Damn Heels by Hailey Coleman

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Competitive Analysis:

At the moment, Damn Heels has no direct competition in Toronto but has competition from American and European footwear providers. Most of the competition is based in the US and specialize in foldable flats. Competitors also provide a larger variety of flats and sell them online and in retail stores. The low barriers to entry for this industry could lead to an increased competition in Canada.

Criteria:

To decide whether Hailey should launch Damn Heels or not, she has to evaluate the profitability and financial feasibility of the venture. For the first year ending November 30, 2010, the break-even quantity must be $ 10,760 (Exhibit 5) for Hailey to go ahead with the venture. If she does go ahead with the launch, Hailey has to decide what platforms to sell via after careful examination of pros and cons for all options.

Evaluation of Alternatives:

- Hailey Coleman launches Damn heels

- Hailey Coleman launches Damn heels either online or on retail platform

- Hailey Coleman launch Damn heels on both online and retail platforms

- Hailey Coleman doesn’t launch Damn heels

Alternative 1

From the Quantitative analysis done for the venture (Exhibit 5), it shows that Hailey will be able to achieve the break-even of 538 units for year 1 and could launch Damn Heels.

- If Hailey decides to launch it on a retail platform, she has the options to do it via clubs, accessory stores and salons and spas. The pros of which are that Hailey will have access to a focused target market at these locations as most of their footfall is of women who Damn Heels is targeting. At retailers, customers can get the touch and feel of the product which is a major step in the decision making process. Also the availability of the product only in special retailers will help convert this unsought product into a sought product. However, at the same time, selling on just retail platform can be a drawback as stores and spas carry a range of other products which increases the competition for Damn Heels. Due to the variety of products sold at these places, shoppers might just miss Damn Heels. Also, selling on consignment give a low incentive to Hailey as the agreement is bound by the seller.

Meanwhile, launching Damn Heels just online can provide Hailey with whole profits as there are no third party providers involved. There will also be easier access to her products which make it convenient for the customers. Online selling is becoming an increasing fad and Hailey will be able to approach a larger target market not just limited to Toronto. Nevertheless, selling online is no easy task. For successful online sales, there has to be high awareness for the product, which isn’t the case for Damn Heels. The purchasing decision has to be made virtually which means there’s no touch and feel to it. There’s also a cost of $1500 to set up the websites and besides that online selling will also incur shipping costs to the customers.

- Alternatively, Hailey can launch the product on both online and retail platforms. This enable Damn Heels to reach out its target market via different channels, giving customers more options, according to their preference. It will make the products definitely more accessible to customers. A multi channel strategy will drive sales which is the end goal of any business and also boost customer perception. Integrating these two channels can be seen as being adaptive to changing times and will lead to increased customer loyalty. Using both online and retail options will require more capital and since Hailey will have to hire another person to help out with the website and with social media promotions, it will increase her fixed costs. Hailey has no prior experience in business and managing two platforms will be an extremely tedious task for her.

Alternative 2

The next alternative will be to not launch Damn Heels. This could be for various reasons due to the risk associated with a first time venture. As mentioned in the analyses, Hailey has absolutely no funds for promotion and PR for the first year and has to fund the entire venture out of her student loan and personal line of credit. These might not be enough to launch a venture of this scale, size and proportion. The lack or appropriate promotional tools in a competitive footwear industry can prove to be a huge risk especially since its an unsought product. Hailey also won’t be taking any salary until the business becomes profitable which gives room for insecurity and if the business doesn’t do well, she will be personally liable for the losses.

Recommendation:

After careful analysis of the venture based on the decision criteria, I would suggest that Hailey Coleman should definitely launch Damn Heels. The numbers obtained from the Scenario Analysis of 2000, 4000, 11,000 and 30,000 pairs (Exhibit 6), show that she will surpass her breakeven profit of $10,760 and make a good amount of net profit of $14834.54. It would also be my recommendation that Hailey launch the product on both retail and online platforms. This will help Damn Heels diffuse into the market quickly and grow the business at faster rate. Hailey should hire a full time social media expert to help her with the online promotion since that will be her only promotional tool, so it is necessary that she does it well. For launching Damn Heels in the retail space, Hailey should choose to sell it via accessory stores and salons first as they have a much larger scope and concentration of customers. Their working hours are longer than a club’s which operate only during late night hours, which is a shorter time span. Once she has a good hold on that segment, Hailey can expand the market to bars and lounges. After the business starts earning decent revenue, Hailey must look into strengthening her promotional strategies.

Plan of Action:

Product strategy: The product is already quite innovative, savvy and high in quality but lacks in variety. Hence, after Hailey reaches breakeven, she could focus some more on research and development and launch more variants in terms of colour, shape and design of the flats. She could also introduce these ballerinas with a very low heel for height conscious customers.

Price strategy: To remain competitive in the market, Damn heels would use a penetration pricing strategy and set a price of $20 inclusive