ITEM COST Average wholesale cost of printable item including shipping.
ITEM PRICE Average selling price of item.
GROSS PROFIT Profit before production and selling costs.
AVE COST Average per item cost of production, marketing, and sales.     Profit Margin 22.4%

Services Offered

As a promotional strategy designed to encourage schools to enlist in theschoolwear program, a number of free services will be provided. These include:(1) up to 8 hours of free artwork depending on the number of students inthe school, (2) up to 7 free screen set-up charges, and (3) all the salesand ordering materials and support needed to market the products. These servicesare key selling points of the program and provides potential customers analternative to more costly and time-consuming schoolwear programs.

Economics of Services

The free services provided by the schoolwear program are a central factorin its marketability. Taking the time to design apersonalized logo is essential to the visualappeal of the product line while eliminating expensiveartwork and set-up costs is financially attractiveto school personnel. Since most schoolwear sales are organized by volunteers,providing all the necessary marketing materials and orderforms makes it much easier for them to administer the program..

The costs to the company for providing these services are viewed as absolutelynecessary for attracting and retaining customers. Artwork and screen set-upcosts are one-time expenses incurred by the company during the initial schoolorder. As a consequence, repeat orders become more profitable to the companyand are seen as absolutely essential for long-term growth. The addition ofCD Rom Clip Art and the storage of previously created mascots and designshas decreased the average time for logo development from 5-6 hours to about30 minutes. To protect its artwork investment, Spirit Sportswear copyrightsall original school logo's. Should a school decide to discontinue its associationwith the company, artwork and separations will be available at the currentartwork hourly rate.

The company's commitment to supply updated marketing materials for reordersprovides a time and cost-saving service for school administrators and volunteersand makes them less likely to go with conventional programs. A school formsdatabase has been developed that has reduced form creation time from 2+ hoursto 10 minutes. In summary, the expenses associated with services offeredby the program are justified as essential elements for generating and retainingschoolwear customers.

CUSTOMERS

Description

Spirit Sportswear's product line will be marketed to Elementary and SecondarySchool Students throughout the United States. Department of Education statisticsshow there are 84,501 public schools and 24,690 private schools in the U.S.,with a total student population of 50 million. Using average gross salesper school figures from the 1992 pilot schoolwear program, the annual salesvolume for casual schoolwear in the U.S. (excluding gym wear and uniforms)is estimated to be over $2,000,000,000.00

Population Analysis
Results of Pilot Program

An analysis of the pilot schoolwear program provided the following responseinformation and was used as a basis for financial projections.

Results of PILOT PROGRAM

Projected Customers, Market Share, & SalesPotential
The following table presents a breakdown of the U.S. market potential forthe Schoolwear Program. The number of schools to be targeted for marketinghas been reduced by 25% from a total of 109,191 to 81,899. This eliminatesschools with less than 100 students and/or those located in economicallydepressed areas. Projections for sales to targeted schools are based on buyingresponses (market share) of 0.5%, 1%, 5%, and 10%. Potential sales figuresare also presented using $1,500 and $2,000 as the estimated average salesper school. The data indicates a very lucrative marketplace with excellentprofit potential.

Table 2 - Sales Potential by Market Share

Chart for Table 2