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UsedSportsEquipmentRetailer MarketingPlan NineLivesOutdoorGearConsignmentShop
UsedSportsEquipmentRetailer
MarketingPlan
NineLivesOutdoorGearConsignmentShop
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Table Of Contents

1.0

Executive Summary

 

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2.0

Situation Analysis

 

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2.1 Market Summary

 

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2.1.1 Market Demographics .

 

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2.1.2 Market Needs .

 

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2.1.3 Market Trends

 

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2.1.4 Market Growth

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2.2 SWOT Analysis

 

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2.2.1 Strengths

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2.2.2 Weaknesses

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2.2.3 Opportunities .

 

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2.2.4 Threats .

 

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2.3 Competition

 

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2.4 Product Offering

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2.5 Keys to Success .

 

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2.6 Critical Issues .

 

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3.0

Marketing Strategy

 

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3.1 Mission .

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3.2 Marketing Objectives

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3.3 Financial Objectives .

 

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3.4 Target Markets

 

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3.5 Positioning

 

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3.6 Strategies

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3.7 Marketing Mix .

 

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3.8 Marketing Research

 

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4.0

Financials

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4.1 Break-even Analysis

 

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4.2 Sales Forecast .

 

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4.3 Expense Forecast

 

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5.0

Controls

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5.1 Implementation

 

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5.2 Marketing Organization .

 

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5.3 Contingency Planning

 

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. 13

Nine Lives- An Outdoor Clothing & Gear Consignment Shop

1.0

Executive Summary

Nine Lives--An Outdoor Clothing & Gear Consignment Store is a business in Eugene, Oregon. Nine Lives will be run by Jim Gearboy, a veteran of the outdoor industry. Jim is very familiar with the outdoor community in Eugene and has leveraged his regionally-specific industry insights into a niche store that has no direct competition but incredible demand.

Through the use of a selection of used goods not replicated in the entire city, superior personal customer attention, and reasonable prices, Nine Lives will capitalize on this incredible opportunity. Jim has secured a location that offers very good foot traffic and easy accessibility. Jim will efficiently lay out the store to increase sales and give the customers the upmost in attention. This attention to detail, combined with Jim's passion and knowledge will make this store profitable quickly.

2.0

Situation Analysis

Nine Lives is a start-up company. Marketing is critical to its success and future profitability. The store offers an extensive selection of used outdoor gear and clothing in a consignment arrangement. Nine Lives also has a limited selection of manufacturers closeouts. The basic market need is reasonably priced outdoor clothing and gear. Nine Lives is meeting this market need by offering primarily used items, discounted off the normal retail prices.

2.1

Market Summary

Nine Lives possess good information about the market and knows a great deal about the common attributes of our most prized and loyal customers. Nine Lives will leverage this information to better understand who is served, their specific needs, and how Nine Lives can better communicate with them.

Target Markets

Nine Lives can better communicate with them. Target Markets Participants w/limited resources Gearheads Bargain hunters

Participants w/limited resourcestheir specific needs, and how Nine Lives can better communicate with them. Target Markets Gearheads Bargain

Gearheadshow Nine Lives can better communicate with them. Target Markets Participants w/limited resources Bargain hunters Page

Bargain huntersand how Nine Lives can better communicate with them. Target Markets Participants w/limited resources Gearheads Page

Nine Lives- An Outdoor Clothing & Gear Consignment Shop

Table 2.1: Target Market Forecast

Target Market Forecast Potential Customers

Growth

2001

2002

2003

2004

2005

CAGR

Participants w/limited resources

9%

27,014

29,445

32,095

34,984

38,133

9.00%

Gearheads

8%

14,025

15,147

16,359

17,668

19,081

8.00%

Bargain hunters

8%

10,584

11,431

12,345

13,333

14,400

8.00%

Total

8.53%

51,623

56,023

60,799

65,985

71,614

8.53%

2.1.1 Market Demographics

The profile for Nine Lives' customer consists of the following geographic, demographic, and behavior factors.

Geographic

• The immediate geographic target is the city of Eugene with a population of 130,000.

• A 35 mile area is in need of the products.

