Business Plan Paper

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Index Table:

1. Executive Summary………………………………………………………….3

2. Business Description and vision……………………………………….4

2.1 WOW Denim…………………………………………………………...4

2.2 Vision……………………………………………………………………….4

2.3 Mission…………………………………………………………………….4

2.4 Value Proposition…………………………………………………….4

2.5 Objectives………………………………………………………………..5

3. Definition of market…………………………………………………………6

3.1 Business Industry and Outlook……………………………………6

3.2 Consumer Behavior and Trend......................................6

3.3 Target Market…………………………………………………………….7

3.4 Business Focus-Why Organic Cotton?...........................8

4. Description of products and services……………………………….9

4.1 Products…………………………………………………………........10

4.2 Services………………………………………………………………….12

4.3 Competitors…………………………………………………………..14

4.4 Competitive Feature………………………………………………15

5. Organization and Management……………………………………..17

6. Marketing and Sales Strategy…………………………………………18

6.1 Marketing Plan…………………………………………………………18

6.2 Wow Denim Brand Equity Pyramid…………………………..18

6.3 Wow Denim Ansoff Matrix……………………………………….20

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6.4 Wow Denim Porter’s Five Force…………………………….22

7. Financial Management………………………………………………..24

8. Conclusion…………………………………………………………………..25

References…………………………………………………………………..26

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1. Executive Summary:

WOW Denim is an organic denim clothing line headquartered in Los Angeles that currently focuses on online selling of denim jeans, shirts & jackets for men & women through partnerships with local boutiques in LA.

With an emphasis on environmentally responsible fashion WOW Denim will also be starting a cloths recycling program where consumers will be able to ship or drop off old pairs of jeans, shirts & jackets & have them used in the manufacturing process for new ones.

Industry research has found that US consumers own on average 7 pairs of jeans and stick to one brand based on one important variable, which is fitting. Based on that statistic the company’s designs center around providing the best fit, with a tagline of “denim so good, you will never take your clothes off”. To further take advantage of this insight, WOW Denim will be launching a custom tailor option where users will be able to request custom fit pairs through an online portal.

Raw material for the organic cotton will be sourced from two suppliers, one based in Turkey and the other in India where it will be transformed to denim and dyed in natural indigo colors and shipped to our manufacturing and shipping partner in LA. Day to day operations are handled through an office in LA.

The primary competition comes from three foreign brands namely Kuyichi, Hiut Denim, and Nudie Jeans, all which have been committed to sustainable fashion and are huge advocates for the organic cotton movement. Primary means of marketing will be online through analytic-driven approaches like SEO and paid search, in addition to capitalizing on social channels like Instagram, Facebook, Twitter, and Pinterest. User generated content and engagement will be key as product pages will include Instagram photos and promote consumer pride in our products.

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2. Business Description and Vision:

2.1 WOW Denim Company was incorporated in December 2016 and operates as partnership between John Smith, Mike Smith and David Smith. Paul Solanki is reputable designer who is running his local boutique in LA & has worked for serval years in retail industries so one thing became increasingly clear to all of us that industry is in the midst of a deep moral and ethical crisis. With cheap labor being continuously exploited with abysmal working condition overseas and traditionally. Manufactured cotton using upwards of 25 percent of the world’s entire agrochemicals consisting of unimaginable amounts of insecticides and pesticides. So, all business partners have decided to launch denim wear online store with suppliers of premium organic denim in Turkey and India where it will be manufactured in LA

2.2 Vision Our vision is to make big move towards minimizing the environmental impact of our products by looking for material that contribute to more sustainable future without compromising on quality and comfort.

2.3 Mission WOW Denim’s mission is to design, produce and distribute Organic denim and fashion to consumers and aims to show other brands that using sustainable materials can be commercially successful without compromising in style & quality.

Currently company is selling denim jeans, shirts & jackets online through its ecommerce store shipping within southern California with market penetration in New York. Company has set its objective for growing its sales and operation as broken down in two phases listed below

2.4 Value Proposition Though there are more than a handful of organic denim startups, at Wow Denim, we firmly believe that with the founder’s combined experience, industry partnerships, and focus on providing the quality denim apparels produced with sustainability in mind from cradle to grave, the brand can stand out. Our plan is to leverage our American heritage and love for the

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fabric and use a marketing strategy that is closely aligned with building personal relationships with our target market.

