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Bayou Boots is a locally owned and operated company located in Lafitte, LA. It was recently opened in 2018 at a location next to the Town Hall in the city. Bayou Boots purpose is to create and provide quality service and products to residents at affordable price. Bayou Boots uses innovated technology to create a boot that is ideal for fishermen but can also be adorn by anyone. Bayou Boots goal for their product is to create a boot that excels in comfort, slip-proof, versatility, quality and style.
Bayou Boots offers two styles of the same boot. You can buy these one of a kind boots in traditional form in any color we have available, or you can have custom boots designed just for you for a higher price.
At the start of the company the product was not very profitable. The average return on sales that is profitable is normally 5-10%. The return on sales was negative 6.4% as well as the return on marketing 11.
3%. This means that after all expenses are paid from revenue, the company is still in the hole and the marketing done by the company is not paying off. At the same time, the unit sales were lower than expected with only 198,000 units being sold in the market. The biggest issue with the start up of the business were the expenses incurred from starting the business to promote the product. The total expenses added up to $12,470,000 which superseded the revenue brought in and gave the company a negative net profit of ,218,000.
Wile it is necessary to spend money to earn money, some aspects of the allocation of funds for the company needed to change in order to prevent further deficit and to begin making a profit. At the start up of the company I was allocating most funds to product development where I should have cut costs or allocated funds to other areas to help promote my product. In the next phase I was able to increase my return on sales to 20.5% and return on marketing to 124.2%. while revenue decreased from the previous phase, my net profit increased to a positive $638,826. In this phase while selling my product at $50 in the home market and $60 in the domestic market, I had a customer satisfaction of 77%. Having a high customer satisfaction was a big goal for my company to keep when making decisions. However, later in the phase’s things changed and certain decisions changed this percentage dramatically. During phase 2 profit continued to rise as well as return on sales and marketing. The company was still looking well until the next phase. In phase three there was a huge drop in revenue and unit sales due to an increase in product price. This also brought customer satisfaction down to 57.7%. Wile the company was still making money with net profits on $1,134,921, the next phase went back into the negative of $560,679 in net profits with a major decrease in return on sales and marketing. This was due in part to an error on allocating funds to the proper markets and divisions. During the last phase I decided to decrease the price according to the price that has created the most sales in each market. Wile this created an increase in revenue, customer satisfaction decreased to 53.9% and net profit became negative $455,943.
Currently the product is being sold in the home market for $75, the domestic market for $90, and the foreign market for $120. According to the break-even analysis provided by the simulation, I would only need to sell my product for $153.89 in the home market, $45.31 in the domestic market, and $222.90 in the foreign market. This was found by taking the projected unit sales in each market and finding the unit cost to make the product and comparing it to the expenses incurred for each market. This has forced me to consider spending less on marketing promotions and advertising and lowering the cost of the product in order to try to gain unit sales. Once unit sales can increase enough, I may be able to increase the cost of the product in order to decrease debts. Currently we are promoting our products through advertisement such as, flyers, advertisements, sales promotions, coupons, television commercials, and through social media accounts. We offer a variety of customer appreciation discounts such as 20% off coupons for customers who frequent our location. We also offer punch cards to customers which allow for 50% any product once you have made five separate purchases on different occasions. When a customer comes in and buys anything, they would give the cashier their card upon purchase and the cashier would punch the card in acknowledgment. We have also been able to advertise and promote the business by setting up booths in many different craft fairs and festivals around our locations. Currently there are plans in the making to be able to sell our products online so that their will be less cost on advertising and promoting our products. Social media is such a big part in todays society and the best part is that it is free! Hopefully this will help to cut back on expenses so that we can make a good profit in the future. Bayou Boots currently does not sell anything through wholesale. We pride ourselves on direct interaction with our customers and would rather not have a middle man in delivering our products.
The company has many strength and weaknesses. Some strengths include good customer satisfactions, the ability to cut costs efficiently, and the opportunity to sell products at a lower cost and still make a profit. The biggest weakness is the decision making of where to allocate the funds in each market. Proper analysis and understanding of how decisions effect percentages and numbers is essential to make effective decision for your company. I have made many decisions that have negatively affected the revenue and net profit of my company by increasing expenses with less unit sales being sold. Hopefully in the next phases I will be able to make proper decisions to increase my unit sales and decrease expenses and cost of goods so that the company can make more of a profit and hopefully create a larger budget to expand our product. Currently the biggest threat is not being able to see any of my competitors’ decisions. Not being able to compare what my competition is doing has set our company back and decreased the efficiency of making decisions. Competitive analysis is a huge part of a marketing plan and can be detrimental when the information is not available or when the information is not used in making decisions for your company. Viewing competitors’ strengths, weaknesses, price, promotions, strategies, etc. helps for another company to create a market plan that can compete with others.
My goal for my company is to have raked within the top 5 of my competitors in all categories by the end of the semester. To do this I plan to analyze data more precisely to make more accurate decisions that will increase my company’s profitability. I will also allocate funds for expenses for efficiently by doing research on trends in our market and using the data from previous decisions. Once profits are increased and the company is consistently gaining profit, I plan to get my brand trademarked. Having my brand trademarked will help with my branding strategy. The basis of my branding strategy is to give consumers an image of family when they see our company logo. I want to build a business that takes its customers interest in hand and makes decisions based on their needs as well. I want consumers to love our product because it is of good quality, it is affordable, and it beats the rest. To accomplish this, I must divide my consumer markets using demographic segmentation. My product is demanded in most small towns or fishing & hunting communities. Considering these types of communities would be my target demographic, I would need to study these towns and become familiar with the variables associated with their community. These variables include age, religions, family size, income, occupation, etc. All of these are important so that I can set a price for my product and so that I know how much resources must be allocated to advertising and promoting my products.
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