Daniel BrockmanErin DurlesserJessica Perez

Spring 2010

Objectives

 Take the work of an artist, and find profitable ways to

grow her business and personal income.

 Identify potential distribution channelsRecommend product extensions, updated

assortment and pricing options Evaluate revenue and profitability scenarios

Overview of a Microbusiness

Ema is an artistHer medium: Handbags • She prints unique images on fabric• Assembles collages of the images• Collage forms the surface of the bag

Each bag is original, one-of-a-kind, uniqueEma loves her work

Estimate of Current Business

Quantities: Produces one or 2 bags over a period of 3 or 4 daysDistribution: Personal website, art galleries and events Costs: Nearly match revenues. Insignificant profit.Price: Up to approximately USD 500 per handbag 2009 Estimates (no reliable records)Units 35 bagsRevenues USD 15,000Costs USD 12,000Profit USD 3,000

Current Customer Profile

Art Haute Couture

Volume Low

Margin Low

Full Cost High

Profit Low

Marketing Costs NA

Inventory Turn Rate Low

Product Assortment NA

Promotional Costs NA

Customer Demographics 35-65

Price Elasticity Low

Market Research

Marc by Marc Jacobs, I Heart Miss Marc Tee , 98.00 USDMARC by Marc Jacobs Miss

Marc Shopper, $148.00 USDMARC by Marc Jacobs Miss

Marc Mabel Tote, $188.00 USDCarlos Falchi Hand-Painted Python Clutch $965.00 USD

Conduct Broad Market Handbag Survey

Consider Potential Distribution Channels

Produce New Channel Profiles

Assess inventory levels/assortment within new distribution channels

Potential Distribution Channels

Department Stores

Trend Retailers

Museum Stores

Online Retailers

Luxury RetailersHigh-End

Department Stores

New Channel Profile• Museum Stores

Museum Stores Handbags Inventory

$0.00

$50.00

$100.00

$150.00

$200.00

$250.00

SFMOMA Museum Store

The Metropolitan Museum ofArt Store

New Channel Profile• Trend Retailer; i.e Urban Outfitters

Trend Retailer (Urban Outfitters) Handbags Inventory

$0.00

$50.00

$100.00

$150.00

$200.00

$250.00

$300.00

$350.00

New Distribution ChannelsMuseum Stores

Trend Retailers

Volume Med High

Margin Med Med

Full Cost Med+ Low

Profit Med High

Marketing Costs High Low

Inventory Turn Rate Low High

Product Assortment Tiered Tiered

Promotional Costs NA High

Customer Demographics 35< Teen+

Price Elasticity Low High

New Product OfferingMuseumStores

TrendRetailers

Assortment: 2-3 styles per seasonMid-cost materials and processes (quilted construction/design)Mid-cost artwork (craft focus)Specialty, weekend use (travel bags)No promotionsMid-level pricing

Assortment: 5-6 styles per seasonLow-cost base fabric (canvas)Low-cost artwork (screen prints)Functional, every-day use, trendyPromotionsCompetitive pricing

Financial AnalysisFinancials

Art Haute Couture Museum Stores Trend Assortment

MSRP $ 500.00 $ 155.00 $ 49.95

x Volume 78 800 5,200

Wholesale Price $ 76.50 $ 23.98

Full Cost $ 490.00 $ 41.95 $ 14.46

Product Cost $ 490.00 $ 23.00 $ 5.40

Screen Charge $ 3.20 $ 2.00

Pockets $ 3.00 $ 1.60

Finishing Costs $ 0.20 $ 0.15 Button/Zipper $ 1.00 $ 0.30 Freight 15% 15%Duty 8% 8%Marketing Costs 15% 0%Promotional Costs 0% 30%Margin - Retailer 2% 51% 52%Margin - WS n/a 45% 40%Rev $ $ 39,000.00 $ 61,200.00 $ 124,670.00 Profit $ $ 780.00 $ 27,638.40 $ 49,485.80

Pricing Structure

Pricing Structure

Profit Estimates

Profit Estimates

Recommendation

Art HauteCouture

Museum Stores

Trend Retailers

Product/Assortment

» Exclusive Design» High End

» 2-3 styles per season» Mid Level

» 5-6 styles per season» Low End

Price» Majority USD 500» 8% priced at USD 700

» USD 130 to 180 » USD 49.95