Aravore Babies 天然高機能服裝：為啟動加州網路銷售之創業企劃 - 政大學術集成

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(1)國立政治大學商學院國際經營管理英語碩士學位學程 International MBA Program College of Commerce National Chengchi University. 碩士論文政治. 大. 立Master’s Thesis. ‧. ‧ 國. 學 y. sit. io. 銷售之創業企劃. er. Nat. Aravore Babies 天然高機能服裝：為啟動加州網路 a. n. v l C ARAVORE Babies, organic and ethically n i made clothing: a hengchi U. Start up Online Business Plan in California. Student: Rocio Nathalie Perez Jimenez Advisor: Professor James Liu. 中華民國九十九年十一月 November 2010.

(2) Aravore Babies 天然高機能服裝：為啟動加州網路銷售之創業企劃 ARAVORE Babies, organic and ethically made clothing: a Start up Online Business Plan in California. 研究生：羅秀. Student: Rocio Nathalie Perez Jimenez. 指導教授：劉助. Advisor: James Liu. 學. ‧ 國. 立. 政治大國立政治大學. 商學院國際經營管理英語碩士學位學程. ‧. 碩士論文. sit. y. Nat. er. io. A Thesis. n. Submitted a to International MBAvProgram. i. l. n C h Chengchi University National i U e ngch. in partial fulfillment of the Requirements for the degree of Master in Business Administration. 中華民國九十九年十一月 November 2010 ii.

(3) Acknowledgement It is always a pleasure to remember and thank those who help in making any project comes to fruition. It is my heartfelt desire to thank all those individuals who in many ways helped me in successfully completing this study. First and foremost, I want to thank the Almighty for giving me the chance to pursue the International Master in Business Administration programme at NCCU, Taiwan, which could not have come at a better time. Special thanks to my advisor Professor James Liu whose patience and guidance have made this business plan a resounding success. It is an honour for me to work with Professor James Liu whose words of wisdom made this study progress smoothly to completion. My genuine thanks also go to professor K. Huang whose insightful lectures and comments during Strategic Management class has. 政治大 My warm appreciation goes to my classmates especially Ling Hoy and Batur Bold for their help in the 立 review of my financial statement. Special acknowledgements go to Sadibou Jammeh who has helped me consider many management and strategic issues in this paper.. ‧ 國. 學. patiently reviewed my entire work. To my ICDF friends, I say a big thank you. You have all served as my extended family from around the world, to me. Your support throughout the programme has. ‧. immensely helped in a number of ways.. I am also very grateful to the government of Taiwan for granting me a scholarship in Taiwan through. Nat. sit. y. the Taiwan- ICDF. My singular recognition goes to Frank Chang, our ICDF coordinator and Ms.. io. er. Lichi Ho, staff of OIP whose assistance have made a great difference in my two year experience as an IMBA student at NCCU. I am indebted to my professors in the IMBA program and fellow colleagues. n. al. i Un. v. who have shaped me not only professionally but in a holistic way in every learning environment we have shared.. Ch. engchi. I cannot also forget my friends back in Paraguay and around the world who have been my pillar of support through distance during this journey by their words of encouragement on every step I take. This thesis would not have been possible without the permission of my cousins, Yanina and Norah from Aravore Paraguay and Aravore UK. I also recognize the invaluable input of my brother in law Andre who has shown utmost with my task and gave me important technical advice. Lastly, I extend my kind regards and blessings to all of those who supported me in any respect during the writing of the project. I owe a million thanks deepest gratitude to my family, my mother ―Lita‖ and father ―Baby‖ who supported me and made every effort to witness in my graduation on behalf of my brother Erwin, twin sister Jazmin and their families. Their love has made me the person I am today. I thank God for giving me the family I have. I am proud of them.. iii.

(4) Table of Content LIST OF TABLES ................................................................................................................... iv EXECUTIVE SUMMARY........................................................................................................1 1. BUSINESS BACKGROUND................................................................................................2 1.1 Mission Statement ......................................................................................................... 2 1.2 Vision Statement ........................................................................................................... 2 1.3 The Aravore value and philosophy.............................................................................. 2 1.4 Company Goals ............................................................................................................. 3 1.5 Company Summary ...................................................................................................... 4 2 PRODUCTS AND SERVICES ..............................................................................................7. 政治大. 2.1 Products Description ..................................................................................................... 7 2.2 Services and Policies ..................................................................................................... 7. 立. 3. COMPETITIVE ANALYSIS ..............................................................................................12. ‧ 國. 學. 3.1 The State of the Apparel Industry ............................................................................. 12 3.2 Who Buys Children’s Clothing? ................................................................................ 16. ‧. 3.3 Marketing Strategy ..................................................................................................... 16 3.4 Advertising and Promotion ........................................................................................ 27. y. Nat. sit. 3.5 US Moms Online Buying Habits ................................................................................ 28. al. er. io. 3.6 Media Habits and Social Networking ........................................................................ 31. n. 3.7 Marketing and Communication Strategy ................................................................. 33. Ch. i Un. v. 4. PRICING STRATEGY ........................................................................................................37. engchi. 4.1 Why Do Customers Buy Organic Cotton Product? ................................................. 37 4.2 Why Organic baby cotton is expensive? ................................................................... 38 4.3 Is Organic Cotton Baby Clothing Actually Organic? .............................................. 38 5. BUSINESS ORGANIZATION AND HUMAN RESOURCES MANAGEMENT............39 5.1 Organization Structure............................................................................................... 39 5.2 Personnel Plan ............................................................................................................. 40 6. FINANCIALS ......................................................................................................................40 6.1 Important Assumptions .............................................................................................. 41 6.2 Sales Forecast .............................................................................................................. 41 6.3 Break Even Analysis ................................................................................................... 42 iv.

(5) 6.4 Legal Environment ..................................................................................................... 43 6.5 Cash Flow ..................................................................................................................... 44 6.6 Income Statement ........................................................................................................ 45 6.7 Balance Sheet ............................................................................................................... 46 6.8 Business Risk ............................................................................................................... 46 6.9 Long-Term Plan .......................................................................................................... 47 APPENDIX ..............................................................................................................................49 REFERENCES.........................................................................................................................53. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. v. Ch. engchi. i Un. v.

(6) LIST OF FIGURES Figure 1. Ordering process ...................................................................................................... 12 Figure 2. SWOT ...................................................................................................................... 18 Figure 3. Resources and Capabilities ...................................................................................... 19 Figure 4. Five Forces Analysis ............................................................................................... 22 Figure 5. Product Life Cycle Stages ....................................................................................... 24 Figure 6 Four Ps Model .......................................................................................................... 25 Figure 7. Non price strategies ................................................................................................. 26 Figure 7 Mothers' purchasing behavior ................................................................................... 29 Figure 8. Monthly purchases of moms in the USA ................................................................. 30. 政治大. Figure 9. Online holiday shopping behavior of moms in the USA........................................ 30. 立. Figure 10. The USA adults' purchase online in percentage wise 1995 to 2008 ...................... 31. ‧ 國. 學. Figure 11. Most used social networking sites by moms in the USA ...................................... 32 Figure 12. Organizational structure ........................................................................................ 39. ‧. Figure 13. Breakeven analysis ................................................................................................ 43 Figure 15. Company products ................................................................................................. 49. al. er. io. sit. y. Nat LIST OF TABLES. n. iv n C Table 1 Comparison among Competitors 14 h e n............................................................................... gchi U Table 2. Sales forecast............................................................................................................. 42 Table 3. Cash flow projection ................................................................................................. 44 Table 4 Income statement projection ...................................................................................... 45 Table 5. Balance sheet projection ........................................................................................... 46 Table 6. Price list of offered products ..................................................................................... 50 Table 7. Depreciation projection ............................................................................................. 50 Table 8. Operational cost ........................................................................................................ 51 Table 9. Predicted target market size ...................................................................................... 51. vi.

