fashion” (letting customers purchase high-quality apparel without shutting out their conscious), “the denim is in the details” (working with only the best local production factories), and “eco is not a fad, but our last chance” (sourcing organic denim from certified suppliers).
CURRENT COMPANY STATUS
I’ll Be Denim was incorporated in October, 2012 and operates as a partnership between Elena Horowitz and James Foster. All company shares are held by the founding duo. Since sourcing, manufacturing, and selling out of Elena basement to friends, family, and through local boutiques, the company has grown to have it’s own online store, relationships with suppliers of premium organic denim in Turkey, and local manufacturers in LA. The company has had its revenues double every two months.
III. Segment – targeting & positioning (marketing intentions)
With our initial line of slim fit, straight fit, and regular fit denim jeans, we’re looking to target the following consumer segment: AGE: 17-35 SOCIAL MEDIA SAVVY: Voraciously active on popular social networks like Facebook, Twitter, Instagram, Pinterest, and Tumblr FASHION FORWARD: With a keen eye on their day to day wear, these male and female fashionistas dress to impress ADDICTED TO MOBILE: They Instagram their food, check their Facebook status while waiting in line, and tweet every traffic disruption they experience. ECO-FRIENDLY: They feel a pinch everything they know their clothes were manufactured unethically or are aware of the eco-footprint they have by consuming clothes made with regular cotton LOCATION: The beachheads for the company will be LA and New York, however, with the ability to shop online, we’ll heavily promote ourselves throughout southern California
SEO: Our content and blogging efforts will be targeted at having us rank competitively for keywords like “organic denim”, “organic jeans”, and “eco-friendly garments” PAID SEARCH: We will invest in both Google Adwords and Facebook Ads to take advantage of their PPC services with optimized landing pages for conversion INSTAGRAM: We will launch campaigns and contest to encourage user-generated images which we will then upload to our product pages to build a community around our brand and the values we stand for OTHER SOCIAL MEDIA: We will subcontract a community manager to regularly engage our Facebook, Twitter, and Pinterest communities PR: We will promote our story, values, and fashion to leading fashion blogs and print magazines emphasizing our earth-friendly and ethically manufactured clothing BUSINESS DEVELOPMENT: We will actively look for the most popular local fashion boutiques frequented by our target market that shares in our values and beliefs Another point to highlight is our focus on customer service with a 100 percent “fit satisfaction” guarantee or reimbursement for any alternations, in addition to a complete refund policy effectively in place. DAILY OPERATIONS
For our day to day operations, I’ll Be Denim has established several key partnerships that ensure long-term durability and the ability to scale alongside demand for our goods. We will source the best organic cotton from two suppliers, one located in Turkey and the other in Japan which means that their supplies were produced without the use of any pesticides and was dyed in indigo using a natural means. Once the shipment arrives in the US, it’ll be routed to our production and shipping partner, DenimsR’Us located in the outskirts of LA who the company will work closely with to ensure quality through regular checks and audits. It is also where the products will ship out of through an integrated backend system and order processing mechanism. The I’ll Be Denim office is located on 2029 Century Park East where the two co-founders in addition to two admin and one sales and marketing support staff will work out of handling all online order processing and ensuring the purchase to delivery of their denim products runs smoothly. It’s also where all requests for refunds will be handled in addition to the future launch of the jean recycling program.
MARKET SIZE AND DEVELOPMENT
A recent report looking at the Global Denim Consumption and Production through the years 2011 to 2021 by Denimandjeans.com found that in 2007 the world jeans market was worth an estimated $51.6 billion and is at pace to grow to $56.2 billion by the year 2014. The report also revealed that North America consumes an estimated 39 percent of denim purchased worldwide while more than 50 percent of production is still based in Asia, specifically in countries like China, India, Turkey, Pakistan and Bangladesh. Another report that focused exclusively on the denim consumption habits in the US found that an average US consumer owns 15 denim garments on average, 7 of which are pairs of jeans. Out of all apparel purchased denim makes up 17 percent which explains why it continues to be the highest selling clothing item in the world. However, when it comes to consumer behaviour and trends most US denim purchasers buy jeans for fit at 66 percent citing the reason over its brand name.
Interestingly enough though, 73 percent prefer to purchase the same brand as the one they own with men showing more loyalty at 64 percent than women at 45 percent. Going deeper into the growing level of awareness around environmental sustainability and climate change, the Cotton Incorporated 2013 Environment Survey found that 51 percent of consumers say that environmentally friendliness is important to their apparel purchase decisions. Digging a little further, about 33 percent are actually more likely to seek out environmentally clothes for themselves. When it comes to the material of their clothes though, nearly 72 percent of survey respondents say that natural fibres are better for the environment than synthetics, with 51 percent of consumers willing to pay more for them. Such trends are driving global brands like Gucci, Timberland, and others to focus on making their products and supply chain more environmentally friendly. Pair all those facts together and you get a winning combination championed by I’ll Be Denim, provide consumers with organic denim manufactured locally with an emphasis on designing for fit while also offering custom fit solutions.
