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The apparel industry is one of the most important sectors of the economy in terms of
investment, revenue, trade and employment generation all over the world. Apparel industry
has short product life cycles, tremendous product variety, volatile and unpredictable
demand, long and inflexible supply processes. The global apparel manufacturing industry is
expected to grow more than ever in times to come. The global apparel industry‟s total
revenue in 2006 was US$1,252.8 billion (~USD$1.25 trillion), approximately 68% of the
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overall industry value. According to an estimate by the US Bureau of Labor and Statistics ,
the global apparel industry will reach a value of US $ 1,781.7 billion (~USD$1.78 trillion) by
the end of 2010. (Fashion Apparel Industry, 2008) The percentage share of different regions
of the world in the total apparel trade revenue for in 2006 is referenced in Figure 1 below.
Some of the current trends include the distressed look, an example seen below in
Figure 2, made popular with brands such as Monarchy, Affliction, Aqua IV, Don „Ed Hardy‟
and many others. The distressed look is typically vintage in appearance and often features
iconic imagery such as skulls, vines, tattoo-inspired art and often features old English
typography. This style is very popular with sports figures such as boxers and mixed martial
artists as well as pop culture musicians across the board.
Another popular trend in our market segment is the more urban targeted graphic prints
made popular with designer toy culture and includes companies such as Kid Robot (Figure
1
Bureau of Labor Statistics; http://stats.bls.gov/iag/tgs/iag315.htm
2
MAGIC – About the Show; http://www.magiconline.com/magic/v42/index.cvn?id=10354
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Figures 4 & 5. Kid Robot outfit; http://kidrobot.com; BAPE store located outside of
Yokohama, Japan as the line forms for exclusive BAPE apparel; http://www.bape.com
With nearly two decades of marketing and promotions experience we are familiar with
the particular segment of the age groups we are targeting. People who wear our products
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Kid Robot MUNNY Camo Metallic Nylon Jacket Black For Men;
http://kidrobot.com/products2.cfm?ID=6827&cfid=8597208&cftoken=46338337&nav_choos
er=&dept=APPAREL&typ=OUTERWEAR
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A Bathing Ape (BAPE), Young man decked out head to toe in BAPE clothing.
http://bape.com
Our consumers are typically hipsters, “a blanket description for the trend in the
"alternative", "anti-fashion" fashion of middle class and upper class urban, young people
moving into "gentrified" or soon to be "gentrified" neighborhoods in city centers. Often
hipsters came to these poorer neighborhoods from well-to-do suburbs of major cities. In
youth culture, the term hipster usually refers to young people who may have an appreciation
for independent rock, a campy or ironic fashion sense, or an otherwise "bohemian" style.
They are typically associated most closely with alternative culture, particularly alternative
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music, independent rock and independent film.” Our clientele are often found at concerts
and music events, extreme sporting events (snowboarding, skateboarding, BMX, Mixed
Martial Arts aka MMA, etc).
Another market segment that no one really owns is the culture of „burners‟, or Burning
Man loyalists. Approximately 40,000 attendees turn out on the „playa‟ for week of mayhem
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Generation Z; Accessed http://en.wikipedia.org/wiki/Gen_Z
Market Segmentation
We estimate that 80% of our customers are between 18 and 34 years of age.
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Hipsters; http://en.wikipedia.org/wiki/Hipster_(contemporary_subculture)
Of these three S.L.A.T.E. (Figure 9, next page) is by far the arena in which we prefer to
break through. This area features many lifestyle brands that are within our competitive
environment and include:
Alpinestars
C1rca/ Four Star Distribution
Ezekiel Clothing
Fresh Jive Mfg.
Obey
Serious
Storm of London
Another trade event, Agenda Show (Figure 10, following page), has recently emerged
on the scene. “The Agenda Trade Show is a forum for the most inspired in the streetwear
and action sports industries to unite. Lines speak for themselves and buyers are not
intimidated by the usual overwhelming tradeshow experience. From the garage-run lines on
the verge of explosion, to the well-established elite, Agenda caters to the needs of buyers
and brands that exist on a higher level of design and aesthetic. With a strong emphasis in
style, art, music and culture, the Agenda experience is as much a lesson as it is a tool.”
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Agenda is expanding aggressively and has events in Tokyo as well.
