Executive Summary
Company Description Product and Services
City’s Finest is a shoe brand that offers ready-made collections of vegan shoes for a wide range of sizes and tailored models to answer the call of customers with specific needs. The brand is focused on authenticity and transparency, producing the shoes locally and sourcing recycled and reclaimed materials that combine the principles of veganism and sustainability. Another unique feature of City’s Finest is its commitment to providing individual experiences to customers with unmet needs – large or small shoe sizes, wide fit shoes, and other specifications that are not addressed in retail.
Market Analysis
Geographic Location
The chosen geographic location is Melrose Avenue, Los Angeles, CA. Melrose Avenue is situated on the border of several highly famous districts in the city, and it is linked to shopping and entertainment (Shatkin, 2020). The population in the district has many young adults in their 20s and 30s, constituting almost 40% of the total district’s population (Statistical Atlas, 2018). Melrose Avenue is a popular shopping destination, many young and older individuals visit the location with the goal of finding or trying on new clothes (Shatkin, 2020). The area surrounding the avenue has significantly more single-person households for both men and women, and many of them are working professionals (Statistical Atlas, 2018). Based on the income and age of the population, the young adults in the district are likely to be work-focused professionals who require high-quality products at an affordable prices (Statistical Atlas, 2018).
The location of Melrose Ave is suitable for the retail business for several reasons. First, it is a well-known retail business, and many other shops have already provided the new venture with an advertised location that is popular among locals and visitors alike (Shatkin, 2020). Such competition also poses a risk to the company, as the avenue has many high-end stores as well as several second-hand shops and resellers (Shatkin, 2020). Second, the nearest districts have a high population of young adults who live alone, which corresponds with the expected target market for the brand.
Target Market
The chosen potential customer group is Millennials and Generation Z – in particular, adults between the ages of 18 and 28. The young group is highly represented not only in the retail district of LA, as noted above, but also in the US as a whole (United States Census, 2019). The prevalence of young adults in California and LA implies that their shopping habits need to be taken into consideration (United States Census, 2019). One of the trends that these generations are leading in is sustainability, including veganism, local shopping, resale, and second-hand shopping. According to Petro (2020), more than 70% of Millennials are now prepared to pay more for sustainable products. More than 60% of Generation Z also prefer sustainable brands (Petro, 2020). The term “sustainable brand” mostly includes companies that use reclaimed or recycled materials as well as organically produced and resourced fabrics (Todeschini et al., 2017). As a response to the sustainable trend, the market for sustainable products continues to grow, but it still has many unexplored niches (George-Parkin, 2019; Todeschini et al., 2017).
A large part of Millennials and Generation Z prefer to shop online due to the convenience and decreasing delivery prices, many still prefer to shop in physical stores (Clack, 2018). Clack (2018) reports more than 55% of Millennials to choose to complete the purchase in a brick-and-mortar store, even if they chose or found the product online. Many young people do not feel comfortable sharing personal information during shopping, and some are trying to cut back on their use of online media (Clack, 2018). The market for vegan shoes and sustainable clothing is growing, with more and more brands appearing in all price segments (Clack, 2018; George-Parkin, 2019). Using the above numbers, the target market is as large as 50-60% of the young Millennial and Gen Z population (Burton, 2017; Clack, 2018; Petro, 2020; United States Census, 2019).
Although Millennials and Generation Z differ in their view of clothing, their values are consistent with the idea of sustainability (Clack, 2018; Petro, 2020). These groups want brands to be transparent about the production process, offer goods that are affordable but grant a “unique” status, and show authenticity in marketing (Burton, 2017). Young adults no longer want to see retouched photos or models of one body size to show the product – variety in body shape and the essence of being “real” take the top spot in customers’ wants (Burton, 2017). The criteria for buying are brand transparency, sustainability, uniqueness, and price (Burton, 2017; Petro, 2020).
Competition
2nd Street
A local competitor – a retailer of premium second-hand clothing and shoes originated in Japan (2nd STREET, 2021). The brand has more than 500 stores in Japan and 9 locations in the USA (2nd STREET, 2021). They sell clothes, shoes, and accessories at physical stores and online, offering famous brand products at middle to high prices, based on the premium model of pricing (2nd STREET, 2021). The advantage of the business is its strong ethical stance and customer participation in the clothes exchange. The main drawback is that clothing sizes, models, and colors are limited by what is submitted to the store. The brand promotes on Twitter, Facebook, and Instagram, the latter having the biggest following out of the three sites with over 13 thousand followers (2nd STREET USA, n.d.). The main words used in messaging are “vintage, second-hand, designer, sustainable, sale, thrift” (2nd STREET, 2021; 2nd STREET USA, n.d.)
