CHARISMA RENTAL
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1. Quiz - 6 2. Introduction - 10 2.1 Aims - 13 2.2 Objectives - 14 2.3 Methodolodgy 18
3. Opportunity - 30
Content
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3.1 Decision making factors - 33 3.2 Product testing - 36 3.3 Our clients - 39 3.4 Supplier - 44 3.5 The problem - 46 3.6 Opportunity platforms - 50 3.7 Trends - 54 3.8 Business opportunity - 60 3.9 Expert feedback - 62 3.10 The big idea - 64
4. British Market - 66 4.1 Chinese market - 71
5. British Competitors - 72 5.1 Competitors analysis - 74 5.2 PEST - 80 5.3 SWOT - 83 5.4 Porter’s Five forces - 86
6. Consumers - 92 6.1 UK consumers - 98 6.2 Chinese consumers - 100 6.3 Shared values - 103
7. Brand Development - 104 7.1 The overview - 105 7.2 Mission, values, vision - 106 7.3 Brand’s pyramid - 108 7.4 Brand’s DNA - 110 7.5 Branding - 113 7.6 Marketing Mix - 116
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8. Brand Strategy - 118
11. Brand Management - 164
8.1 Business model - 119 8.2 Business objectives - 120 8.3 Pre-strategy objectives - 122
11.1 Initial funding - 165 11.2 Start-up costs - 166 11.3 Marketing budget - 168 11.4 Sales forecast - 171 11.5 Monthly spendings - 173 11.6 Conversion rate - 175 11.7 Profit and loss - 176 11.8 Sensitivity analysis - 182 11.9 Cash flow - 184 11.10 Risk assessment
9. Marketing strategy - 126 9.1 Year One - 127 9.2 Year Two - 129 9.3 Year Three - 130 9.4 Strategy insight - 132
10. Communication strategy - 136
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10.1 AIDA - 137 10.2 DRIP - 138 10.3 Communication objectives - 140 10.4 Further strategy - 144 10.5 Online/Offiline communication - 149 10.6 KPI’s - 150 10.7 Logistics - 155 10.8 Communications timeline - 156
12. The Future - 188 12.1 Conclusion - 190 12.2 Ethical clause - 192
13. References - 194 13.1 Bibliography - 208 13.2 List of images - 220 13.3 Appendix - 238
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1. What is pommadier cream used for? a). to keep your shoes shiny and nourished (good) b). to add moisture for your lips c). to fertile plants
2. Does UK recycle plastic cups?
1.Quiz
a). yes b). no (good) c). please, can ask my friend instead
3. How long does it take for plastic bag to recycle? a). 5 years b). 50 years c). 400 years (good)
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4. How much money Americans spent on handbags in 2016? a). $5 billions b). $79 .6billions c). $12,1 billions (good)
5. What is the minimum wage for garment worker in Bangladesh? a). 73,85 GBP (good) b). 490,25 GBP c). 300 GBP
6. What is the most popular handbag style? a). Satchel b). Tote c). Hobo (good) To find out the correct answers, see appendix, page: 240 8
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2.Introduction
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There are about seventy new businesses formed every hour - only in the UK. Sixty percent of them will fail within the first three years, twenty percent of them will fail in the first twelve months. (Telegraph, 2019) What matters the most is that people are having new ideas and they are brave enough to make them happen. However the problem is that most of them have rushed it and struggled to do their research before they launched their new business. There are certain questions that need answering before the business can succeed. It is crucial for each business to plan for the future and of course - keep on keeping on, expanding. This piece of work is the realisation of the research that was conducted last and this year.
All the facts will be brought into the account, but most importantly - the need of the consumers and the availability within the market. Looking at the issues that appeared within the first stage of this dissertation, millennials are willing to change their shopping habits. They are very flexible, however they tend to be a little bit selfish when it comes to their own needs. They like to see sustainability as an important theme that appeared within the last few years, however they are lacking to see innovations brought to the subject. They want to be a part of the movement, mostly because it is fashionable and will make them look and feel better. Those who are genuinely sold on changing their lives - from diet plans to daily habits, sustainability is a lifestyle. 11
To develop a strong business plan, ensuring it differs from ones existing on the market.
2.1 Aims
To reach out and gain attention from affluent Chinese customers. To provide a quick, ultra effortless service available 24/7. To refine the second hand industry and provide repairing and restoring service available for new and existing customers. To investigate how the business can be expanded in the next three years. To bring innovation into the sustainability market. To build the relationships and gain attention together with brand recognition within the social media world.
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2.2 Objectives 14
Analysing competitors and their businesses will be crucial in order to find a gap within the market and provide a unique outcome that will differentiate itself from competitors. Our sales will be measured daily for twelve months to ensure their sales are constant and consistent. Measuring the amount of wealthy chinese people living around the UK and what is the purpose of their traveling in and out of the country and then adjusting itself to their needs. Due to high demand for “wanting it now�, the next day delivery is crucial to be accessible. Fourty five percent of millennials are considering this option as the successful one (Forbes, 2019), this is why the business will be providing a next day delivery system. Offering a special restoring service as a part of the brand growth. It should create more interest from conscious consumers who are keen on giving a new life to their old accessories.
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Organising special events e.g. pop ups around the biggest shopping centres e.g. Bicester might attract consumers to rent from us and use our restoring services which will be available to pick up within the same day for the clients to avoid waiting a long time for their goods. Classifying the business as sustainable will not bring any innovation into the market, however because of its promotional ways and giveaways, the consumers might find it more interesting. It is essential for the brand to attend sustainable events and attend well being classes which will not only promote the business but also make it more genuine for the consumers. Collaborating with influencers will be a helpful source of promotion for the business as their values are deeply connected with their followers who can be encouraged by them to check and hopefully subscribe into our brand. 16
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2.3 Methodology 18
This report was based on market’s primary and secondary research - both qualitative and quantitative. Refining and analysing the results by focusing on limitations and strengths was key to finding out what the actual consumer/ market needs are, and so the objectives were leading the research in a path that was meant to explain the gap within the market. Each research style will have to be represented by a group of people or digital/print sources, as those respond to past and present happenings.
Focus group - primary - qualitative research The current mission of this research was to find out whether luxury items are in demand amongst young people especially millennials, and whether they are willing to pay for rental service and whether they are interested in second hand luxuries. It is important to measure how many people would follow this pattern and to ask them why they chose this answer.
This will allow the business to understand the consumers perspective and see how it can be fulfilled and expanded in the future. To get those answers it was crucial to convey a focus group that had at least one international student or millennial. In the group of five contestants, one of them is Houyan - international, male chinese student. Two of them were casual, local people - couple - both age 30 (Alicja & Arek), topshop worker - Alice age 23 and barista - Katie, 22. They were asked some questions to get an insight of who they are and what is their thought of what vintage and rental is. See the sample questions on the next page. 19
Sample
Could you please tell me a little bit about yourself? (Age, interests, what are your thoughts on sustainability)
Would you be willing to rent a luxury item handbag or other accessories from an online renting service? If not - why?
When shopping in a second-hand/vintage store, what do you tend to search for?
Do you tend to shop for clothes/accessories overseas or back at home?
Have you ever found a luxury/designer item in a vintage store? If so, have you bought it? If not - why?
What do you do with your luxury items when they get ruined/damaged?
Have you got any luxury/designer clothes/accessories in your wardrobe already? If so - where did you get it from? If not - would you like to buy it?
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If they do - would you like to get them fixed by a specialist? If so - would you go for extra personalisation or would rather keep them original? How often do you ask for next day delivery? If you don’t - why is that? 21
In terms of the focus group’s strengths there aren’t many (Writing, 2019). Initially this method is a great way of measuring spontaneous reactions from the contestants, which in this case was beneficial for the brand. People sat in comfortable environments (Starbucks), drank their drinks and just shared their opinions. How could this be read as strength into this research? Luckily, the answer is their honesty. Contestants weren’t offered any reward at the end of the focus group so they didn’t feel reinforced by giving supportive answers.
Knowing their actual feelings was helpful and insightful, as it revealed the clients needs and directed the brand especially in terms of restoration services. Unfortunately the concept in whole was moderated by the brand developer - myself, people used as contestants were close to me, which means their attitude might have been too relaxed. According to that, each person within the group was totally different to each other, which means the extroverts could speak their mind out louder than e.g. introverts. (Poppulo, 2017) Some people e.g. Houyan weren’t sharing as much as others, which unfortunately is a significant disadvantage in terms of running focus groups. Apart from that, the focus group was executed with only five people, which cannot provide the answers for the whole fashion market. Beneficially each person was coming from a different background, however some of them weren’t even into second-hand shopping Houyan who likes the idea but doesn’t follow it. Please see the appendix to see the results and analysis of each question.
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Those answers can be lacking in further insight. Within this quantitative type of research, it is pivotal to conduct it at the beginning, as it can change the whole brand concept. Luckily the contestants were very positive about the listed questions, which helped gaining positive responses in terms of concept and brand launch. The question are listed below:
This type of quantitative research brings a variety of answers from at least hundreds of respondents. That is definitely one of the key strengths of survey/ questionnaire, the easy and quick results (Surveyanyplace, 2019). People get to decide super quickly without analysing the problem/question for too long and of couse this can be read as benefcial but can also be disadvantageous for the researcher. If so, data can be interpreted badly because the contestants tend to pick a listed answer without thinking why. 24
Sample
Instagram - primary - qualitative and quantitative
1.Have you ever rented accessories/clothes from an online renting website? 2.What do you think of luxury brands in general? 3.Would you pay more money for a second-hand designer item? 4.Do you follow fashion trends? 5.Would you use a repair service for your luxury/premium handbag if it got destroyed? 25
Due to the research type, It was crucial to keep the questions short and easy to understand. I have managed to receive the answers within 24 hours after posting them on social media, instagram’s tools allowed me to compare each question and know exactly who is into what exactly in terms of luxury brands, restoration and renting. One of the questions that hasn’t provided much insight is the fourth one, as fashion trends tend to change constantly and the brand’s idea is to stay trendy as well as timeless. However, this data can be used in the future within some possible brand expansion. One of the disadvantages of instagram poll survey is that some of the contestants left some questions unanswered, that unfortunately decreases the rates within the answer ratio. The brand would definitely benefit from an honest answer instead than skipped one. Knowing some questions weren’t comfortable ones brings a doubt into researchers mind and questions their honesty. Although it is important to remember that this type of research is very casual and some people might just skip out of their boredom or simply because they don’t want to be a part of it anymore.
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Overall questions used in instagram poll were helpful to understand the consumer needs and find what the gap is within the market. Please see the appendix to see the results and analysis of each question.
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Online content analysis - secondary - observational research
Online content analysis - secondary - observational research
Emma Firth (2020) This UK-based blogger is sharing her experience with Cocoon.club, one of the biggest competitors on the market. Her article is extremely insightful as it provides the whole cocoon experience, which could also be used as primary research product testing. It explains what the renting process looks like and what the customer is supposed to expect after signing up. This type of research is again - insightful and perceptive, written in easy to read language - especially for the target consumer group and provided by correctfully chosen influencer. The disadvantage of this article however is the fact that it is only advertisement, although it is promoting valuable, futuristic content. The article mentioned the price of the subscription and the fact the user is only allowed one bag per month which can be discouraging to the consumer. It is important to stay on the top of the competitors pyramid, so knowing those advertisement materials helps with brand development in the future.
