1.0 Executive Summary ii 2.0 Market Trend Analysis 1 3.0 Environmental Analysis 2 4.0 Competitive Analysis 3 5.0 Segmentation Analysis and Consumer Buying Behaviour 6 5.1 Objectives 6 5.2 Target Market 7 5.3 Why this Target Segment? 7 5.4 Target Market ProIile 7 5.5 Consumer Buying Behaviour 9 6.0 Positioning Statement 9 7.0 Marketing Mix 9 7.1 Product 10 7.2 Price 11 7.3 Place 12 7.4 Promotion 12 8.0 Financial Analysis 14 9.0 Exhibits 16 9.1 Exhibit A Weekly Schedule oI Classes OIIered at NRG 16 9.2 Exhibit B - Selective Product Comparison (in CAD) 16 9.3 Exhibit C NRG Floor Plan 17 9.4 Exhibit D Consumer Buying Behaviour Collage 18 9.5 Exhibit E Perceptual Map oI Competitors 18 9.6 Exhibit F Bulls Eye Diagram 19 9.7 Exhibit G Forecasted Income Statement 19 9.8 Exhibit H Total Units Sold 20 9.9 Exhibit I Revenue Calculations 20 9.10 Exhibit J Break-Even Analysis 20 10.0 Bibliography & Citations 21
1.0 Executive Summary With Aritzia Iounded in 1984 and growing at a steady rate in the retail sector, consumers today are now demanding a new line oI apparel. Yoga and other Iorms oI physical and mental disciplines has been an ongoing trend in the past Iew years, stimulating demand Ior Iitness apparel. Furthermore, Iunctionality adds value to active-wear and provides an opportunity Ior retailers to understand and satisIy that need. To meet the needs oI our potential customers, New Revolutionary Green (NRG) is a new Iashion line that integrates technology with style and comIort while maintaining an eco-Iriendly image. NRG is a standalone label under Aritzia Iocusing on 'Green, innovative, and Iashion-Iorward athletic apparel. This report provides an overview oI our product in addition to an in-depth analysis oI the several Iactors that can aIIect our brand and a detailed marketing plan to reach our target audience. The report contains the Iollowing: N Analysis oI the current market trends; supported with recent statistics and market data N Environmental analysis oI how external Iactors will aIIect our brand N Analysis oI our direct competitor lululemon athletica N Overview oI the key target segment including objectives, target proIile, and buying behaviour N Description oI NRG with a marketing plan to strategically launch and position the label eIIectively N Financial Iorecasts Ior budgeting purposes In conclusion, this proposal recommends the launch oI the new label New Revolutionary Green.
2.0 Market Trend Analysis AIter conducting thorough exploratory research, the phenomenon oI interest Ior teenagers and young adults revolve around Iashion and staying Iit. Today, yoga seems to be the new trend. It emphasises ongoing 'Green and is now seen as a popular type oI exercise. Not only does it help to relieve stress but it also helps the body to relax and stay slim. To Iollow along and incorporate this trend, Aritzia decided to join in the social and environmental movement by creating an athletic apparel industry Ior women. Based on Canadian yoga statistics since 2003, Canadians have been practicing yoga, and has been growing at a rate oI 15 each year. Within this group segment aged 18-34, 72.3 oI the participants are Iemales 21 . With a steady approximation oI this market, Aritzia thereIore decided to Iocus on a target market Ior Iemales between the ages 23-35, which are urban trend Iollowers. As we can see based on the statistics, the market is sizeable - covering approximately 68.6 oI the Iemale population within Ontario 22 . Nonetheless, women are the majority oI the decision- makers Ior merchandise. With the dynamic Iashion trends changing season to season, women can be considered Iashion-Iorward and shopping-enthusiasts. They buy clothes to Iollow the trend whereas males tend to shop when they are in need oI an item not seeing brands as important as Iemales. Based on the inIormation given Irom 2008, it shows that shopping Ior yoga is primarily shopping Ior the ideal pair oI pants; comIortable and stylish. From gathering secondary data and observing conclusive research through online reviews about lululemon clothing, the rating distribution is highly skewed to a 5-star rating. Although customers do Ieel their products are expensive and possibly even overpriced, they still continue to purchase their products because they perceive value in them. Sales continue to increase as they promote value-based products.
