Long Term Marketing Considerations
The considerable fixed expenses and marketing logistics of contacting alltargeted U.S. schools during the first year makes it wise to consider longerterm campaigns. Table 8 presents the fixed costs breakdown for 1, 2, 3, and4 year campaigns. It also includes the calling information used in the analysis.
COMPETITIVE ANALYSIS
Major Competitors
As of February, 1995, the company believes its major competition is fromlocal T-shirt shops and screen printers in the general vicinity of each school.Spirit Schoolwear is aware of one other company which offers schoolwear asa method of fundraising. This company offers a similar line of products withfairly simple one-color imprints. It does not, however, offer the art, screenset-up, and marketing services that are the heart of Spirit Sportswear'sprogram. During the coming school year, our telemarketing staff will continueto gathering information from each school on the names of previous suppliersand how those suppliers were selected. This information will be invaluablein assessing the company's position in the marketplace and in determiningfuture marketing strategies.
Comparisons
Products
From viewing the schoolwear samples of other companies, the products suppliedby North Bay Sportswear are, in most cases, superior in both design and printquality. This is a direct result of North Bay Sportswear's strict attentionto quality control and the company's computerized graphics department.
Services
Services provided by the Spirit Schoolwear program are fairly unique in today'simprinted sportswear industry. Customer response to the free artwork, set-up,and marketing and sales materials provided by the program indicate that theseservices are major selling points and set the program above those providedby other companies.
Pricing
Program product prices are very competitive with other screen printing companiesand for many schools are lower than their previous supplier prices. SinceNorth Bay Sportswear is a medium-sized wholesale screen printer, it is ableto sell products at lower prices than local retail T-Shirt shops and smallerscreen printing companies.
Sales and Marketing
From the customer feedback generated by the program, the marketing strategyemployed by Spirit Schoolwear is very different from those of other schoolwearsuppliers. Since the program is geared toward generating sales throughoutthe nation, the use of telemarketers to identify and introduce the programto potential customers is a strategy not widely used by companies sellingonly in their local marketplace. Coupled with the free services and supportprovided by the program, Spirit Schoolwear believes its sales and marketingapproach is superior to most companies in terms of generating potentialcustomers.
CAPITAL EQUIPMENT
Requirements
Capital equipment requirements for implementing the schoolwear program arelisted below. The projections are based on high costs and can be reducedby purchasing repossessed, liquidated, or used equipment. For the programto meet its projected production needs, Spirit Schoolwear will buy and/orlease production and Art Room equipment and sublease that equipment backto North Bay Sportswear. The acquisition of equipment will occur on an "asneeded" basis. Once all equipment is in place, marketing and production capacitywill be approximately $15 -$20 million in gross sales per school year.
Table 9 - Capital Equipment Projections
MARKETING EQUIPMENT PRICE QNTY COST
Phones w/headsets $350 50 $17,500
PowerMac 6100 8/250, Kybd, Mse $1,700 50 $85,000
Monitors, Gray Scale $250 50 $12,500
Copy Machine $17,000 1 $17,000
Workstations and Chairs $400 50 $20,000
Phone System $3,600 1 $3,600
Network Hardware $1,500 1 $1,500
PowerMac 6100 Fileserver $3,500 1 $3,500
Total Marketing $160,600
PRODUCTION EQUIPMENT PRICE QNTY COST
8/C Auto Press $65,000 2 $130,000
10/C Auto Press $125,000 2 $250,000
4/C Manual Press $3,595 2 $7,190
8/C Manual Press $7,000 1 $7,000
8/C Manual Press-Arms Down $10,000 1 $10,000
Heat Flash Cure14X14 $1,600 4 $6,400
Heat Flash Cure16X16 $1,800 1 $1,800
Heat Flash Cure16X33 $2,200 1 $2,200
Infrared Flash Cure 22X18 $5,000 18 $90,000
Med Capacity Dryer $18,000 2 $36,000
High Capacity Dryer $35,000 4 $140,000
Screen Exposure Unit $10,000 1 $10,000
Total Production $690,590
þTable 9 (cont') - Capital Equipment Projections
ARTROOM
Computer Systems
PowerMac 8100-24/500-20" Color-CD $6,700 1 $6,700
PowerMac 8100-16/500-17" Color-CD $5,200 1 $5,200
PowerMac 8100-16/500-17" Color-CD $5,200 1 $5,200
Quadra 630-16/250-17" Color-CD $3,000 1 $3,000
Software Upgrades $2,000 1 $2,000
Total Computer $22,100
Peripheral Hardware
Scanner $3,500 1 $3,500
1.3 GB Removable Optical HD $1,200 1 $1,200
500 MB External HD $300 2 $600
Cables $200 1 $200
Total Peripherals $5,500
Printers
11X17 1200 DPI Laser $8,500 1 $8,500
Linotype Image setter $80,000 1 $80,000
8.5X11 1200 DPI Laser $3,500 1 $3,500
Total Printers $92,000
Furniture
Workstations $300 6 $1,800
Art Tables $200 3 $600
Light Tables $250 3 $750
Camera and Processor $10,600 1 $10,600
Total Furniture $13,750
Total Artroom $133,350
TOTAL CAPITAL EQUIPMENT $984,540
START-UP EXPENSES
Start-up expenses are based on full implementation of a nation-wide programwithin the allocated time frame. For the 2, 3, and ,4 year programs, costsare recurring each year due to the additional recontacting of schools fromprevious years.