Crossroads Trading
Local competition – a reselling company based in the United States with more than 30 locations in different states (Crossroads, n.d.). The stores take in consumers’ clothing and resell them or trade them for in-store credit (Crossroads, n.d.). The products include clothing, shoes, and accessories in season and in good condition (Crossroads, n.d.). As the sales are completed only offline, a price strategy is unclear. The strengths of the brand are its strong focus on young adults, unique clothing, and sustainable message. The weaknesses are the limited number of sizes and options, dependency on customer input, and strictly offline selling (Crossroads, n.d.). The company primarily advertises on Instagram with more than 29 thousand followers (Crossroads Trading, n.d.). The main terms used in posts are “thrift, fashion, spring clean, outfit of the day, hand-picked” (Crossroads Trading, n.d.). The company also has a blog, where it discusses trends and new arrivals (Crossroads, 2021).
Ahimsa
Brand mission competition – a vegan shoe company with a factory based in Brazil (Ahimsa, 2021). Ahimsa has worldwide shipping, but sells goods only online and does not have stores in the USA (Ahimsa, 2021). The brand offers shoes in men’s, women’s, and unisex collections, ranging in style from boots to dress shoes and sandals (Ahimsa, 2021). All shoes are “almost entirely done by hand,” and all materials are vegan (Ahimsa, 2021). The pricing strategy is value-based or cost-plus, as the brand highlights its transparency (Ahimsa, 2021). The women’s models range from $89 to $199, and unisex and men’s shoes are priced similarly (Ahimsa, 2021). The main advantage of Ahimsa is its status as the only fully vegan brand-owned factory (Ahimsa, 2021). The brand also has reasonable prices for shoes in the US (Ahimsa, 2021; Priceonomics, 2017). However, the brand does not have physical locations, which limits its reach to Millennial clients (Ahimsa, 2021). The company promotes on social media and through word-of-mouth marketing on vegan-focused websites (Ahimsa, 2021). All Ahimsa’s social media accounts are in Portuguese, which greatly limits their outreach (Ahimsa, 2021; Hainla, 2021).
VEJA
Brand mission competition – a French company with factories based in Brazil (VEJA, 2021). VEJA shoes are sold in other brands’ shops, and the company has an online store (VEJA, 2021). Only a third of VEJA models are vegan, the rest two-thirds of all shoe varieties are manufactured from leather and other non-vegan materials (VEJA, 2021). VEJA sells shoes and accessories, focusing on sneakers and running shoes (VEJA, 2021). The prices range from €85 to €250, and the women’s section is much larger than the men’s (VEJA, 2021). The brand’s prices are somewhat higher than those of Ahimsa, but they still are in the medium range for the US (VEJA, 2021). The main strength of VEJA is its great transparency and social accountability – its website has a detailed explanation of all steps in sourcing and manufacturing, explaining the limits of production (VEJA, 2021). The weakness is that VEJA’s shoes are not completely vegan; also, it does not have brand stores. The company markets on Instagram – VEJA’s account has more than 586 thousand followers (VEJA, n.d.).
Beyond Skin
Brand mission competition – a luxury vegan shoe brand that offers high-end women’s footwear for all occasions (Beyond Skin, 2021). The shoes are designed in the United Kingdom and made by hand in Spain, explaining their premium pricing – the models cost from £110 to £395 (Beyond Skin, 2021). All shoes are made from faux leather, and the company focuses on casual and event footwear (Beyond Skin, 2021). The advantage of Beyond Skin is that has assumed a specific niche of classical women’s footwear in women’s styles. Such targeting is also a drawback, as the company does not offer men’s shoes or any other materials or interesting designs that may be interesting to the younger generations (Beyond Skin, 2021; Burton, 2017; Petro, 2020). The company seems to be inactive on social media, and its website does not feature any links to profiles (Beyond Skin, 2021).
Psudo
The range of American-made vegan shoes is limited, especially among men’s models and casual middle- and low-price range footwear (Hainla, 2021). Psudo is an American brand that manufactures slip-on-style sneakers for men and women (Psudo, 2021). The company has one model of shoe that is sold in different colors and patterns at $128 (Psudo, 2021). The limited range of shoes is a strength and a weakness, as it provides Psudo with a niche but decreases the number of potential customers (Psudo, 2021). Another advantage of the brand is its local production and its commitment to hiring local workers. The company advertises on Facebook and Instagram with a small following of fewer than 2,000 people (Psudo Sneakers, n.d.).