(7) EXECUTIVE SUMMARY This business plan introduces the company Aravore and represents the idea of a high potential fast growing business. The online retail company Aravore will be operated from a partner home, which is located in Fremont, California, the heart of the Silicon Valley and the Bay Area. The partnership company will sell affordable, beautifully made, and soft baby clothes and bedding, knitted and crocheted in 100% certified organic cotton and organic merino wool. Our target customer, which is a middle-and/or upper-class woman in her 20s, 30s, 40s or 50s with children or grandchildren, ages 0 to 6, environmentally conscious, and. 政治大. with interest in fashion, who can choose and buy the products from our website. The. 立. appearance and convenience from our online store, with its pictures, variance, information,. ‧ 國. 學. and different shipping options, makes shopping easy and pleasurable. The company, Aravore USA, is going to sell online baby clothes and bedding, knitted and crocheted in 100%. ‧. certified organic cotton and organic merino wool. Since Aravore will only sell and not make the clothes, Aravore USA can be considered a retail business. At the beginning the products. sit. y. Nat. are going to be available online only. While browsing through the company webpage, the. io. er. customer will get a good overview of our products. They then can place their order, which will be processed either the same or on the next business day, depending from the time the. al. n. order was placed.. Ch. engchi. i Un. v. Internet gives us a big platform to sell our products to a wide range of customers in the United States of America. We are aware of competition in this business sector, and that customers will compare us with other online stores. However, we are confident that our unique certified product with soft colors, its unique classic and at the same time modern style, thus the service we provide, will be profitable, and fill a niche. It is this uniqueness and variety, what will make this business successful right from the beginning.. 1.

(8) 1. BUSINESS BACKGROUND Aravore, (a piece of Heaven/sky) was founded by sisters Yanina and Norah, who were inspired by the natural beauty of their childhood spent in South America. They currently employ over thirty craftswomen in their workshop in Asuncion, Paraguay and five people in London. Yanina and Norah are cousins and we want to expand the family business to be a global brand.. At Aravore, we believe passionately in sustainable fashion and upholding the highest ethical standards along the supply chain. This is why we have a hand in every step of the production. 政治大 through to the knitting, sewing and finishing that happens at our own workshops in Paraguay. 立. process, from the sourcing of the (rain-irrigated) organic cotton and organic merino wool. It is very important for us that the growth of the business ensures that everyone involved in. ‧ 國. 學. this venture enjoys a rewarding job and has a better quality of life as a result.. ‧. 1.1 Mission Statement. y. Nat. sit. Aravore USA, where organic clothes feel like a piece of heaven, is dedicated to high quality. n. al. er. io. but affordable products, customer satisfaction, a healthy baby skin, and the environment.. 1.2 Vision Statement. Ch. engchi. i Un. v. Be leaders in baby organic clothing. We want to be known on the market, as the number one shopping place for affordable organic cotton baby clothes.. 1.3 The Aravore value and philosophy At Aravore, it is believed that clothes should be for life, not for one season and each and every one of our garments is made with passion and exquisite attention to detail. The Aravore seamstresses & knitters work on each garment by hand, with love – ensuring garments that are not only superbly crafted and comfortable to wear, but can be kept in families for generations to come.. 2.

(9) Aravore USA will contribute positively to local communities in Paraguay, where the organic cotton is produced. By selling these fair traded products in the USA, we support employees, suppliers, and local farmers in Paraguay. Besides this, we help create a more sustainable approach to high-quality organic cotton production and to help build stronger local communities. We want to minimize our environmental footprint, to create a great workplace, to satisfy our customer's needs, and to improve diversity. Aravore is currently working on a project to increase the amount of organic cotton that is grown in Paraguay by sponsoring a cooperative of small-scale farmers in their transition from conventional agriculture to organic cotton. This project includes the establishment of a local community fund to carry out. 治政大 having the minimal impact on All Aravore items are made from the finest organic materials, 立 and softness. Each piece includes a swing tag signed by the planet with maximum durability improvements in health and education in the local area.. ‧ 國. 學. the seamstress - creating a more direct link between the artisan and the child eventually wearing it and making them into perfect gift items. Each season displays a new collection as. ‧. well as a small selection of numbered limited edition items. Soft, dreamy colors, simple. Nat. n. al. er. io 1.4 Company Goals. sit. look with a vintage feel that is yet modern and very wearable.. y. shapes and extraordinary detailing have become Aravore’s trademark, achieving a luxurious. Ch. engchi. i Un. v. The main goals of Aravore as a retail business is to be practical with high commitment to producing environmentally friendly products and to advocate for mutual trust and benefit for Aravore and its partners, the suppliers. Some of the specific goals are: To ensure customer satisfaction at all time by providing quality products To provide ethically and environmentally friendly products To maintain high profitable business by providing a good range of products To help local artisans in Paraguay grow by expanding the market share of Aravore To create and build awareness among consumers the importance of organic products. They key business objectives over a three-year time frame are as follows:  Achieve operational breakeven within the first seven month and make a net profit in year3.

(10) one  Achieve an annual expected demand growth of 3% in year-two and three  To have positive cash flow in the five years projected  To maintain a net Income of 30% or higher of total revenues.  Beyond year-three, be able to accumulate enough capital for further store expansion. 1.5 Company Summary The word ―Organic‖, in connection with food or clothes, has become quite popular in recent. 政治大. years. Many people buy these days’ organic products, such as food and baby clothes, to avoid. 立. allergic reactions from their children. The aimed business will be primarily merchandise baby. ‧ 國. 學. clothes and blankets, made from 100% organic cotton. The certified product, whose country of origin is Paraguay, comes from a family owned company named Aravore (meaning ―a. ‧. piece of heaven‖ in Guarani, the Paraguayan native language). Aravore USA would be the North American sales agent for parent company.. sit. y. Nat. io. er. 1.5.1 Company Ownership. Aravore team consists of two owners, twin sisters Rocio and Jazmin Perez; two private. n. al. Ch. i Un. v. investors. Jazmin, has lived in US for the last 6 years and has a child age 5. She has a degree. engchi. in business administration, and is actively involved in woman sport activities with infants; she has a solid understanding of business fundamentals. She will be responsible for the daily business, bills and for filing taxes such as self-employment tax, estimated taxes, and business taxes. I will be responsible for financing the initial capital of the business.. 1.5.2 Start-Up Plan The company, which will be funded with private savings, is going to sell baby clothes and bedding, knitted and crocheted in 100% certified organic cotton and organic merino wool. It can be therefore considered a retail business. At the beginning all sales will be made exclusively online, using a website, which describes why organic cotton, the products, provides pictures, prices, has a secured payment systems, easy checkout, and offers customer 4.

