Foxy's Original

Topics: Variable cost, Costs, Management accounting Pages: 7 (2050 words) Published: April 9, 2012
1.Discuss the pros and cons to launching the Foxy brand in the United States. PROS:
Launching the Foxy brand in the United States would be beneficial to the company because of the sheer size of the market. In comparison to the Canadian market, the U.S market is much larger and includes a larger number of consumers. In addition, those consumers are very interested in attaining nice but affordable products. American consumer culture is concerned with seeking out the lowest-cost, highest-quality product regardless of its country of manufacture. Due to of the decreased emphasis Americans place on purchasing only domestic products, American consumers will be open to a high-quality, low-cost Canadian product. A third pro to launching in the U.S is having the ability to infiltrate fashion hubs; cities like New York and Los Angeles are not only fashion epicenters in the U.S but they have world-wide influence and a significant presence in the international fashion industry. Having access to these markets is key in brand expansion. Lastly, the United States features very large trade shows with over 75,000 buyers in attendance. CONS:

However, there are several key cons associated with launching the Foxy brand in the United States. The product will lose some distinctiveness since it will be available to consumers on a larger scale. As a result, Foxy’s original Canadian customers could potentially be alienated and refuse to continue buying the product. One of the reasons Foxy was able to succeed in Canada is the personal contact that the owners of Foxy had with their brand distributors. By launching the Foxy brand within the United States they will lose the personal contact as well as the assurance that their brand is being appropriately represented.

1.Assess each distribution strategy from a qualitative point of view.

According to the case study, trade shows act as a “one stop market place.” Buyers come from all over the region to attend. The shows are not open to the general public but only to buyers from boutiques, specialty, and department stores. This characteristic gives Foxy little control over who is exposed to and purchases their product. Additionally, attendance is geographically diverse, for buyers come from all over the region. This means the Foxy product will be scattered throughout stores spanning the United States and not necessarily be concentrated in U.S fashion hubs. This in turn has implications in the buyer market Foxy is striving to reach. Distributing the product through sales representatives would have a different effect on the Foxy brand. According to the case study, Foxy plans to develop a sales force in the key U.S fashion hubs. By only distributing the product in pinpointed geographic zones, the product would be more likely to only circulate in those designated markets. Trade shows, on the other hand, would spread the product over a more diverse geographic region. Distribution through sales representatives would be a faster way to enter the market, since experienced sales representatives would have previously established industry contacts. The representatives would be able expose to the new brand to a set of industry contacts who may be more willing to take a chance on the brand on the basis of the pre-established relationship.

2.Identify all costs, other than variable costs, for the trade-show distribution strategy. Categorize these costs as investments and fixed costs (per trade show and for fiscal 2005).

Investments for Fiscal Year 2005
$4000 for a booth to the used in 30 trade shows.
*We are regarding the booth as an asset. Therefore, the depreciation expense per trade show (($133.33) will be associated with the total fixed costs per show. The initial purchase of the booth ($4000) will not be considered in the total fixed costs per year and will be regarded as a sunk cost.

Fixed Costs Per Trade Show
Registration fee per show-$3000
Fee to ship booth to each show-$1500...
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