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http://www.agendashow.com
Some of our direct competition includes popular lines including Affliction, Analog, Aqua
VI, Christian Audigier, Diesel, Ed Hardy, Fox, Kid Robot, Monarchy, Obey, Rebel Spirit,
Roar, Rock & Republic, RVCA, Savage Republic, Stussy, tokidoki for MIMOBOT, Triple 5
Soul, True Love and False Idols, WeSC, and others. Other lines which overlap into our
target market but cater more toward the surf and skate markets are still competitors and
include Hurley, O‟Neill, Quicksilver and others.
Typically the profit margin is about 100% gross markup. For example if a pair of jeans costs
about $20 to make we would wholesale for $40 and the retailers would continue their
markup another 100% on that to retail at $80.
Reducing the overall cost of goods can greatly benefit our bottom line as we can
keep our retail price. Many of our competitors have premium retail prices. Decorated finished
goods with specialty finishes can retail at $40-80 and up for a t-shirt which the cost of goods
can remain roughly the same – at about $4-10 for finished goods. The potential profit in our
market segment is obviously attractive.
F. REGULATORY RESTRICTIONS
Although not affecting us immediately there are two areas we forsee in which regulations
may apply to our organization. The first is fair labor and fair trade laws. Things that could
affect us are cost of raw goods and manufacturing and related services where we source our
goods. We are a socially responsible organization and work only with companies that
practice labor and pay a living wage to their employees. Some large companies have been
singled out such as The Gap whose operations may include so-called slave labor. This is
strictly not tolerated in our operations.
The second regulation has to do with importing quotas and related fees and tariffs.
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Polo Ralph Lauren Corp (RL); http://finance.yahoo.com/q/is?s=RL&annual
B. DISTINCTIVE COMPETENCIES
We have several identifiable factors that help our success. The first competency our
company has is that every member of our team are gifted individuals with each very visible
in their own niche. Each member is very creative and has their own strengths - expressing
themselves artistically in mixed media including graphic, 3D, and fashion design,
photography music and much more.
These competencies help us on the creative side but the true key to our success is our
organization and 20 years of business experience – including fashion. Having already
operated in this space successfully greatly reduces our learning curve and advances us in
our path to continued profitability.
Joann Kuo //
Joann's passion is fashion. She earned her degree in Product Design at Stanford
University and is a marathon runner. Joann's second life is in the medical devices
industry, founded a yoga apparel line, and can sew a mean giraffe.
The internet has obvious advantages and being from Silicon Valley we try and
integrate leading technology as early adopters. Our website has a wealth of information
about our company in general and contact information and has been a way for both buyers
and end consumers to find us.
1. Wholesale Buyers
The preferred method to communicate with buyers is really direct interaction with buyers.
We have developed proprietary CRM solutions to better service our customers. Personal
relationships are what we take pride in and helps us better meet the needs of our customers.
Another thing we do with areas of high concentration such as California, New York, Chicago
and Florida we personally visit accounts. Larger numbers in territories has us naturally
migrating toward sales reps. Sales reps can exclusively carry our lines or work with several
related lifestyle brands. Phone calls are a great way to communicate with buyers when a
personal visit just doesn‟t line up.
One way to maximize the effectiveness and efficiency of face time with buyers is at trade
events. A leading tool we use to reach buyers, both existing customers and prospects, are
tradeshows. Over the years we have exhibited at all the leading shows here in the US from
Los Angeles to Las Vegas to New York City including MAGIC, ASR, International Fashion
Boutique Show and more. We‟ve been a part of leading emerging shows such as 432F,
Look show and others.
The next instrument we use to communicate with buyers are emails. This is the fastest
method of delivery – virtually instantaneous. Email allows us to forward links to access our
line sheets, new products, inventory updates and other related information. We incorporate
To increase our effectiveness and help make buyers aware we have run print
campaigns in various magazines that specifically target those in the fashion industry such as
Sportswear International. We have had editorial written up in several industry magazines
such as Impressions.
Another tool we use to communicate with buyers is direct mailing – what is often referred
to as traditional „snail mail.‟ This keeps our bulk mail permit well exercised and is one more
way to increase the recognition and retention rate of our brand in buyers‟ conscious.
Broadcast faxing is another way we try and keep our name in circulation with our
accounts. This can be a good method, especially for more traditional buyers. This is much
easier now as VOIP technologies allow fax broadcasting at a very nominal cost, if anything
at all.