(11) friendly shipping methods. This will enable the business to be opened to the complete North American market from the beginning. The anticipated customers are private persons, such as families with babies, and businesspersons, such as baby store or boutique owners. Besides the online activities, in a second phase growth, it is planned to make the product public to local baby storeowners in the Bay Area, by introducing the product to them and striking deals for carrying the products.. Aravore will find a mentor at the Development Service Center in Fremont, to get some guidance and assistance. We also will take advantage of the free business workshops,. 政治大. sponsored by the City of Fremont, Cal State East Bay SBDC, and Fremont Chamber of Commerce.. 學. ‧ 國. 立. 1.5.3 Company Locations and Facilities. The business will be located in Fremont, California, U.S.A. Fremont is located in the east of. ‧. the Bay Area, in the county of Alameda, just a couple of miles from cities like San Jose, Santa Clara, and the big metropolitan San Francisco. At the beginning, the business will take. y. Nat. sit. place at home. In this case, we need to obtain a "Home occupation Permit‖. This permit. al. n. of Fremont.. er. io. application is available at the Development Service Center, a governmental office in the City. Ch. engchi. i Un. v. Aravore USA will be registered in Alameda County. This step needs to be completed before obtaining a Business License from the City of Fremont.. No physical store is needed, since the business will be online, though a later opening of a store cannot be excluded, if the company performs successfully. In order to establish a successful working environment, the company will need one office room for the daily business activities, and one storage room for the products coming from abroad. The office room will be located in an apartment-home, and consists of a desk, chair, a computer with high-speed Internet access, telephone with fax line, and a printer. Office supplies, including pens, eraser, pencils, stapler, scotch tape, post-its, white board, printer paper, and agenda.. 5.

(12) The storage-room, which measures 10x30 feet, is located in a public storage place just one mile away from the office, will count with hangers, boxes, and a specific closet for the clothes.. As an online business, the shop will be available 24 hours, 7 days a week, and 365 days a year. The webpage is planned to be online by January 1, 2011, to be able to start with the sales right before the Saint Valentine’s Day. This date would be also the first day in business.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. 6. Ch. engchi. i Un. v.

(13) 2. PRODUCTS AND SERVICES 2.1 Products Description The company Aravore USA will sell baby clothes, made from fairly traded organic cotton and organic merino wool. Beautifully made and incredibly soft, each item has its own particular charm and identity. The products, which are blankets, ponchos, cardigans, jackets, dresses, coats, pants, mittens, booties, hats, and scarves can be bought online store from the Aravore USA webpage.. 政治大 wool as well as luxurious vintage and re-claimed fabrics and trimmings. Beautifully made 立 and incredibly soft, each item has its own particular charm and identity.. Aravore clothes and bedding are made from fairly traded organic cotton and organic merino. ‧ 國. 學. Soft, dreamy colors, simple shapes and extraordinary detailing have become Aravore’s. ‧. trademark, achieving a luxurious look with a classic feel that is yet modern and very. y. Nat. wearable. The Basic collection includes gorgeous vintage knits, matching hand knit. sit. accessories for babies and toddlers from 0-6 years as well as exquisite shawls and blankets.. al. er. io. Each season unveils a new fashion collection as well as a small selection of numbered limited. n. iv n C and bleach are avoided, so that Aravore’s are kind to the baby's skin and kind to the h e nproducts gchi U edition items. Only the highest quality organic yarns and fabrics are chosen and harmful dyes. earth.. Aravore Babies uses 100% organic cotton spun by Promover S.A - AratexOrganica (certified organic and fair trade by IMO - Switzerland). The merino wool is spun by hilanderiaCapen in Argentina and it is certified organic by OIA (Organizacion Internacional Agropecuaria) according to EU 2091/91 organic standards.. 2.2 Services and Policies 2.2.1 Placing orders Placing an order is simple and customers can choose any of the methods listed below:. 7.

(14) Online Customers can shop confidently on our secure website. Customers will simply place products into the virtual shopping chart using the "Add to basket" button. When they are finished shopping, they click the "Checkout" button and they will be prompted to provide billing and shipping information. If at any time they have questions about the ordering process, they can call a toll-free number that will provide answers to their queries.. Phone By calling at the phone number provided, customer can leave a message if phoning outside. 治政大 Time). After that time all calls will be answered between 8 a.m. until 7 p.m. (Pacific Standard 立 answer machine. will be forwarded to an automated office hours and we will contact customers on the following business day. All phone calls. ‧ 國. 學. Email. ‧. Customers may email their order anytime to: [email protected]. To ensure privacy, we will encourage customers not to send any credit card info via email. We will contact them. sit. n. al. er. io Shipping and delivery. y. Nat. for this information.. Ch. i Un. v. All orders will be processed on the day they are received subject to payment clearance and. engchi. stock availability. Orders placed after 7:00 PM will be processed the following day. We will remind customers that it may take up to 5 working days for delivery to their address from the day they have placed their order.. Aravore USA will provide affordable shipping service for every customer. During checkout, the client can choose the desired shipping method from different options. These options will be UPS, FedEx, DHL, and US Postal Service. Depending on how fast the product is needed, the customer can choose, among others, from a five to seven business day taking ground shipping, or next day air shipping method. While the first option (ground shipping) will be the most economic, but slowest one, the other, (the next day shipping) is the most expensive,. 8.

(15) but therefore the fastest variant.. All parcels will be sent with a premium sing-for delivery service and the charge includes insurance for the goods sent.. As online business, Aravore USA will sell all products through the local U.S. webpage. The informative and safe webpage with pictures and descriptions of each item will allow the customers to see the product of interest virtually. Once the customer has decided, what product, quantity, and size he/she wants, the items will be moved into the basket. During. 治政大and the order submitted. All orders Besides this, the desired shipping method must be chosen 立 they are received, subject to payment clearance and stock will be processed on the day. checkout, the customer can pay, either by using credit cards or the more secure PayPal option.. ‧ 國. 學. availability. The delivery will take between one and ten business days, depending on what delivery method was chosen. The professional packed products will be shipped via USPS,. ‧. UPS, FedEx, or DHL, depending on what the customer decided during checkout. To make shopping at our webpage as convenient as possible we offer Returns and Refunds. A full. y. Nat. sit. refund or free exchange is guaranteed for unworn and unwashed items within 30 days of. n. al. er. io. purchase. The original method of payment will be credited, excluding the delivery cost.. Customer Service. Ch. engchi. i Un. v. We pride ourselves on the quality and efficiency of our service to customers and we will be delighted to assist them in any way we can to make their shopping experience with us an enjoyable one.. Payment Options We will accept payment by Visa, Master Card and Delta/Maestro Cards. We will also accept American Express card for phone orders. As in UK all payments will are handled securely by Barclaycard, in US a secure system will used.. 9.

(16) Packaging and Gift Wrapping All Aravore Babies products will arrive in our signature recyclable boxes. There is no extra charge for this service. A hand-written note or card can be added if requested (for online orders, there is an option to add on a message during the checkout process).. Returns and Refunds We will offer a full refund or free exchange for unworn, unwashed items returned within 30 working days of purchase. We will not guarantee an exchange or refund for any items sent to us over this period. We recommend that customers use registered mail to send items back to. 治政大faulty or not as ordered). method of payment, excluding delivery (unless goods are 立. us as we cannot accept liability for loss or damage in transit. We will credit the original. ‧ 國. 學. Privacy and Security. According to new data from Forrester Research (2009), 62% of non-buying online consumers. ‧. polled said concerns about giving credit card details. About one-quarter of respondents preferred to research online but go shopping offline. 28% of North Americans go online for. y. Nat. er. io. al. sit. other reasons but don’t buy there, for a variety of reasons.. v. n. The research further revealed that 62% of non-buying online consumers sampled said that. Ch. i Un. they are concerned about giving credit card information over the Internet which held them. engchi. back, while 55% cited the inability to see an item personally before buying. 25% of nononline buyers said they prefer to research online but buy in a store. 22% cited delivery costs, 21% cited ―horror stories heard about online shopping,‖ and 17% don’t buy online because they aren’t confident the product will arrive in good condition. 12% didn’t want to wait for the item to be delivered; others cited a variety of additional reasons.. The biggest obstacle is concern about the safety of entering credit card information on the Web — 62% cited this as a deterrent. Over 50% of respondents said that they'd prefer to see an item in person before buying it. Factors related to delivery, such as cost, product condition after shipping and waiting time until delivery, all ranked lower.. 10.