Unmet Needs
An unmet need is the lack of variety in shoes for men and the absence of local brands that offer vegan products (Pérez Curiel, 2017). The competition on Melrose Avenue offers second-hand shoes at high prices – their limited size and design range expose a potential niche for tailored experiences (Pérez Curiel, 2017). Competitors such as Ahimsa, Beyond Skin, and VEJA sell goods online and do not have a presence on Melrose Avenue or in the US in general, limiting the access to customers who prefer to shop in physical locations (Clack, 2018). A great disadvantage of online shoe stores is the inability to look at and try on the shoes without making the initial transaction. While online retailers may offer good return policies, the idea that the transaction is made may turn consumers away from a purchase (Clack, 2018).
As the interest in local brands increases, another unmet need appears (Hainla, 2021). Hainla (2021) highlights the lack of American-produced shoes for men, with Psudo being a weak competitor in areas other than slip-on sneakers. As Hanbury (2019) notes, Generation Z consumers do not want to see the same model in a store for several months – they want something that follows trends and is comfortable and affordable at the same time.
Burton (2017) finds that younger generations want to see different bodies and sizes represented in the goods. Pertaining to shoes, one may introduce collections that bridge the gap between men’s and women’s models and create shoes in a variety of sizes that are unisex. The demographic of men who can purchase only a limited number of sneakers and dress shoes can be covered while also interesting a large portion of young adults.
Competitive Advantage
The competitive advantage of City’s Finest is its combination of commitment to sustainability and transparency and its unique product range that combines gender-neutral models with customization. City’s Finest offers young adults changing collections of shoes at mid-range prices that are suitable for any gender. The size variety of the brand is further supported by the ability to order shoes in a different fit – a feature absent in competitors’ ranges. The materials that City’s Finest uses are vegan, and the company produces the shoes locally to lower the impact on the environment through transpiration (Clack, 2018; Petro, 2020). As a result, City’s Finest offers a brick-and-mortar experience of vegan shoe shopping, currently unavailable for many customers (Hanbury, 2019), and the store is located in a popular and prestigious shopping district of Los Angeles (Shatkin, 2020).
Advertising Plan
Based on the chosen demographic, the marketing for City’s Finest should concentrate on social media and entertainment. Fromm (2021) highlights the value of experiences as the foundation for selling products. Authenticity, value, and a political and ethical stance are crucial to attracting younger customers (Burton, 2017; Fromm, 2021). Vegan customers are especially interested in ethics-driven campaigns (Petro, 2020). Video is the medium that is most interesting to Generation Z and Millennial clients (Fromm, 2021). Micro-influencers – people who have between 1,000 and 100,000 followers – are more approachable than media figures (Cameron-Kitchen, 2020; Expert Panel, 2020).
The advertising plan includes brand social media accounts on Instagram and Tik-Tok, two platforms with video capabilities. Apart from the brand’s own account posting about new products and their values, City’s Finest will work with micro-influencers. Local (Los Angeles) influences will be approached to market the brand through posts, videos, and a giveaway campaign for a pair of footwear of choice. Such engagement should expose young people to the brand and drive engagement on its social media profiles.
An email newsletter campaign is another popular marketing strategy among Gen Z customers (Campaign Monitor, n.d.). Emails sent once per week can contain promo codes, recommendations, and news about ethical fashion. Fromm (2021) notes that content adjacent to the brand’s message is as important as the product for many clients. Emails can discuss slow fashion, vegan news, and the latest political and business breakthrough in ethical manufacturing.
Mission Statement Goals and Objectives
Implementation
The goals and objectives outlined on the basis of the mission statement show that the brand needs to make sales and drive engagement on social media. The goal of increasing customization is a production aim that refers to the step of improving the range of available models. Before it can enter the market and increase its share, City’s Finest needs to establish a presence and get recognized by its target demographic. The first goals to implement are to design the newsletter and Instagram marketing campaign. When creating these two marketing elements, the brand will focus on the product range as well as such ideas as sustainability, veganism, social responsibility, sustainability, and price. Local manufacturing and tailoring are two strengths that will be highlighted as well.
Next, a local influencer will be contacted for a promotional giveaway and cross-platform marketing. Vegan fashion influencers that live in Los Angeles are a preference to ensure a connection with a local following. Online publications that compile information about vegan brands and discuss the latest vegan fashion news should be contacted for a feature or for inclusion in the list of brands. While this addition can occur organically, a feature could grant City’s Finest an opportunity to highlight its strengths (Burton, 2017). These objectives should drive engagement on social media and connect audiences of these magazines and influencers with the store’s accounts and the website, potentially increasing sales. The final goal is to start sales, which contains an objective for profit margins and customer satisfaction. The implementation of these objectives lies in the success of the marketing campaign and the feedback from the potential clients. This goal is the center of quantitative measurement in this business plan. It combines the financial success of the brand and its recognition by clients.