2.5 Objectives

Phase I (Next 6 Months)

• Increase online sales by 20 percent by end of year through influencer and social media marketing tactics

• Partner with 3 additional local high-end fashion boutiques with shared values as distribution channels

• Increase online social presence on Facebook, Twitter, Instagram, and Pinterest by 30 percent

• Build out a “custom apparel” line of the business giving online consumers the ability to create their own denim jeans and jackets

Phase II (Next 12 Months)

• Initiate Trash-Free packaging for almost all shipping by having tie-up with Repack company.

• Create strategic partnerships with local fashion boutiques in New York for distribution in the area

• Scope out local manufacturers in New York area for quality production with aim of opening operations for denim jackets as the next product line and increased delivery within region

• Initiate a recycling program whereby consumers will be able to deposit their denim and have them be reused in the creation of new jeans.

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3. Definition of Market:

3.1 Business Industry and Outlook A recent report looking at the Global Denim Consumption and Production through the years 2011 to 2021 by Denimandjeans.com found that in 2016 the world jeans market was worth an estimated $51.6 billion and is at pace to grow to $56.2 billion by the year 2017.

Another report that focused exclusively on the denim consumption habits in the US found that an average US consumer owns 15 denim garments on average, 7 of which are pairs of jeans. Out of all apparel purchased denim makes up 17 percent which explains why it continues to be the highest selling clothing item in the world.

According to the commerce Department, online sales increased 14.6 percent in 2016, shoppers now make 51% of their purchases online compare to 48% in 2015 and 43% in 2014

3.2 Consumer Behavior and Trends However, when it comes to consumer behavior and trends most US denim purchasers buy jeans, shirts & jackets for fit at 66 percent citing the reason over its brand name. Interestingly enough though, 73 percent prefer to purchase the same brand as the one they own with men showing more loyalty at 64 percent than women at 45 percent.

Going deeper into the growing level of awareness around environmental sustainability and climate change, the Cotton Incorporated 2016 Environment Survey found that 52 percent of consumers say that environmentally friendliness is important to their apparel purchase decisions. Digging a little further, about 33 percent are actually more likely to seek out environmentally clothes for themselves.

When it comes to the material of their clothes though, nearly 72 percent of survey respondents say that natural fibers are better for the environment than synthetics, with 58 percent of consumers willing to pay more for them. Such trends are driving global brands like Gucci, Timberland, and

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others to focus on making their products and supply chain more environmentally friendly.

By Pairing all those facts together and you get a winning combination by WOW Denim, provide consumers with organic denim manufactured locally with an emphasis on designing for fit while also offering custom fit solutions.

3.3 Target Market:

• Age Group: 17-35

• Social Media Savvy: Voraciously active on popular social networks like Facebook, Twitter, Instagram, Pinterest, and Tumblr

• Fashion Forward: With a keen eye on their day to day wear, these male and female fashionistas dress to impress

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• Addicted to Mobile: They Instagram their food, check their Facebook status while waiting in line, and tweet every traffic disruption they experience.

• Eco-Friendly: They feel a pinch everything they know their clothes were manufactured unethically or are aware of the eco-footprint they have by consuming clothes made with regular cotton

• Location: The beachheads for the company will be LA and New York, however, with the ability to shop online, we’ll heavily promote ourselves throughout southern California

• Obese Group: Plus-size clothing has some constrain in style and choice for material.

3.4 Business Focus: Why Organic Cotton? Fashion is second most polluting industry in the world, While Organic cotton uses no Genetically Modified (GM) seeds, Conventional Cotton do use GM seeds. Around 70 to 80% of organic cotton production is rain-fed rather than irrigated. As a result, there’s a lower water footprint in comparison to conventional Cotton. Recycled cotton typically saves 40% of water, also uses no pesticides or insecticides and eliminates landfill by disposed garments. The global production of all textile fibers consumes 1 trillion gallons of water. Several sustainability reports have been published in which the water consumption per jeans in conventional production has been measured. Generally, the figure is between 7.000 and 8.000 liters per pair of jeans. In terms of greenhouse gasses the figure is typically 23,5 KG of CO2 per pair of jeans. Conventional

Cotton Denim Industry

Organic Cotton Demine Industry

Reduction

Water Usage (L)

7000 1550 78%

CO2 Emission (Kg)

23 9 61%

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4. Description of Product & Services:

4.1 Products: Collection consist of a 100% Denim line of shirts, jeans and jackets and can be described as tough and sexy with a cool, street wise look and feel to them The collections are divided in Basic, Contemporary and Trend items: ‐

1. The basic line consists of simple styles, with subtle branding and design. The entire basic line is made of organic cotton.