(17) Aravore is aware of this survey and information. To accelerate adoption, Aravore USA must gain trust from shoppers and focus on winning over young females—the most hesitant group of online shoppers with the greatest future spending promise. That is why Aravore’s strategy on this issue is committed to protecting customer’s privacy. Aravore will take all the essential measures to make sure that any information customers give us, including credit card details, remains private and secure and that the payment and registration information are processed with total confidentiality and in accordance with data. 治政大 place to protect the loss, misuse and alteration of the information. All data will be protected 立 available. Financial information like credit card numbers or using the most advanced methods protection laws. It will also show in our web site: The site will have security measures in. ‧ 國. 學. personal information like social security numbers will not be stored on the site.. ‧. Sourcing and fulfillment (logistic). Aravore USA will get the supplies from the branch in the United Kingdom, which has been. y. Nat. sit. successfully established for years. With the help of their shipping expertise, the products will. n. al. er. io. be sent to our office location in Fremont, California.. Ch. i Un. v. Due to the geographical position from the two offices, the route will be as followed: Aravore. engchi. UK storage London  Cargo loading at London Heathrow Airport Cargo receiving at San Francisco International Airport Aravore USA office in Fremont, California. International expedition will be used for the shipping. Once the products were received and checked at the office in Fremont, California, the items will be transferred to the local storage, using a private car/truck.. The customer will order the products by using the Aravore USA webpage. After his/her order submission, he/she will receive an order confirmation via e-mail, or fax. The order will then be processed by taking the items out of the local storage, packed and shipped to the customer, using his/her desired shipping method. Please see the figure1 below. 11.

(18) for the general delivery chain:. Figure 1. Ordering process. 立 3. COMPETITIVE ANALYSIS. 政治大. ‧ 國. 學. The competitive analysis section describes the nature of the industry of baby clothing and. ‧. further analyzes the competitive advantage of Aravore and also its major competitors. sit. y. Nat. 3.1 The State of the Apparel Industry. al. er. io. As already mentioned before, the company, Aravore USA will operate online. This. n. guarantees a wide customer range, but also means competition with other similar stores,. Ch. i Un. v. which are already online. We think that three of our major competitors are Kate Quinn. engchi. Organics (www.katequinnorganics.com), Baby Bunz (www.babybunz.com), and Heavenly Organic ( www.heavenlyorganic.com).. Comparing the three businesses, all of them focus on selling organic cotton clothes for babies. Although there are some key differentiators, some of them with more variety of colors, wider target of recipients, and diverseness of products offered; all of them propose similar measurements of quality. Some of them introduce exclusive offers, attracting customers through free shipping with a minimum amount of money on shopping. There are some divergences in return policies, and in shipping conditions. Below is a brief comparison of their prices in similar products offered, and some conditions about the shipping and policies. 12.

(19) of return. Kate Quinn - Katequinn.com (1): manufactures its products with 100% organically produced cotton certified by Control Union Certification, and also Fair Trade certified. Among their product ranges are baby clothes, baby accessory, baby bedding, bath, and they are proposing new product line to be out soon.. Baby Bunz & Co. - Babybunz.com (2): They are also involved in producing organically made products. A special collection of their offering include natural baby basic, offers clothes diaper, and additional organic cotton soft-wears and toys, and a selection of diapering products.. 立. 政治大. Heavenly Organic - Heavenlyorganic.com (3): They carry a selection of 100% organic cloth,. ‧ 國. 學. diaper covers, accessories, and clothing for babies. Members recognize their responsibility to a healthy environment and donate at least 1% of their annual sales to environmental. ‧. organizations worldwide.. y. Nat. sit. The comparison table tells that prices range within the average in the three stores, although. al. n. Organic (3), providing various shipping options.. Ch. engchi. er. io. the differences are not too big. The shipping makes the difference, especially with Heavenly. i Un. v. We are aware of that customers will compare us to the three mentioned online stores, but we are confident that our unique product thus the service we provide will fill a niche. Each season reveals a new collection as well as a small selection of numbered limited edition items. Soft, dreamy colours, simple shapes and extraordinary detailing have become Aravore’s trademark, achieving a luxurious look with a vintage feel that is yet modern and very wearable.. Table 1 below shows the comparative prices among the competitors. The table also gives a comprehensive analysis of the different shipping methods and return policies by these different competitors.. 13.

(20) Table 1 Comparison among Competitors. Item. ARAVORE Babies. Kate Quinn. organic 100% Certified 100% cotton, certified cotton cotton. organic certified. Heavenly Organic. Baby Co.. 100% organic cloth. They are involved in producing organically made products. Organic cloth, diaper covers, accessories, and clothing for babies. Baby basic clothes, clothes diaper, and toys, and a selection of diapering products. $30.40. $34.00 - $12.00 $13.00. products. Products. Baby clothes, two seasons per year,. Baby clothes, baby accessories, baby bedding, bath. 政治大. 立$42.00 - $44.00. $45.00 avg. $26.00. $17.00. $75.00 a basket with 4 organic items. Any desirable amount is available as gift certificate. $25.00 - $50.00-$100.00. Delivers within US, orders over $100.00 are shipped for free.. Optional: USPS, FEDEX, UPS, Free shipping with any purchase over $75, in U.S.A. only.. io. n. al. Returns. Website. Full refund or free exchange for unworn, unwashed items returned within 30 days of purchase. www.aravore.com. y. sit. Nat. UPS, FedEx, DHL, US PS. Ground shipping most economic.. er. Shipping Optional:. ‧. ‧ 國. $35.00. 學. Tops Bottoms Gift sets. iv n C All returns be 30 days h emust i U backunconditional nwithin g c hmoney postmarked guarantee. 30 days of package receipt. A copy of packing list or receipt is needed.. Returns will not be accepted without the copy of receipt.. www.katequinn.com. www.heavenlyorganic.com. Bunz&. $42.00 a basket with 4 organic items Different according total shipping UPS.. charges to the amount, through. Returns within 30 days for exchange credit or refund. Items must be in original condition and packing.. www.babybunz.com. With an estimated $44.1 billion in 2009, the children’s clothing market has faced challenges since 2006 due largely to the unfolding economic crisis. The downturn has compelled. 14.

(21) families to economize and reduce spending on children’s clothing by limiting replacements, downgrading to less expensive brands, seeking out sales and turning to less expensive retailers. In addition to examining the ways consumers, suppliers and retailers are dealing with the economic crisis, a research on the market has concluded on the following tendencies: - The growing number of older, single mothers, and how their tastes and spending differ from other moms - The rapidly-growing Hispanic youth population and how their numbers will serve to sustain the market as it wait out the down economy - The green movement has shown up in children’s clothing, driving interest in organic. 治政大 - Moms turn to retailers for children’s clothing 立 compels consumers to change shopping habits - Recession drives down demand, clothing and influencing designs and graphics. ‧ 國. 學. - Concern with environment and child safety drives demands for organics - Advertising and marketing emphasize savings and value during downturn. ‧. - The amount spent on clothing is driven by income and age of children - Choice of retailer varies substantially with mom’s age and income level. y. Nat. sit. - Moms enjoy shopping for their kids. al. er. io. - Age appropriate clothing a key concern, especially for moms aged 35+. v. n. - Moms are changing their shopping habits to cut down costs. Ch. i Un. - Hispanics show high demand for children’s clothing and warrant long-term focus - Impact of Race and Hispanic Origin:. engchi. - Hispanics spend the most on children’s clothes - Upper-income blacks invest heavily in children’s clothes and warrant focus. All the above plus the fact that moms represent a $2.1 trillion market and are a multi-faceted group have been taken into consideration in this online business plan. Aravore US has a potential market the United States of America. With a population of 310,232,863 (July 2010 est.) million people, and twenty percent of those are in the ages between 0 and 14 years (CIA, 2008), the target market is immense. Due to the topographic location of the United States of America, the market can be later easily extended to Canada in the North.. 15.