Statistics show that Canadian women have spent $79.1 million on yoga apparel last year, and only 63 oI those purchases were worn Ior sports and exercise. In addition, only 30 oI lululemon clothes are used Ior yoga 23 . This leads to the conclusion that these purchases were not made just Ior athletic purposes, but also Ior the Iashion element and trendy luxury labels. Focusing on regional shopping centres in Toronto, Aritzia and lululemon are considered as notable tenants 24 . This means that the two brands have become a Iashion success as Iemales today are bound to walk into either oI those stores to make purchases. As Aritzia is branching into yoga wear, this leads to a new line oI apparel titled - New Revolutionary Green. This new brand label, a subsidiary oI Aritzia, Iocuses on yoga wear Ior women, competing with only one direct authentic yoga brand competitor, lululemon. Our biggest competitor has a current market value oI 35.36, which remains on a steady increase Irom time to time. Our goal is to successIully enter this market, create value in our brand, and portray our apparel to be at par with lululemon, iI not better. 3.0 Environmental Analysis The biggest trend in North America has been going 'Green. Companies are taking initiative to go 'Green and are encouraged by government to do so. As a result, 'Green clothing has emerged Irom brands such as lululemon. This is a trend that has a grasp on a global perspective. Companies like Nike have set plans to have 100 oI their clothing in 2011 to have at least some 'Green material 1 . Canadians value a healthy liIestyle with the need to be physically and mentally active 2 . The mentality oI Canadians is to pursue a healthy living liIestyle while conserving the environment at the same time. These are considered as value-added to many companies that try to Iollow suit and provide consumers with what they are asking Ior. These
two trends - both social and cultural - aIIect all businesses and are reinIorced by marketers and by the government. It is a trend that tries to protect the environment and to aid oneselI. Lululemon is the most notable in the clothing industry to IulIill the need by promoting yoga athletic clothing while being environmentally Iriendly. 'Tweens crave Ior what is trendy and in the business market, the promotion oI healthy active living and environmental Iriendliness is the most dominant. Technology plays a major role in the development oI our product and how to sell it. Lululemon is Iocused on presenting new technology. They created the Luon technology and partnered with Descente Ltd to constantly create new technology Ior clothing 3 . Technology is used to assist in advancing 'Green clothing and saving energy within retail stores. Usage oI Radio Frequency IdentiIication (RFID) chips have been increasing within the retail industry in which tracking items can be done in an instant. By being able to track every single item, the chips have the ability to provide protection Ior retail companies and give great customer service on their items 4 . Going Iorward, RFID chips will soon be part oI almost all retail industries in the next decade. To remain competitive, companies must invest in RFID technology to not only reduce costs but also to increase sales by providing quick and accurate service. 4.0 Competitive Analysis Within the yoga community, the one major retailer Ior yoga apparel is lululemon Athletica. It started in 1998 in Vancouver, British Columbia and has opened over 100 stores in Canada, expanding their retail stores into large urban markets 5 . Although there are only 15 lululemon stores in Toronto 6 , through their unique marketing and advertising strategies, they have managed to capture a large portion oI men and women who practice yoga. While there are a Iew retailers
that sell yoga apparel and related accessories in Toronto, (Ior example: Roots Yoga, Margarita Active-wear, Naturals Apparel) these brands operate on a much smaller scale compared to lululemon and have been unsuccessIul in securing market share or gaining brand awareness. Due to the market niche that lululemon has been able to IulIill, it is without a doubt that lululemon is the only major competitor. Lululemon`s method oI promoting their image and creating brand awareness is very unique. Absolutely no money is spent on advertising 7 . Instead, lululemon has programs where true athletes are Ambassadors that share the same philosophy and culture that lululemon embodies: 'to live longer, healthier and more Iun lives. First, lululemon enlists local athletes and Iitness instructors as Ambassadors who provide Ieedback to lululemon on the Iit, Iunction, Iabric, design and quality oI their apparel. In return, lululemon sends staII and customers to help these instructors build their own businesses. By partnering up with Iitness studios, this helps lululemon build a communicative spirit among athletes. Each store has a co-ordinator that organizes yoga or Iitness classes (Ior example, running clubs) which helps promote brand awareness. Furthermore, lululemon searches Ior local athletes to work within their stores 6 . These athletes can provide personal testimonials on how great the product is when customers have questions about the perIormance oI the athletic apparel. All oI lululemon`s business strategies have been aligned with the idea oI encouraging people to lead healthy active lives. Their maniIestos oI motivational quotes listed on their environmentally Iriendly reusable bags help promote their image 6 . Lululemon`s positioning is Ior the upper middle class who practice yoga. Lululemon`s clothing is athletic wear that is comIortable and Iorm Iitting and the product`s key diIIerentiation is the unique Iabrics used to manuIacture the products.