KUYICHI – Based in the Netherlands, the company has been in the market since 2001 selling organic denim wear while simultaneously using natural indigo dyeing techniques and running a robust jeans recycling program HIUT DENIM – Based in the UK, the company operates out of a small town known for manufacturing jeans. It currently offers a selection of organic denim jeans targeted at both men and women, making only 100 pairs a week and resolving to only make jeans NUDIE JEANS – Headquartered in Sweden, the company achieved its goal of launching an organic denim jeans collection in 2012 and has both online and brick-and-mortar locations. They also have a wide assortment of sustainable efforts ranging from providing a fair living wage to everyone involved in the manufacturing process and recycling jeans.
BRAND DIFFERENTIATION AND VALUE PROPOSITION
Though there are more than a handful of organic denim startups, at I’ll Be Denim, we firmly believe that with the founder’s combined experience, industry partnerships, and focus on providing the quality denim jeans produced with sustainability in mind from cradle to grave, the brand can stand out. Our plan is to leverage our American heritage and love for the fabric and use a marketing strategy that is closely aligned with building personal relationships with our target market. In addition, with fit being the biggest variable in jean purchase decisions, our custom fit program in addition to our slim, straight, and regular fit jeans will help us delight our customers who in turn will spread the word.
V. Marketing strategy (approach to providing value in order to achieve objectives) ANSOFF MATRIX
Marketing Your Products
Here’s something to keep in mind before you start jotting down a detailed plan, this is referred to as the BUYER’S FIVE-STEP ADOPTION PROCESS. This model highlights the sequence of steps a buyer goes through before making the final purchase decision.
AWARENESS – Customers are aware you exist, but don’t know what it is you do or sell INTEREST – Customers have now heard of you and because of what they see, they want to learn more EVALUATION – Customers are now decided whether to give you a shot or not TRIAL – Customers are willing to make an initial purchase to take your products and services for a spin ADOPTION – Customers now love what you have to sell and will regularly purchase from you. The first half of that adoption process gets covered through your advertising and promotions plan, while the later half requires a solid sales and distribution plan. Some of the questions that you’ll want to answer for each are outlined below.
VI. Marketing programs (describing actions to be implemented)
7P’S (Market mix)
ADVERTISING AND PROMOTION PLAN
Will you have a dedicated presence across many of the popular online channels (ex. website, social media, relevant marketplaces…etc.) used today to gain brand awareness? Will your marketing plan be primarily inbound focused (ex. SEO, social media, blogging…etc…), outbound focused (ex. PPC, affiliate marketing, sales teams…etc.), traditional focused (ex direct mail, brochures, and print advertising) or a mix of all three? What are other low-cost yet effective marketing mediums that you’ll leverage to get attention? What is your PR strategy? Why would the press be interested in your story? SALES AND DISTRIBUTION PLAN What channels will you use to get your product out there? Will you sell via your website, a retailer, wholesaler, or a different channel all together? How will customers be able to pay for your product?
What will your return policy look like? Will you offer any guarantees? If so, what will they look like? What happens after a customer makes a purchase? What type of customer support will you provide? Once you get all these details down, the next chapter will walk you through putting together an operations plan. This will give your business plan reader a boost in trust that you’ll be able to deliver on your vision highlighting how you’ll get from manufacturing to shipping.
VII. Financial plans* (projected costs, revenue & sales forecasts, anticipated profits)
VIII. Metrics & Implementation controls
“Making promises and keeping them is a great way to build a brand.” ― Seth Godin
Now it’s time to slice and dice your market into segments and identify your target customer. You’re going to want to describe a number of both general and specific demographic characteristics that apply. Some of the questions you’ll want to answer are:
Where do they live?
What’s their age range?
What’s their level of education?
How many of them are there?
What are some common behaviour patterns?
What do they spend their free time on?
Where do they work?
What technology do they use?
What ethnicity are they?
How much do they earn?
Where are they commonly employed?
What are their values, beliefs, or opinions?
The details and the questions you’ll answer will vary greatly based on what it is you’re selling, but you should get a gist. Essentially, you want to paint as detailed a picture as possible with both the qualitative and quantitative information you can gather. Another way to frame your customers which can be useful to paint another layer onto what you already know is the PRODUCT DIFFUSION CURVE, in other words how quickly your customers are likely to adopt a new technology. There are five major categories this breaks down into, they are:
INNOVATORS – These are the folks who’ve done their research on the latest product launches, follow all the hype, and will wait for any amount of time in a line to get their hands on the latest gizmo. EARLY ADOPTERS – Based on the feedback and response from innovators, early adopters then decide whether to jump on the bandwagon or not. EARLY MAJORITY – Once a products been tested and proved by a larger pool, these customers listen closely to the recommendations of the groups listed above when deciding whether to purchase something or not. LATE MAJORITY – These individuals don’t trust anything until it becomes commonplace and popular LAGGARDS – They only change their consumption habits when what they’re used to no longer exists and becomes obsolete. Only when that occurs do they start looking for alternatives There are certainly no shortage of ways to break down your customer segments, but you’ll want to do it in a way that’s most meaningful for what you’re trying to market. Speaking of marketing, you’re going to have to provide a detailed plan for how you’re actually going to go from generating awareness to ultimately getting what you’re selling into the hands of your target customers.