Dilemma: 1. Attending trade shows, 2. Hiring sales representatives or 3.

both

Foxy jewelry offered high style and high quality at an affordable price point and targeted women
between the ages of 18 to 30 who were style- and price-conscious. The jewelry was designed for three
groups of women: The Reversible Enamels Ladies, The Bridge Ladies and The Chain-lovin’ Ladies.

Kluger and Orol decided to charge the same price for their products in the United States as they did in
Canada 34usd = 34cad

The U.S. jewelry market was more than 10 times larger than the Canadian jewelry market, offering a
much greater opportunity for product exposure

Classic jewelry (currently 50 per cent of Foxy merchandise in Canada) was also not as popular in the
United States.

There were 10 potential trade shows for 2005 where Foxy could showcase its products. Registration for
all shows needed to be complete by November 2004, at an average cost of $3,000 a show.

Kluger and Orol would require five days of preparation and both would work nine hours a day at the
trade show.

The partners researched a number of booths and settled on one that would cost $4,000 and could be
used for approximately 30 trade shows

The booth would have to be shipped to each trade show at an average cost of $1,500 a show. Plane
tickets and related travel costs would average $2,000 per show, and product samples and promotional
materials would cost $2,800 per show.

The partners had estimated that an average retailer order would consist of 25 necklaces and 12 pairs of
earrings. Retailers would purchase necklaces for $17 and earrings for $12 from Foxy, which they would
then sell to their customers for $34 and $24 respectively. Shipping terms were FOB shipping point and
cost an average of $15 an order.

All necklaces consisted of a chain, a pendant, a label, a clasp, and labor fees for a total cost of $8.05 for
each necklace. A pair of earrings cost approximately $5.50 to manufacture.

The partners expected anywhere from 20 to 45 orders at each trade show. Historically, 50 per cent of
retail buyers at the trade shows would reorder product approximately two times a year.

Sales representatives would be compensated with a 15 per cent commission on all sales.4 They would
also receive $200 a month towards rental space in their jewelry showrooms5 (see Exhibit 6 for
showroom display), two sets of sample boards6 a year for a total cost of $2,900 and catalogues and
promotional materials averaging $600 a year. Foxy would have to hire a part-time bookkeeper to pay
the sales representatives because calculating sales commissions would be time-consuming and
complicated. The bookkeeper’s fee would be $40 an hour, and this person would be required for 48
hours a year. Travel expenses, such as gas and mileage were not covered by Foxy.

Production costs and retailer order size were the same for this option as for the trade show option. The
average sales representative would sell between 10 to 15 orders each month.

3rd option: attending trade shows and hiring a sales force:

Kluger and Orol investigated structuring the sales representatives’ commission package based on sales
they made personally rather than on all sales made within their geographic location.

they hoped their profit would grow by at least $100,000.