Lululemon`s products are distinctive in the types oI Iabrics that they use. The materials used to manuIacture the clothing have many technical Ieatures; the brand has prided itselI on a type oI Iabric that is moisture wicking. Furthermore, lululemon sells clothing that uses silver yarn that eliminates bacteria, so the clothes stay odourless 6 . These practical Ieatures compete with NRG`s technology oI using Iriction to generate electricity while practicing yoga. This competes directly with lululemon`s products as this Ieature within clothing is exclusive to NRG, just as the special Iabrics are exclusive to lululemon (ReIer to Exhibit F). The use oI these special Iabrics by lululemon is very practical and useIul Ior athletes. Clearly, it brings great value to their customers. Lululemon uses a value-based pricing method, which Iocuses on the overall value the product delivers 7 . The clothing Ieatures are unrivalled in the active wear category and thus, by using the improvement value method, it is evident that consumers would be willing to pay much more Ior their products relative to other comparable products. Based on data Irom Statistics Canada, in the 2009, lululemon had approximately 0.105 oI all retail market shares in Canada 9 . However, this ratio is not truly reIlective oI lululemon`s true market share as lululemon`s retail stores speciIically sell yoga athletic wear. Using data Irom other major athletic clothing brands in Ontario, lululemon captures approximately 1.04 oI the market share selling athletic apparel (Total athletic apparel market share in Ontario Iound by summing the sales oI Nike, Reebok, Adidas, Under Armour, Puma, Columbia Sportswear, New Balance, Lululemon (private companies: Roots and Ice Gear were not included as there were no sales numbers publicly available)). Lululemon is a market niche that specializes in selling yoga attire and accessories, thereIore, a reasonable estimate oI 35 oI athletes who practice yoga are loyal to
the lululemon brand. Clearly, through lululemon`s unique promotional strategies, the exclusive Ambassadors club have gained popularity through yoga and Iitness communities.
As a new competitor to lululemon, NRG oIIers similar Iitness classes Iree oI charge and designs athletic clothing with a very unique beneIit to its customers, this leads lululemon to start oIIering more or diIIerent beneIits Ior customer retention. For example, lululemon may start oIIering a loyalty program to maintain its large market share within the Toronto area. However, due to lululemon`s strong connection and relationships within the yoga and Iitness communities developed through their Ambassadors program, customer loyalty may not be an issue. However, due to advanced technology that NRG`s clothing has to oIIer, lululemon may have to start investing in research and development to expand the Ieatures oI their current Iabrics. 7 It is without a doubt that NRG will enter the market as a strong competitor towards lululemon. 5.0 Segmentation Analysis and Consumer Buying Behaviour 5.1 Objectives New Revolution Green (NRG) is built as a subsidiary oI Aritzia, a Canadian clothing company Ior women. Its mission is to provide customers with high-quality, environmentally-Iriendly athletic wear. At the same time, it oIIers clothing that is casual and comIortable and yet stylish. We do this by providing customers with clothing which Iollows the latest Iashion trends. Our marketing strategy is to attract visibility quickly by pricing our products at par and slightly above our major competitor- lululemon athletica; this allows us to create perceived value in our consumers` minds. NRG will embed a technology called Piezoelectricity which will help promote our eco- Iriendly store.