Kelsey Jones (2019) Finding out about other people’s experiences within the handbag rental industry was crucial to discover what exactly these people are looking for and what matters to them the most. Unfortunately there aren’t many sources available so far, which makes the analysis difficult and hardly possible, although some people decided to share some content about their favourite brands and experiences. Looking at the amount of the sources, it can be assumed that most rental brands aren’t investing money into communicating their brand through influencers, which opens up a gap within the market. Looking at the needs of the borrower - Kelsey Jones, she’s searching for a brand that offers seasonal, trendy and of course well known handbags e.g. Lady Dior. This type of research unfortunately brings some limitations as each paragraph is short, however the author keeps those well concentrated and straightforward which is insightful in terms of customers’ needs and how to exceed them.
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3.Opportunity 30
Charisma Rental - luxury handbag rental service based on monthly subscription. Those who sign up for the subscription will be able to keep the bag by buying it from the brand as well. We are fully sustainable, from our recycled paper packaging to handbags. Our brand supplies second-hand, authentic handbags from approved sources only. There is no time limit within the rental: the subscription includes two luxury handbags a month for only 85 GBP and of course, if you feel like you need more, then you can swap anytime. Each swap costs an additional 30 GBP and will be automatically added into your monthly subscription. The brand is based on two revenue streams: subscription and bag selling. To make sure the brand is creating more income, we will only be allowing the “buy now” option to those who subscribed. Brand will go beyond renting, we want to be a leader on the market and educate people on slow, less waste, sustainable fashion, by introducing eco communication into our brand. This will be done through our social media especially instagram to gain attention from our target consumers - millennials, gen Z and affluent chinese community living in the UK.
In terms of growth, the business can expand in a few different ways, however this extension needs to be strategically planned. Due to sustainability being our main trend and reason behind the brand, we need to communicate the “repair not replace” idea of fashion. Our aim is to introduce accessories/handbags restoration service together with pop-up stores available through department stores such as Bicester Village.
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3.1 Decision making factors As a new business, our focus point is to become leaders within the relatively new type of industry and to provide easy-going service. Our affordable price point is meant to attract more customers, bring income to the company and attract different demographics. We want to be effortless and convenient and of course communicate the brand in the most green-like way such as: educational channels, restoration/repairs and second hand-less pollution fashion only. The quantitative research conducted through instagram polls could be considered as non-reliable due to the small amount of contestants (approximately hundred in total). However looking at the results it released plenty of insightful information in terms of brand development e.g. millennials/gen z needing restoration service/second hand fashion. Based on the research, a fresh, polished business idea was born. Here is the list of the points of why the brand should carry on and what could support decision making process.
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- Sustainable living idea attached as the brand would be supporting renting instead of buying - Second hand market is currently growing around the world due to sustainability issues and high demanding of young people - Supplying authentic, luxury only items - to ensure those are authentic there will be a need to work together with luxury brands. This work should be based on commissions rate e.g. five percent per rental. - Renting is allowing any consumers to have a cake and eat the cake by giving an extra but also by keeping money in their pocket - accessible and affordable for millennials. demanding of young people 33
- Allowing consumers to feel powerful and special by offering them top/well known brands - Second hand market is currently growing around the world due to sustainability issues and high demanding of young people - Additional repairing system - so customers can repair their handbags/accessories without throwing them away - existing customers will receive a 10 percent discount. - Pop up stores based in luxurious shopping malls/department stores which offer a fast - up to four hours repairing systems. Those would be available for the new and existing clients and would allow consumers to regain a new look of their handbag or accessories - personalisation included. - Chinese customers who travel around the world, could be encouraged by the idea of having their luxury handbags restored while they spend their time shopping e.g. at Bicester Village
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3.2 Product Testing 36
Looking at the results and positive feedback received throughout the primary research and focus/testing group, the business launch could easily be presumed as a successful one. Of course the contestants weren’t able to see the finished product - handbags and actual website, however they have seen the mock up of the website and the logo. Their attitude toward the brand was positive and that is what amplified the fact that brand could launch in the future. As already presented, the fact the brand could be offering restoration services was increasing its value and differed itself from other brands. In terms of secondary research, looking at Cocoon Club Facebook advert (Facebook, 2020) It is clear that consumers need to get educated about the rental concept (please see appendix).
Most of their commentators were not understanding why they have to pay for subscription or why they have to pay for something they will need to return later. Another issue they had with the service was that handbags were already used. This research proves that customers just need a little more insight about what the brand is doing and how it works. The clothes/handbags rental system is still relatively new to consumers, that is why not many consumers understand the way it works. Working it out might help not only the environment but also can change the future shopping concept, looking at the article by Paula Cocozza, less people is now buying from the actual brand but it is buying second-hand instead (Guardian, 2019). Knowing this, there might be a chance that people could go even further and upgrade their current fashion habits into new ones. 37
This type of research helped to gain plenty of responses, however those might not translate correctly due to lack of background explanation. Variety of people voted for the “buy” option, which assured the brand that having this possibility will be crucial and we need to allow our customers this privilege, as some of them might become attached to their rented bag and might want to keep it. In terms of poll inconveniences, the question was very easy and wasn’t explaining the background of the business - voters didn’t even know what they would “rather get”. Please see the transcript/results at the end.
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3.3 Our clients
Unfortunately some key information was still missing, especially the financial ones. As a brand we are in need to find out more about our clients and their preferences in terms of buying. This is why the instagram poll was created, it allowed us to ask the potential customers if they would rather: buy, sign up for a subscription or both.
The idea has a large potential to be popular amongst those on stable income but also young people who follow trends and want to stand out while living their normal life. Since China has such a high demand for luxury goods, their affluent customers have become the number one target customer. Currently, their economy is going through a massive change which allows both millennials and younger generations to live the luxurious life their parents always dreamt of. Their desire for prestige lifestyle opens the gates for the rental luxury business to succeed on the market due to expanded knowledge of target consumers who follow the trends and want to be as relevant as influencers and instagram individuals from Europe. More than half of Chinese people are still searching for bargains online, which might suggest that their spending money is still low and they cannot afford what they are searching for. Rental service has a potential to fill this gap for them as it gives a feeling of owning something special without losing money.
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Chinese consumers account for about one-third of the world’s total spending on luxury, but this is expected to increase to 44% by 2025. (Ipsos, 2019) 40
According to Chinese ethic group: facts and figures (Gov, 2020) the most chinese populated place in the United Kingdom is London (with a total figure of 43,016) and the least place is Leeds (5,933 people). Same statistics explain that it is most 47.2% of the young people (18-34) who come to stay in the UK, which explains why Chinese people stay in certain cities e.g. Nottingham or Manchester. These cities are known for really good business BA courses, which influence young people to study abroad. Their after graduation income tends to be higher than the national average (28,100 GBP) and it is still growing. Most of them rent their accommodation instead of buying houses which again, can be interpreted as the fact that they are only living here temporarily. Looking at those statistics, the brand would like to introduce the affluent chinese individual into our target consumer group.
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Looking at the conducted research, it will be crucial to focus on british millennials - not only students who tend to overspend and struggle with handling their finances correctly. (Murray, 2020) Young full/part time workers are perfect target consumer for the brand, as most of them have spare money to spend. They can be single or in a relationship - as long as their income is stable. Their liberal views allow them to skip over their parents family values e.g. having kids in young age, they are concentrated on their happy life, career and occasional party/going out. Of course they care about fashion but also support the environment as they are getting woken everyday by the current events and protests all over the world.
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In 2019, consumers in the United Kingdom spend 71.9 billion on clothing and footwear, compared with total domestic expenditure of 1.4 trillion British pounds. (Statista, 2020) 43
3.4 Supplier 44
Vestiaire Collective.com (B2B) The brand is willing to continue the brand to brand business model by collaborating with VC.com as they only offer authentic and verified luxury handbags. The key to keep this partnership is to make it beneficial for both brands. We are willing to sign an exclusive contract with this supplier in order to be continuous in terms of bringing new handbags into our website and of course help them with pushing their stock off their website. The brand has never done this type of partnership before, however they are very popular amongst fashion gurus e.g. Vogue who collaborated with them and used influencers to promote the brand. The Drum Online Media Awards (2016) This could obviously help our brand as it would introduce us to the fashion world and become a part of their empire.
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3.5 The Problem Highlighting the potential risks that could appear whilst developing the brand was important for us. Those upcoming risks can be stressful and time consuming, although with special care any issues can be fixed and overcomed. (Deloitte, 2016)
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Keeping up with strategic risks is just a part of brand management which are in need of constant attention from the employees. The low pricing factor will definitely be beneficial for the customers, however it will affect the company by not allowing the CEO to employ a group of staff to help around the development of the brand. Having to work all by myself might create stress and might affect future deals with re-stocking companies e.g. Vestiaire Collective. In the latest interview Keri Calagna mentioned “brand and reputation risk is often tied to emotions, trust and gut reactions toward an organization, it can pose the largest potential for value destruction. However, when managed well, brand and reputation risk can create an opportunity to influence perceptions and create value.� This quote suggests that developing a plan within a team of staff and listening to each other might be crucial to success as a business. Not having a strong team will increase the chance of the brand’s disappearance from the market. Other risks that might appear were listed below.
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Competitive market - looking at the previous year, the list of competitors grew by at least three (BagButler, Front Row and On Loan) within six months (Google, 2020) Large start-up and three-year investment. To keep the brand exclusive and special there will be a need to constantly upgrade the styles and of course following micro trends. The start up costs will cover about fourty handbags, which will not be enough in the future. In order to keep the same repubaility, the brand will need to source its bags from the same second-hand, luxury and authentic source.
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“Wanting now� mentality of young people who need to receive their product as soon as possible. The postage/packaging costs are relatively high in comparison to what the brand is charging, so having to figure out the best way of posting products to the subscribers is key to keep the business sustainable.
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3.6 Opportunity Platforms Communicating the brand through social media is significant to keep the customers interested. Visual platforms such as instagram helps with gaining interest through expressing the branding and its DNA. Our branding needs to attract our target demographic and translate itself into a hip/luxury brand without giving up on the sustainable/green type of business.
CHARISMA RENTAL
NEW IN ABOUT US HOW IT WORKS SUSTAINABILITY RESTORATION SUBSCRIPTION LOG IN
SUBSCRIBE FOR ONLY 85 GBP AND RENT YOUR DREAM TOTE KEEP IT FASHION & SUSTAINABLE COLLECTION S/S 2021
Informational and sales platforms such as main websites will have to be constantly to the public, as those will generate income for the brand. Once the branding is established, the certain colour palette will be applied into the story-telling, packaging and platforms.
