Foxy Originals
Foxy Originals
Team 1: Van-de-lay Industries
Ruwanthi Herath, Manasa Varalakshmi, Gabriela Chassagne, James McDougall, Aaron Layden
Executive Summary
Foxy Originals hopes to gain successful market entry into the United States within six months. The U.S. market is significantly larger than the Canadian market that Foxy currently operates in and has substantially less brand loyalty and demand for classic jewelry. Foxy’s two potential methods of market entry are: (1) Tour their products at ten U.S trade shows and make direct sales to retailers or (2) Hire four sales representatives in fashion hubs across the U.S. We, Vandelay Industries, recommend Foxy implement the first alternative.
The contribution margins for the sales representative method is $216 per order, with a break-even point of 118 orders. The trade show’s contribution margin, $302, and break-even point, 313 orders, are significantly higher because of their fixed costs. To reach Foxy’s $100,000 target profit, the sales method would require 581 sales, while the trade show method would require 645 sales. This shrinking disparity in the number of orders necessary to reach the $100,000 target profit highlights the power of the contribution margin over time.
Jen and Suzie have tremendous product expertise and relationship building abilities. These core competencies would be put at significant risk if sales responsibilities were shifted into the busy schedules of sales representatives handling 15 different brands at once. Turning their brand and product presentation over to sales representatives has unjustifiable risk.
We recommend that Foxy choose the trade show method, reduce its classic jewelry inventory to 15% at their booth, and target the “Chain Lovin’ Ladies” demographic in the four major fashion hubs of the U.S. The contribution margin of trade shows and the specificity of their efforts with retailers will result in sustainable growth in a new market.
Case Background:
Jen Kluger and
Team 1: Van-de-lay Industries
Ruwanthi Herath, Manasa Varalakshmi, Gabriela Chassagne, James McDougall, Aaron Layden
Executive Summary
Foxy Originals hopes to gain successful market entry into the United States within six months. The U.S. market is significantly larger than the Canadian market that Foxy currently operates in and has substantially less brand loyalty and demand for classic jewelry. Foxy’s two potential methods of market entry are: (1) Tour their products at ten U.S trade shows and make direct sales to retailers or (2) Hire four sales representatives in fashion hubs across the U.S. We, Vandelay Industries, recommend Foxy implement the first alternative.
The contribution margins for the sales representative method is $216 per order, with a break-even point of 118 orders. The trade show’s contribution margin, $302, and break-even point, 313 orders, are significantly higher because of their fixed costs. To reach Foxy’s $100,000 target profit, the sales method would require 581 sales, while the trade show method would require 645 sales. This shrinking disparity in the number of orders necessary to reach the $100,000 target profit highlights the power of the contribution margin over time.
Jen and Suzie have tremendous product expertise and relationship building abilities. These core competencies would be put at significant risk if sales responsibilities were shifted into the busy schedules of sales representatives handling 15 different brands at once. Turning their brand and product presentation over to sales representatives has unjustifiable risk.
We recommend that Foxy choose the trade show method, reduce its classic jewelry inventory to 15% at their booth, and target the “Chain Lovin’ Ladies” demographic in the four major fashion hubs of the U.S. The contribution margin of trade shows and the specificity of their efforts with retailers will result in sustainable growth in a new market.
Case Background:
Jen Kluger and