5.2 Target Market New Revolution Green will be located in downtown Toronto where the central business district oI Toronto is located at. This district contains the headquarters oI many Canadian companies as well as a large residential population. Lots oI high-rise condominiums are also located nearby. NRG athletic apparel has one key market segment. This target market is Iemale only, 23- 35 years oI age, who are high-income individuals having an annual income oI $50,000 or more, according to Statistics Canada. 5.3 Why this Target Segment? We have targeted our sales towards this speciIic market segment as our store is located in an up- scale shopping district where it is also a Iinancial district. There are all sorts oI designer Iashion and upscale stores located in this area, since it is also a Iinancial district; the majority oI customers to these stores will generally have high income and will be able to aIIord the premium priced apparel we have. Young consumers, aged 23-35, tend to have more disposable income than the older generation, they are willing to spend more money on clothing and are more conscious oI the Iashion trends. According to the Women`s Clothing Stores article, women between the ages oI 17 and 24 increased spending on clothing by 1 percent, whereas purchases by women between the ages oI 35 and 44 Iell by 10 percent, and purchases by women over the age oI 55 dropped oII 13 percent. 5.4 Target Market Profile: FashForward Greenies - Refer to Exhibit D Gender: Female Age: 23- 35
Education: University Degree Holders Income: $50,000 Type: Iashion Iorward, trend Iollowers, environmentally Iriendly, healthy liIestyle New Revolution Green Iocuses its business with individuals who earn an annual income oI $50,000 or more, these individuals are high-income Canadians who account Ior 25 oI total income in Canada, according to Statistics Canada. We grouped this market according to where they lived- Toronto, Canada, a larger urban area where 31 oI the 5.5 million Canadians who earn $50,000 annually live. High Income Canadians. who thev are / where thev live (according to Statistics Canada) (1) 5.5 million Canadians earn $50,000 annually; (2) 46 oI this 5.5 million Canadians live in Ontario; (3) 31 oI this 5.5 million Canadians live in larger urban centres, i.e. Toronto; (4) 25 oI this 5.5 million Canadians are women; (5) 58 oI all women aged 15 and over had jobs; The predominant shopper in a yoga Iocused athletic apparel store is a typically 23 to 35 year-old Iemale who has a wide range oI disposable income and are trend Iollowers. FashForward Greenies are individuals who are active, busy and independent. These individuals hold university degrees and a decent paying job, thereIore, they are able to purchase our premium priced products. This year, sportswear becomes street-wear in spring 2010 according to research, individual trend Iollowers who also lead a healthy liIestyle are also included in this target segment. Individuals in this segment lead a healthy, balanced, Iun-Iilled liIestyle, who are also environmentally Iriendly and are willing to spend money on luxury athletic apparel. Lastly, FashForward Greenies are extremely Iashion driven shopping Irequently, and want the newest style. They deIine value as: Fashion ~ Quality ~ Price.
5.5 Consumer Buying Behaviour Our target market`s buying behaviour can be described as variety-seeking buy behaviour. They have low involvement but perceive the diIIerent athletic apparel brands diIIerently. Customers in this segment are willing to try something new or diIIerent. They may have spent an amount oI time and eIIort looking and evaluating the other available brands - lululemon, keylime athletic wear, tee-art. FashForward Greenies have had prior experience with athletic wear and their perceived risk is moderate. 6.0 Positioning Statement New Revolutionary Green (NRG) is Ior young Iemales concerned with the environment who are seeking comIortable apparel to express and enhance their physical and mental wellbeing. NRG strives to be an innovative and trendy line oI athletic Iashion established as its own independent retailer and brand that integrates technology into its products to deliver Iunctionality in addition to style. Unlike lululemon athletica, NRG apparel can charge electronic devices eIIortlessly utilizing Piezoelectricity technology 10 while oIIering comIort and style. Please see Exhibit E Ior a perceptual map oI where NRG hopes to establish its position in the market. In comparison with other competitors, NRG is priced in the upper right quadrant oIIering high quality at a high price creating value Ior the customer. 7.0 Marketing Mix New Revolutionary Green (NRG) is a new Iashion line Ior women that Iocus on comIort and style. Developed and established under the parent company Aritzia, NRG will have a strong position in the apparel market Ior women who seek trendy and comIortable clothing. NRG will be an independent retail store located in downtown Toronto, Ontario. The core competency