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Charismarental.com - Rental website for luxury handbags with restoring services available. Keep the international/affluent chinese market friendly domain will have to be a part of the website. Having an option to pay in different currencies might be ideal, however at the beginning to measure the demand and see if we are gaining popularity, the brand will only be providing the GBP pay. Instagram - Due to its high amount of active users, instagram is the best platform to communicate (Dargaville, 2019) the brands mission/vision/values and update on dailly upgrades/happenings. It helps gaining followers through hashtags and influencers who will be key promoters of the brand. Due to its popularity the brand will be able to reach out to different demographics and affluent chinese consumers through well known national influencers e.g. Zola Zhang (Vogue, 2018). Customers will be getting daily highlights about what and how we are doing in terms of sourcing and repairing handbags. Instagram will also be helping with measuring the KPI’s in terms of how many sales or people have appeared on the website after certain influencers mentioned the brand to their followers. 52
Baidu - Chinese internet search provider - google like but popular in China - Charisma needs to be visible on this platform so the target consumers can find it. Our website will need to make sure we use the right hashtags for the chinese consumers e.g. #newyear #proverb or #chinesenewyear as those are the ultra-overtime popular amongst chinese people. (RiteTag, 2020) 53
The idea of charisma rental was created by sustainability and second-hand/vintage fashion trends. These two macro trends are the base of the brand and will strategically communicate the brand to the consumers. Our brand will support vintage fashion, less-waste way of living and absolutely new way of getting new things - renting it. Investing into timeless handbags will be our mission, however trend forecasting needs to be a daily routine within the business.
3.7 Trends
Looking at the competitors, cocoon.club who share a similar business model to charisma rentals, it is clear that their secret mission is to provide as many timeless handbags as possible, as these bags are the most popular. Out of 206 bags available on their website, only 72 of them are with members right now (08/07/20). Of course those bags are the most popular ones e.g. LV, Bottega Veneta, YSL or Chanel. Sustainability, rentals, second-hand clothes are definitely the macro trends in the world, however it is crucial to list fashion micro trends in order to understand the most popular styles. See below.
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XXL Tote Bags - a glitched contrast to the other handbag fashion mini trend. Those bags were showcased all over Europe fashion weeks 20/21. Compared to the micro Jacquemus, these handbags aren’t meant to be “cute” but should create a strong look and allow the owner to fit whatever they need. Tote bags are definitely timeless - best investment for the brand, whether it’s super large or normal size. In terms of reparations, these bags will also be most sustainable as the specialist will only be using one-surfaced type of fabrics, without hard to replace details.
Chanel 2.55 - According to WhoWearWhat (2019) this bag came out in the fifties and ruled the world through scandales since then. It is famous amongst the fashion elite and by looking at online sources (Vestiaire Collective, 2020) is still one of the most expensive, second hand ones. Having timeless pieces on the website should attract more clients, especially those who are handbags connoisseurs. Those people tend to work within the industry and hopefully would be happy to collaborate with the brand in terms of promotion. 56
Micro handbags (e.g. Simon Porte Jacquemus three inch top-handle purse). “They were seen as necklaces—or very, very chic lanyards, depending on how you looked at them—decorating the necks of models that ended with vintage-style kiss-lock coin purses at Erdem or miniature boxy totes at Gabriela Hearst.” (Cheng, 2019). Due to their impractical side, these bags will only be popular for a certain amount of time e.g. summer or special events, this is why investing money in those wouldn’t be a best decision. However, having only a few might increase their popularity as customers will have to sign on a waiting list for those. 57
Belt Bags - slided around the chest area. Available in any shape and colour. The crocodile effect ones are the most popular and wanted ones - great for parties and casual walks. Those bags are made of a good type of leather material (Chylak, 2020), which will last for a long time - especially if the restoration team will be keeping their eye on them. However due to the brand’s DNA and sustainable beliefs, the fact that we are promoting leather goods might be translated into negative allegations from consumers who are supporting vegan/eco-friendly values. Looking at recent article by Retail Market Expert (2020), plenty of brands is currently struggling to communicate their brand. Avoiding the same mistakes such as Non-ethical/local origin production and not delivering what was promised is what Charisma Rental needs to be cautious of.
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3.8 Business Opportunity 60
A monthly subscription paid by verified clients will allow them constant access to the best, expensive looking wardrobe filled with newest and most popular specimens of well known bags. A small amount of money paid monthly should be considered as an investment into their own ego. This should satisfy their needs and desires and will also leave them with spare money on their account. Knowing that this business is only just starting, it is necessary to consider a large amount of spendings at the beginning. It might take a while till the business will create income, however it is important for monthly subscription to remain lower than what competitors (e.g. Cocoon Club with their monthly subscription of 99 GBP) offer so the demand of this particular service grows.
Buy now scheme - a new revenue stream that should increase the money coming in. Customers who rented the bag and fell in love will be offered to buy it from us. It will be a great way for the customers to grab a bargain as the prices will not be as high as brand new ones. Starting a new business might be difficult, so having a new revenue stream will be beneficial as it provides savings and allows for further growth e.g. more bags coming in or restoring. Looking at the instagram poll responses, most of the young people have already bought an expensive bag, which opens the opportunity for the restoring service to be working smoothly together with rental. This could obviously be a part of the expansion in the future. The idea of delivering this sort of goods could be happening within a pop up store based in massive shopping centers e.g. Bicester, which is extremely popular amongst affluent chinese consumers. We would like to allow them to drop their goods at the beginning of their shopping and pick them up by the end of the day.
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3.9 Expert Feedback 62
“OMG that’s actually great you know! What about the competitors? Are there many? I just googled them and it looks like you have a good shot! Good luck with that!” Izabela Cyl, CEO of House of Carats 63
3.10 The Big Idea Rethink your wardrobe. Charisma - providing affordable, worldwide, luxury handbags rental service for people who like to play with fashion and desire to stand out. This business idea enables us to tick both boxes - luxurious and sustainable.
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Research gained from the previous report - Stage 1 proved that most millennials tend to search for luxury items whilst shopping in charity/second hand shops. In order to create a business plan that will succeed and take the consumer needs into consideration, it was crucial to remain sustainable. The idea of buying second hand/returned luxury goods by the brand and then renting those items instead of selling has a potential to be working just well. This idea goes beyond just a previous target consumer - millennials but also allows older and younger generations to become a part of it. Rental creates a long lasting life and allows consumers to enjoy it - no matter in what environment or occasion. The proposed rental service will be based on a deep level of trust from luxury brands who will be approached by us to sell their handbags at discounted/wholesale price. 65
4.British Market Research 66
“Consumers are more likely to be encouraged now to buy everyday luxury items from retailers that offer some form of discount or reward scheme.” (Business Advice, 2017)
More recent study by Luxury Daily explains “Twenty-nine percent of those who purchased luxury goods in 2018 plan to increase their spending within 2019, compared to 28 percent in 2018 and 26 the previous year. Luxury spending in the United Kingdom is likely to see the greatest spending compared to other countries, according to Luxury Institute’s 2019 State of the Luxury Industry report.” This means “The U.K. is likely to reach a high of $21,193 for average luxury purchasing per consumer within the next year. “ (Luxury Daily, 2019). However, according to “Walpole’s new research the British luxury sector is now worth 48 billion pounds to the UK economy, up from 32.2 billion pounds, with exports topping 38 billion pounds and employment reaching 156,000.” (Fashion United, 2019) That is a strong fort that Britain is building. Although it is crucial to know that this study doesn’t only involve the fashion industry but also fine wines and spirits, high-end beauty and car manufacturing. Looking at different statistics, british people are just likely to spend more and more money, every year. Even a survey by Finder.com revealed that this year british people will spend more than 1.45 billion pounds, which on average makes 35 pounds a day, per person. (Professional Jeweller, 2020). Seems like people just enjoy to spend their money, especially on special occasions e.g. luxury products or moments. Finder study proved that it was millennials in particular who were spending the most money throughout valentines day “forking out 42 GBP on average on their loved ones. This is followed by gen X (GBP 38), baby boomers (GBP 30) and gen Z (GBP 27).” (Finder, 2020).
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Why do they want to buy luxury products? Statista.com conveyed the survey amongst 20-30 year olds respondents in the UK. Asking them a question “What are the main reasons you are willing to spend money on high-end fashion or luxury items?”. The highest answer that scored 19.7% was their desire to just treat themselves, another 19% acknowledged the quality of the items, and 17.1% admitted that it just makes them feel good. Only 2.8% of people said that luxury brands are more ethical and that is why they tend to go for them. (Statista, 2018) Looking at this survey, people are still not portraying luxury brands or maybe even luxury in general, as ethical and sustainable. This market research brought a new question such as “Can luxury be sustainable for the customer?” Hopefully. Thinking of the previous research conducted whilst doing Stage 1, consumers were more likely to buy luxury handbags/clothes/accessories if they could get them cheaper - from a charity or second-hand shop.
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Michael Ward, said: “Britain’s luxury brands are our calling card to the world. We should be enormously proud of these businesses: their heritage, creativity, craftsmanship, quality, innovation – and the contribution they make economically, culturally and to soft power diplomacy. It is critically important that this thriving sector is promoted and protected to ensure its long-term growth.” (Fashion United, 2019)
This statement from director of Harrods and chairman of Walpole explains what sort of feeling “Britain” gives to people abroad. British people, their accents and way they live their life is still considered as “special”, “interesting” and even “sexy” by other nations (Netflix, 2020) This is also one of the reason chinese market was considered as one of the major target consumers to use the new business that is about to be created. According to Walpole research, chinese people tend to have that desire of owning something that they could have bought in the UK, simply because it makes them feel affluent and better. (Fashion United, 2019)
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The same report also showed that the average chinese consumer spends nearly 6000 USD on luxury goods annually. That is caused by their desire to live a different, more lavish lifestyle, filled with trips abroad, fine dining and of course - luxury goods. However, the younger consumers - generation z and late millennials are more conscious about trends and how to deliver them in a much modern way. Their spendings is a little bit lower than older millennials (about 3500 USD annually - on luxury products). Taking this into consideration, it is elementary to provide them a sustainable way of getting luxury goods - renting. Due to the rise of social media popularity, customers - both chinese and british feel the need to express themselves through their unique content. Chinese people in general are more conscious about their social status and wealth, our brand could fulfill their needs of living this type of lifestyle without spending thousand pounds. To challenge this report and further business plan, it is crucial to think of the less appealing, bad situations which can happen. From the research conducted via various studies and financial reports, it is clear that “majority of these young consumers are fresh to market, presenting both a tantalizing opportunity and an implicit imperative for brands to stay current, or risk losing out to more digitally savvy rivals.� (China Luxury Report, 2019). For a new business to grow and become a first choice to go it needs to bring an innovation into the market. It needs to send a clear message to the clients, which for this business might be a struggle as it is new to the completely different market.
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The research showed that in 2018 chinese consumers have spent 115 billion american dollars on luxury items, to make it even more dramatic - by 2025 their spendings will grow to 171 billion dollars (China Luxury Report, 2019).
4.1 Chinese Market
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Front Row
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Onloan
OurCloset Hire street UK many - Items per month - limited
5.British Competitors
Find Rent Wear
Chic-by-choice
Hurr Collective
By rotation My Wardrobe HQ
Catwalk-club
Cocoon Club Charisma Rental
low - Price - high
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5.1 Competitors analysis 74
By looking at the current competitors, there is still a little gap within the market for a new business to start up. Luckily, just a few rental services are specialising in luxury handbags only. The biggest competitors are: Hurr collective (P2P) - founded in 2017 and Catwalk-club (B2C), founded in 2019, Cocoon.club and MyWardobeHQ - all UK based platforms. Hurr has been described as “airbnb of fashion” (Forbes, 2019) and is considered as one of the most popular within the millennial generation (Street, 2019). Catwalk-club, whose name is very similar to Rent-The-Runway - first american rental service, has absolutely no recognition online, however because of their considerable low prices they are most likely to become successful. Their minimum rental time is four days, which allows each rental to secure a minimum of five percent of the real rental price of a bag.
