Executive summary
XL Ladies Clothing will be a partnership business that intends to provide extra large women clothing at lower prices to customers in unique and well-fitted design. The firm will endeavor to provide quality types of extra sized clothing for all occasions and events to its esteemed customers. Besides, the firm will continue to offer a variety of extra-large sized clothing designs for different seasons thus making its products to be known by majority of the consumers. The target market for the firm will comprise of the women populace particularly the middle aged and young women that constitute around 62% of the market. The approach will benefit the bigger global community given that the UAE is a global commercial hub.
XL Ladies Clothing will be located in Dubai and requires over 5 million AED as start-up capital comprising of total assets and expenses. In addition, the firm intends to make the returns on sales in the first year of operations. The firm will emphasise on product quality that will continue to attract the increasing demand for extra-large sized women’s clothing. Product quality will increase the firm’s competitive advantage as well as its market share. The increased market share will result in increased revenue that benefits both the firm and its shareholders. The increased revenue benefits to the shareholders make the firm ideal for investments. Besides, the business will majorly depend on the vast experience and technical skills of its four partners.
Business description
Overview of the business operations
As indicated, XL Ladies Clothing is a business that intends to provide extra large women clothing at lower prices to customers in unique and well-fitted designs. The extra large women clothing will be imported, sorted out, packed, arranged and sold in the firm’s stores located in Dubai. The business will take advantage of the increased demand for extra large women clothing to establish and increase its share in the UAE market.
Objectives of the firm
Satisfying the needs of customers with quality and all types of plus-size clothing for all occasions and events is the main objective of the firm. Customers’ tastes differ in many ways and the firm understands that creativity is one of the ways it can use to influence the purchase of its products. Another objective is to be the leader in the provision of extra-large women clothing by the end of 2016 using a brand name that is recognised by the targeted customers. Offering all types of plus size clothing for all occasions and events will ensure long-term sustainability of the firm since there are many concerns today among women regarding the type of clothing.
Mission statement
The mission of the business is to attract and maintain customers through the provision of convenience and high quality products that surpass the anticipation of the clients.
Business location
The firm will be located in Dubai given the nearness to the market. Most of the presumably large women live in Dubai suburbs. Therefore, locating the firm in the central business district will increase its accessibility. In other words, the location will be idyllic and perfect since it will provide easy access to the customers.
Form of business ownership
The business will be a partnership owned by four partners. The business will be incorporated as a partnership in the first year of its operations. However, the partnership will be changed into a limited liability company in the third year of its operations. As indicated, the business is owned by four partners who contribute the largest percentage of its startup capital.
Target market
The business will be targeting the women populace especially between the ages of twenty-one to fifty five years due to their elastic reactions to market needs. Additionally, XL Clothing will target large sized fashionable customers since these individuals are conscious of their size and consume at least twice of the firm’s products. Specifically, women conscious of their large sizes account for approximately over sixty-eight percent of the market. Ideally, the clothes will be factory-made in US. It is imperative to mention that offshoring of the production process is cheaper. However, the qualities of the products that will be produced surpass the cost that the customers will pay.
Project costs and funding
The startup capital
The business will require over 5 million AED as start-up capital comprising of total assets and expenses. The start-up expenses will include costs incurred during the facility preparation for on-site construction services, legal services and accounting, special consulting as well as contingency plans. The largest start-up in terms of finance is required for the building of manufacturing facility. Once completed, the facility will be one of the long-term assets. Besides buildings, machinery and fixtures, inventory as well as cash are categorised as assets. All the financial forecasts beginning with start-up capital are shown in the appendix.
The product description (XL ladies clothing)
The business is committed to the provision of products that offer excellent quality to the target customers. The firm will focus on the needs of customers. As such, the firm will endeavour to provide extra-large women clothing, which is one of the most highly required type of clothing in the market. In fact, the business will be focusing on the provision of all types of extra large women clothing ranging from underwear to pajamas and sports suits. Besides, the extra-large clothing will be of superior quality. In fact, the type of clothing offered by the business will be considered suitable since the clients will be offered with an opportunity to choose the most appealing and suited sizes. Essentially, the firm will be offering a wide range of extra large clothing in terms of sizes, quality and suitability. The type of cloths offered by the business shops around the UAE will best suit the majority of obese women particularly in Dubai.