• The total targeted population is 51,000.

Demographics

• Male and female.

• Ages 17-50.

• Students with limited financial resources.

• Outdoor enthusiasts.

• Deal seekers.

Behavior Factors

• Enjoys spending time outside.

• Collects copious amounts of outdoor gear.

2.1.2 Market Needs

Nine Lives is providing its customers a wide selection of used outdoor gear and clothing at reasonable prices through a consignment-style arrangement as well as closeouts purchased from manufacturers and distributors.

Selection: A wide range of different clothing and gear options.

Accessibility: The store is open for extended hours and is easy to browse.

Customer service: The patron will be impressed with the level of attention that they receive.

Competitive pricing: All items will be discounted relative to new retail prices.

Nine Lives- An Outdoor Clothing & Gear Consignment Shop

2.1.3 Market Trends

The market trend for outdoor gear and clothing is the ability to purchase products at discount prices. One way the trend has played out is the business model of selling closeout and last year model items. This trend has occurred in the last few years and it is a variant of the T.J. Maxx type business model where items are sold at discount prices. Examples of this business model in the outdoor industry are the websites of sierratradingpost.com or rei-outlet.com. These sites only sell discounted, new, outdoor gear. Nine Lives is different in that the bulk of their merchandise is used. This matters less as outdoor gear is typically based on utility instead of fashion.

Market Forecast 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 2001 2002 2003 2004
Market Forecast
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2001
2002 2003
2004 2005
2.1.4 Market Growth

Participants w/limited resources10,000 0 2001 2002 2003 2004 2005 2.1.4 Market Growth Gearheads Bargain hunters In 1999, the

Gearheads2005 2.1.4 Market Growth Participants w/limited resources Bargain hunters In 1999, the outdoor gear industry achieved

Bargain huntersMarket Growth Participants w/limited resources Gearheads In 1999, the outdoor gear industry achieved over $9 billion

In 1999, the outdoor gear industry achieved over $9 billion in sales. This market growth can be attributed to several factors:

• The recent health conscious trend in America that has fueled outdoor activities.

• The increased popularity of outdoor activities among young people who recognize it as an inexpensive way to entertain themselves.

• The increased selection of reasonably priced outdoor gear.

Nine Lives- An Outdoor Clothing & Gear Consignment Shop

Target Market Growth 10.00% 5.00% 0.00%
Target Market Growth
10.00%
5.00%
0.00%

2.2 SWOT Analysis

The following SWOT analysis captures key strengths and weaknesses within the company and describe the threats facing Nine Lives.

2.2.1 Strengths

• Strong relationships with manufacturers and distributors enabling Nine Lives to secure good closeout items from those sources.

• Great retail space that is bright, well laid out, and centrally located.

• Excellent staff who are highly trained and customer attentive.

2.2.2 Weaknesses

• Nine Lives lacks brand equity.

• A limited marketing budget to develop brand awareness.

• The struggle to continually get quality used items for consignment.

Nine Lives- An Outdoor Clothing & Gear Consignment Shop

2.2.3 Opportunities

• A growing market with a significant percentage of the target market still not aware of Nine Lives.

• A growing market of people who have used equipment that they would like to sell.

• Good margins and low overhead.

2.2.4 Threats

• Competition from online discounters.

• The entrance into the Eugene market from an already existing used gear store.

• Inability to get sufficient inventory.

• Local retail competitors starting to sell significant quantities of closeouts.

2.3 Competition

Currently, there are no true direct competitors in Eugene. There are two Oregon competitors that have very similar product offerings although one is a consignment shop and the other is a normal retailer. The normal retailer (they buy new and used equipment and sell it to the public) is located in Portland and is doing well, and the similar style consignment shop is located in Bend, another outdoor-friendly town, but with a much smaller population base (around 50,000 people instead of Eugene's 130,000 people) and they are also doing well.

Nine Lives' competition is present in Eugene in the form of new, retail outdoor stores, such as R.E.I. and McKenzie Outfitters. These retailers have a wider selection of goods, but have normal retail prices and no used merchandise.

