Face Smash Apparel, Research Paper Example

Face Smash Apparel (Face Smash) is a men’s mixed martial arts sports retailer based in Tucson, Arizona. Face Smash offers the most comprehensive selection in town and arguably on the Internet/mail order as well Through offering the most complete and competitive  selection as well as a knowledgeable support staff, it’s believed Face Smash will be able to quickly gain market share. Tucson was chosen because of its diverse, active culture. It is not uncommon for people to make a job sacrifice in exchange for quality of life gains, and the active, outdoor lifestyle is what is most important to the people of Tucson. Face Smash is a Arizona based L.L.C.

Keys to Success

Face Smash has identified three keys to success that will be instrumental in reaching sustainable profitability. The first is to satisfy customer’s needs, but then the needs of internal and external stakeholders, such as investors, employees, spokesmen and of course fans of the brand who shape the brand image. Through paying attention to these issues, Face Smash can be successful. Finally strict financial control must be implemented to maintain a sustainable business.

Competitive Edge

Face Smash’s competitive edge will be displayed publicly in The Octagon. When fighters use the apparel and identify it as the most effective in the market, the brand will earn its reputation fundamentally. The company will also fight to maintin headway in the customer service arena. By establishing the brand as a formidable provider of elite customer service, Face Smash will gain notoriety for its professionalism. Face Smash understands that the types of athletes that participate in a variety of mixed martial arts sports do so as a part of their lifestyle. It is a part of their life, an activity that they enjoy and look forward to. While the activities may be somewhat painful when you are doing them, depending of course on the intensity that you reach, overall it is quite enjoyable. This would also explain why they participate in so many different ones. One on hand some of the sports are seasonal, on the other hand, you cannot get enough of just one.

Management

Discuss the target market in terms of demographic, psychographic/lifestyle, and geographic considerations along with appropriate marketing mediums to reach those markets. Present appropriate financial elements to include a startup budget, sales projection, and income statement.

Chart: Highlights

Objectives

• Become the premier mixed martial arts apparel retailer in Tucson.
• Increase market penetration to 10% by year three.
• Reach profitability within the second year.

Mission

It is Face Smash’s mission to become the premier men’s MMA clothing retailer in Tucson. This will be accomplished by offering low prices, the most advanced apparel for competition. Face Smash will strive to go beyond expectations in customer service for this industry.

Keys to Success

• Manage the need of all external and internal stakeholders involved. .
• Monitor the competitive environment and set benchmarks.
• Employ and practice financial conservatism.

Start-up Summary & Legal

Face Smash is in the process of starting up the company. Legal counsel will be consulted for a variety of issues including business organization formation, contract negotiations, and other aspect of business law. Face Smash will also utilized a business consultant to gain insight into business issues that were not intuitive to management. Face Smash will incur $10,000 of build out expenses for the space. The following equipment will be needed for start-up:

• Cash register, bar code scanner, and other checkout materials
• Computer system with all technical needs (ie..printer, scanner,  Internet connection).
• Assorted racks for display such as shelves and mirrors.
• Background sound, in the form of a stereo system.

Table: Start-up Funding

Chart: Start-up

Table: Start-up

Market Segmentation

Face Smash’s market can be broken down into two distinct segments: hardcore athletes and newbies. Each group has distinctive demographics which are detailed below:

Products

• Fighting shorts
• Gloves
• Mouth guards
• Water repellant sweats
• Assorted accessories ans supplement apparel
• Socks
• Briefs, including wind briefs (with a wind resistant front panel)

Hardcore MMA Practitioners

• Typically spend eight – 13 hours per week on their training regimen.
• Regularly participate in two to three different mixed martial arts sport activities.
• 51% have at least an undergraduate degree.
• Have on average at least a $47,000 annual income.

New to the Sport of MMA

• Typically spend seven – ninehours a week training.
• Have only recently (within the last few years) began to get serious in mixed martial arts activities.
• 58% have undergraduate schooling or a degree.
• > $49,000 of household income.

Table: Market Analysis

Chart: Market Analysis (Pie)

Target Market Segment Strategy

Segmenting the market is based on the fact that the two different groups have their own respective purchasing patterns. Hardcore MMA athletes have a significant amount of sport specific clothing, so if they shop for new gear it is generally to replacement old apparel. They can afford to buy the best on the market, so Face Smash must have competitive apparel for the top quality athlete as well as affordable apparel for the newer fighter. The more advanced MMA athlete is also more likely to purchase more than one of the same product if it’s of competitive quality, seeing as they are very active in the sport. Those who are new to mixed martial arts activities, or represent a larger number of new consumers and could potentially be the driving force behind Face Smash’s success. They will purchase less frequently than the advanced customer at least to the level that they currently participate  This group is more likely to make less frequent but larger purchases. This group is particularly exciting because it allows Face Smash to have a significant impact on the outfitting of these people.