Evaluation
The instrument for measurable financial data for City’s Finest is the net profit margin. The issue of knowing how much profit a business brings is the foundation for any for-profit venture (Musallam, 2018). In comparison to other types of profit margins, the net profit margin accounts for operating expenses, interest, and taxes, providing a more reliable number than the gross or pre-tax margin (Musallam, 2018). The net profit margin is calculated by dividing the net income by revenue and multiplying by a hundred to be displayed as a percentage. Net income is revenue minus the cost of goods sold, expenses (operating and other), potential interest, and taxes (Musallam, 2018). Looking at this statement, the investor can see whether the business can make a profit post-tax and operating expenses. The margin can be calculated quarterly to show the capacity for generating a profit and annually to present the overall performance and potential of the business (see Table 1).
Table 1
Where Expenses = Cost of Goods Sold + Operating Expenses + Other Expenses + Interest + Tax (Musallam, 2018).
The qualitative measurement for City’s Finest explores customer engagement with the brand’s social media, their perception of the brand, and their thoughts about purchasing the products. It has items in the form of statements, with which the customer can agree or disagree on a Likert scale from 1 (strongly agree) to 5 (strongly disagree) or 1 (never) to 5 (always). The first three statements ask about the presence of the brand on social media. The next three items are concerned with the client’s perception of and engagement with the email newsletter. The last three statements ask customers to measure their potential of buying the products.
Budget
References
Hainla, L. (2021). American-made vegan shoes: All vegan shoes made in USA 2021. Top Vegan Shoes. Web.
Hanbury, M. (2019). Gen Z is leading an evolution in shopping that could kill brands as we know them.Business Insider. Web.
United States Census. (2019). QuickFacts: Los Angeles City, California. Web.
Ahimsa. (2021). About us. Web.
Todeschini, B. V., Cortimiglia, M. N., Callegaro-de-Menezes, D., & Ghezzi, A. (2017). Innovative and sustainable business models in the fashion industry: Entrepreneurial drivers, opportunities, and challenges. Business Horizons, 60(6), 759-770. Web.
Pérez Curiel, C. (2017). Sustainability and luxury: The ecological intelligence in the aspirational dimension of luxury. Journal of Socialomics, 6(2), 1. Web.
VEJA. (2021). Limits. Web.
Beyond Skin. (2021). About. Web.
2nd STREET. (2021). About 2nd STREET. Web.
2nd STREET USA [@2ndstreetusa]. (n.d.). Posts [Instagram profile]. Instagram. Web.
Crossroads. (n.d.). Selling & shopping. Web.
Crossroads Trading [@crossroadstrading]. (n.d.). Posts [Instagram profile]. Instagram. Web.
VEJA [@veja]. (n.d.). Posts [Instagram profile]. Instagram. Web.
Psudo. (2021). About us. Web.
Psudo Sneakers [@shoppsudo]. (n.d.). Posts [Instagram profile]. Instagram. Web.
Campaign Monitor. (n.d.). The ultimate guide to marketing to Gen Z. Web.
Musallam, S. R. (2018). Exploring the relationship between financial ratios and market stock returns.Eurasian Journal of Business and Economics, 11(21), 101-116. Web.
Burton, A. L. (2017). Meet Gen Z: Spendthrift, entrepreneurial, and smartphone-obsessed, here’s how to best reach this throwback generation. Footwear Plus. Web.
Priceonomics. (2017). How much do women’s shoes cost vs men’s?Forbes. Web.
Statistical Atlas. (2018). Overview of ZIP Code 90038, California (ZIP Code).Web.
Clack, E. E. (2018). Despite the online boom, more than half of all millennials still prefer to shop in physical stores.Footwear News. Web.
George-Parkin, H. (2019). 7 numbers that prove vegan shoes are on the rise.Footwear News. Web.
Shatkin, E. (2020). The guide to Melrose Avenue West. Discover Los Angeles. Web.
Petro, G. (2020). Sustainable retail: How Gen Z is leading the pack.Forbes. Web.
Cameron-Kitchen, T. (2020). 10 reasons why micro-influencer campaigns interest Gen Z (and how they can boost your business).StartupNation. Web.
Expert Panel. (2020). 10 best tips for using micro-influencers in A Gen-Z marketing campaign.Forbes. Web.
Fromm, J. (2021). Five undeniable truths about marketing to Gen-Z. Forbes. Web.
Crossroads. (2021). The best winter-to-spring shoe trend. Web.