The products will be offered in unique displays, which differentiate the business shops from the large shopping malls around the UAE. In fact, the extra large women clothing will only be found within the business shops. The unique extra large women clothing will only be found in the business shops, which is an attribute that will differentiate the products from the competitors. The unique display will enable the type of clothing to be easily identified by the potential customers. Further, the business will ensure that the extra large women clothing stands out consistently within the market by ensuring that the products are provided according to the required specifications. The business will provide the target customers with high quality extra-large clothing that influences purchase and maximise sales, profits, and revenues.
The business products will be one of the new extra large clothing imported and sold in Dubai. The product mixes in terms of type, quality and sizes offer competitive advantage to the business. The brand remains to be among the favourites currently being distributed in the market. Besides, the product will be distributed in sizes and branded types that reflect on the designs considered by customers as of superior quality. The sizes, design and type will also mirror the expected price of the target market segment. Further, the high quality of the new product replicates the firm’s philosophy of choosing the product lines that ensure reliable and superior quality, competitive prices and fulfillment of the clientele desires.
Marketing plan
Market analysis
Target market
The main target market for XL Clothing will be females of larger size ranging from size 38 to 56. In fact, the consumption of large sized clothing among women in the UAE experiences increasing trends particularly within the target market. The reason is that women are increasingly gaining weight due to stable income and increased participation in economic activities. The consumption of large sized clothing also increases among the female youths as well as the middle-aged women. The firm will take advantage of these inclinations to increase its market share. According to the survey, the target market for XL Clothing will mainly consist of Dubai residents. Besides, the firm will mainly target large sized women between twenty-one and thirty years as well as those between thirty-one and forty years. Generally, the product will target the younger generation and the middle ages customers particularly women. In other words, the market will consist of individuals who are young, outgoing and full of life.
On the other hand, XL Clothing will utilises premium tactics to appeal to the specific consumer division thereby augmenting the volume of sales. The market survey indicates that large sized middle-aged women represent approximately over eighty percent of large sized clothing consumers while the young females accounts for the remaining proportion. Most importantly, the lower middle-aged women populace mainly between the ages of twenty-five and thirty-five years forms the bulk of XL Clothing market since the age bracket accounts for over sixty-two percent of the entire product consumers. Besides, larger sized women between the ages of thirty-six and forty-five years account for approximately over eighteen percent. Moreover, women of over fifty years consume the estimated market products of over twelve percent.
Young women populace especially between the ages of twenty-one and thirty years will also be a major market target for XL Clothing due to their elastic reactions to market needs. Additionally, XL Clothing will target large sized fashionable and conscious customers since these individuals are conscious of their size while consume at least twice of the firm’s products (Kotler and Armstrong 345). Specifically, women conscious of their large sizes account for approximately over sixty-eight percent of the market share products.
Market segmentation
XL Clothing targets various potential consumers and purchasers who recognise the worth of stylish and large sized clothing. Actually, stylish large sized clothing market will be aggregated according to the potential purchasers exhibiting similar requirements and responding in the same way to the marketing actions (Solomon 78). For the purpose of segmentation analysis, the firm will emphasise on customer demographics, consumer insights, psychographic, market trends and growths.
Customer demographics
Regarding consumer demographics, XL Clothing focuses on market division according to age and income. Depending on the age of clients, the firm’s products target individuals of ages between twenty-one and forty years. Specifically, the firm will target individuals within the ages of twenty-one and thirty-five years that account for over sixty-two percent of the entire populace.
Considering the consumers’ income categories, XL Clothing will emphasise on females with average income. In particular, the firm will be targeting middle and high-income earners. However, the firm will also focus on women belonging to the upper low-income bracket though most of the women found within the income level accounts for approximately twelve percent. On the other hand, the female counterpart in the middle and income levels accounts for over eighty-seven percent. Nevertheless, the firm will vary demographic segmentation depending on the target consumers.