Expenses 1 yr. 2 yrs. 3 yrs. 4 yrs.
Capital Equipment $984,540 $492,270 $328,180 $246,135
3 Month Purchasing Reserve $175,000 $87,500 $58,333 $43,750
Legal fees $10,000 $10,000 $10,000 $10,000
Accounting Fees $3,000 $3,000 $3,000 $3,000
Licenses and Permits $1,000 $1,000 $1,000 $1,000
Leasehold Improvements $10,000 $5,000 $3,333 $2,500
Employee Advertising $3,000 $1,500 $1,000 $750
Phone Hook-up $10,000 $5,000 $3,333 $2,500
Marketing Materials $90,000 $45,000 $30,000 $22,500
6 Month Wage Reserve $80,000 $40,000 $26,667 $20,000
6 Month Phone Reserve $150,000 $75,000 $50,000 $37,500
6 Month Rent & Utilities Reserve $12,500 $12,500 $12,500 $12,500
Total Start-up $1,529,040 $777,770 $523,013 $402,135
SUMMARY
Spirit Sportswear and Marketing is a company devoted to the Promotion &Sales of a Imprinted Sportswear Fund-Raising program for elementary and secondaryschools. The company has a joint development agreement with North Bay Sportswearfor production of all artwork and imprinted schoolwear products. Managementhas 13 years experience in the imprinted sportswear industry and is wellversed in the marketing and production aspects of the program. The immediategoal of the company is to market the program on a state-wide basis.
Financial projections used in the analysis of program potential are basedon high costs and low to moderate revenues. This was done in an attempt toprevent the problems that arise when new companies underestimate start-upexpenses and overestimate income. The company is confident that the projectionsset forth in this business plan are reliable and valid.
The risks associated with implementing the program nation-wide are limitedto operational expenses and to the marketing and telemarketing costs relatedto contacting the various schools. Many of the cost risks normally associatedwith product sales have been eliminated. Product inventory requirements areminimal since the company purchases its goods after an order has been placed.Wages paid to most salespeople are commission only and are due after paymentfrom the customer. The joint development agreement with North Bay Sportswearprovides complete in-house production of all artwork, marketing materials,and product line, thereby reducing the need for outside services.
There are several major factors that favor the potential success of the program.The schoolwear market has a very large and accessible population that purchasesmillions of dollars in schoolwear items. The cut-backs in educational financinghave made fund-raising programs very attractive to school administratorsand organizations. However, many programs require an inordinate amount oftime and effort for school officials and volunteers. Spirit Sportswear'sschoolwear program not only provides a lucrative method of fundraising, italso eliminates a great deal of work for the schools by providing all salesmaterials and order forms. Other factors adding to the attractiveness ofthe program include the promotion of school spirit and pride, and the abilityfor schools to order the products after they have collected the money andtheir profit. In summary, the schoolwear program provides schools with awinning combination of substantial fund-raising capabilities, minimum programadministration time and expenses, and increased student participation andpride in their school.