Another form of competition is thrift stores that sell used clothing and equipment. The amount of decent used outdoor clothing and equipment floating around thrift stores is small and it is hit-or- miss. In order to score the deals you have to regularly make the rounds at several thrift stores.

2.4 Product Offering

Nine Lives will sell a wide range of outdoor clothing and gear. The following is a partial list of the offerings at any one time:

• Fleece outerwear.

• Rain gear, waterproof breathables as well as coated nylon.

• Thermal underwear.

• Synthetic clothing for sports or travel.

• Hats.

• Gloves.

• Gaiters.

• Shorts.

• Pants.

• Shirts.

• Packs.

• Sleeping bags.

• Sleeping pads.

• Tents.

• Duffel bags.

• Bicycles.

Nine Lives- An Outdoor Clothing & Gear Consignment Shop

• Kayaks.

• Roof racks.

• Canoes.

• GPS.

• Cookware and stoves, and much much more.

Nine Lives will sell the items on consignment, meaning Nine Lives will sell other owner's items and pay for them when sold. Typically the items on consignment will be used. They will also consist of new manufacturer's closeouts and seconds. This will only occur when the savings are large and the items are likely to be sold quickly.

Nine Lives will be procuring the merchandise from a variety of sources:

Individuals: These people believe that it is preferable to receive something for their goods rather than packing them up to a thrift store. Alternatively, these people might want the newest generation piece of gear or clothing and the way they finance this desire is by selling off their old stuff.

Manufacturers: Sometimes the manufacturer will want to get rid of their inventory excess, whether because the merchandise is last year's model or they have an overstock. In any case, they may look to consignment shops to allow them to lower inventory.

Retail store closeouts: Same rationale as the manufacturers.

Manufacturer representatives: The representatives often have a large number of samples from many different manufacturers. After they no longer need the samples they will typically get rid of them as they serve little purpose to hold onto the samples.

2.5 Keys to Success

The keys to success will be to constantly track and meet the market needs.

Nine Lives will also:

• Generate repeat business.

• Increase the transaction amount per customer.

• Increase the amount consigned per customer.

2.6 Critical Issues

Nine Lives is still in the speculative stages as a retail shop. Its critical issues are addressed by the following actions: continue to take a modest fiscal approach; grow at a reasonable rate, not for the sake of expansion, but because it is economically wise to; and continue to build brand awareness which will drive customers to Nine Lives.

Nine Lives- An Outdoor Clothing & Gear Consignment Shop

3.0 Marketing Strategy

Nine Lives advertising budget is limited, so the advertising program will be fairly straightforward. Nine Lives will advertise in local outdoor magazines and journals, the local newspaper (Register Guard), and the student newspaper at the University of Oregon. Additionally, Nine Lives will advertise in the outdoor industry journal in hopes of attracting new sources of inventory.

3.1 Mission

Nine Lives' mission is to provide the customer with quality outdoor clothing and gear at reasonable prices. We exist to attract and maintain customers. When we adhere to this maxim, everything else will fall into place. Our services will exceed the expectations of our customers.

3.2 Marketing Objectives

• Maintain positive, steady growth each month.

• Experience an increase in new customers who are turned into long-term customers.

• Increased visibility evidenced by an increase of new customers and people bringing in used equipment for consignment.

3.3 Financial Objectives

• A double digit growth rate for each future year.

• Reduce the variable costs associated with the per transaction expenses.

• Increase the profit margin.

3.4 Target Markets

Nine Lives will be focusing on three distinct groups of people that purchase outdoor clothing a gear:

1. Outdoor participants with limited financial resources. This group of people has discretionary income and enjoy spending time participating in outdoor activities. These customers however, must maximize their limited money to be able to participate in the wide range of outdoor activities. For them, an outdoor consignment shop is ideal because the same amount of money allows them to have more or better equipment than they could get through traditional retail outlets.

2. Gearheads. This group is people that collect outdoor gear. This is not a "poser" group, they actually use the stuff, they just like to have the right piece of clothing or gear for each individual activity. Offering better prices than regular retail outlets allows them to buy more stuff for the same amount of money.