Cocoon club - monthly subscription service for luxury bag lovers. One out of plenty that offers the subscription service, because of that it will be considered as my main competitor. They have only launched in 2019 but aren’t slowing down and simply are going for the first place on the podium. Their monthly 99 pounds subscription - similar to Rent the Runway (99 US dollars a month) covers light repairs and a refundable covering fee that covers damages. Cocoon club is offering new season, pre-owned and limited edition handbags, that means they basically have it all. The only way to compete with them is to lower the subscription price and step up with the sustainability issue talk. Or... to offer more bags to rent, as cocoon is only giving one bag per month, or takes additional charges of 10 pounds for a swap. 75
My Wardrobe HQ on the other side is presenting their business idea based strongly on sustainability and ethical consumption/circular economy. They have currently opened their second shop, again in London, which is a great strategy and future investment as their clients will gain easier access to the service. One of their stores has been placed in Liberty London on Regent Street, which makes them a high competitor towards my brand, due to the fact that we both share similar strategies about cooperating with department stores. However looking at their online rating, they have gained loads of unfortunate feedback throughout the last three months (Google, 2020). Majority of people complained about high prices and the way the business delivered the goods - as according to voters, some garments were sent to the wrong address and the quality wasn’t always on point. My Wardrobe HQ again is offering peers to peers options, for anyone to sell their garments, handbags, accessories online. Their renting options are from 4 to 14 days, but can be expanded after a consultation with a brand. (MyWardrobeHQ, 2020) 76
It could be speculated that Hurr has additional features inside their pocket - their garment rental added into the business. Potentially, whoever would decide to rent a handbag could rent a dress for the exact same money, however because they are peer to peer service only, there is no subscription option included. Yet again, this gives an opportunity for my business to be in the middle of the gap due to terms and conditions of subscription applied. Hurr believes that they have a high understanding of what their client wants (Vanity Fair, 2019) This is why they tend to deliver - by person, mostly in London and that is why they have collaborated with RePack brand who is responsible for their sustainable packaging. However because of the high demand in Europe, they are planning to expand their delivery worldwide. Similar to my brand, hurr collective is having a pop-up store opened in Belgravia, which is currently gaining plenty of interest from consumers and only 5 stars feedback.
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Catwalk-club also hires the bag without allowing customers to sign up to their subscription box, leaving customers feeling like they aren’t involved inside the community. However, with every transaction the service is charging each customer a refundable fee, which again might be difficult for those who are on the budget and cannot allow their bank account to be emptied so easily. Their vision on the other hand is very similar to my brand - to empower women, that is mostly why this rental service was included within the main competitors. Their most wanted bags are pricey e.g. 116 pounds for only three days (Christian Dior, Tote Burgundy bag) which might discourage potential clients from using the service. Brands mentioned within the analysis are more successful, mostly because of their medium/affordableprices (Vanity Fair, 2019).
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Once the market has been analysed and competitors were established, it was time to come up with a PEST chart. It meant to help the business figure out the potential risks within different areas. Due to the type of the service and its consumers - british and chinese, there were a few errors that were highlighted. Mostly because of the Corona Virus that appeared in January 2020 (Nhs, 2020), the brand might struggle due to panic that was caused by the media and politics. As well as the financial aspects which might be struggling due to future recession.
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Economic Political
5.2 PEST
- Regulations e.g. future relationship between the EU and the UK - Brexit - Tax differentials e.g. corporate income tax - Funding, grants and initiatives e.g. government might not want to support brands that export to different countries due to coronavirus issues and recession. - International pressure-groups - Home market pressure-groups - COVID-19 e.g. bad press and limited communication between China and UK
- Economy trends e.g. globalization, low interests (J P Morgan, 2020) - Overseas economies e.g. accommodative monetary policy, intermittent favorable news on US-China trade negotiations (IMF, 2020) - General taxation e.g an increase in National Insurance Contribution (NIC) thresholds is a welcome move for all employees and the self-employed. (Independent, 2020) - Market/trade cycles e.g. GDP decrease (Currency Transfer, 2019) - Exchange rates due to recession caused by pandemic (Exchangerates, 2020) - International trade issues - General recession in major economy
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- Maturity of technology e.g. constant website/online updates which might be time consuming, expensive and might cause a glitch between workers and new systems - workers might need constant training - Manufacturing maturity e.g. assuring ourselves that warehouse/production is going smoothly. Information and communications e.g. positive reaction from customers toward the brand - Licensing e.g clothing import/export license and UK export finance (UKEF) (GOV, 2020) - Loss of privacy e.g. consumers might not want to share their details such as name or card details due to confidentiality issues. (Forbes, 2019)
5.3 SWOT
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- Demographic change e.g. new, younger generations might lose interest - Consumer attitudes and opinions e.g. bad review might impact the brand image and cause loss of customers - Influencers reputation e.g. might be damaged due to their social media channels/platforms not being sourced properly - their credibility will decrease - Advertising and publicity - Fashion and role models e.g. less fashion gatherings caused by isolation - Loss of trust in media sources e.g. people reading less fashion related content due to current events related to pandemic
Once we knew what the type of issues we could potentially face in the future, it was significant to find out the strengths, weaknesses, opportunities and threats that brand could be facing in the future. The SWOT business model helped the brand find out the background of the industry and discover the potential development.
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Weaknesses - Subscription model - Small variety of handbags at the beginning - Big investment - Only one supplier
Strenghts - The possibility of brand expansion.g. restoring service - Sustainable model of business - Second hand luxury goods - Only authentic products - Fully insured to avoid scams and unintentional errors/damages - Additional bag swaps - Bag can stay with customer for unlimited time
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Threats - Rental services are becoming very popular which means the demand and business opportunities are growing, leaving the less established brands with a potential to fail within the industry - Communication with target consumer might be difficult due to language problems - Might struggle to create income even after twelve months
Opportunities - Additional restoring service with a pop up store - Collaboration work with well known, prestige shopping malls - popular amongst target consumer - Adding accessories or clothes into the shopping range - Giving special offers for those who kept the membership for a certain length of time
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The Porter’s five forces model is dedicated to analyse the competitors of the business. This was due to determining what Charisma Rental is doing differently than already existing brands.
5.4 Porter’s Five Forces competitors framework
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Competitive rivalry - Relatively small amount of competitors however it is growing due to a large demand - Trends are constantly changing however within the bag industry they tend to stay similar. Iconic pieces such as Birkin, Chanel Boy bag or Dior Saddle bag need to be purchased as those are the most popular ones within loads of demographics. (WhoWearWhat, 2020) - The product range might be very limited at the beginning due to financial and also stock issues - some bags are extremely difficult to get hold of and of course - brands need to be able to afford them first.
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New market entrants - Difficulties getting affluent chinese consumers on board. - Routes to market - relying absolutely on the research and opinions and of course allowing a third person who works for me to introduce my brand to chinese market might be difficult. Once the brand becomes more popular it will be crucial to have an actual office in China with more qualified people who will be helping with delivering high end luxury rental service.
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Product and Technology development - Alternatives prices/quality - there is no way this service will be offering a bad quality service and products. Every item and of course business needs to be insured in order to stay luxurious and not let any financial damage appear. Due to membership policies, we will be offering discounts for clients - new ones and those who have been with us for a while. - Distribution changes - It is crucial to offer next day/up to two days delivery service for us as the brand. - Fashion and Trends - of course our mission for the future is to be following those trends, however due to the limited amount of stock we might be struggling to deliver those within the first three years.
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Buyer’s power
- Buyer choice - of course the buyer is our master, we will be doing whatever is possible to make sure our clients are satisfied with our service. There will be a need to constantly challenge the market by doing loads of research, although as a fashion marketing and branding graduate it will be something that I will be doing on a daily basis. - Buyers size/number - Luckily due to the type of the service there will be no size issues. However we will make sure bags have been placed into the right categories eg. clutch or tote bags. - Change cost/frequency - The prices of subscription might grow due to recession - each client will be notified of these changes in the email. Also each customer will have to agree with our policy and the extra charges will be mentioned within that. - Product and service importance - clients will be receiving extra discounts as well as for rentals and restoring. The availability of the service will be for everyone - it will be a part of our marketing and advertising. - JIT Scheduling - it will be important for us to predict stock that is going to come and only demand inventory that will be needed - however to start off the business we will make sure we have classic, well known pieces for all the clients to rent. Each of our stock will be selectively chosen by the specialist - mostly me at the beginning, that is to make sure they are all authentic and to establish whether there will be any restoring changes needed in order to make these handbags look fresh and brand new.
Supplier’s power - Brand reputation - being great is the only option. There will be no way for any mistakes to happen - this is why the insurance part will be crucial to keep the business going. As mentioned already - clients decide what it wants and we will be here to listen and of course deliver. The relationship with our customers is most important for us. - Geographical coverage - introducing the brand to the UK market should be easier - since the business will be based in the UK. - Product/service level quality - Packaging will be definitely hand picked from a local brand who offers personalised packaging services. We are willing to listen to the client and to use only sustainable, fully recycled products.
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6.Consumers
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To find out what exact consumer we are reaching out to it will be useful to use Amazon’s example of consumer segmentation. Amazon is currently the biggest online retailer (Scout, 2019), because of that their knowledge is very powerful and can be used for other businesses to follow. Charisma’s mission is to attract as many consumers as possible, hence why consumer segmentation needs to be carefully processed.
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Demographic segmentation - People with access to the internet and those who are active social media users. The main consumers, known as The Generation Z (1995-2010), millennials (1980-1994) and Gen X (1960-1979), would definitely fit into the perfect renters. The study by Amazon showed that 45 percent of online buyers belong to the 35-49 age group, which agrees perfectly with the planned target consumer. Statistics from 2019 by the World Economic Forum are showing that the average Gen Z user is spending roughly 2.55 hours a day using social media - in Asia, but 1.50 in Europe. The second on the chart are millennials who spend 2.38 hours a day. Gen X might be using the internet only for special purposes e.g. shopping or whatsapp (WEF, 2019) as their score was only 1.49 hour a day. - Moving forward - brands mission will be to concentrate on the younger audience as their online presence is much higher and will be easier to reach out to them via different omni channels. - Mostly females - however we don’t judge - anyone is welcome. - Single, in relationship or married. Women in power - who need their bag to be a statement of this power. - Students, specialists and professionals.
Situational segmentation Low pricing - one of the major factors for purchasing online. We will be offering an affordable subscription which could potentially be cancelled anytime. Special discounts - for those who used our restoring service and those who stayed with us - kept their subscription - for longer than three months. Newest trends - straight out of Fashion shows - will be great for young people, influencers and professionals who attend Fashion Weeks 94
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Psychographic segmentation - Customers segmented by loyalty - keeping the subscription - Additional rewards for those who left their feedback on our website - Checking who and how often customers check the “New in� site - Middle to upper class women who are very aspirational and live a mainstream lifestyle.
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Geographic segmentation - International appeal - For urban areas - smartphones are crucial due to our website access and email notifications
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Here are some examples of what the potential customer would look like.
6.1 UK Consumers
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Becky - 24 years old - only just graduated from University where she studied Journalism. She recently started a new job as social media content creator and is very much into fashion. Becky cares about others opinions and wants to be known as a fashion icon, hence why she spends loads of money on luxury/premium brands. She is currently saving up for a house that she wants to buy with her boyfriend - Louis, 31, that is why she needs to save up more than she used to. Becky is fluent in social media - especially Instagram and snapchat. She follows fashion icons such as Kardashians, Leandra Cohen or Chiara Ferragni who she considers as main fashion inspirations.