revolves around advocacy and drive Ior the environment. The store and its line oI products will IulIill the needs and wants oI those who seek physical and mental wellbeing. 7.1 Product NRG aims to provide potential customers a unique experience not limited to simply shopping. Aside Irom purchasing our quality products, we want to build a strong customer relationship through other innovative methods. Our store and the new line oI merchandise will exploit a technology called Piezoelectricity. Piezoelectricity relies on mechanical stress to generate an electric Iield, which can be utilized Ior Iunctional purposes such as charging electronic devices (i.e. mobile phones, iPods) 11 . NRG will take advantage oI this technology and embed it within our stores and products to promote a 'Green mindset. The store atmosphere will be a signiIicant component in deIining our brand and merchandise. We will be striving to promote environmentalism (i.e. Going 'Green) 12 through day-to-day operations and our merchandise - advocating this broad philosophy as Iollows: Piezoelectricity technology inIused with our high-end quality merchandise supports environmentalism; providing customers Iunctional value as they perceive our trendy and comIortable products Lighting will be partially powered by Piezoelectric apparel worn by customer service representatives in the store Physical and mental discipline classes are oIIered at diIIerent times oI the week allowing customers to get involved with our vision Ior overall wellbeing (Exhibit A)
Emphasizing comIort and social harmony, range oI apparel sizes will suit most, iI not all, our customer base. II otherwise, custom orders can be arranged 13 . Store representatives will be trained to oIIer advice and advocate company values to customers regarding health, Iitness, and the environment Furthermore, the store layout and structure will act as a marketing strategy to capture market share. As our target segment (Section 5.4) is Iitness-Iocused and environmentally conscious, the layout relies on natural lighting through sun rooIs, large windows, and mirrors. ReIer to Exhibit C Ior more details. StoreIront Display 1` will have staII perIorming Yoga and other exercises to promote healthy living and mental wellbeing. The Fitness Centre will hold weekly classes that are Iree oI charge in addition to personal training sessions, which require a Iee. With organic plants and windows throughout the store, the thought oI selI-expression and comIort will expose customers to calmness and harmony. Under well-deIined interior design and expressive marketing displays, NRG can capture market share within the target segment we set out to reach. 7.2 Price NRG products will be priced competitively with our direct competitor lululemon athletica. NRG will aim to price at a premium to reIlect an image that sustains quality and prestige products and customer intimacy with our customers adopting a 'Price Lining strategy. NRG will be customer-oriented to create value in our brand and its merchandise to position ourselves as a premium Iashion line in the consumers` minds. Using 'Price Lining 14 as our pricing tactic, top-oI-the-line products are priced above the competition while pricing the majority oI our products at par with our competitors as shown in Exhibit B. This strategy creates perceived value in consumers` minds because we Iorecast the majority oI our sales to come Irom our
standard line. For customers who purchase our main products, we deliver value such that they perceive to be buying quality, brand, and status due to other merchandise priced at such a high premium. 7.3 Place NRG will be located in downtown Toronto, Ontario. Established as a Canadian brand, NRG`s retail store will provide customers a convenient location to shop and participate in our various Iunctions held every week. NRG aims to deliver value through developing an eIIicient inventory system Ior the products in the store to be available Ior customers in the right quantities and at the right time. As our store only holds NRG merchandise, it is categorized as a specialty store concentrating on Piezoelectricity-inIused apparel. ManuIacturers will distribute indirectly to consumers as all products are to be sold in our NRG retail store. The key point is the location oI our store. Stationed in downtown Toronto, NRG takes advantage oI the busy streets and the vast amount oI people in the area, including our target audience (reIer to Section ). 7.4 Promotion Through selective Integrated Marketing Communication (IMC) tools, we hope to maintain a prestigious image in the consumers` minds. Following the steps Ior an IMC campaign, we take into account the Iollowing: 1) Target Audience has been identiIied (reIer to Section 5.4) 2) Objectives are aligned with our positioning statement to be the preIerred store Ior our target customers when they are seeking 'Green apparel Ior comIort, style, and
Iunctionality. Launch campaign hopes to inIorm target segment oI the new store and its unique products. 3) Budget has been Iorecasted (reIer to Section 8.0) 4) Key message directed to target audience: Our unique selling proposition can be viewed as 'NRG...Green & More. We want customers to think oI NRG when they think oI Green`, healthy active living, and physical and mental wellbeing. 5) Media and medium are limited to magazines to prevent negative word-oI-mouth. Magazines selected are related to health, Iitness, and mental wellbeing such as Fitness, Natural Health, Yoga Journal, and Women`s Health 15 . 6) Communicating our message through the Iollowing IMC tools: N Public Relations 4 Partnering with health charities (i.e. Change Foundation 16 ) Ior mutual beneIits relating to health and wellbeing, reIerring to cause-related marketing 4 Sponsoring various health and Iitness institutions (i.e. Yoga Sanctuary 17 ) with equipment and Iitness apparel (i.e. Yoga clothes and/or mats) 4 Releasing annual reports to maintain a strong Ior potential investors N Limited Sales Promotions Grand Opening Sale, Iollowed by exclusive sales Ior customers who actively visit our store N Electronic Media promoting our store through a corporate website, blogs, and social media (Facebook, MySpace, Twitter) 7) Assess the impact oI our campaign will allow us measure our progress and success Ior the launch oI our new brand and store.