(22) The consumer data survey also reveals interesting information about the population growth rate which stands at 0.97% and a birth rate of 13.83 for 1,000 populations (2010 est.). 3.2 Who Buys Children’s Clothing? - Moms are the dominant shoppers, with older moms turning to more hand-me-down (Incidence of buying children’s clothing, by age, May 2009) - Tiered pricing warranted as clothing is a necessity for parents with children - Moms are changing shopping habits and open to secondhand clothing. 政治大. - Moms trade down and turn to affordable, private label brands. 立. ‧ 國. 學. As a summary of all those facts from above, Aravore can target customer middle-or upperclass woman in her 20s, 30s, 40s or 50s who has children or grandchildren, ages 0 to 6, is. ‧. environmentally conscious, and has interest in fashion.. sit. y. Nat. A number of findings suggest that younger moms may take more pleasure in shopping for kids and are also open to more fashion-forward products, including sophisticated looks and. io. n. al. er. pricier offerings (Mintel’s consumer research, September 2009).. Ch. 3.3 Marketing Strategy. engchi. i Un. v. Insigthful opportunities after recent survyes, shows that differentiation Strategy for younger vs. older moms is needed, where younger moms shop for fun and may seek cooler and fashion for kids, highlighting more traditional kids’ styles and value proposition when speaking to older moms. The market of Aravore is divided according to the following segments: Age: children, ages 0 to 6 years old Gender: male and female Family cycle: families with children Income: medium, high ($54,000 yearly and above). 16.

(23) Lifestyle: conservative, trendy, and economical Social class: middle, upper Interest: online shopping, children’s health Attitudes and beliefs: eco-friendly, health conscious. 3.4.1 SWOT Analysis for Aravore The strength of Aravore as can be seen is that it is vertically integrate with suppliers of organic cotton. This is very important as it can have easy access to raw materials and timely availability in order to be ahead of competition. This can also lead to strong supplier. 治政大 from certified organic cotton. The Aravore has a highly differentiated product which is made 立 to gather resources and increase turnover provides superior flexibility in its business model relationship while minimizing the cost of input and inventory.. ‧ 國. 學. advantage.. ‧. The weaknesses of Aravore are that it is new in the market relative to its major competitors. With little or no market share, Aravore will have to compete with little cash. In order to be. y. Nat. sit. successful, Aravore US will have to increase its learning curve to catch up with already. n. al. er. io. established competitors.. Ch. i Un. v. The opportunities for Aravore are abundant. The US market is very large and continue to. engchi. grow. The estimates are very positive for Aravore US. The online market is growing especially in the organic clothing segment. This means that Aravore can capitalize on this trend and make competitive inroads in the first year of business. There is also an opportunity for strategic alliances with suppliers and other chain stores to sell the products of Aravore. In this way, Aravore will leverage on the market share of these chain stores. This is very crucial for success and where necessary, Aravore will consider joint ventures with partners to penetrate the market.. However, there are some threats for Aravore. With a low entry barrier, this market can be very competitive and bloody. Businesses that have deep pocket can easily come in and dilute. 17.

(24) the market share. There are no labor laws inhibiting potential entrants. This means that companies that have higher and wider product range and reach with strong distribution networks and easily come in and take the market.. Figure 2. SWOT. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i Un. v. 3.4.2 Resources and Capability Analysis In order to differentiate Aravore and its products from its competitors, a Resources and Capabilities Analysis is conducted to see what are the valuable, rare, immobile, costly to imitate and non-substitutable offerings of Aravore US. This will determine how easily and fast Aravore can succeed in the US market.. 18.

(25) Figure 3. Resources and Capabilities. The quality of the product is made of by. Valuable. organic cotton which is highly processed from certified producers Rare. Baby clothing made of organic cotton. Immobile. 立. Not really costly to imitate however is difficult to. ‧ 國. 學. have certified suppliers and raw material. ‧. It is substitutable but with the green movement. Non-substitutable. Nat. io. sit. y. and the trend makes it highly in demand. n. al. er. Costly to imitate. 政Aravore治 babies products are mobile 大. Ch. engchi. i Un. v. 1. Valuable: The quality of the product is high which made of organic cotton. These highly processed products from certified producers are healthy and environmentally friendly to baby skins. This makes the product of Aravore even more valuable compared to some competitors. Another competitive edge Aravore has over it competitors is that all products are100% handmade adding to the beauty and style of the clothes.. 2. Rare: Baby clothing made of organic cotton are rare even though the trend is changing towards them. This is due to the scarcity in organic cotton producers. Organic cotton means, the cotton have to be grown organically and treated and proceed organically. This process is. 19.

(26) time consuming and with the mass market production, this is not very viable. Therefore, many companies combine organic and chemical components to produce baby clothing. Aravore employs many artisans in Paraguay who are skillful in handicraft. The design is uniquely made from computer simulations and sent to these experts in Paraguay for sewing and knitting.. 3. Immobile: However, Aravore products are mobile but the cooperative we belong is immobile. This is one the advantages Aravore enjoys. In Paraguay, there are cooperatives that control organic cotton in order to sustain and support the indigenous cotton industry.. 治政大 in the supply of certified organic cotton. 立. This support and control from government will help Aravore to maintain its competitive edge. ‧ 國. 學. 4. Costly to Imitate: The products Aravore makes are relatively costly to imitate but it is difficult to have sufficient supply of certified cotton to feed the mass market. We will. ‧. continue to strengthen the supplier relationship to sustain the competitive advantage.. y. Nat. sit. 5. Non-substitutable: Even though the product of Aravore substitutable, the green. al. n. Aravore.. er. io. movement and the new trends in environmental products serve as a good sign for success for. Ch. engchi. i Un. v. 3.4.3 Five Forces Analysis According Michael Porter’s Five Force analysis, the industry of the organic clothing should be analyzed on the following five elements.. Industry Rivalry: There are three main competitors in the US that have considerable market share. However, the intensity is medium since the market is still in the growth stage. There is sufficient demand for the industry which means that other companies can come into the market easily to tap the benefits. There are low exit barriers with low barriers to entry.. 20.

(27) Entry barrier: The international certification is the main entry barrier. Once potential entrants have this certification, they can enter the market without much restrain. There is also low capital requirements compared to other industries. This may allow easy entrance from potential competitors.. Bargaining Power of Buyers: Due to the low switching cost buyers face, there is considerable buyer power for the product of Aravore. Buyers can freely choose between products at any given time.. 治政大 suppliers tend to have strong power over Aravore. 立. Bargaining of Suppliers: due to the availability of few certified suppliers of organic cotton,. ‧ 國. 學. The Threats of Substantial Substitutes can not be neglected. Aravore must plan and prepare for fluctuation in demand specially in economic down turn, when customers will be. ‧. force to cut on their spending, there by buying cheaper products.. Aravore should also educate consumers about the qualities and benefits of organic products. y. Nat. al. er. io. sit. versus non organic ones.. v. n. If Aravore build brand loyalty fot its products, we will have an absolute cost advantage with respect to potential competitors.. 21. Ch. engchi. i Un.