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6.2 Chinese Consumers
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Bethany - 22 years old - only just graduated from University abroad, where she studied Marketing. Her parents are wealthy and adore their daughter who is constantly feeling like she needs to pay back for everything her parents did for her. Bethany doesn’t have big aspirations although she is very hardworking and has hidden talents that she isn’t talking about such as painting or dancing. Fashion is important to her - especially after spending three years in the UK, getting inspired by young people with their free spirit and their free mind. Bethany’s persona on social media is important to her - she posts occasionally but her feed is always well planned. Bethany wants to be surrounded by premium brands without asking parents for their money.
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6.3 Shared Values It doesn’t matter which country the consumers are from, they all have something in common. They are strong and powerful ladies who live for fashion and special moments. None of them has ever been in a really bad financial situation, although they are all living in the moment. They all grew around fashion and desire to look good in any situation, with or without searching for inspiration - online or in real life, they deserve a chance to feel special and rent their dream tote. Anywhere, anytime, all the time.
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7.Brand development
CHARISMA RENTAL
7.1 The overview Charisma is sustainable rental service with a luxury soul and ethical mind. With over 60 different styles, we cover the newest - straight out of runway styles, classic designs and the unique special styles. Delivery, bagging, payment - we have you covered. With a monthly subscription fee of 85 pounds we offer free delivery and insurance and of course two different handbags to rent - a month, and additional swaps at extra cost. Once your credit check has been approved, we will give you access to all the luxury we offer. Simply just log in and rent. For those who have been friends with us for more than three months we offer special deals and discounts - but don’t worry, we won’t be emailing you, however we will just apply the discounts to your next luxury rental adventure. We are only sourcing second-hand authentic luxury handbags. If the sustainable factor doesn’t appeal to you, then we are not sure what will, however we got that cover - to make sure all the handbags are maintained in perfect condition, we collaborate with the highly skilled restoration team. 105
Values 7.2 Mission We want our clients to look fashionable in timeless pieces. We want them to feel special and confident. We want them to walk down the street, feeling like a diamond they deserve to be.
We are no longer interested in creating waste but we are passionate about sharing what we already have. We are going back to the basics by repairing what is broken instead of throwing it away.
Vision We see the world as it is - polluted and full of waste. This is why we want to be a part of the changing process and bring a new way of dressing up. Renting that is. To avoid the waste, we want to go back to basics and help our happy clients to give a new life to their handbags by restoring them.
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Brand Idea luxury handbag rental allowing the consumer to own their dream tote.
7.3 Brand pyramid
Brand Persona outgoing, charismatic, easy going, unique, happy
Framework tools such as brand pyramid is helping to establish what revelations brand is bringing into the market. It manifest different feelings and helping to express the brand to the consumer by creating special emotion.
Emotional Benefits charismatic, powerful and strong feeling. It is supposed to make customers happy and that they are owning IT - the world.
Functional Benefits affordable goods that can be rented for a certain amount of time - great for special occasions or daily tasks. Features and Attributes Luxurious, timeless and classic designs, affordable membership, inclusive, restoration service included, effortless 108
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Brand personality charismatic, fashionable, sexy, brave, unique, classy, chic, outgoing, stylish and hip
7.4 Brand’s DNA
Products and Services sustainable, luxurious, premium, second-hand Internal beacon motivational, inspiring Consumer views amazing, fast forward, interesting
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7.5 Branding
Logo (Tamil MN 69 pt in Bold) 112
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Marketing MIX of 4P’s - product, promotion, price and place is a part of the marketing strategy. This mix will help to establish how to encourage the target clients to use the provided service and how to build the strongest brand possible. Product: Sustainable, well established luxury brands only, fashionable, hip and wearable. Each bag is different and each client will find something special for themselves. These bags will make them feel special and confident. Of course we value second hand, sustainable movement but mainly we care about the quality, which is always kept on the highest level. With our highest attention to the details, we want the packaging to also match the bag, this is why we collaborate with our special packaging brand who is using paper only. Please be aware that each packaging has been customised and will definitely be recycled. Do not worry about collecting your perfect tote, we will ship them to you using free next day delivery to make sure you will get your desired bag on time. If you somehow made a damage to the bag - don’t worry, the membership fee covers the small damages. We got you!
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7.6 Marketing Mix
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Promotion: We definitely value our customers, this is why we are happy to give you special discounts, especially if you have been with us for sometime. Do not worry about getting spam emails. Once you have been with us for more than three months, we will make sure the promo code has been added to your next rental, Enjoy! The brand will be featured in major fashion magazines such as Vogue, Elle, Vanity Fair, Paper or I-D. We want our fashionable ladies to learn more about our brand and allow them to rent instead of buying - it’s just cooler! The brand would definitely appreciate it if consumers would leave the review of the brand or each bag - we want to know your opinion and feedback!
Price: With only 85 pounds per month membership, we are the leading team on the market. Apart from that we offer two different handbags and additional swaps, where our main competitor is only offering one. Each swap will cost extra 30 GBP, however you will get to keep the bag for as long as you need. As a new business we value the consumers and we want to make a special connection with them to find out what their needs are. The price might change after a while, however this decision has not been established yet, so for now - we will be keeping the extra price for all customers. Apart from that we will be giving discounts for those who didn’t cancel their membership and for professionals e.g. stylists who would be interested in renting the handbags out for the television shows etc. Whoever signs up for the membership will have to go through a verification process throughout the bank - this will only take a minute, once this has been approved, our business will apply the refundable fee to the account. That fee will be treated as the insurance for our brand - we do trust everyone, but we like to keep our eyes open, just in case.
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Place: Our mission is to be visible on social media e.g. instagram - very much popular amongst gen Z and millennials. However it is our website that will be the business card of our brand. Customers will be advised to contact us directly through the email/contact us overlap. We will be notifying customers about the new bag drops and fashion trends, we will be happy to post about current trends and of course pictures posted by our customers. We will be having our own #charismarental for people to unite together and give more recognition to the brand. We will offer different types of bags in order to please and satisfy everyone’s needs. However we will only be buying second hand ones, that is because we believe in a circular economy. Each bag will be delivered directly to the office of ours and as a brand, we will make sure we take perfect pictures of it and then list the goodie on the website.
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8.1 Business models 8.Brand strategy
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Due to the high usage of internet and direct selling, the brand became the B2C type of business (Janse, 2019). Renting out goods to customers for their private, personal use. The brand will be using content marketing such as: social media posts, videos and even articles, in order to attract the new customers and keep the existing ones entertained. However the brand will also be partnershipping with handbags supplier: Vestiaire Collective which will reinforce the brand and add B2B model.
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8.2 Business objectives
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- To purchase second hand/returned goods that are in reasonably good condition. - To gain the best deal from delivery and packaging service. - To rent out the office space for the business. - To target the UK base of customers and gain their trust by offering loyalty schemes. - To collaborate with department stores and explore the ways of setting up a pop-up store. - To set up a pop-up store within Bicester Shopping Village to perform the most desired restoration services. - To allow the customers to buy their favourite bag at the discounted price. - To collaborate with few fashion influencers e.g. Freyawewer, Jemerced or Alyssainthecity for fashion week in London, Milano, Tokyo, Paris and of course Beijing. - To become the most popular rental service in the UK. - To partnership with affordable restoring service.
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8.3 Pre-strategy objectives
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Knowing the ways of how to reach the customers, it is now time to establish a three year brand strategy that defines what and how Charisma Rental is going to be performing to establish itself as a strong brand. This strategy has been implemented by the idea of marketing mix, as it covers all promo, product, place and price. However before the strategy was created, it was important to prepare the brand for what is going to be happening in the future and what to begin with. The pre-start strategy includes all the points listed which have to be checked before the start of the business.
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Getting a discounted price contract with the post office for next day deliveries only. Collaborating with a packaging company - each postage needs to follow our branding rules and be made out of a fully recyclable paper package. Getting a good deal from a private liability insurance company, that will allow the brand to keep the goods within the temporary but locked office. Finding out the best restoring professional and offering a free lance work with the brand.
Collaboration with a credit check provider who will be responsible for checking credits of my future customers before they sign up to the membership. Using the freelance, zero hour contract accountant who will be responsible for bookkeeping and taxes. Stocking handbags from the same source - Vestiaire Collective website as they only provide authentic, already checked by professional, handbags.
Getting legal advice and contract terms and conditions written by the lawyer.
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9.1 Year one: - Investing approximately 30,000 GBP into handbags in total, with this credit the brand will be able to stock 60 handbags which is nearly one-third of what one our main competitor is having after being on the market since their 2019 launch.
9. Marketing Strategy
- Launching an instagram account with insight of the brand to the clients - that is a useful tool to build the positive impression and interest amongst the customers. - Reaching out to the fashion/lifestyle magazines - digital and paper ones e.g. Elle, Paper Magazine, Vice or Vogue and using their services to advertise the brand to the little fashionistas. - Launching an actual Website. - Collaborating with influencers - promo codes (10% off the first month) directly through their ads - instagram stories/posts.
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9.2 Year two: - Organising giveaway to the clients who shared/commented and tagged a friend under the sustainability related post about the brand. - Collaborating with influencers who are well known in China and Europe. - Spotify playlist with free podcast with fashion related content. - Supplying approximately 60 new handbag styles.
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9.3 Year three: - Working on collaboration with luxury department stores. - Building up a sustainable, restoration pop-up point opened for the customers. - Creating videos of how the restoration process is going and posting it on Instagram. - Continuing on using the media services to advertise the brand e.g. through digital lifestyle magazines. - Sourcing more stock into the brand - preferably from the same source (Vestiaire Collective) as according to the reviews, their quality is always great. 130
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9.4 Strategy insight 132
The strategy began with smallest spendings as the brand will be probably struggling to make any money within the first year, however it will be a bigl time for the big investments. Building up the excitement through social media will allow the brand to save the money and keep it steady. The biggest spendings will definitely be the advertising which of course have to happen, otherwise the brand won’t receive any recognition. Launching a website will be a one time cost (not including updates), although according to research, most customers are happier to use services that offer discounts (Mintel, 2019), this is why the idea of a special 3-months-in discount appeared. After the first year, the brand should be known to more people and suppliers so hopefully, it will be able to provide more designs for the customers who are searching for new trends constantly (Elle, 2019). As the brand who is providing only second-hand luxury handbags and promotes the use-itagain movement, it will be important for the brand to remind the customers about it by spreading important messages and facts about sustainability and the fashion industry. By measuring the KPI’s the management of the brand will be aware who is the main client of the brand and will be able to strategically analyse and personalise the content that brand needs to promote. Moving onto content, the influencers will be asked to pose and take pictures wearing our rented handbags during fashion week. It will be their duty to tag us/create a post about the brand and introduce it to their followers. 133
Last but not least, the third year. It will be the time where the brand will be leaving the office and promoting itself out there - throughout events/pop-up stores. It is important to create a bond with the customers and really expose them to our mission and values. We will be targeting affluent chinese consumers through the luxury department stores e.g. Bicester around Britain. As we will be gradually expanding the brand, we should be able to import more handbags into our inventory and this will also be our goal. For some it might be questionable why the brand is taking so long to introduce new stock into the inventory, however we believe the brand should take a relaxed approach when it comes to having plenty of stock. That’s being said, we as the brand will also be very busy giving new life to already existing handbags - restorations. Since that is one of our main USP’s, the brand needs to implement it carefully and remain the sustainable - environmental friendly aura. 134
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0. Communication Strategy
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10.1 AIDA The communication strategy of this report is explaining how and what platforms the brand will be using to communicate itself to the consumers. Two models have been applied to help the brand promote itself by communicating it to the masses. AIDA explains the consumers’ approach and how they decide on whether they buy from the brand or not.