3. Bargain hunters. This group will buy things because it is a good deal, not because they really need the item. While some of the used items will appeal to them, the manufacturers closeouts and seconds will really excite this group.

Nine Lives intends to target people that have a need for outdoor clothing and gear but do not have unlimited financial resources. Most outdoor enthusiasts do not have unlimited financial resources. People typically choose to live in Eugene for its quality of life and wonderful outdoor activities, and

Nine Lives- An Outdoor Clothing & Gear Consignment Shop

people are willing to make significantly less (relatively) than in Portland because quality of life is so important.

With a large population of outdoor enthusiasts, particularly those that sacrifice financial gains for quality of life, Nine Lives has a large population base to draw off of. The University of Oregon is located in Eugene and has an active outdoor student body. Additionally, the university has a large Outdoor Program which will be a large source of buyers and sellers.

3.5 Positioning

Nine Lives will position itself as a reasonably-priced outdoor gear and clothing retail store. Eugene consumers have a demand for discounted outdoor equipment.

Nine Lives' positioning will leverage their competitive edge:

• A selection of used clothing and gear not replicated in the city. Although there are many different outdoor retailers in Eugene, there are none that sell used merchandise. Used merchandise can be up to 60% less expensive than the new counterpart, so there is definitely a draw to the product, particularly in a town where people enjoy their outdoor activities at the expense of making money.

• Superior, personalized customer service. Although Nine Lives' product is used clothing and gear, there is no reason to assume that the patrons of a used store deserve any less quality of customer service that you would expect from a top shelf retailer. Even consignment shop retailers have expectations of high service. At Nine Lives the customer will be treated with very personalized service. It is not unusual that consignment shops have regulars who frequent often. With this in mind, Nine Lives will have a database of customers and purchasing history so when they enter the store the sale person will have very personal information about the customer.

3.6 Strategies

The single objective is to position Nine Lives as the premier place to purchase reasonably priced clothing and gear for any outdoor adventure. The marketing strategy will first seek to create customer awareness regarding the products offered, develop the customer base, and work toward building customer loyalty and referrals.

The message that Nine Lives will seek to create is that Nine Lives offers the finest selection of reasonably-priced outdoor gear and equipment for enthusiasts. This message will be communicated through advertising in a variety of sources. The first source is the local outdoor magazine/journal. The second source is the Register Guard. The third is the U of O student newspaper. The final source for advertisements is the outdoor industry journal for manufacturers and distributors.

Nine Lives- An Outdoor Clothing & Gear Consignment Shop

3.7 Marketing Mix

Nine Lives' marketing mix is comprised of the following approaches to pricing, distribution, advertising and promotion, and customer service.

Pricing: Nine Lives pricing will be based on a percentage system for the consignment items and standard keystoning for the new products.

Distribution: All sales will take place in the retail space.

Advertising and promotion: The bulk of the advertising will be with the local outdoor journal, The Register Guard, the U of O student newspaper, and the Outdoor Industry Journal.

Customer service: Obsessive customer service is the mantra. Nine Lives' philosophy is whatever needs to be done to make the customer happy must occur, even at the expense of short-term profits. In the long term, this investment will pay off with a fiercly loyal customer base who is extremely vocal to their friends with referrals.

3.8 Marketing Research

During the initial phase of the marketing plan development, several focus groups were held. These focus groups provided helpful insight into the decision making processes of outdoor enthusiasts.

An additional source of dynamic market research is a feedback mechanism based on a suggestion card system. The suggestion card has several statements that customers are asked to rate in terms of a given scale. There are also several open ended questions that allow the customer to freely offer constructive criticism or praise. Nine Lives will work hard to implement reasonable suggestions in order to improve their service offerings as well as show their commitment to the customer that their suggestions are valued.

The last source of market research is competitive analysis. Nine Lives will send people to local competitors to gain information about the service offerings.

Nine Lives- An Outdoor Clothing & Gear Consignment Shop

4.0 Financials

This section will offer a financial overview of Nine Lives as it relates to the marketing activities. Nine Lives will address break-even analysis, sales forecasts, expenses forecasts, and how those link to the marketing strategy.