Behavioral aspects
In terms of behavioral aspects, consumers’ willingness to purchase premium for high quality large sized clothing as well as the consumers’ concern for value attributes will be taken into consideration (Cole 253). Other reasons such as consumer preferences will be taken into consideration.
Psychographics
XL Clothing will also segment its market based on the inquiries made by customers regarding the products, marketing communications and channels of distribution as well as consumers’ preferences, lifestyles and emotional attachments to the firm’s brand. The firm will concentrate on the social impacts of the customers on the use of the products.
Market needs
The segmentation of the market based on market needs will enable XL Clothing to offer a variety of alternatives in terms of size and prices as well as enhance competitiveness in terms of quality. Further, this kind of market dissection benchmark will enable the firm to offer competitive prices for the product.
Market trends
The industry data indicates an increasing trend in the consumption of the products despite depressed disposable income and rising prices. The consumption of large sized clothing also increases among the Dubai households. In other words, the consumption of large sized cloths has doubled among Dubai household particularly among the young and middle-aged women. According to the market survey, consumption is highest among the middle-aged generation (Burns 235). The increasing trend in the consumption of large sized clothing particularly the imported is significant for XL Clothing since new product brought into the market will be sold.
Competitor analysis
The business will continue to experience stiff competition from various firms in the industry including large shopping malls around UAE and the international firms’ subsidiaries operating in Dubai such as Castaluna Ladies Shops and Evans women clothing shop. Currently, direct competitors including Castaluna and Evans have market shares of approximately twenty percent and twenty five percent respectively. The expectation is that the business will continue to compete favourably and capture a sizeable market share of approximately thirty percent.
Castaluna Ladies Shops
The Castaluna Ladies Shop is the leader in the industry and controls approximately twenty percent of the entire market share. In addition, the Castaluna Ladies Shop has become tantamount to the provision of quality types of plus size clothing for all occasions and events. In fact, Castaluna Ladies has over three hundred branches all over the UAE as well as an online outlet that offers variety of extra-large sized clothing designs for different seasons thus making its products to be known by majority of the consumers. Further, the firm has distinct trademark as well as efficient delivery channels. Castaluna Ladies product philosophy is centered on quality and consumer satisfaction thereby gaining competitive advantage over rivals.
Evans Ladies Clothing shops
Evans Ladies Clothing is the second largest in the industry with over twenty-five percent of the market share. The firm has diversified its operations in over 150 shopping mall branches spread across the UAE. The business brilliance of the firm’s management has led to its rapid expansion within the country. Further, the low-pricing strategy of Evans Ladies Clothing has been vital in the attraction of consumers. The firm has also received various international quality accolades in terms of quality and limited size offerings thereby amassing numerous consumers. Evans Ladies Clothing has been experiencing an increasing trend in revenues leading to augmented levels of growth.
Marketing mix strategies
Price penetration strategies
The pricing strategy of the business will be market penetration to attract many customers to buy the product within a short time. Considering the quality of the clothes the outlet will distribute, the price will not be a huge cost for the target consumers. In addition, the price penetration strategy will also help the business to introduce the product in the market. Factors that will influence pricing decisions is the customer’s expectation since they already have increased anticipation from competing companies in order to receive a high level of services and products. In other words, the firm will utilise high-quality low-prices strategy to penetrate the already highly competitive market. As indicated, the business faces stiff competition from various firms producing similar products within Dubai and its surroundings.
Therefore, the low pricing differentiation strategy will provide a critical competitive advantage. Apart from the high expectations the clients have on the type of clothing to be provided, the business should also have the right price for the product to encourage the purchase so that it can realise increased profits (Cole 201). In essence, price is a critical element in the market penetration strategy since it will primarily be used to attract customers and create sales revenue.
As expected, the quality and value addition attract high prices. However, the prices of extra large clothing will be middle-high targeting high-end customers, low as well as middle-incomers. The high-quality low-price strategy will be applied particularly to penetrate the competitive market (Solomon 122). The pricing strategy will be aimed at widening the spectrum of customers the business is targeting.
The promotion and advertising strategies
The firm will be most active in its promotional undertakings. The aim of the promotional strategy is to enable the business brands become a recognisable logo. In the promotional strategy, the business will utilise various basic techniques to reach the customers. The promotion techniques the business will utilise include advertising, public relations, personal selling and sales promotions (Pinson 207).
