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Foxy Originals Expansion into the US Market Case Solution
| Solution Id | Length | Case Author | Case Publisher |
|---|---|---|---|
| 2556 | 1812 Words (11 Pages) | Elizabeth M.A. Grasby, Nina Gupta | Ivey Publishing : 907B04 |
A Word File
Kluger and oral set the basis of “Foxy”; a jewelry start-up in Canada that later became a prominent brand in the marketplace. They received a wonderful response from the market because they were locals and Canadians have special brand loyalty to their local manufacturers. After success in Canada, Kluger and oral are planning to expand their company in the U.S marketplace. This market is ten times as compared to the Canadian market, but a major challenge waits for them there as people in the U.S are not brand loyal but look for modern trends. Foxy owners have sales representatives and trade shows in their minds as the distribution channels for entry in the U.S market. Both have some pros and cons associated with them. An estimate of different costs and selling estimates are provided which are used in calculating the breakeven points and contribution margins. The result suggests that Foxy should opt for sales representatives to enter in the U.S market.
Following questions are answered in this case study solution
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Discuss the pros and cons of each sales channel.
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Compute contribution margin for each channel.
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Compute the break-even point (in terms of orders and dollars) for each distribution channel.
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Discuss the company's future scope.
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Should Foxy Originals have to use a sales representative model or a US Trade show?
Case Analysis for Foxy Originals Expansion into the US Market
1. Discuss the pros and cons of each sales channel?
Trade shows:
Trade shows are commercial centers for enlisted faculty where retailers get an open door to source items straightforwardly from merchants and wholesalers. One of the upsides of U.S. exchange shows is the enormous retailer crowd, giving Foxy new item thoughts and the open door to connect with industry masters. The buyers traveled eagerly and looked forward to visiting the top US fashion centers. Be that as it may, this dissemination channel has difficulty since it is hard to focus on the deal's geographic area because of the different participation of retailers. Trade shows also include some extra costs, for example, travel costs which has to be incurred every time a trade show is set up. Such costs can be prevented by the use of sales representatives.
Sales Representatives:
Sales Representatives channel includes the utilization of salesforce to lay out the presence of the item in significant design center points. A benefit of this circulation strategy is that Foxy can undoubtedly infiltrate the U.S. market contrasted with career expos as agents have existing contacts in the design business and require the least preparation. Not only do sales representatives have contacts in the industry, but they are also familiar with the retailers of the product. Therefore, the organization will kill the expenses of making a trip to showcase its image in the U.S. market. Not with standing, this technique has misfortunes as getting individuals who will be marketing the company effectively through different channels. Representatives also cause some extra expenses including the rent area, bookkeeper fee, and sample boards. Moreover, a competition can establish not only between the sales representatives but also between representatives and the company if their commission package is not structured properly.
2. Compute Contribution Margin for each channel?
For Trade shows:
Contribution margin (low order estimates) :
= Total sales – Total variable costs
total sales= Units sold × Sales price
Necklaces per show=25(20) × $17=$8500
Earrings per show=12(20) × $12=$2800
Total sales for 10 shows= 10 × 11,300=$113,000
Total variable costs= Sold units × Unit variable cost
Direct cost= 10((25(20) × $8.05) + (12(20) × $5.50)) = $53,450
Total variable costs= $53,450
Contribution margin at low order estimates=$113,000 - $53,450= $59,550
Implying that at low order estimates, the company shall break even at a revenue of $59,550.
Contribution margin (high order estimates)
= Total sales – Total variable costs
total sales= Units sold × Sales price
Necklaces per show=25(45) × $17=$19,125
Earrings per show=12(45) × $12=$6,480
Total sales for 10 shows= 10 × $25,605=$256,050
Total variable costs=
Direct cost= 10((25(45) × $8.05) + (12(45) × $5.50)) = $120,262.50
Total variable costs= $120,262.50
Contribution margin at high order estimates=$256,050 - $120,262.50= $135,787.50
This Implies that at high order estimates, the company shall break even at a revenue of
$135,787.50.
Contribution Margin for Sales Representatives:
Contribution margin (low order estimates)
= Total sales – Total variable costs
total sales= Units sold × Sales price
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