A)wareness - Consumers could be attracted by the brand who is offering special deals. For them to find out about the brand it would be crucial to stay active on social media platforms and to be featured in fashion/lifestyle magazines. Those communication services will be promoting the brand as those are the most popular amongst the target consumer. (I)nterest - To make the brand interesting for the client, we will need to focus on sustainability movement and second-hand content. (D)esire - Getting attention and interest about the brand is crucial but now it is great time to convince the customers that they are helping the environment by using both rental and restoration service. Getting a discounted price or loyalty scheme might also be helpful. (A)ction - Finally, the customer is ours. However in order to keep the customer happy, it is crucial to still provide the best possible outcome - easy delivery, great customer service and overall a happy experience. 137
Once the customer is satisfied. It is time to check what charisma rental is doing differently than other rental services. This marketing tool helps to establish what differentiates the brand from its competitors and what methods should be applied in order to attract those who aren’t the consumers yet.
(D)ifferentiate - Looking at the competitors, charisma rental has the potential to be successful as it has a unique USP - restoring service. We are giving away special discounts and awarding those who are loyal after only three months. Our bags are second-hand and we promote giving a new life to old accessories instead of buying new. Those are the features that differentiates the brand, however those might need upgrading in the future, as the competition might be increasing.
10.2 DRIP
(R)emind - We stand for sustainability and less waste movement. Looking at the research conducted throughout Stage 1. Sustainability is one of the most important factors when it comes to shopping and the topic is growing amongst consumers. Brand’s consumers are hip and fashion aware, hopefully our values will transfer an important message to them and they will appreciate the brand’s mission. (I)nform - Membership only scheme. Next-day delivery. Sustainable packaging. Discounts. Those are the benefits and features of the brand. The discounts are here to attract and keep the consumers as those cover the financial aspects that some consumers might be worried about. (P)ersuade - It is for those who want to support the green world, follow the trends and feel fabulous. That is the message that brand is willing to tell consumers and make them feel that way.
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Internal - business - communications: - To find ourselves on the podium within the luxury handbag rental services in the UK and be portrayed as the most affordable, effortless and sustainable service.
10.3 Communication objectives
- To engage and communicate with employees by signing up into team communication tools such as Chanty. - To engage with employees by setting up clear goals and communicating on a daily basis. - To measure the success of the strategy and implement the improvements where needed. - To grow the consumer base by 20 percent within the first 6 months and keep at least 1000 consumers by the end of the first year.
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External - brand - communications: - To develop social media content suitable for different age groups. - To produce a set of videos explaining how the restoration service works. - To create a social media content explaining the origin of our bags. - To apply pictures of celebrities wearing each bag as a part of advertising. - To collaborate with a marketing agency that will prepare and design our pop up store. To publish an article through digital/paper media/magazine.
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10.4 Further strategy
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Knowing the brand objectives, it is now valuable to conclude them with a strategy. Which is meant to cover the issues that the brand might be facing whilst becoming a successful business. Here is a list of the challenges for the business, all based on the research, that was conducted throughout the year.
1. Customers tend to buy second hand goods in order to make a difference for the environment but mostly because they want to feel better about themselves. (Primary research - Stage 1) - This statement informs that customers need to be assured that rental service is here to not only help them but also help the environment get better. The ways to show them how it will be done have to be graphical e.g. videos or expert talk. Once the brand gets more recognition and becomes financially stable (most likely second or third year), it would be beneficial for the brand to come up with a monthly podcast. This podcast would be hosting special guests e.g. professionals, environment guru’s e.g. Conscious Chatter - US based Kestrel Jenkins. Due to high costs of having podcasts available for all consumers, the brand would have to give something extra for those who joined the membership e.g. exclusive materials or direct Q&A with the guests. Those extra materials could encourage more people to hop on our board. - In order to promote the brand and environmental issues that fashion is causing, the brand would like to encourage customers to use #getCharisma tag on social media. This hashtag has a straightforward meaning to everyone, even those who never heard of the service and also is easy to remember. 145
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2. Whenever they buy second hand goods, they are focused on finding luxury products. (Primary Research, Stage 1)
4. Different types of age groups are focused on wearing second hand clothes, from students to elderly people. (Primary research, stage 1)
- Delivering only luxury, second hand bags that look brand new is a winner for clients and us. However the brand has to constantly be focused on giving the clients the luxury feeling while delivering the goods to their houses, hence the special packaging e.g. personalised and have that “awww� sort of look.
- Covering different consumer gaps might not be that difficult due to the fact that our handbags will be timeless and can be worn by anyone. Whoever is interested will be able to find something suitable on the website. As already mentioned in our brand overview - We are not excluding anyone.
3. 95% potential customers declared that they would be interested in using restoration service rather than throwing clothes/accessories away. (Primary research, stage 2)
5. Vogue magazine is still considered as the fashion bible for the 30-50 generation. (Secondary research, stage 2)
- The restoration service available for the customers needs to be constantly available. It of course will be financially draining at the beginning but it will be an investment for the future. Our mission is to deliver goods in perfect condition without buying brand new ones which causes damage to the environment.
- Having support from a magazine like Vogue would be a dream come true. The magazine is known all around the globe and for most people - chinese included. As a brand with a great idea - for the public and environment, we will be chasing the magazine for a little feature that explains who Charisma Rental is.
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6. Packaging and personalisation matters (Secondary research, stage 2) - Good packaging proves that the company understood their target audience and did their research on how to deliver those goods to them. We want to communicate the brand as a sustainable one, because of that it is crucial for us to use recycled paper packaging. We will require personalised hard cardboard boxes with a lid and bow to keep the luxurious edge. To make our customers feel special and included we will always throw a small message inside each box, it will be very casual e.g. “it is your time to shine (name of the person who rented the handbag)!�
7. Logo that tells a story makes the brand successful (Secondary research, stage 2) - Looking at brands like Apple, McDonalds, Coca-Cola, most of the audience can identify their logos within the first few seconds (ReadyArtWork, 2013). Charisma rental will be aiming for a timeless, elegant logo type like Vogue or Cartier. Strong black on white background fonts that will represent power and strength that all women and men have.
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10.5 Online/Offline communication Online:
Offline:
- Sustainability content e.g. podcast/blog available on the website
- Word of mouth type of communication/ promotion - professionals using our service within their secret circle e.g. media
- Influencers talking sustainability and talking about our rental service - pictures/videos on their profiles - Magazines - brand featured within the magazine. - mostly instagram. The format of this communication will be very simmiliar to the digital version - just without any - Magazines - a short introduction of the brand with video clips. recommendation - digital source of media
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10.6 KPI’s 150
KPI: 1. Increasing of sales conversion rate by 8% 2. Increase in sales from influencers and their promo codes 3. Product Testing 4. Subscription length 5. 10% increase in e-commerce and subscribers 6. Generate 1% return within first year 7. Providing restoring service at least once a week 8. Tracking the top products of the website Measurement: 1. Sales Forecast 2. Affiliate marketing tool 3. Checking the amount of stars the brand received by the testers 4. Analysing the MRR growth 5. Influencers, magazines, podcast promotion 6. Profit and Loss 7. Restoration campaign/marketing 8. Measuring the popularity by looking at charts of how many people is signing up for each bag
Means for success: 1. Making sure the business is viable during annual profit and loss accounts to ensure profitability throughout the year 2. Signing contracts before starting the collaboration and monitoring their involvement by measuring the sales after picture/story/article have been posted 3. To find out which bags received the most interest and to know which style is best future investment 4. Finding out if people are interested in our service or subscribed for it because of the promo code provided by the brand. 5. At least 9000 GBP profit increases each year within a three year strategy. 6. Making sure the company makes profit and is able to provide more bags every year 7. Ensuring the restoring service is bringing profit and gaining interest from consumers 8. Providing more similar/same handbags so its availability increases
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Brand performance Social media: measuring the amount of likes on each post and finding out what content is the most popular one. Happy days inside the brand: Employee satisfaction needs to be measured on a daily basis by communicating with them face to face/online. Popularity Contest: Measure which bag was the most popular one by checking how many times it has been rented. Costs of Goods sold: Analyse the top wholesalers and get a discounted price in exchange for a steady partnership based on trust and constant cooperation. Sales by Region: Find out where the majority of sales/renting took place regional and international. Profit: Generate at least 1% return within the first year. Cost: Keep a track of all spendings and money coming in throughout every month Brand Engagement Website visits: measuring the amount of website’s entrance clicks and checking the ratio between entrances and memberships. Customers: checking out the amount of enquiries we have received throughout the week. This will allow the brand to create FAQ sections on the website. Search engine: finding out how many times a brand’s name was typed into google. 152
Brand Awareness Communicating the brand: Ability to successfully communicate the brand through different online platforms e.g finding out whether sales increased after video was published. Creating a voice of the brand: constantly reminding clients about the brand’s values and checking whether related content was popular e.g views/likes on instagram vs sales. Supporting consumers: ability to provide 24/7 customer service and offering reasonable help to those whose expectations weren’t completely satisfied. Each consumer will be asked to rate the customer service at the end of the call/once the problem was resolved. Brand Loyalty Reduced marketing costs: unlike NastyGal, our brand doesn’t want to spend too much money on marketing - especially at once. Each “purchase” will be happening at once and the brand will be measuring the purchase increase and whether it was worth it - financially. Customer referrals: offering discounts to those who recommended the brand to their friends/ family by giving them special discount code. Membership deals: customers will receive special discounts after three months of keeping their subscription/membership. 153
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10.7 Logistics
“The Sourcing: The brand’s mission is to provide at least 60 handbags annually, this will need to be spread across the seasons (autumn/ and spring/summer). According to statistics done by Quartz average winter (2015), the average woman owns 11 handbags. We will focus on desired pieces (Hermes, Chanel and Gucci) to keep up woman thewithmost the needs and to attract more customers. However the brand will also be souring the most fashionable pieces - all through Vesowns 11 tiaire Collective Community. The brand was happy to collaborate with us, therefore they will be sending us a batch of their handbags through the post. handHead office: Our brand focuses on young people and affluent chibags.� nese. The research proved that most chinese people stay in london/ manchester. To avoid long waiting time in the post office queues need to register our office over there. London is the cen(Quartz, wetre might of fashion and will allow us to work more effectively in terms of logistics, marketing and communication. 2015)
Employers: The brand will become a one man army throughout the first year, however we will need to fully employ more people once it gets busier. We will be working with freelancers e.g. accountant, website designer, photographer. London is very popular amongst students who are seeking for job experience, this is why we could also provide job roles for those seeking placements. Transport: All the parcels will be handled through post, our office will be the pick up point for the local delivery man who will be coming over daily. Unfortunately due to money issues, the local delivery man will have to be replaced by myself or my partner. Since our mission is to get 100 subscribers a month, there is a chance of having 200 parcels to be sent every month, which approximately makes 6 parcels a day. Quality control: Each bag will have to go through quality control - the brand is completely relying on its supplier who hopefully will not be failing. However mistakes might happen and some bags will have to be sent back. 155
Apr 2020
Jun 2020
Google Ad visible for Facebook users
Visual sustainability content on Instagram
Feb 2020 Sustainability content + influencers
Aug 2020
Oct 2020
Dec 2020
Instagram/ Facebook ad release
Sustainability month + visual content with restoring expert via Instagram
Vouchers available + Influencers content
10.8 Communication timeline
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Jan 2020
Mar 2020
May 2020
Jul 2020
Sep 2020
Website Instagram Facebook launch
Empowering content on Instagram + Podcast talk
Offering special discount for those who leaves the review of their charisma experience
Wedding/Holiday new SS20 collection drop
FW Content + Influencers promotion
Nov 2020 Hash tag promo/ giveaway - posting pictures of happy customers 157
January: Social media including instagram, facebook and website launch. We will be offering 10% off the first month of subscription to attract the new customers. February: Growing a fan/followers base by following similar style, fashion, sustainable movement accounts. Posting a few posts based on what our vision is e.g. avoiding pollution and creating new waste but reusing goods - even the luxury ones. The mission is to get at least 5 000 active followers within the first three months. We will need to create content that visualises our aesthetics e.g. Carrie Brandshaw, fashion week shots, restoration videos and sustainability. This should allow the brand to create an image/movement that hopefully consumers will like and will want to be a part of. On top of that the brand will need to send a one month subscription pack to chosen influencers so they can promote the brand through their insta stories. Charisma rental will be suggesting each influencer to use #charismarental hashtag and of course to tag the brand. March: Women empowerment month. 8th of the March is also an International Women’s day which means we will be embracing this information on our social media accounts - facebook and instagram. We will communicate our brand through collaborating with The Wingwoman podcast who talks fashion, beauty and genuinely gossips. (Glamour Magazine, 2020). 158
April: Google ad for the older (30+) type of audience. According to Search Engine Land, 63 percent of users would click on a visual type of ad. In terms of creating such an add, the brand will use their old video content and add eye-catching words such as: LUXURY, HANDBAGS, AFFORDABLE. May: Since 97 percent of consumers are searching for their shopping online (Blue Corona, 2020), and 90 percent of them are trusting the reviews (Google, 2020). We will need to communicate our brand through the good reviews - which might mean that we will need to encourage customers to always leave reviews after each rental. The brand will be offering discounts for those who leave the review and recommend the brand to their friends e.g. once the friend sign up, they will both receive 10% off. June: Another quiet time for communicating our brand - apart from posting instagram stories, visual content we will be working on closing a deal with digital and paper fashion magazines. July: Introducing more handbags into our collection - the brand will not list all of the bags at the launch as it is crucial to build the excitement about new collections coming up. Due to its time of the year, we will be launching a Spring/Summer collection, suitable for daily or special occasions. August: Another add - visual type through instagram as this will be our main platform to gain the younger consumers. This time we will be showcasing our previous work on influencers and quote the magazines who wrote about our brand.