4.1 Break-even Analysis

The Break-even Analysis indicates $16,000 be need in monthly revenue to reach the break-even point.

$8,000

$6,000

$4,000

$2,000

$0

($2,000)

($4,000)

($6,000)

($8,000)

Break-even Analysis

$0 $5,328 $10,656 $15,984 $21,312 $26,640
$0
$5,328
$10,656
$15,984
$21,312
$26,640

Monthly break-even point

Break-even point = where line intersects with 0

Table 4.1: Break-even Analysis

Break-even Analysis:

Monthly Units Break-even

216

Monthly Sales Break-even

$16,000

Assumptions:

Average Per-Unit Revenue

$74.00

Average Per-Unit Variable Cost

$37.00

Estimated Monthly Fixed Cost

$8,000

Nine Lives- An Outdoor Clothing & Gear Consignment Shop

4.2 Sales Forecast

The first month will be used to get the store ready for business and there will be no sales activity. To prepare the store, display counters will be set up, as will all of the racks. Dressing rooms will then be built. Month two will mark when the store is officially open, and business will be slow. During month two Nine Lives will begin to build up inventory. This will be done through advertising in the local outdoor magazine/journal, as well as advertising at the University of Oregon, as well as through their Outdoor Program.

Month four will finally have a decent amount of sales activity and it should steadily improve from there.

Monthly Sales Forecast

$100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 Table 4.2: Sales Forecast
$100,000
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
Table 4.2: Sales Forecast

Participants w/limited resources$30,000 $20,000 $10,000 $0 Table 4.2: Sales Forecast Gearheads Bargain hunters Sales Forecast Sales 2001

GearheadsTable 4.2: Sales Forecast Participants w/limited resources Bargain hunters Sales Forecast Sales 2001 2002 2003

Bargain huntersSales Forecast Participants w/limited resources Gearheads Sales Forecast Sales 2001 2002 2003

Sales Forecast Sales

2001

2002

2003

Participants w/limited resources

$135,152

$185,214

$210,412

Gearheads

$50,048

$63,541

$68,547

Bargain hunters

$116,570

$62,545

$65,122

Total Sales

$301,770

$311,300

$344,081

Direct Cost of Sales

2001

2002

2003

Participants w/limited resources

$67,576

$92,607

$105,206

Gearheads

$25,024

$31,771

$34,274

Bargain hunters

$58,285

$31,273

$32,561

Subtotal Cost of Sales

$150,885

$155,650

$172,041

Nine Lives- An Outdoor Clothing & Gear Consignment Shop

4.3 Expense Forecast

Marketing expenses are to be budgeted so that they are high for the first five months and then trim down until the winter holiday season where they will spike again. During the second year, expenses will be higher during the winter holiday season as well as during the spring and fall, marking the beginning of the new sports/outdoor season.

Monthly Expense Budget $1,200 $1,000 $800 $600 $400 $200 $0 Jan Feb Mar Apr May
Monthly Expense Budget
$1,200
$1,000
$800
$600
$400
$200
$0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Table 4.3: Marketing Expense Budget

Local outdoor magazineAug Sep Oct Nov Dec Table 4.3: Marketing Expense Budget Register Guard U of O student

Register GuardTable 4.3: Marketing Expense Budget Local outdoor magazine U of O student newspaper Industry journal Marketing

U of O student newspaperExpense Budget Local outdoor magazine Register Guard Industry journal Marketing Expense Budget 2001 2002

Industry journaloutdoor magazine Register Guard U of O student newspaper Marketing Expense Budget 2001 2002 2003 Local

Marketing Expense Budget

2001

2002

2003

Local outdoor magazine

$1,600

$2,000

$2,500

Register Guard

$1,500

$2,000

$2,500

U of O student newspaper

$1,675

$2,000

$2,500

Industry journal

$1,550

$2,000

$2,500

------------

------------

------------

Total Sales and Marketing Expenses

$6,325

$8,000

$10,000

Percent of Sales

2.10%

2.57%

2.91%

Contribution Margin

$144,560

$147,650

$162,041

Contribution Margin / Sales

47.90%

47.43%

47.09%

Nine Lives- An Outdoor Clothing & Gear Consignment Shop

5.0 Controls

The purpose of Nine Lives' marketing plan is to serve as a guide for the organization.

