Introduction
We are pleased to provide Target with our new VR product line idea. Our proposed product line would greatly complement Target’s product choices, and we know that Target has a long-standing dedication to innovation and consumer pleasure, as many of you know. Over the last year, we have worked hard to create a Virtual Reality product line that will completely change how Target’s consumers purchase in-store. We have listened to our customers and carefully studied their wants and requirements to create a range of products that not only satisfy but also exceed their expectations.
Brick-and-mortar stores like Target need to innovate to compete with the growing popularity of online shopping. Our VR product line is the ideal response to these problems and will help establish Target as a frontrunner in the retail business. This range of products can revolutionize how Target’s clientele shops and vastly improve their experience there. Let’s proceed with our proposal and examine the possibilities of our VR product line for Target. That is kind of you.
Projected Break-Even Point
A key part of our plan is the estimated break-even point, which shows when the Virtual Reality product line will begin to generate a profit. Based on our financial forecasts, we expect the Virtual Reality product line to break even in its third year of availability. Our break-even analysis considered unit sales volume, pricing, and fixed and variable expenses. The fixed costs of creating the Virtual Reality product line would be about $50 million. This would include everything from research and development to manufacturing to advertising.
We calculated that the variable expenses, including labor and materials, would be $20 per item. Our market study indicates that the Virtual Reality product line can command a $100 per unit price, yielding an $80 per unit profit.
We used this calculation to calculate the break-even point:
Break-Even Point = Fixed Costs / (Unit Price – Variable Costs).
Based on our projections, we arrived at the following break-even price for our VR product line:
Break-Even Point = $50,000,000 / ($100 – $20) = 625,000 units.
This indicates we must sell 625,000 copies of the Virtual Reality product line to break even. We estimate that by the end of the third year after the introduction, we will have sold 1.25 million devices, generating a profit of $50 million.
The predicted break-even threshold for the Virtual Reality product line has been meticulously laid out in a table and graph. The projected unit sales volume and income at various time periods are shown graphically, enabling us to monitor our progress toward the break-even point. The market potential and demand for our virtual reality product line have led us to conclude that our projected break-even point is reasonable and doable.
Action Plan (Timeline)
As part of the action plan, we created a schedule for the product launch process. Critical processes, including product design, development, manufacturing, marketing, and sales, are all included in the timeframe. We’re committed to following this timetable so that we can roll out the product as planned and within budget. We have also planned for any problems during the launch process.
Marketing Metrics
As was previously noted, it is essential that the Virtual Reality product line’s marketing KPIs closely match the marketing strategy’s goals. Our marketing strategy has two primary goals:
- bolstering client loyalty and
- enhancing the shopping experience.
As a result, we will be able to gauge the product line’s performance based on these marketing metrics:
Customer Loyalty
The Net Promoter Score (NPS) will be used to gauge customer satisfaction. Asking clients on a scale from 0 to 10 how likely they are to suggest a product indicates how satisfied and loyal they are. We will calculate NPS at regular intervals and establish cutoffs for poor, average, and excellent customer loyalty.
Retail Environment
By polling customers’ in-store experiences, we can gauge the product line’s contribution to enhancing the retail setting. We will also track product sales in shops that have adopted the VR experience to see how it affects sales volume.
Five-Year Projection of Financial Performance
Let us now look at our Virtual Reality product line’s expected ROI. We have calculated a five-year forecast that factors in expected revenue, costs, and net profit. Our findings lead us to believe that Target’s Virtual Reality product line will majorly contribute to the company’s bottom line. We anticipate an annual revenue of $25 million in our first year of operation, with further expansion in the coming years. We expect to reach $500 million in sales by the fifth year.
Launching a new product line will involve costs. The initial investment for product research, manufacturing, and promotion is anticipated to be over $100 million. While this may be a significant upfront cost, the long-term success of the Virtual Reality product line will more than pay for itself. Target’s virtual reality product line will become profitable within the first two years of sales. We expect a 15% profit margin in year five, translating to $22.5 million in net profit.
Although based on our most educated guesses and assumptions, these predictions are subject to standard business risks and uncertainties. Based on our findings, we are confident that our predictions are reasonable and achievable. Overall, Target’s Virtual Reality product line will be a worthwhile expansion of its current offers and a boon to its bottom line in the coming years.
Conclusion
To conclude, our suggested Virtual Reality product line for Target has the potential to completely transform the in-store shopping experience while also generating substantial new income for the corporation. We have prepared a detailed strategy covering everything from the estimated break-even point and action plan (timeline) to market KPIs for monitoring success against financial and market goals over five years.
References
Pizzi, G., Scarpi, D., Pichierri, M., & Vannucci, V. (2019). Virtual reality, real reactions?: Comparing consumers’ perceptions and shopping orientation across physical and virtual-reality retail stores. Computers in Human Behavior, 96, 1-12. Web.