2. The contemporary items are commercial and mainstream, but are still innovative and have a strong ‘WOW‐feel’ to them.

3. The trend line consists custom made apparels of fashionable and innovative ideas, with distinct and refreshing designs.

Men’s Wear:

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Women’s Wear:

WOW Denim is also focusing on Plus-size clothing & Custom made apparels. Plus-size clothing will start from 3XL and it is up to 6XL for both men’s & women’s category with wide verity of styles.

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4.2 Services: Wow Denim provide exclusive services to customer that create strong customer base which are as below:

1. Recycling Program 2. Custom Apparel Design 3. Trash free Packing 4. Home Trial & One Day Delivery

Recycling Program: Fast fashion encourages consumers to purchase un-needed clothes at rapid rate. Around 30% of garments in wardrobes isn’t worn for a year. In fact, it is estimated that the average person throws away 32 kg (70 pounds) of clothing per year. Wow Denim has tied with Blue Jeans Go Green company which is running organic denim cloth recycled program & made Home insulation from them so we provide coupons to our customer for dropping of their old denim clothes. They can also buy home insulation by using that coupons. Custom Apparel Design: Our money-back guarantee assures that you are 100% satisfied with your order. Our service team is here seven days a week to assist in your design, or provide a quick quote. Every order is reviewed by an expert artist, confirming that your design turns out exactly the way you envisioned it! We also encourage plus-size clothing in customized apparel as most of the obese people are looking for fashionable clothing which they do not get easily in market as per their need so Wow denim will be best place for them. We also do embroidery work & some graphic design work in our custom apparels, in all categories like in jackets, shirts & jeans.

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Trash Free Packing:

For sustainability reasons, Wow Denim is sending out its products only with RePack.

RePack is a returnable and reusable packaging that rewards you for every order. It is a sustainable alternative for packaging trash and throw-away consumerism, as RePack can be reused up to 20 times. RePack can be returned simply by dropping it into any post box, anywhere in the world. Free of charge. Once the RePack is returned, you will get a 10% discount voucher in your email – for every Wow Denim + RePack order you make. This voucher can then be used in any web store using RePack.

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Home Trial & Same Day Delivery: Company provide option that customer can order more than one sizes for same product for their home trial & they can send back without any shipping cost. This is providing flexibility & satisfaction to customer for their buying products. As online shopping has become more prevalent, affordable same-day delivery was seen as the Holy Grail. Same day delivery is like It's that last bit of fruit that people want.

4.3 Competitors

WOW denim has three strong competitors in market who has captured almost 60 percent of USA organic denim market.

• Kuyichi - Based in the Netherlands, the company has been in the market since 2001 selling organic denim wear while simultaneously using natural indigo dyeing techniques.

• Hiut Denim - Based in the UK, the company operates out of a small town known for manufacturing jeans. It currently offers a selection of organic denim jeans targeted at both men and women, making only 100 pairs a week and resolving to only make jeans

• Nudie Jeans - Headquartered in Sweden, the company achieved its goal of launching an organic denim jeans collection in 2012 and has both online and brick-and-mortar locations.

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4.4 Competitive Feature Wow denim is mainly competing with Kuyichi, Huit denim, Nudie jeans and G-start raw as all this companies are selling 80% organic denim clothing and have online presence.

Wow is newly introduced in market and competing with the brand which have already acquired good market base and brand value by analyzing market need we are come up with some new ideas with calculated risk to compete with other brands.

Our Starting price for all the products will be at least $75 as initially profit margin will be lower compare to another brand. Starting from raw material purchasing to manufacturing, design, shipping and managing operation we have cut down our cost in all levels by merging with some organization or getting sponsorship and better deals from the wholesaler.