Industry Analysis

Face Smash participates in the men’s retail clothing industry, specifically in Mixed Martial Arts and boxing sports clothes niche. The MMA mixed martial arts clothing market is a $765 million dollar industry. Face Smash is well poised in Tucson, Arizona, a sports minded town. Customers can participate in any number of activities, all within a 20 minute drive from Tucson. Products in this industry are purchased through a local shops, or magazines, or through the internet by mail.

Competition and Buying Patterns

Face Smash faces competition from several sources:

Tap Out: According to  CNN Money, tap Out has a 200 million dollar choke hold on this industry. They specialize specifically in MMA apparel.

Form Athletic Apparel: : Known for their use of superior material, they are currently funded by the WEC and sponsored by the future UFC superstar Uriah Faber, and have been doing business since the start of 2010. They sell predominantly T-Shirts and Hats, but are known to have octagon ready apparel as well.

Red Arme: An Asian inspired brand with a military theme that promotes the craft of mixed martial arts through their limited edition designs they have major ad support in the Strikeforce and mixed martial arts events.

Ecko ULTd. MMA: Has long been a stylish brand for young people. In the clothing industry since 1993. They are now getting involved in the MMA market with a line of hats, bags, t-shirts, and jeans designed specifically for fans of MMA, or MMA athletes to wear casually when in public.

Cage Hero:  Their slogan “The Hero Comes From Within” has garnered their brand buzz among armature MMA fighters.

Clinch Gear: The leading running-specific mail order house. The pluses and minuses are similar to Tap Out.

The buying patterns for the hardcore MMA fighters is one where they will will go to a sport specific store (or mail order) to make a purchase. This is due to the fact that they have a technical appreciation of the products. Through intended use, they notice all of the unique subtleties between the different products, giving them   a more informed understanding of the wider selection. New fans of the sport are more likely to make their purchases from a general retailer because of the wide range of products that they offer.

Strategy and Implementation Summary

Face Smash will attain profitability by having a larger selection than its competitors. Face Smash offers a brand customers can trust. Face Smash’s marketing strategy will focus supplying professionals with the preferred gear necessary for them to have a competitive edge under the assumption that this advantage will trickle down to a higher rate of sponsorships and endorsements. Face Smash will use a combination of magazine/journal advertisements, social network marketing, SEO, and viral video marketing to reach its market base. In addition to the advertisements, Face Smash will also be quite visible at the different competitions, and on popular television broadcast relating to the field. This can be established through employing staff specifically for the role of getting the name out, or for sponsoring the training and development of upcoming fighters within the market.

Sales Forecast

It is expected that in the first three months the company will not have significant sales activity. The first two months retail will be established. Month three will have a trickle of sales activity. This is to be expected as the business is just establishing itself in the market and most are not yet familiar with Face Smash. Earnings are forecasted to grow slowly during the first year, but accrue aggressively after month 26 and then producing exponential growth from there on out.

Table: Sales Forecast

Chart: Sales Monthly

Chart: Sales by Year

Milestones

• Completion of business plan
• Securing retail space
• First month the doors are open
• Profitability
• Explosive sales revenue

Table: Milestones

Chart: Milestones

Personnel Plan

The Manger will begin operations with a few key positions:

Manager: He will have multiple titles and duties within the organization. Some main functions include sales, marketing, procurement, and business development.

Sales staff: Initially Face Smash will have a maximum of 4 sales people on the floor at any one point. The sales staff will also handle  customer service The first six months staffing will be minimal

Support staff: Face Smash support staffing will be handled through an outside vendor. This si specifically for jobs like stocking shipments, or renovations.

Bookkeeper/Accountant:  necessary bookkeeping duties. Financials will be reviewed by a local CPA firm and other accounting will be handled by a part-time employee.

Table: Personnel

Financial Plan

The following sections will outline the key Financial Strategy for Face Smash Apparel.

Important Assumptions

The following table details important Financial Assumptions.

Table: General Assumptions

Break-even Analysis

The break-even Analysis exposes what will be required in monthly returns in order to break even.

Table: Break-even Analysis

Chart: Break-even Analysis

Projected Profit and Loss

The following table and charts show the Projected Profit and Loss.

Chart: Profit Monthly

Chart: Profit Yearly

Chart: Gross Margin Monthly

Chart: Gross Margin Yearly

Table: Estimated Profits and Losses over the first three years

Face Smash Projected Cash Flow

The following table and chart shows  the Projected Cash Flow.

Chart: Cash

Table: Cash Flow

Projected Balance Sheet

The following table shows the Projected Balance Sheet.

Table: Balance Sheet

Work Cited

Carlson, E. (2010). Does everyone agree that sustainable management is needed? Social Responsibility FAQ. Western Governors University.

Heal, G. M. (2008). When principles pay, corporate social responsibility and the bottom line. Chichester: Columbia Business School Publishing.

Lawrence, A. T., & Weber, J. (2010). Business and society, stakeholders, ethics, public policy. (Thirteenth ed.). New York: McGraw-Hill/Irwin.

Lev-Ram, M. (2010, August 18). A $200 million headlock on mixed martial arts. Retrieved from http://money.cnn.com/2010/08/18/smallbusiness/tapout/index.htm