However, the business will majorly utilise innovative advertising to attract and inform the clients about the products offered both in mass and digital media. The firm will be investing in both mainstream and social media advertising to increase awareness of the products to many customers. The brand awareness will also be improved through innovative advertising in mass media particularly in television (Lee 314). The major objective of advertising is to increase brand awareness of the products being offered by the firm to target users.
The business will utilise corporate social responsibility to appeal to many people as a method of maintaining its public relations. The success of the firm in public relations will improve its goodwill and attract public attention (Bradley 201). Further, the firm will provide special offers as a good way to stimulate and retain its customer loyalty. The business will extensively apply personal selling (Keller and Kotler 71). The firm’s sales representatives will be fully trained on the business’s product information and will be responsible for the provision of excellent customer services.
Environmental and market analysis
SWOT analysis
Strengths
The high quality products will enable the firm to gain larger portions of the market. Besides, given the diverse competencies of the partners, the business will be able to amass increased profits at lower costs.
Weaknesses
Since the business is new in the market, its trademark will take time to be known by clients in the market. Additionally, meeting the demands of the clients will be difficult since the XL will only begin operations with a single store.
Opportunities
The firm is presented with a prospect of opening an online store as well as a website. As such, the business will be capable of advertising its products across the UAE region. The partners are also aware of the demands of the clients in the local market. In this regard, the firm has the prospect of establishing a local factory to manufacture XL clothing.
Threats
The major threat facing the firm emanates from the well-established firms including Castaluna and Evans. Moreover, the firm is also faced with a possibility of the partners selling shares to anonymous persons.
PESTEL analysis
Political environment
Political aspects have been found to be a predominant influencing factor in the management and operations of the business. Like any other industry or business, XL Ladies Clothing requires politically stable environment in order to achieve its goals (Fullen and Podmoroff 35). However, UAE particularly Dubai where the business is situated is enjoying both political and social stability. The business will thrive to expand since the country in which it operates enjoys political stability.
Economic environment
The recent economic boom in the UAE particularly Dubai has resulted into many smaller businesses sprouting up due to the increased demand for products and services. The disposable income has increased considerably and most businesses are transacted (Sahlman 56). Besides, spending on household products has increased tremendously. Therefore, the improved economic situations will greatly influence the growth and development of the firm.
Social environment
Many social issues affect the industry. However, the business will align its products with the target market needs including age and culture. In fact, culture is the most important social factor influencing the industry (Finch 115). However, the products the firm is selling are aligned with the socio-cultural needs of customers. In Dubai, just like any Arab country, the socio-cultural setting is such that women are not allowed to expose most parts of their bodies. As such, the type of clothing provided by the firm will reflect on this social need. Therefore, the firm is investing in areas where socio-cultural factors will promote the sales of the product.
Technological environment
The firm will incorporate online activities in its operations. As such, technology remains integral to the success of the business (Blackwell 234). However, the developed ICT infrastructures only support large businesses. As most of the operations rely on the availability and usability of information technology, the business will thrive to apply the available technology to develop. In essence, technology forms an integral part of the firm. All aspects of the firm including sales, purchases, marketing, management, and operations depend on the development of technology. Therefore, the firm will invest in cost effective technology to ensure that the product’s presence in the market is increasing.
Legal environment
Legal factors are critical to the establishment and operations of the firm. The legal requirements of Dubai government support the establishment and growth of businesses. As such, the business will comply with the legal requirements in order to operate effectively (Covello and Hazelgren 334). Essentially, the legal environment in Dubai is conducive and supports the growth and development of firms particularly businesses that adhere to the required regulations. The business will take advantage of the supportive legal environment to establish and ensure that the product reaches the target customers.
Barriers to entry into the industry
Competitive rivalry
Increased competition is one of the major barriers to entry (McKeever 121). The purchasing patterns of consumers depend on products’ eminence, price, delivery period, the market and the firm’s reputation. As such, the firm will have to look into the quality, prices and delivery times of products to attract numerous buyers. Moreover, the firm will consider locating its operations near the market to capture more buyers.