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September: Fashion Week London - we will need content from this exciting time. Working together with a fashion influencer who will agree on wearing our handbags and allow us to take pictures of them. We will be posting those pictures on instagram with our #charismarental, #getcharisma hashtags amongst fashion week hashtags. October: Sustainability month. We will communicate eco-facts through social media and blog posts - available on the website. November: Posting pictures of customers who used our #charismarental hashtag on social media. Our brand will be encouraging the subscribers to use the hashtags in order to be featured on our instagram platform and receive the 10% discount. We want to reward them for renting instead of buying and appreciate their help for the environment. December: Christmas time - obviously we will need to get extra customers through this money spending time. We will not be encouraging people to buy handbags but we will encourage them to give a 6 month subscription to their beloved one by offering vouchers available through the website. 160
The first year of communication was planned ahead to make sure everything links together and creates an interesting story around the brand. As already mentioned, most brands tend to go into administration within the first year of existence, it was crucial to keep the customers entertained without spending too much money. Our main focus are luxury handbags, restoration and environment, this is why we have to assure our clients that we are working on helping them to feel great and do something useful for the planet by the same time. We want to avoid being read as greenwashed business, this is why we have to make rental service clear to our customers - explain how it works and why it is time to start renting instead of buying. Hence why we will also be promoting restoring videos, since those will be explaining why it is better to restore instead of getting a brand new one. We want to be promoted by green-healthy-lifestyle fashionistas e.g. @Ecolifechoices - chinese, slow fashion influencer (Hibs100, 2020) Jihea is known to their followers as an activist who takes care of the planet no matter what. Communicating our brand through influencers is important as their followers genuinely aspire to be like their “idols� and live same lifestyle. Those influencers are aware of lifestyle trends and promote genuine content that Charisma rental wants to be identified with. They managed to build trust between themselves and followers who might be encouraged to use the promotional codes offered especially through their social media platform as they tend to go for the same products as their favourite bloggers/instagrammers. Another way of using the influencers to promote the brand is just by using their outfit pictures when they wear the bag they have rented from us. The brand could arrange a private conversation with them about encouraging them to use our restoring service and maybe write a short post on instagram about their experience with our brand. Since social media are our main promotional/communication platform, we will be organising fun activities such as promotions for our subscribers by inviting them to use our hashtag with their outfits. We will be posting their outfits on our instagram stories and giveaway 10% off for the next month subscription.
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11.1 Initial funding
11.Brand management
Once the communication strategy is clear, it is now time to speak business - money. The brand management means spending and receiving money, however it is necessarily to invest some in order to gain some. List of the investments Charisma will be getting at the beginning:
40 thousand pound as the start up cost from the lovely parents. 25 thousand pounds as business start up loan with Start Up Loans 5 thousand pounds - own savings 5 thousand pounds - boyfriend’s savings = 75,000 GBP
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11.2 Start-up costs 166
Knowing that loads of the initial funding was either gifted or borrowed, there is a massive pressure on my shoulder - as the business owner. Thankfully family or boyfriend never mentioned any time limit for me to return the money, this is why it will be important to focus on paying back the 6% annual interest rate of the start up loan. However, there are some key start up costs that will need to be maintained e.g. bags, packaging and postage, marketing, website launch, insurance, bookkeeping etc. So far, it is clear that handbags will be taking the majority of those costs (approximately 30,000 GBP). Looking at the chart below, some of the amounts were only assumed - as it was difficult/impossible to get information or a quote back from the company/person.
Luxury handbags (60 items) = 29,460.00 postage for 100 subscribers x 12 months = 13,128.00 Postage for sold bags (5 bags a month x 12) = 328..20 Packaging for sold bags (100 a month x 12) = 5,520.00 Packaging for sold bags (5 a month x 12) = 138.00 Annual insurance (59.99 x 12) = 719.88 Mobile bill (30 gbp x 12) = 360.00 Utilities (50 gbp x 12) = 600.00 Accommodation/Storage = 9000.00 Photographer (200 a day x 3) = 600.00 Website designer (200 GBP a day x 3) = 600.00 Digital Google feature = 500.00 Digital advertising (500 GBP assumed amount) = 500.00 Social media content director (416.70 GBP x 12) = 5000.00 Annual printing costs (30 GBP x 12) = 360.00 Paper advertising (assumed amount 500 GBP x 2) = 1000.00 Influencers (1250 GBP x 4) = 5000.00 Accountancy and legal fees (annual) = 1750.00 Total: 74,564.50 GBP
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11.3 Marketing budget 168
Discounted royal mail postage = 5.47 GBP includes next day delivery (guaranteed by 1pm), signature required, full tracking up to 2kg and 2500 insurance included. (Royal mail business account). It will cost 10.94 per subscription per month. Packaging = 4.60 GBP per subscription. 140,00 GBP for 500 envelopes (0.28 per envelope) - each parcel will need a spare envelope stuffed inside the parcel (0.56 for one mail) to make the customer happy and to make sure that customer will send their handbags back. 172,00 GBP for 100 thick based paper material boxes (1.72 per box) with lid and customised personalised style (suitable for Charisma’s branding). 3,50 GBP for 50 metres of ribbon (0.02 per mail) that will also be a part of the packaging - will give a more luxurious and sophisticated type of look/ branding. Looking at these calculations each parcel will cost 2.30 GBP, that makes 4.60 per subscription (monthly).
Insurance = 59,99 GBP AXA private liability insurance for Charisma with 100,000 GBP cover. It is perfect for one up to two people working from home. Due to the fact that my house has a private security alarm, the price was a little bit lower - according to Josh who was the sales person. Mobile bill = 30 GBP per month including 50 GB internet, unlimited texts and minutes. The amount of gigabytes available isn’t really that important as the business will be run from home at the beginning. Utilities e.g. water, power, internet = approximately 50,00 GBP per month Accommodation = 750 GBP per month for a little working space/handbags storage Photographer (freelancer) = 200,00 GBP a day. Will be happy to use a friend of mine or someone from the agency - will need a professional to take quality pictures of the handbags and additional content for the website/social media. Website designer (freelancer) = 100,00 GBP again, graphic designer/website specialist will be needed to maintain the website. It will be essential to become business friends with this person and if collaborate for longer - if possible. As well as a photographer, the plan is to use this person max 3 times a year, however this might change. Digital advertising = 500,00 GBP assumed amount for the Google and Instagram adverts. We will be using the cost per click method to measure how popular our advert was. To assure ourselves we are hitting the right target we will be showcasing the ads on social media as 91% there has completed their viewing rate. (CMO, 2020) 169
10% off promo codes = 850 GBP 10% for all 100 subscribers from the release day (Jan 2020). We will also have influencers promoting the brand at least twice a year which should sell extra 200 subscriptions (1700 GBP). Social media content creator = 5,000 GBP annual income for our freelancer. This person will not be hired by us but will be working with us as a freelancer - preferably from home. Each decision about a new post will have to be discussed with this person and will have to match our instagram/facebook feed. Printing costs = 300,00 GBP annually - includes ink and paper. The company will need to print invoices and additional papers e.g. copies of emails or accounting information. Digital marketing = 500,00 GBP per feature - this amount has been assumed as it was impossible to get back any information from: vogue, elle, paper or i-d magazine. Press marketing = 500,00 GBP per article - this amount has been assumed as it was impossible to get back any information from: vogue, elle, paper or i-d magazine. Influencer = 5000,00 GBP through agency maybe? We will definitely not pay more for influencers especially at the beginning of our journey. We will only be interested in someone who is deeply connected with fashion and sustainability.
11.4 Sales forecast
Our mission is to sell a minimum of 1200 subscriptions throughout the first year. Unfortunately the information about the customers numbers from different rental brands were strictly confidential. Although Izabela Cyl, the CEO of House of Carats (an e-commerce brand selling luxury accessories) has confirmed that she has managed to sell 196 pieces within her first month on the market. Of course we could argue that her brand is totally different from renting service, however Charisma Rental and House of Carats have very similar communication strategies very much based on social media.
