Damn Heels by Hailey Coleman

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Executive Summary

Damn Heels is an idea conceptualized by Hailey Coleman, a young business student based in Toronto, Ontario. The idea is to provide women with a solution for switching from heels to flats easily. A lot of women face this problem where an occasion requires heels as a dress code but would like to switch to a more comfortable option later. Hailey intends on launching this venture by year ending 2009. Damn Heels has a few American and European competitors and no Canadian competitors while the footwear industry has been growing gradually for while. Damn Heels’ target market are females between age 20-25 primarily. Hailey has very limited funds at her disposal for starting the venture and no funds for first year of promotions and hence will rely heavily on social media.

Hailey Coleman has to calculate the feasibility and profitability of this venture and decide whether to launch it or not. The criteria used for the decision making process are net profits and breakeven profits generated, initial investment and risk factors of various distribution channels.

The breakeven point is quite achievable according to Hailey’s profit projections and the initial investment is less due to low set up costs. Damn Heels is an unsought product and will require a lot of effort in promotions to convert it to a sought product. The quantitative analysis show that the venture is profitable and hence it is recommended that Hailey Coleman go ahead with the launch.

Decision Statement

After months of careful examination, product development and consideration, Hailey Coleman is faced with a major decision of whether she should go ahead and launch her venture of foldable flat footwear or not.

Internal Analysis

Strengths:

One of the major strengths of Damn Heels, is that it is an innovative product, which is convenient to carry due to its light and foldable material. At the moment there are no big players in this particular kind of footwear industry which own a chunk of market share in the Canadian market which is also advantageous for initial set up. Damn Heels is also expected to be sold in areas of downtown Toronto, where there’s a high concentration of restaurants, clubs, bars and universities which bear a thriving demand for foldable flats. Hailey Coleman, the owner of Damn Heels is a business student at Ryerson University, which means that she has the business acumen that can help formulate this venture. Another important strength is the price point of $20^[1] including taxes, which is quite reasonable compared to its American and European competitors. The venture has virtually no fixed costs as Hailey intends to store inventory in her apartment to save on costs and has also decided to not take a salary until the business starts making decent amount of profits. Damn Heels also has a commitment to provide high quality flats and has also hired a quality-control agent for the same, which is great for the goodwill of the company.

Weaknesses:

Hailey lacks the initial investment and hence plans to finance the venture from her student loan and personal line of credit, which accrues interest. Even though there are no competitors within the Toronto market, competition does exist from her American and European counterparts, hence Damn Heels cannot avail of first movers advantage.

Hailey has no previous entrepreneurial experience in the footwear industry which could be a major drawback as she has to learn and implement from the scratch. One of the major weaknesses is that Hailey has no funds for promotion of the product and will be relying heavily on social media and word-to-mouth promotion, which aren’t very promising promotional tools. Hailey will be getting her shipment from Chinese manufacturers that could cause delays in lead time which could disrupt the distribution process.

External Analysis

Opportunities:

The footwear industry has been showing a steady growth over the past decade and is estimated to continue doing so (Exhibit 1). Hailey can quite easily tap into this rising consumer demand for flats. According to her survey (Exhibit 2), 93% women mentioned that their feet pain after a night out, 43% women said they would definitely buy flats given the option after a night out and 46% said they would consider buying flats at the end of the night. These numbers show a positive demand for Damn Heels. The US – Canada dollar exchange rate difference is almost negligible which means there will be no cost of currency. The requirement for initial capital is very less and hence Hailey will easily be able to finance the venture out of her loan and personal line of credit. The footwear industry is also very big which means there’s a lot of availability of suppliers which gives Hailey several options to distribute her risk incase of adversity.

Threats:

Damn Heels’ competitors provide a wide range of foldable flats while Damn Heels cannot afford that at least initially, this could hurt Damn Heels’ promotion. Since the barriers to entry for this industry are quite low, competition could easily be increased once the industry becomes attractive for other firms to enter. 2009 is also a time of recession for the Canadian economy which means less purchasing power and overall demand in the country (Trichur, 2009). At the same time, currency rate fluctuations, if any, could pose a threat that could lead to increase in costs and reduction in net profitability.

Consumer Analysis:

More and more young women are becoming fashion and trend conscious seeking for practical solutions for routine problems. Damn Heels expects to solve those problems by integrating convenience, care and comfort into one product. Focused target market will include young outgoing, trendy females under the age 29 yrs. with low to high incomes. The decision process is fairly uncomplicated and there’s low level of involvement as it involves mostly impulse purchasing since there’s no pressing need for this product per se.

Market Analysis:

The Canadian footwear industry has projected a continuous growth. 2009 estimates the industry to value at $ 5560.8 million. The market can be segmented geographically and demographically. Damn Heels can focus to target Toronto as that’s where most of her customer base is and then expand to GTA (Exhibit 3). Demographically, Damn Heels’ primary market could be women in the age group of 20-25 yrs. and are students while the secondary market could be women in the age group of 20-40 yrs. who are professionals and home makers. (Exhibit 4)