8.0 Financial Analysis NRG projected Iirst year revenue is $1,249,887, selling 12,625 units, and will grow at a similar rate to the main competitor Lululemon (66 per year 7 ). The Iirst year revenue was obtained through segment proIitability. NRG will target women in Canada who did Yoga within the past 12 months (1.3 million people 6 ) who has an income oI over $50,000 (22.7 18 ). The target market will primarily be living in Toronto, Ontario (14.26 oI the total population). Through engaging in rigorous advertising campaigns, NRG projects to have a great reception to their magazine ads, getting approximately 75 oI the readers to come into the store. NRG is very positive about the clothing line which have been prepared and will hope to obtain excellent consumer purchase results; NRG projects 40 oI the customers who enter the store will buy a product. The high quality clothing line will be priced at $139 while the regular clothing line is priced at $95. NRG has decided at those prices through market research; to penetrate into the market, NRG priced the clothing line cheaper than Lululemon (main competitor). ReIer to Exhibit H and I Ior the calculations on the segment proIitability and Iirst year revenue numbers. NRG will start making a proIit on the income statement in third year oI operations. II the company can maintain an average 66 oI growth per year and keep the cost oI goods sold and variable expenses proportional Irom year to year, NRG is projected to earn an EBITDA oI approximately $85,000 in the third year. The breakeven sales number is 39063 units; assuming the variable costs stay proportional with the increasing revenue. ReIer to Exhibit I and J Ior the calculations oI the proIitability year and breakeven sales. New Revolution Green arrived at the expense numbers through comparison with the primary competitor Lululemon. Since NRG`s business model is very similar to Lululemons, the selling and administrative expenses will be similar proportionally as well. AIter careIul research,
NRG has Iound a building Ior lease in downtown Toronto which they can renovate Ior their new store. The rent will be $10,000 19 per month which will be treated as a Iixed cost. NRG will also be promoting in Yoga Journal in addition to the word oI mouth and product promotions. The company has researched it will cost them approximately $380,000 20 Ior a Iull page colour advertisement in the magazine. NRG hopes to continue the magazine promotion on a yearly basis and will treat the magazine expense as a Iixed cost.
9.2 Exhibit B Selective Product Comparison (in CAD) New Revolutionary Green (NRG) lululemon athletic Yoga Pants (Solid) 95 98 Top Quality Yoga Pants* 189 108 Shorts (Groove) 50 48 Hoodie (Solid Zip-Up) 75 98 Tanktop (Racerback) 35 42 *Note: NRG prices certain products at a premium to create perceived value Ior customers
9.3 Exhibit C NRG Floor Plan
9.4 Exhibit D Consumer Buying Behaviour Collage
9.5 Exhibit E Perceptual Map oI Competitors
9.6 Exhibit F Bulls Eye Diagram
9.7 Exhibit G Forecasted Income Statement
NRG AnnuaI Income Statement
(in miIIions $CDN)
For year ended Dec 31, 2012 For year ended Dec 31, 2013 For year ended Dec 31, 2014 Year 1 Year 2 Year 3 SaIes 1.2500 2.0750 3.4445 SaIes Returns and AIIowances 0.0625 0.1038 0.1722 Net SaIes 1.1875 1.9713 3.2723
Cost of Goods SoId 0.5875 0.9753 1.6189 Gross Income 0.6000 0.9960 1.6534
9.8 Exhibit H Total Units Sold Population oI women who did Yoga 1,300,000 Income over $50,000 (Percentage) 22.7 Living in Toronto, Ontario (Percentage) 14.26 Positive Reaction to ads (Percentage) 75 Customers who buy (Percentage) 40 Total units sold 12625 units
9.9 Exhibit I Revenue Calculations Assuming consumers purchase 1 unit Irom the high quality clothing line per 10 purchases Irom the regular clothing line:
First year revenue: 10x x 12625 11x 12625 x 1148 high quality purchases ThereIore, 11477 purchases Irom the regular clothing line
1148 * $139 11477 * 95 $1,249,887
9.10 Exhibit J Break-Even Analysis From the numbers based on the Iirst year, Cost oI goods sold: 47 oI revenue Selling and Administrative Expenses: 31 oI revenue Average revenue per product: 1,249,887/12,625 $99/unit Average cost oI goods sold: (1,249,887*0.47)/12,625 $46.5/unit Average Selling and Administrative Expenses: (1,249,887*0.31)/12,625 $30.7/unit Contributed Surplus: 99 46.5 30.7 $12.8/unit Fixed Costs: Rent Advertising $380000 $120000 $500000 Units to breakeven: $500,000/12.8 39063 units
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