We have strong base in plus-size segment, as in USA obese people ration is more in between age of 35 to 55, none of our competitors have plus-size clothing and in retail industry very few companies have plus-size with stylish design so by introducing this segment for Organic denim people will be more encourage to buy our product which have advantage of style, comfort and quality

Our manufacturing unit applying Treatment of the jeans by laser is replacing the conventional use of sandpaper and potassium permanganate. Sandpaper is used to brush the surface of the fabric and

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basically ‘open up the yarns’ to make the white base of the yarns visible. This will only become apparent after applying the chemical substance of potassium permanganate. By the use of laser, we basically burn of the surface (and consequently part of the indigo dye stuff) of the yarns. The white, worn effect, will become more apparent after applying Ozone to it. With this process, we eliminate though manual labour and the use of harmful substances. Also, the jeans will be stronger because the yarns are less damaged by the manual brushing.

Oxygen (O2) is converted to ozone gas (O3), jeans are dampened, exposed to the ozone, and rinsed the ozone is reconverted to ordinary oxygen before release into the environment. While chemical bleaching or stonewashing uses six to seven washes and rinses, ozone finishing requires two to three. At optimum concentrations, it bleaches denim in 15 minutes to levels commonly desired by fashion today, versus 30 to 45 minutes with traditional methods.

None of our competitors have custom made clothing option we have well know designers they will introduce their tailor’s fit option and customer can also come up with their recommended measurement and style option they want. This flexibility is also applying for all plus-size segment clothes.

We also provide coupons and vouchers on our recycling program if you send off your old denim clothes then you will get discount coupons for your next purchase. Only Huit denim is running this program but they are not providing any discount coupons.

Our 100% inventory is of organic denim clothing, while other competitors are partially involved in organic denim clothing.

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5. Organization and Management:

Organization Chart:

Wow Denim is an online clothing business. It depends on an organized division of responsibilities to run an efficient, diversified business. Main decision and responsibilities will be divided between the two top partners. We will focus on maintaining high quality and a cohesive business entity. Top division employees will be given specific responsibilities such as sales & marketing, customer service, IT management, Finance and business development. Wow denim is completely departmentalized. The Managing director assumes the responsibilities of the manager while his counterpart, will be responsible for duties of MD. We will make all decisions in accordance with the company mission. Every six months the manager will assess the results of these tasks, and the responsibility of the employee involved, to determine promotion and salary issues. If we develop our business in a wonderful way we might use outside consultants to develop our business. Outside consultants show us new way of running this. So, everything depends on business idea and strong managing system.

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6. Marketing and Sales Strategy:

6.1 Marketing Plan

SEO: Our content and blogging efforts will be targeted at having us rank competitively for keywords like “organic denim”, “organic jeans”, and “eco- friendly garments”

Paid Search: We will invest in both Google AdWords and Facebook Ads to take advantage of their PPC services with optimized landing pages for conversion

Instagram: We will launch campaigns and contest to encourage user- generated images which we will then upload to our product pages to build a community around our brand and the values we stand for

Other Social Media: We will subcontract a community manager to regularly engage our Facebook, Twitter, and Pinterest communities

PR: We will promote our story, values, and fashion to leading fashion blogs and print magazines emphasizing our earth-friendly and ethically manufactured clothing

Business Development: our focus on customer service with a 100 percent “fit satisfaction” guarantee or reimbursement for any alternations, in addition to a complete refund policy effectively in place.

6.2 Wow Denim Brand Equity Pyramid The model is typically applied in the context of brand-building activity, when the focus is on increasing consumer loyalty. The systematic process reveals how the marketing mix needs to be adjusted to align the brand’s positioning and communications with the needs of its target market. The model describes the consumer’s journey from basic awareness, through an exploration of what the brand stands for, the establishment of an emotional connection, through to a relationship.

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Building Block Level 1: Salience The foundation of the model is built on meaning of the brand in consumer’s life. Wow denim is highly recognizing as environmentally sustainable brand as we are only selling organic denim clothing and with emphasize on environmental issue we provide cloth recycling service to customer and our all the shipping has trash free packing. Costumer are also aware about environmental issue with clothing industries so they also want to move their choice to different direction without compromising in style & quality. US consumers in between age of 35-55 have problem of sizing in their choice of apparels so we are providing plus size clothing in wide range of variety. Building Block Level 2: Performance & Imagery This stage of brand defines what are you? so the brand must be able to deliver its promises to customer and then brand will be judge based on the quality & its performance which will create its image in market.