2. Consumers
We integrate a diverse mix in methods of outreach direct to our end-user consumers. We
already know who have embraced our clothing, primarily the electronic dance music and
skateboarding communities. Over the years we have seen shifts toward new trends and we
are definitely seeing a resurgence in these markets recently. We see the momentum and
customer behavior and are confident that despite our past successes there has been no
better time for a product line and brand like ours. There is a tremendous void and customer-
driven demand. Like in chess we are anticipating where our market will be.
Knowing our customers we see one of the strongest ways to reach out to our consumers
is promotion through events. A large part of our rapid name recognition originally was our
tremendous involvement in the Electronic Dance Music (EDM) community. We had millions
of imprints of our Remix brand logos on event flyers, posters and other print collateral. Out
of the hundreds of events we‟ve been involved with on various aspects we have originally
vended at quite a substantial amount in different geographic regions with exciting results –
selling substantial quantity at events, and more importantly, opening retail account in
immediate and surrounding areas.
In addition to our own websites we have home on popular social network portals
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Facebook , MySpace and others to help us more effectively reach and be reached by our
customers. Web promotions is something we can certainly excel at and integrating viral
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promotional videos distributed via sites such as YouTube is certainly something we want to
get involve with.
Another tool we use is stickers which we have as standalone as well as hangtags. This
is great for our customers to slap on their cars, dj coffin, record case, skateboards, mountain
bikes, snowboards, school binders, etc. Stickers are a great way to get virtually free repeat
views and things people love. One drawback to hangtag stickers is they are often stolen off
garments from store racks.
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http://www.new.facebook.com/group.php?gid=2211961296
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http://groups.myspace.com/remix
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http://uk.youtube.com/REMIXCULTURE
In addition to market penetration there are three other areas of the Product-Market
Growth Matrix (visually represented above in Figure 11) we incorporate is product
development , market development and diversification. With our diverse range of creatives
we always have new products in incubation and development which we have for existing
markets. One example we have to this expansion is growing into the vinyl toy market and
further into the dj bag market, something which was quite successful for us previously.
Market development is expanding into new markets with existing products. An example
is bringing our apparel, accessories to markets that are new to us, such as the MMA sports
market which is currently held heavily by Affliction.
The fourth segment of the matrix is diversification which is both new markets and new
products. We do not have any interest currently in pursuing this area. An example of
diversification is Richard Branson‟s Virgin brand. “Virgin Cola, Virgin Megastores, Virgin
Airlines, Virgin Telecommunications are examples of new products created by the Virgin
Group of UK, to leverage the Virgin brand. This resulted in the company entering new
markets where it had no presence before.”12
C. DISTRIBUTION CHANNELS
Our distribution channels are primarily through traditional brick and mortar retail stores, as
has been the norm for us but an increasing amount is done online – both with brick and
12
http://en.wikipedia.org/wiki/Product-Market_Growth_Matrix
The majority of our sales has been to mom and pop boutique and small independent
chains in the US and Canada but we have been expanding to larger lifestyle chains such as
Urban Outfitters and Hot Topic as well as boutiques, small chains and distributors outside
the US.
Focusing the new collections through existing channels is key but new chains have
emerged such as Metro Park USA, a virtually exact match with our target market that was
founded by Hot Topic founder Orv Madden. Metropark USA near approximately 60 stores in
just a few years and describes its so-called „lust for life‟ as “the decisive lifestyle shopping
destination for today's trendsetting young adults, blending fashion, music, and art to offer a
rare and inspiring shopping experience. Part club, part street boutique, we are fast becoming
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famous for our carefully edited multi-brand fashion assortment and dynamic atmosphere.”
D. COMMUNICATIONS
Outreach is done multiple ways – most are previously mentioned above. Our preferred way
to communicate is face time with our clients followed by telephone and then mail and email.
Events, whether trade events or concerts, are a preferred way to communicate with the
industry and consumers concentrated in one space.
We do our public relation currently in-house and communicate to various media – online
and print to give them news of our products. When we expand to significantly higher volume
we will consider retaining a PR firm who can more effectively deal with broader broadcast.
E. SALES STRATEGIES
There are a few sales and marketing strategies we integrate. The first and foremost goal is
to achieve customer satisfaction while making a profit for our company and investors. The
primary focus of our business is wholesale so having our retailers and distributors happy and
happy carrying our products is our primary concern. Our strategy is market dominance with
several contributing strategies to help us attain our goal.