(28) Figure 4. Five Forces Analysis. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i Un. v. 3.4.4 Product Life Cycle Stage in the Product/Industry Life Cycle: An important determinant of the strength of the competitive forces in an industry is the changes that take place over time. A useful tool for analyzing the effects of industry evolution on competitive forces is the Industry Life Cycle. The development of most markets follows a growth curve similar to that illustrated in industry life cycle figure below. As the graph shows different groups of customers have different needs as they enter the market over time and this has major implications for a company’s product differentiation and market segmentation decisions. Figure 5 shows the quantity of product sales on the (Y) along the time period (X). 22.

(29) Aravore is in the second stage, the early adopters, which means the customers understand that technology or innovation might have important future applications and are willing to experiment with it, meaning try new trends or products of features so see if they can pioneer uses for it. Early adopters are often visionaries who appreciate how this new products may be used in the future and try to be the first to profit from its use.. Early adopters enter the market while the industry is in its embryonic stage. The next group of customers, the early majority, represents the leading wave or edge of the. 治政大new products against their costs and they are pragmatists, they weigh the benefits of adopting 立they are confident that the product will offer them tangible wait to enter the market until mass market. Customer in the early majority are comfortable with the new product. However,. ‧ 國. 學. benefits.. ‧. The turning point from the embryonic market to the mass market is not a smooth transition, sometimes it implies a competitive chasm or gulf, a gap that companies must cross. If. y. Nat. er. io. al. n. Strategies matched to fit this stage. Ch. sit. companies fall into the gap they go out of business.. i Un. v. Aravore should build new competencies, creating a business model that can successfully. engchi. cross the chasm. For example identify the customers’ needs, then developing new strategies and redesigning new products continuously, creating exclusive lines, assuring distribution channels and having marketing campaigns to reach the early majority. In this way we will have a suitable product, at a reasonable price that can help us penetrate the market easily.. 23.

(30) Figure 5. Product Life Cycle Stages. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. 24. Ch. engchi. i Un. v.

(31) 3.4.4 Business Strategy. Figure 6 Four Ps Model. 立. 政治大. ‧. ‧ 國. 學 er. io. al. sit. y. Nat Non-Price Competitive Strategy:. n. iv n C U market segment are the dimensions products with different or superior h features. e n gProduct c h i and. Product differentiation allows industry rivals to compete for market share by offering. used to identify four nonprice competitive strategies: market penetration, product development, market development and product proliferation. Notice that Aravore will concentrate on expanding market share in an existing product market, so it will engage in a market penetration strategy.. This will involve strong advertising to promote and build. product differentiation. This will be done through marketing campaign aiming to influence customer’s brand choice and to create a brand-name reputation for Aravore and its products. Because brand-name products often command premium prices, building market share in this situation is very profitable.. 25.

(32) Figure 7. Non price strategies. 立. 政治大. ‧. ‧ 國. 學 sit. y. Nat. 3.4.5 Why Buying Aravore Products?. Aravore has organic cotton, and we adhere to labor standards of Fair Trade. Aravore products. io. n. al. er. are also made out of certified cotton that is certified by IMO Control-Switzerland. Aravore is. i Un. v. also ethically concerned about paying the just price to the artisans in Paraguay by making. Ch. engchi. sure they are not only empowered and have access to open markets but also they improve their livelihoods and their families and communities through a trade to the benefit of all. Aravore engagement with the local Paraguayan community is a measure of Fair Trade.. Even though consumer demand for US-grown organic cotton has skyrocketed over the last few years, the supply of US-grown organic cotton has decreased significantly during that same period. The main reason for this is simply overseas competition. It is much cheaper to produce organic cotton in India, Turkey, PARAGUAY, for example, than it is to produce it in the United States. Without commitments from buyers to pay them for their organic cotton crops, farmers have been forced to turn to other more profitable crops.. 26.

(33) 3.4.6 Market Segmentation The consumer market segmentation will be geographically seen in the United States of America, as long as it will be an online business and only available within the 50 states. The demographic segmentation will include babies and toddlers, children from 0 to 6 years old, male, female, as well as families with any ethnicity, nationality, and social class.. 3.4 Advertising and Promotion The products will be located at a warehouse in Fremont, California. During the start-up, Aravore will mainly focus on word of mouth strategy and mailing to let people know about. 政治大. the existence. Aravore will advertise in 2 or 3 different parenting and woman´s/children. 立. magazines to impress and build brand awareness. Aravore will also use online advertisement. ‧ 國. 學. as resource to communicate with potential customers. To maximize advertisement effect, Aravore will focus on baby cloth, organic product, environmentally friendly product, fair. ‧. trade, certified cotton, and other key factors for customers to be aware of the qualities and differentiation factors that made Aravore´s products unique and special from the competitor.. sit. y. Nat. Aravore will have links in its web page, link with other related companies and will have. io. er. periodic publications about the trend of using eco-friendly products. As the segment target are active woman who has constant network, Aravore already has a Facebook account but. n. al. Ch. i Un. v. will open an Aravore US account to strengthen the relation with local consumers.. engchi. Our customers though, can find them mainly by visiting our webpage and in advertisements through magazines all over the United States. To assure that the webpage will reach a wide range of customers right from the beginning, advertisements in magazines such as ―Parents‖, ―American Baby‖, ―Cookie‖, ―Parenting‖, ―Green‖, among others, are planned. These magazines are specially focused on either family, parental care, or green products. Besides this, the products will be available throughout local "green fairs" or special "trade fairs". This will give us the opportunity of having direct contact with customers in the Bay Area of California.. The best way to advertise the products is the media, and according to that we will invest 27.

(34) mainly in parenting magazines, Internet, and direct email. Placing coupons and discounts in advertised magazines will be our sales promotion. These coupons can be later used in the online store during checkout.. Aravore will also provide business cards, brochure and pamphlets available in special "green" and organic events, fairs, mother to be classes, baby-activities classes and events, pediatric offices if possible, and others.. The website fits into the advertising and promotion plan, because it will tell how the. 治政大making the products. A special link involved, the name of the company, and the process of 立 where articles about our products have been cited, will be with the picture of magazines, company was born, the origin of the cotton, why organic cotton, an introduction of the people. ‧ 國. 學. included in the web. During local trade shows Aravore plans o have a small stand, where business cards, brochures, pamphlets, and of course, the products will be presented.. customer's eyes.. ‧. Introducing the products in a special arrangement at trade shows will capture future. n. Ch. engchi. er. io. al. sit. y. Nat 3.5 US Moms Online Buying Habits. i Un. v. Mom’s habits on gifts: According to the United States economy statistics and industry report, updated, May 2010, Moms plan to buy different holiday gifts for their children depending on age of children. The gift moms find most appropriate for children 6 years old or younger is toys, followed by clothing and books.. 28.

(35) Figure 8 Mothers' purchasing behavior. 立. 政治大. ‧. ‧ 國. 學. Nat. sit. y. The most popular time for Moms to start shopping for the holidays are October (27%) and. er. io. November (37%) (Report, 2009). This is consistent with the shopping tendencies of Moms in 2007 and 2008. This is a very important data in order to plan our sales and promotions. n. al. Ch. i Un. v. around these dates. Find below the summary chart of the research.. 29. engchi.

