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Foxy Originals - Expansion to the U.S. Market

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by

Connor McKinnon

on 9 December 2015

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Transcript of Foxy Originals - Expansion to the U.S. Market

Foxy Originals -
Expansion to the U.S. Market
Case Summary
Owners:
Jen Kluger and Suzie Orol

Initial Problem:
Over-saturation of Canadian Market

Solution:
Expanding into a foreign marketplace

Target Market:
United States of America (U.S.)

Recommendation:
Enter the U.S. market via trade shows
Overview Pertinent Information
Introduction to Foxy Originals
Introduction to U.S. Market
Introduction to Methods of Deployment
Originally a small Canadian Business, founded in 1998

The brand is currently found in 250 boutiques across Canada

The brand achieved market saturation in approximately June of 2004

Success of the brand linked with the personal relationships formed by the owners

Current target market is women between the ages of 18 to 30 who identify themselves as style- and price-concious

Currently there are three major stylistic groups targeted by the brand
Sales Representatives
Reversible Enamels Ladies
Bridge Ladies
Chain-lovin' Ladies
Trade Shows
Expected to be more than 10 times the size of Canadian market

The key fashion hubs are identified as New York, Los Angeles, Chicago, and Dallas

The U.S. market is supposed to respond more to latest as trends as opposed to the Canadian market who prefers classic designs
Warning:

Currently 50% of Foxy Originals is classified as classic jewelry. This will be discussed further in Assumptions.
Two potential methods of entering the market are identified as distribution by
trade shows
or distribution by
sales representatives

A combination of the methods is eliminated because the partners do not want to divide their attention during the initial wave of deployment
Note:
While the a combination has been eliminated for the initial wave. We have not removed it as a possibility in our recommendations.
Analysis of Distribution Methods
Assumptions
Currency calculated in Canadian dollars
Price of product remains constant across markets
Expenses remain constant
Expansion financed by internal revenue
No saturation within first 5 years
American and Canadian inflation rates are equal
Forecast is for 5 years, inflation based on Inflation.eu
First year sales, used average of expected sales based on numbers provided by Kluger and Orol
Over 4 years after the launch, we estimate sales will grow by 25% (Year 1), 50% (Year 2), 75% (Year 3), and 50% (Year 4) for both options
Kluger and Orol are able to adapt their designs to the changing tastes of the U.S Market
The number of sales representatives remains constant and are located within the fashion hubs
The partners would attend 10 trade shows each year within the fashion hubs

Projection for the First 5 Years
Recommendations
As consultants for the Foxy Originals company it our professional opinion that the owners should undertake the following steps for both the short term and long term entering of the U.S. market.
Contingency and Fallback
Short Term
Long Term
Kyle B., Anh L., Connor M., Tiffany S.
The partners should:

Undertake the trade shows option versus the sales representatives option to establish brand awareness

Pay close attention to the initial market response and capitalize on those markets whose response is greatest through increased attendance of trade shows in those locations.

Pay close attention to the initial market response and marginalize those markets whose response is lowest through decreased attendance of trade shows in those locations.
The partners should:

monitor fashion trends as the U.S. market is particularly sensitive to the latest styles.

perform an analysis of a combination of distribution methods once the internal structure has been established in order to increase market share when and where possible.

manage potential market saturation and prepare to expand again when an alternate market emerge as viable.

consider investing in a U.S. distribution center to decrease shipping costs.
Sales failure

Sudden negative change in costs

Negative brand image

Exit strategy
THANKS FOR LISTENING.

ANY QUESTIONS?

NPV over 5 years for Option 1: $1,348,107.04

NPV over 5 years for Option 2: $75,780.63
Full transcript