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Wow denim has affordable rates for its all products compare to other brands, organic denim clothing is also allergy free clothing, so we deliver our products with style & quality is people are ready to buy it. Our custom- made products & plus-size products made youngsters & obese people group our ideal customer. Building Block Level 3: Judgement & Feelings Once we deliver our product and services to customer, they made judgement in respect of the product feature and benefits. Wow denim is known for its highly fashionable and environmental friendly clothes and our products are judge on their material quality, working temperature and dyes and colors. Building Block Level 4: Resonance This stage of brand defines what is relation between customer and brand? We have loyal customer who are constantly purchases through online and have good reviews on social network.

6.3 Wow Denim – Ansoff Matrix This is one of the most powerful tools in determining what growth strategy should be followed by an organization. This model works from the assumption that increased sales can come from:

1. An increase in sales of an existing product 2. Introduction of a new product 3. Encouraging greater consumption within an existing market 4. Finding a new market

From our market analysis, it shows that to capture sales objective Wow denim should choose following strategies:

Market Penetration:

To increase online sales and to catch eyes of consumers we are doing online store marketing which include SEO (Search Engine Optimization), appearance on social sites like Facebook, twitter, pinterest.

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As environmentally sustainable company our all the products are of organic denim there are group of people who is willing to buy environmentally friendly clothes for them so we are targeting first those people.

For Organic Denim collection, there are no such companies who provide option for custom made clothes but wow denim provides that option without compromising in style, fashion and with great satisfaction.

Market Development:

To launch current product in new market we need to do research about consumer behavior of that market and what are the government regulation of doing business over there.

Wow denim want to launch their products in European countries and Asian countries so for that we need to understand market and consumer behavior over there as both the markets have good potential for organic denim clothing and we will also get benefits in term of our raw material as this two are main suppliers of organic cotton.

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Wow denim has started cloth recycling program for their consumers which is not adopted by any other competitors and this program will be beneficial for consumers as well as for environment.

Our plus size clothing is also sizing concept for specifically in organic denim & custom-made section US has good market for this category as people are compromising their choice just because of size and there are very few companies who are known for plus size clothing in retain only.

6.4 Wow Denim – Porter’s five Force

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By looking at the porter’s 5 forces model above and putting this into context of Wow denim the main problem that Wow Denim face is the growing number of entrants into the market as well as the threat of substitutes and degree of rivalry within the industry.

In terms of threat of new entrants, there are number of competitors within the market. These can be similar departmental companies like Kiyuchi, Huit, Mud jeans, G-start Raw and Nudies. Companies are directly works with farmers for raw material & some of the companies are using sustainable material like recycled cotton and polyester from discarded water bottles.

In terms of threat of substitute Mud and Kiyuchi jeans are close substitution in men’s wear. G-star jackets are substitute in men & women.

In terms of buyer power, buyer has low switching cost they can easily switch to another brand. Age group of 45-55 demanding for plus-size (3X,4X,5X), women are demanding custom made tops and jackets required more category.

In terms of supplier power, every supplier has different sustainable production and different price frame and before purchasing raw material environmental management and code of conduct needs to check.

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7. Financial Management:

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8. Conclusion: E-business has become a part of everyday life in the world of business. Low starting costs and the rapid growth of the usage of the Internet as well as the growth of online shopping, encourages more and more companies to go online. It is a fact that nowadays almost every modern company has a web site and it is considered almost as a necessity. It is also interesting to see as the shopping behavior of consumers is transferring more online every day. The services and that companies provide through the Internet are easily accessed without having to leave home, making the shopping experience as convenient as possible. The idea behind the concept of Organic denim clothing is to take advantage of the fact that online shopping is growing rapidly. By using different techniques in marketing, analyzing the benefits of e-business and applying all that in a business plan is a way that a small business can gain competitive advantage in USA among the large chains. This thesis provides theoretical and practical information on how to develop a business plan for any online company. The learning process during the making of this thesis has been great, since I have learned new facts of entrepreneurship and marketing.

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9. References:

http://www.thegoodtrade.com/lists/ethical-denim

http://textileexchange.org/become-a-member/

https://www.fairwear.org/about/membership/

https://www.originalrepack.com/

http://bluejeansgogreen.org/Receive-Insulation/

http://fortune.com/2016/06/08/online-shopping-increases/

http://www.cnbc.com/2016/06/09/the-next-wave-of-online- shopping-is-about-to-hit.html

http://www.businessinsider.com/