(36) Figure 9. Monthly purchases of moms in the USA. 立. 政治大. ‧. ‧ 國. 學. Figure 10. Online holiday shopping behavior of moms in the USA. n. er. io. sit. y. Nat. al. Ch. engchi. i Un. v. Under the following question: "How Much of Your December Holiday Shopping Will Be Done Online‖, 16% of Moms plan to do 50% or more of their holiday shopping online. Moms with higher education and higher household income are consistently planning to do. 30.

(37) more of their shopping online than other Moms. (Marketing to Mom’s coalition, Holiday Shopping, September 2009 Highlights).. 3.6 Media Habits and Social Networking Taking into consideration the online social network, we can see a change in demographics over time. According to Nielsen//NetRatings survey (2010) the number of Americans that use internet raised from 67% in 2005 to 79% in 2009.. Nearly three out of four U.S. households with a phone line have access to the Internet. In the. 政治大. U.S. 204.3 million people have access to the Internet, or 74.9 percent of the population.. 立. Women were found to be slightly more likely to surf the Web than men.. ‧ 國. 學. Figure 11. The USA adults' purchase online in percentage wise 1995 to 2008. ‧. n. er. io. sit. y. Nat. al. Ch. engchi. i Un. v. "Women make the majority of purchases and household decisions, so it's no surprise that they are utilizing the Internet as a tool for daily living," (Nielsen//NetRatings, 2009) Internet access for women between the age of 35 and 54 was 81.7% while 80.2% of men had access in the same age group. For 25 to 34 year olds, 77% of women had Internet access while 75.6% of men had access to the Internet.. 31.

(38) 87% of adults’ ages 18 to 29 go online and more than half of the adult Internet population is between 18 and 44 years old. Among all adults’ ages 65 and older, 41% go online.. Income and education are strongly related to internet penetration. Nearly all high-income (94%) and college-educated Americans (95%) are online, while only 57% of Americans earning less than $30,000 and roughly a third of those with less than a high school education use the Internet. This shows internet penetration in very high among the target customers of Aravore.. 治政 that 46% of online American adults 18 and older use a大 social networking site like MySpace, 立 Facebook or LinkedIn.. Social Networking Sites have risen among all ages. A research conducted in 2009 indicates. ‧ 國. 學. Figure 12. Most used social networking sites by moms in the USA. ‧. n. er. io. sit. y. Nat. al. Ch. engchi. i Un. v. Social networking continues to develop among moms as a way to communicate with friends, family and children. Since last year Facebook has become the leader among Moms at 39%, overtaking MySpace (28%), the 2008 leader.. 32.

(39) Social Networking Sites (2008 to 2009) –Total Moms 2008. 2009. Point Change. Facebook. 15%. 39%. +27 points. MySpace. 42%. 28%. -14 points. Twitter. 1%. 11%. +10 points. Linked In. 3%. 3%. Flat. Flick. Not Asked. 1%. NA. 治政大 so customer, and friends can all the above, Aravore US will have its own portal in facebook add us as their network. We立 will have links on pages like eco-friendly products, fair trade,. Facebook is tops among all adults, while older adults blog more. Taking into consideration. ‧ 國. 學. baby related articles, and also websites for expectants mothers guide and related topics.. ‧. 3.7 Marketing and Communication Strategy. sit. y. Nat. As an online business, our main communication methods will be the Internet, telephone, e-. io. er. mail, and fax. These channels will remain the same with no restriction to the target audience. Our computers will be online 24 hours a day, 7 days a week. Orders can be done through our. n. al. Ch. i Un. v. webpage, or via e-mail, at anytime. An automated e-mail will be sent to the customer to let. engchi. them know that we have received their order. All phone calls will be answered between 8 a.m. until 7 p.m. (Pacific Standard Time). After that time all calls will be forwarded to an automated answer machine. By calling at the phone number provided, customer can leave a message if phoning outside office hours and we will contact customers on the following business day.. Our marketing will count on a real-time customer feedback through Web surveys, and a promotion response after a sale. This will give us a good feedback about our customer's expectations. A customer login will be available to the website with intelligent service request processing due to saved customer profiles. There the client can update billing and shipping information, as well as the e-mail for after sales communication. A reliable database 33.

(40) of our customer's information will be used to send out newsletters, which will include new line & promotions, actual sales on the web, and/or information that is relevant for them. Such information could be magazine releases, photos, and other important data, in order to educate the customers about our business.. Aravore will optimize its website by using the following techniques; requested to our web domain, sitemap, link with keywords, hot keywords like organic baby apparel, eco-friendly products, made in Paraguay product, fair trade, and also use free tools as Google, Yahoo, Traffic Travis, join parenting groups, construct a blog network submit articles related to eco. 治政大24 - 48 hours. We will also consider paid advertising to ensure our site become visible within 立looking for baby clothes. the number of people that are. products, baby products, fair trade, join Facebook, using pay-per-click, and other forms of. ‧ 國. 學. One way of advertising on website will be "pay-per-click" on websites that carry our banner or other promotional items. This is easier to control and we will have a clear picture of how. ‧. effective the campaign was.. y. Nat. sit. Another way of advertising Aravore will be buying small campaigns on Yahoo / Facebook. al. er. io. and have our logo/product shown to customers visiting those websites. The potential. v. n. customers will see our ad on these pages and click on it if they are interested. For those tyes. Ch. i Un. of promotion, only fixed fees are charged. And does not depend on how many customers. engchi. actually clicked on the ad. This kind of ad will be done in the second phase, not in the start up phase.. 3.7.1 Brand Quality Aravore will reinforce brand image through digital networking. Social media tools like Facebook, You Tube, Twitter, and blogs have redefined how business operates, they have become a powerful focus in corporate communication from all over the world, often being used to demonstrate great leadership, strengthen corporate reputation and reinforce brand.. We are aware that building brand is a very important key success factor. Many brands. 34.

(41) represent certain values and personalities. For example: - Gymboree offers rugged, colorful clothes and higher-end, vintage looks with Janie and Jack brand - American Eagle (77kids) offers new ―kid cool‖ brand - The Children’s Place offers affordable, kid-friendly fashions - Tween Brands targets girls aged 7-14 with ―fun and cool‖ image - Garanimals offers mix-and-match brand that helps kids build confidence. - Gerber capitalizes on strong association with healthy, happy babies. 治政大comfortable, fashionable clothes as quality organic baby apparel but also for a high quality, 立company. We will use the slogan ―Aravore, babies clothing, well as a socially responsible Like the above, ARAVORE will make every effort to be recognize not only for offering high. ‧ 國. 學. organic and ethically made‖. ‧. The slogan on the web page and all other means of communication is key in establishing the brand. Another elements of the brand building are the colours and the pictures of children. y. Nat. sit. wearing the clothes in safe environment, playing alone and being with other children. The. al. er. io. quality of the images will reinforce the attributes of our products. Since customers would not. v. n. be able to feel the clothes, these elements will be central to the message conveyed in marketing and advertising.. Ch. engchi. i Un. 3.7.2 Quality Strategy Customers want to have confidence that our business is well run and that our products meet the specified requirements. Our main goal is to fulfill these expectations. A Quality Manual will serve as a guide with information about the structure, format, and content of the business. Information about the organization such as the name, location, telephone number, related information, and a brief description of the organization and the products will be included.. Similar information will be available and accessible for our customers online. We will work on providing a quality online service, assuring maximum satisfaction of the customers, by. 35.