Accountancy and Legal fees = 250,00 GBP annual (including bookeeping) and 1500 GBP annual for the loan repayments. The brand will be repaying a 6% interest off its 25,000 GBP loan taken to start the business. 170
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11.5 Monthly spendings
The average woman owns 11 handbags. (Quartz, 2015) 17 million of millenials living in the United Kingdom. (UkDomain, 2020) 172
To keep Charisma Rental on its toes, the brand will be aiming for 100 subscriptions per month. Knowing that the brand will be renting two different bags to each customer per month, we have to establish the packaging and posting costs. Postage per monthly subscription (both items) = 10.94 GBP Packaging per monthly subscription (both items) = 4.60 GBP Postage + Packaging = 15.54 per subscription a month x 100 subscriptions = 1554 GBP x 12 months = 18,648 GBP annually. Postage and packaging per 1 sold bag = 5.47 + 2.30 GBP = 7.77 GBP x 5 = 38.85 GBP per month for sold bags assuming we sell 5 a month x 12 months = 466.20 GBP annually. Total postage + packaging for 1st year = 19,114.20 GBP annually We have to be aware that we are offering promotion deals of 10% discount in the first month of business launch. This change had to be mentioned within our profit and loss formula as it should take at least 850 GBP from the January 2021 (assuming we will have 100 subscribers). Since the brand will be getting celebrity/influencer endorsements who will offer discounts, we have included additional 850 GBP as promotion costs in July 2021. Those numbers might increase, depending on the amount of subscribers. 173
It is very helpful to use a 8% conversion rate which is considered good in order to work out the estimates of the sales - within the millennials age group. According to TheUkDomain, currently there are nearly 17 million of millenials living in the United Kingdom. Knowing that they will be the main target consumer, it is best to divide this number by 8% and this will show up the amount of potential consumers. This conversion rate shows that 2,125,000 (17,000,000.00/8%) could potentially be considered as the consumers of Charisma Rental. Now following the conversion, to establish the revenue it is crucial to know the revenue per sale.
11.6 Conversion rate
Knowing the revenue per subscription is 85-15.54=69,46 GBP, it is needed to multiply this amount per the conversion rate = 2,125,000/69,46 = 30,593.15 and this - according to our finance specialist - Eve Davies, should be the revenue with 8% conversion rate.
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11.7 Profit and loss
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“A profit and loss account shows a company’s revenue and expenses over a particular period of time, typically either one month or consolidated months over a year. These figures show whether your business has made a profit or a loss over that time period.” (Kashflow, 2020) Looking at the chart, the brand will have to spend quite a bit of money. Apart from the overheads that will come up to 5.829.50 GBP the brand will have to spend 14.730.00 GBP for the handbags - all within the first month of launching. Since our goal is to sell at least 100 subscriptions a month throughout the first year, we should be able to gain 102,000.00 from our subscription revenue stream and additional 30,000.00 from the selling one. Since we are relying on getting customers through promo/ influencers, we have invested another 1700 GBP into the expenses, which deducted our gross 2021 profit into 130,300.00 GBP and of course after taking away all the other spendings and how much money we have potentially made the net total for 2021 turned out to be 93,935.70 GBP. Knowing that the brand invested 74,564.50 into launching the brand, we will still be making 19,371.20 GBP of profit within the first year. This isn’t ideal, especially knowing that profit figures are only predictions, however having two streams of revenue makes the brand financially stronger and hopefully more successful.
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This financial model is allowing the brand to determine how low or high it can possibly go in terms of spendings. Knowing our variables and the actual net profit, it is possible to assume what the figures would be if the business goes up or down by 20%.
11.8 Sensitivity analysis
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Looking at the chart, it was crucial to include all the spendings (variables and overheads), luckily for the brand it has managed to keep the positive net figure even when the figures dropped by 20 percent. That is pivotal as it proves that a brand has a chance to stay in business even if some unpredicted issues appear on the market.
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11.9 Cash flow 184
The brand was very lucky to have a high amount of cash injection - which was explained earlier in the initial funding section. Figures within that chart were growing steadily, ending up the year with a positive figure of 114,196.00 GBP of total revenue.
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11.10 Risk assessment The risks selected as high impact are the ones that the brand needs to look out the most, as those are the ones that will affect the brand the most. Financially speaking. Charisma Rental is afraid of the new competitors that might want to launch, not charging enough money for the subscriptions and of course not making enough revenue on the USP - restoring service.
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Getting recognition amongst chinese, affluent consumers living in the UK. Working together with different shopping centres and promoting our brand through pop-up stores that offer restoring and showcase available handbags.
12 The future
Bringing restoration service into the business and offering it to subscribers and customers outside the website - through pop up store. Getting featured in fashion magazines and digital fashion platforms. Co-working with at least 50 influencers on instagram. Introducing more and more luxury handbags - working together with celebrities.
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12.1 Conclusion
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To conclude this journey, it would be beneficial to highlight the main points that differentiates this business strategy from others existing on the market. First of all, it would be the most affordable within the targeted markets. Fully sustainable, following the vintage/second hand macro trend with heavy values that enquire the new, futuristic way of shopping. Our business doesn’t support fashion, as this industry is bringing damage into the environment but it evolves around new technology and introduces the fresh mindset within fashion itself. Charisma Rental built a strong three years strategy business plan that includes plenty of upgrades within the brand. Those were introduced to satisfy the clients needs and keep the brand interesting at all times. We are clear about where we source our bags from, we have no time to mislead our clients and desire to always be honest and authentic.
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12.2 Ethical clause 192
I confirm that this work gained ethical approval and I have faithfully observed the approval in the conduct of this prodject. Aleksandra Tysiac N0764245 Wordcount: 8628
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13 References
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13.2 List of images 220
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13.3 Appendix Focus Group
Quiz results: 1A, 2B, 3C, 4C, 5A, 6C
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Focus group: It was crucial to find out what type of feelings the potential customers would get from my brand. Some of the contestants actually knew each other - the couple, which means their opinions could have been biased, although each answer brought some insight into the brand opening. Four out of five were interested in renting clothes and actually loved the idea of the business, five of them did not approve the “Rentaii” name, so that will need to be questioned and most likely changed. Three out of five contestants were happy to sign up for a monthly subscription - due to their financial settlement. Two who weren’t keen on the idea mentioned that signing into a subscription just isn’t perfect for them as they are students and are very much aware of their spendings. Their answers bought loads of data into the report - mostly the positive one. Most of them agreed that products to become sustainable should become durable and recyclable. Most of them weren’t afraid of second hand clothes - as long as their condition was okay. One person did mention that he doesn’t look out for luxury products inside the vintage stores as he doesn’t believe in their authenticity - however three people in particular (ladies) have admitted that well known, luxury brands are the most desirable ones. Most people were excited about the renting idea, however they were concerned that there is a chance of damaging the items and having to pay extra for that.
They also didn’t like the fact that renting is only temporary and they get used to products very easily, however ⅘ out of them were willing to try the service. Their biggest struggle was the fact that renting is one of the new services and they simply couldn’t really understand the rules, which of course - after explaining how it works, became more understandable and attractive. Moving onto the other topic - the older group of people within the focus group (Alicja and Arek) has admitted to already using restoration services e.g. tailoring, shoemaker in the past. They have also said that they don’t like throwing clothes or accessories away without trying to restore it. Instagram poll: Out of seventy-nine respondents, twenty-six confirmed they have already used rental services, and twenty-three haven’t but is interested in trying. That has left thirty respondents still a majority, who haven’t used rentals at all. Looking at current trends in fashion, rentals are sustainable but relatively new to customers. According to retail analyst and founder of NBK Retail, the industry is all “about consumers prioritising access over ownership” (Russon, 2019). Consumers are much more aware these days, especially amongst different demographics, which leads them to believe that owning clothes isn’t as necessary as it used to be - as they barely have any connection with an item. 243
People are used to renting cars or accommodation but clothes are still considered as personal items, which hopefully can be changed soon. Looking at Euromonitor International chart (Skift, 2018), short-term rentals within the booking industry have increased nearly sixty percent within the last ten years, and of course the majority of transactions have been made online. Subscription or peer to peer renting prices within the fashion industry are relatively cheaper, especially compared to different industries, which maybe is the reason why young people are willing to use those services and luckily for this business opportunity - the popularity of the trend will continue to grow. Coming back to the research, there is a gap that needs to be looked into - an easy review of rental services from primary sources of information. The lack of knowledge about customers’ experience with rental services could be considered as impactful insight into the report, perhaps that is another field that needs to be covered in order to create a successful business plan. Contestants who were asked “What do you think of luxury brands in general?” mostly answered that they are “still dreaming about them”. Potentially it could mean that there is a demand for these brands to be a part of millennials life. However, 23 out of 84 said that they don’t really care about them. 244
Those who were sceptical could benefit from being approached in different ways. That is because some of them might be interested in sustainability, which will be part of the business concept. Surprisingly 23 contestants admitted that they love their designer bags, which again means that there is a demand for luxury handbags amongst young people and that the gap for second-hand luxury needs to be filled. So, moving forward, another positive response received through the poll was by looking at the amount of people who are willing to purchase a second-hand, designer bag. 40 out of 71 approved the idea, and 20 confirmed they already did and have their own second-hand, designer bag in their collection. Only 11 responded “no” to “Would you pay more for a second hand designer bag”. This small percentage shouldn’t be a massive let down for the business, due to the knowledge that most of respondents who answered “no” could simply be removed from the target audience circle. Their response could also lead to the conclusion that even if they aren’t willing to pay extra money for a bag, then maybe they could pay less just to own the bag for a short period of time - by renting it. To a “Do You follow Fashion trends’ question, 35 respondents admitted that they do, 43 confirmed that they do but only sometimes, however they tend to pick classic items which are going to be wearable with different outfits. 245
The last question confirmed that the business unique selling point is definitely - on point. Contestants who were asked whether they would be happy to use repairing/restoration services on their luxury items answered YES - sixty times, and only if affordable - twelve times. Only 3 contestants chose NO as their answer. Again this might be caused by the rise of recycling popularity within the last few years and the fact that recycling has become a habit that most young people tend to follow. (PlasticEurope, 2017) 246
Knowing that, restoring might need to become a large part of the business, perhaps bigger than planned. However, to avoid financial issues, this idea might need to be introduced later on - within the next three years strategy.
Appendix Instagram
18 said they don’t follow trends and they “get whatever they like”. Those who aren’t searching for new trends would be a great target consumers as they are more likely to go for items which are simple, as well as those who admire classics. Opening a new business will be pricey, this is why getting the newest, trendiest bags might be difficult and maybe even impossible. That means the trend followers might not be satisfied with the variety available on the website, and then less income within the business. In order to please the majority of masses, it will be crucial to invest into classics and bags that are desired by them. One of the contestants who responded to the questionnaire was Robert Cavalli the youngest son of Roberto - italian fashion designer and inventor (Wikipedia, 2019). His response was also within the majority of votes - he prefers classics that go with different outfits. Knowing that, it is important to stay positive and believe that his response meant that finding out more about this brand is significant to him.
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Appendix Shop safari (expert talks)
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The largest group of shoppers according to research is 57.6% and it represents the young professionals who shop online/at the store/second hand shops. Out of 258 responses they had a major vote of 156. The second largest group is - students - the millennials, who took part in the research - their number (94) was surprisingly smaller. This might be caused by lack of responses within this age group throughout the online surveys (monkey and instagram). Most of the professionals who worked in the vintage/second hand shops admitted that it is students who shop the most. The next group of shoppers - very similar to the last one is people in their thirties (11) and boomers (10).
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Appendix Enquiries (packaging)
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Appendix Enquiries (Ad prices)
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Appendix Enquiries (Bag sourcing)
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Appendix Enquiries (Magazines)
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Appendix - Graphs
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Appendix Handbags
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