The following areas will be monitored to gauge performance:

• Revenue: monthly and annual.

• Expenses: monthly and annual.

• Repeat business.

• Customer satisfaction.

5.1 Implementation

The following milestones identify the key marketing programs. It is important to accomplish each one on time and on budget.

Table 5.1: Milestones

Milestones

Plan

Milestone

Start Date

End Date

Budget

Manager

Department

Marketing plan completion

1/1/01

4/1/01

Jim

Marketing

Advertising campaign #1

3/1/99

4/1/99

$4,000

Jim

Marketing

Advertising campaign #2

3/1/99

4/1/99

$2,400

Jim

Marketing

Totals

$6,400

5.2 Marketing Organization

Jim is primarily responsible for marketing activities. This is in addition to his other responsibilities, and will depend on outside resources for graphic design work and creativity.

5.3 Contingency Planning

Difficulties and risks:

• Problems generating visibility.

• Difficulty procurring sufficient inventory.

• The further development and increased popularity of discount outdoor gear websites.

Appendix: Nine Lives- An Outdoor Clothing & Gear Consignment Shop

Table 4.2 Sales Forecast

Sales Forecast

Plan

Sales

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Participants w/limited resources Gearheads Bargain hunters

$0

$4,125

$4,987

$7,845

$8,325

$9,458

$13,545

$14,995

$15,855

$17,458

$18,545

$20,014

$0

$1,325

$1,514

$2,125

$2,514

$3,250

$4,654

$5,002

$6,511

$7,545

$7,254

$8,354

$0

$1,300

$1,499

$2,147

$2,503

$3,215

$4,512

$5,000

$6,474

$7,454

$74,141

$8,325

Total Sales

$0

$6,750

$8,000

$12,117

$13,342

$15,923

$22,711

$24,997

$28,840

$32,457

$99,940

$36,693

Direct Cost of Sales

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Participants w/limited resources Gearheads Bargain hunters

$0

$2,063

$2,494

$3,923

$4,163

$4,729

$6,773

$7,498

$7,928

$8,729

$9,273

$10,007

$0

$663

$757

$1,063

$1,257

$1,625

$2,327

$2,501

$3,256

$3,773

$3,627

$4,177

$0

$650

$750

$1,074

$1,252

$1,608

$2,256

$2,500

$3,237

$3,727

$37,071

$4,163

Subtotal Cost of Sales

$0

$3,375

$4,000

$6,059

$6,671

$7,962

$11,356

$12,499

$14,420

$16,229

$49,970

$18,347

Appendix: Nine Lives- An Outdoor Clothing & Gear Consignment Shop

Table 4.3 Marketing Expense Budget

Marketing Expense Budget

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Local outdoor magazine Register Guard U of O student newspaper Industry journal

$200

$50

$100

$100

$300

$50

$50

$50

$200

$250

$200

$50

$200

$50

$75

$100

$250

$50

$50

$50

$200

$225

$200

$50

$200

$50

$125

$125

$325

$50

$50

$50

$200

$250

$200

$50

$200

$50

$100

$100

$250

$50

$50

$50

$200

$250

$200

$50

 

------------

------------

------------

------------

------------

------------

------------

------------

------------

------------

------------

------------

Total Sales and Marketing Expenses

$800

$200

$400

$425

$1,125

$200

$200

$200

$800

$975

$800

$200

Percent of Sales

0.00%

2.96%

5.00%

3.51%

8.43%

1.26%

0.88%

0.80%

2.77%

3.00%

0.80%

0.55%

Contribution Margin Contribution Margin / Sales

($800)

$3,175

$3,600

$5,634

$5,546

$7,762

$11,156

$12,299

$13,620

$15,254

$49,170

$18,147

0.00%

47.04%

45.00%

46.49%

41.57%

48.74%

49.12%

49.20%

47.23%

47.00%

49.20%

49.45%