Increased cost of establishment
The expenses incurred in the establishment of plants are expensive and industry-specific. As such, the firm will incur the additional costs in sustaining trademark devotion as well as establishing plants (McKeever 121). Most importantly, the business will consider its delivery chains, localities, and trademark as well as the financial capital to gain the advantage of warding off potential competitors.
The reactions of firms to the barriers of entry
The industry is highly competitive with players offering diverse similar products. Therefore, most firms consider employing convenience and low-price strategies to counter substitute threats. Moreover, firms exploit technological advancements as well as the financial strengths to increase competitive edge (Kraten 99). In addition, firms consider using various advanced designs to produce high quality products. The availability of world renowned outlets including hotels will attract customers to the proposed outlet. We expect customers to search our company via the internet to find the quality clothes the outlet will be selling.
Operations
Business location
The firm’s stores will primarily be located in Dubai given the nearness to the market. Most of the women who are conscious of their large sizes are mainly found in affluent city suburbs. The location will be idyllic and perfect since it will provide easy access to the target customers (Vernon 61). Besides, since the business mainly depends on imported products, Dubai is the most ideal place given its location and accessibility to imported products.
Business layout
The business has four departments including sales, store operations, finance, and purchasing, which will be operating under the CEO. The managers will be responsible for staffing, planning and controlling of everything in their own departments. The store will design a supply chain network to facilitate efficient provision of its products to the target audience by opening branches near the targeted customers and use mobile vehicle to supply the product. The extra-large clothing for all designs will be imported at reduced costs. The management layout is indicated in Appendix 8.
Management and personnel plan
Management team
Given its small size, the business will not immediately have an elaborate management team. However, as the firm growth progresses, the management team will consist of both experienced and skilled workforce. The skilled and experienced workers will mainly be employed in the management and supervisory positions. However, at the lower levels, unskilled temporary labor force will be required (Stutely 111). The business will majorly depend on the vast experience and technical skills of its four partners. The four partners will form the core of the business management. The four managers have over thirty years experience in almost all aspects of clothing manufacturing, retail and distribution processes as well as business enterprise development and operations. Each partner will contribute to the well-being of the company.
Essentially, the growth and development of the firm will depend on the expansive experience of the four partners on the retailing and manufacturing procedures as well as the distribution of clothing products, business enterprise development and growth. Besides, the partners have been involved in the start-up, development and growth of other cloths manufacturing and retailing companies. The success of the firm will rely on the technical skills of the partners in charge of the store operations.
In fact, stores operations require vast experience in clothes retailing and manufacturing industry. The reason is that the store managers will be in charge of delivery, suppliers and supply chain management. As such, the manager should demonstrate its involvement in the management and operations, design, sales and distribution of diverse clothing products around the globe.
One of the partners will be in charge of sales. In other words, the firm will also benefit from the expertise and experience of the sales manager. The sales manager is expected to bring vast experience and technical skills in the development and growth of the business. The firm’s financial capabilities will depend entirely on the experience and technical skills of the partner who is charge of finances. The expectations are that the financial manager will help the organisation raise funds for the start-up and operations.
Besides the contribution of the partners that form the management team, the daily operations of the business will be part of their collective responsibility. Apart from overseeing the daily management and operations of the firm, the partners will be implementing corporate business models, licensing intellectual property, managing, designing and constructing manufacturing facilities as well as the continuous technical and business support. The business will also depend on the junior personnel drawn from various fields and capabilities. The expectations of the firm are that the junior personnel will be increased with time.
Financial Plan
Financial forecasts
All the financial forecasts including income statements, balance sheet and cash flows are presented in the appendix.
Loans and other investments proposal
The business will pursue a loan of over 300,000 AED from a local bank. In addition, it will present a cash flow forecast, an opening balance sheet for the first month and a closing balance sheet for the end of the first year to the bank. Moreover, the firm will present its income statement forecasting for the first year and owner equity to the lender. The financial statement will help the bank to see how the business has planned its future cash requirements while trying to avoid liquidity.
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Appendices
Appendix 1: The personnel plan
Appendix 7: Growth rate and breakeven analysis
Breakeven analysis
Appendix 8: Management Layout