Market Dominance
One of the strategies we integrate into our mix is market dominance - mainly the
electronic dance music (EDM) community. EDM is one of the primary musical genres of our
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target market, along with hip-hop, alternative rock, etc. The Love Parade in Germany, the
so-called „Highway to Love” has been the world‟s premier event and attracted 1.6 million
attendees on July 19 2008 (Figure 12, above). It has been named “the biggest, most
spectacular and most peaceful musical event in the world,” something EDM is often
synonymous with.
Love Parade was founded in Berlin but these large scale events are not restricted to that
market. Love Parade has organized events in other nations including Brazil, Israel, the
United States, Venezuela and more. Below is an image from Love Parade Tel-Aviv 2004
(Figure 13, following page). The San Francisco Love Fest is a spin-off from Love Parade
and is expected to draw 100,000 people Oct 2008. The numbers and the potential market
13
http://www.metroparkusa.com/about
14
http://loveparade.com
There are not currently any clothing lines, at least in the US, that own this space of the
market. One of the largest players was and now is us, with our Remix line. Our brand
represents music, especially dj culture, which is starting to see a significant escalation in
numbers again after pulling back slightly the past several years. Aligning and defining our
brand with the movement will help us lead the market segment.
Some of the more traditional sales strategies we implement to reach our goal of market
dominance include the Three P‟s (Product, Pricing, Promotion).
One thing that differentiates our product is our use of eco fabrics such as organic cotton,
bamboo, recycled content, etc.
Our pricing is aggressing. Many of our competitors‟ price points are $50-80 for t-shirts.
Our goal is to provide hip designs on eco fabrics for $30-50.
04. Operations
A. PRODUCTION AND SERVICE DELIVERY
Manufacturing for our products is something we have worked diligently on. We have
manufacturer both directly and with manufacturing brokers. The majority of our products
have been manufactured in Southern California, but also Mexico and China, and even some
locally. Some of our services are done locally, including screen printing.
Logistically we are fluent with the various stages that garments go through from
conception to a store shelf. Chris, Carin, Shilo and I all have extensive experience with cut &
sew all the way from design, pattern making, grading, marking, raw materials, cutting,
sewing, dyeing, trim, packaging, shipping and more. Some of our customers such as Urban
Outfitters, Hot Topic, etc have special requirements such as hangtag labeling or other
special distribution routing.
As previously stated we are comfortable with smaller runs in the hundreds of units and
can scale up virtually seamlessly and can call on our extensive network of contractors,
suppliers and service providers to meet production and delivery requirements.
D. SUPPLIERS
We have a substantial number of suppliers – both of raw materials, finished goods and
service providers, such as sew shops, dye houses, screen printing, embroidery, printing and
more. The suppliers we use are from across the country and overseas. We try and use local
suppliers, especially on the West Coast, if not California, or even the Bay Area. Local
suppliers offer the benefit of faster time to incorporate, reduced resource usage
(transportation fuel) – making sense both from a socially responsible as well as economic
perspective. Of course we do a cost benefit analysis but do give extra consideration to green
operations.
05.Financials
The financials are what operations of a business are intended to positively impact and
although our organization is built on creativity we do push for a healthy bottom line to both
help ensure our longevity and self-sustainability as well as provide positive financial returns
to our organization for fund future expansion as well as reward our stakeholders.
Attached are several budgets including a projected operations budget, a three year
revenue projection, and a pro forma income statement.
$0
LICENSING
Spundae (15% wholesale, 50% advance) $1,000
$10,000
DEVELOPMENT
Website design 5000
Website maintenance - annually` 2000
Data warehouse maintenance
$7,000
SUPPLIES
Paper, fax toner, etc 1000
$1,000
OTHER
Trademark 375
Assorted legal fees 5000
$5,375
06. Review
A. SUMMARY OF SIGNIFICANT ASSUMPTIONS
B. ANALYSIS
07. References
Back That Thing Up; Jessica Pallay; DNR; Feb 11, 2008; Accessed 21 August 2008.
http://www.dnrnews.com/site/article.php?id=1393
Streetwear : the insider's guide / Steven Vogel.; San Francisco: Chronicle Books, 2007