(42) offering a quality website that provides clear information about the business and our products, and a fast and reliable way for them to make the purchase. All these will be key factors in our quality strategy. Through this quality assurance, we will build customer loyalty and reduce the returns to 0%.. In addition, every product will have the certified organic symbol to assure customer that they get what they pay for. All products are 100% made from certified cotton, by Imo ControlSwitzerland. This important information will make the difference, when our customer's decide on our brand. We strongly believe that the international certification, if properly. 政治大. administered will add value to the business model and will be key differentiator from competitors.. 立. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. 36. Ch. engchi. i Un. v.

(43) 4. PRICING STRATEGY Considering our target customer group, we know that there is a high demand for the product line of organic baby clothes. We will buy the items from wholesale price, directly from Aravore UK, which will give us enough profit margins when we re sell the products. The items will be shipped from the branch in the United Kingdom to the store in US. There shipping expertise will help us get the Aravore organic baby clothes even faster on the U.S. market.. 立. 政治大. To make sure we do not overprice our products online, we compared our prices with the. ‧ 國. 學. prices of our competitors. The prices reflect the quality and uniqueness of Aravore, but overall they are average for this market. Table 6 describes the different prices for our. ‧. products offering.. y. Nat. sit. 4.1 Why Do Customers Buy Organic Cotton Product?. al. er. io. We really need to stop and think whether the clothing we buy for our babies really do good. n. iv n C preferred choice of all parents but at time, it is a little expensive than other natural hthe e nsame gchi U. for them or just pose them health hazards? Organic cotton baby clothing has become the most. baby clothing. So, every parent must know what they are spending for their baby will actually ensure safety for him/her.. Among the reasons why people buy organic clothing are: it helps protect your children, it reduces pesticide use, it protects farm workers, it protects water quality, it prevents soil erosion, it is a sturdier fabric, it saves you money, it feels amazing inside and out, it supports a true economy, it supports a healthier environment.. 37.

(44) 4.2 Why Organic baby cotton is expensive? Cotton is natural and thus safe. Then why go for expensive organic cotton clothing for babies? We all know that cotton, though natural, is treated with all kinds of chemicals while growing them in the fields as well as during the manufacturing process. Organic cotton, on the other hand, do not use any pesticide or other chemicals in growth stages neither during manufacturing. More manpower, time, effort, pure raw materials and other methods are involved in the production of organic cotton fabric and clothing. Due to this complex and time consuming process, organic cotton clothes become fairly more expensive than other baby clothes.. 立. 政治大. 4.3 Is Organic Cotton Baby Clothing Actually Organic?. ‧ 國. 學. Not all organic cotton baby clothing claimed to be organic are so. Only the clothing that is made with certified organic cotton fabric is organic. There are also different levels of. ‧. certified cotton 70%, 90%, or 100%. However only clothes made out of 100% organic cotton are really organic.. sit. y. Nat. al. er. io. Aravore is 100% certified organic cotton. We feel very passionate about supporting. n. Paraguay-grown organic cotton for environmental, ethical, and economic reasons.. Ch. i Un. v. We feel responsible to educate our consumers about the importance of ―using‖ eco-friendly products.. engchi. We, Aravore US are aware of the green trend that requires safe and for healthy clothes for babies whose skin are even more delicate in the early years of growth.. Besides the reasons above, Aravore will operate in the USA but all raw materials are sourced from Paraguay, which makes good economic sense while supporting local and fellow countrymen. We are proud to export high quality handmade environmentally friendly product from our country.. 38.

(45) In the United States, there are much stricter environmental laws than many other countries, including some countries where organic cotton is currently grown. It is important to emphasize that Imo Control-Switzerland as well as the World Fair Trade Organization WFTO’s certified and approved our cotton as genuine and met the standards of fair trade.. 5. BUSINESS ORGANIZATION AND HUMAN RESOURCES MANAGEMENT 5.1 Organization Structure. 政治大. The company Aravore USA will operate as a partnership online retail business. The partner. 立. of the business will take care of all daily tasks, such as handling orders, customer relations,. ‧ 國. 學. finances, and storage inventory. In the second phase of growth, and when our financial situation improves, opening a physical local store in California’s Bay Area will be considered.. ‧. In that case, we would need to hire two sales persons for the store, who will work 40 hours a week. The organizational chart would then be as followed:. io. sit. y. Nat. n. al. er. Figure 13. Organizational structure. 39. Ch. engchi. i Un. v.

(46) As the organizational chart shows, all main tasks will be handled by the company’s owner. Only the sales portion changes with the employment of sales persons, if we decide to open a store in the future. A feedback in terms of inventory will be expected from the employees, to restock all items that are sold in the store. The business owner will act as manager/supervisor for any hired employee.. 5.2 Personnel Plan If Aravore USA is successful in the first year, it will consider employing more staff to be able to sell more from a physical location. As compensation for the job of sales person, will be a. 政治大. fixed salary with prospects of commission. A12 days vacation per calendar year, and 15. 立. bonus for exceeding sales target. The company’s spending and earnings will be. ‧ 國. 學. communicated to the employees in monthly team meetings. This ensures that everybody knows how the company is doing. The small team allows open communication between the. ‧. supervisor (business owner) and the employees. As a small business we will not offer any health insurance in our benefit package.. sit. y. Nat. io. so that they will stay with us for a long time.. n. al. Ch. engchi. er. Our goal is to keep our employees motivated by supplying them a good work environment,. i Un. v. 6. FINANCIALS This section describes the financial nature of Aravore and its plans in the future. It also provides financial information on the viability of the business and how it can be successful. This section being the most important looks at sales forecast estimations, break-even analysis and provides income and balance sheet and projected cash flow to see the worth of the business.. 40.

(47) 6.1 Important Assumptions As a retail business, Aravore USA will use an income statement to track the sales and operating expenses. The numbers will give us a good required overview about our earning and spending and will be accessible to any employee, if required. As a small, private business, we will have no stockholders or investors to report too. The income statement will focus on our sales, done via the Internet, and expenses, and utilities. Since the business will be physical present in the state of California, we must collect sales tax from Californian customers. For that reason, the statement will include those sales as well.. 政治大 the United Kingdom will be paid with US Dollars. 立. All values will be in American Dollars. Even the imported items from the Aravore store in. ‧ 國. 學. Aravore will closely track our finances, we always have a professional accountant look at our statements too. He will verify if we fulfill all business requirements, especially in terms of. ‧. taxes.. y. Nat. sit. Aravore USA will split the expenses into business startup and operating expenses. Startup. al. er. io. expenses are business registration fees, business licenses and permits, webpage design, and. n. iv n C Other fixed costs, such as rent or helectricity were not e n g c h i U used for the calculation, since the business will be run from our home. See table 7.. starting inventory. Operating expenses are utility fees, storage costs and inventory costs.. 6.2 Sales Forecast The total target market is estimated at 102,960 people in 2011. However only 5% is our actual expected demand that is 5,199 people. From year 2 (2012 onwards) we estimate a 0,98% growth of the target market. Sales forecast will be increased with 3 % in average due to marketing activities. For details about the market segment see exhibit Target Market (Table 9).. 41.

(48) Table 2. Sales forecast. 政治大. 立. ‧ 國. 學. 6.3 Break Even Analysis. According to our estimated break even analysis we will break even around 2269 unit sales.. ‧. By second half of the first year, we will actually start making profits. Break Even Formula: Fixed Cost / (unit price – variable cost). Nat. sit. y. Given: Unit Price is: 31 US$.. io. The Fixed Cost is 5,390 US$ monthly.. n. al. clothes per day.. 42. The Break-even point is 245 clothes per month, or 8,2. Ch. For details see Price List on Table 6.. er. The Variable unit cost is estimated at 9.3 US$. engchi. i Un. v.