Foxy Originals

Topics: Variable cost, Contribution margin, Costs Pages: 6 (1786 words) Published: April 9, 2013
Foxy Originals
1. Discuss the pros and cons to launching the Foxy brand in the U.S. Pros: Kluger and Orol had established strong Foxy jewelry market in Canada but it is getting saturated. By expanding into the United States Foxy would be able to avoid oversaturation of the Canadian market. The U.S. jewelry market was almost 10 times larger than the Canadian market which offers great opportunity for their product exposure. With this expansion, Kluger and Orol could expand their production as well as possibly begin developing new product lines. Foxy is currently experiencing a steady growth period in sales so expansion to a new market at this time would be a good way to capitalize on this growth. By expanding into the US Foxy could potentially pull back a little on the volume growth in Canada to not drive the price down in the future. Cons: Kluger and Orol have only done business in Canada. Both countries have very different market and very different taste, so creating jewelry line that will be successful in both countries will be very difficult. Establishing new business in new country with new marketing ideas and sales will result in large upfront cost. 2. Assess each distribution strategy from a qualitative point of view. US Trade shows: Since the retailers personally get to meet the designers and see their products in the booths, it creates confidence in the product and its quality thereby enhancing the brand reputation. This also enables the retailers to take a good look at all the designs and choose certain signature designs of foxy thereby increasing the sales compared to the alternate strategy. As the foxy company itself ships the orders to the retailers they would ensure that the retailers get the original foxy jewelry. a lot of passion for the product. One of the main drawbacks is the amount of time that is being spent in the trade show and the lack of time to focus on the Canadian market. Also, by using the trade shows only the only direct contact with the customers is through the few days at the show. When the owners are not in town, there will not be any direct marketing occurring to push their products to additional suppliers. Sales Representatives: The reps will be able to continually market and sell the brand to the local businesses year round instead of just during the few days of the trade show. Each sales representative carries 10 to 15 brands and markets them to retailers. So he might not put high efforts in marketing one particular brand and try to increase the brand’s reputation. Since there are several brands of jewelry available at single place, retailers wouldn’t be focusing on a single brand. This doesn’t help in development of loyal customers to the brand. If another brand pays slightly higher commission to the sales representative there are chances that the person would be inclined to sell more of those goods and this might adversely affect foxy’s sales. In case the popularity of foxy brand increases the sales representative might sell duplicates of the brand to the retailer to make more profits which would affect foxy’s business.

3. 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 2005). Costs |  |  |  | Per show | Year 2005 |

Investment |  |  |  |  |  |
Booth cost|  |  |  | $ 133.33 | $ 1,333.33 |
Fixed costs|  |  |  |  |  |
Registration fees|  |  | $ 3,000.00 | $ 30,000.00 | Booth shipping cost|  |  | $ 1,500.00 | $ 15,000.00 | Plane tickets & travel|  |  | $ 2,000.00 | $ 20,000.00 | Product samples & promotional materials| $ 2,800.00 | $ 28,000.00 | Total|  |  |  |  | $ 94,333.33 |

4. Identify all costs, other than variable costs, for the sales-rep distribution strategy.  Categorize these costs as investments and fixed costs (per sales rep and for 2005)....
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