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- 1. Leve Jeans Genuinely Green Eco-Fashion Leve Jeans Marketing Team: Sara Syeda, Mark Lester, Chris Hudson, Derrick Cheroti, David Stepeck, Jonathan Wallace, & Luke Stroh 1February 25, 2017
- 2. About the Company “Leve Jeans” is an all-natural and 100% organic clothing company that designs, sources, produces and markets stylish, high quality sustainable denim for young girls and woman. Leve is located in Dallas, Texas and is looking to expand its brand and product offerings locally and throughout USA. Synopsis: We are an innovative, dynamic and a socially responsible denim company determined to meet the eco-fashion needs of our consumers and reduce our carbon footprint. Mission statement: “At Leve, we believe in implementing safe business practices in offering solutions to conserve the planet, do no unnecessary harm, and make quality organic denim jeans that are minimally processed and inherently more sustainable. We want to provide our consumers an alternative to conventional denim fashion with eco-friendly, customizable solutions that meet their needs”. Vision: We hope to lead by example, inspire, and educate; to create a sustainable future and improve the social, economic and environmental well-being of the community. Objectives: Leve Jeans’ green objectives are eliminating wastefulness in the environment, conserving natural resources, creating a profitable biodegradable product portfolio, and spreading awareness of Leve’s eco-friendly brand along with the company's commitment to the environment. 2
- 3. Why Green Marketing? ● Global awareness of conserving the plant and consumer preferences on environmental friendly products. ● Governmental regulations on manufacturing processes for firms to become more responsible. ● Promote socially responsibility- Moral obligation to the environment and consumers. Also for company to carry out its objectives. ● Reduced carbon footprint- promotes the production of eco-friendly products that are safe for the environment and manufactured in a sustainable fashion to conserve natural resources and minimize wastage. ● Ensures long term growth and profitability with reduced costs associated with manufacturing and selling of products: including packaging, transportation, energy/water usage, and advertising via modified marketing. ● Good for business: Attract consumers by access to new markets, increase profit sustainability and gain competitive advantage over companies through design and materials differentiation. 3
- 4. Incorporating Green: What We OfferOur Product- What we offer: ○ Recycled plastic, certified 100% organic & recycled cotton, and pre and post consumer reclaimed denim. ○ Organic agriculture is grown using methods and materials that have a low impact on the environment (not containing toxic materials or ozone-depleting substances) ○ Environmentally sustainable: dyed with low-impact reactive dyes, biodegradable detergents and animal cruelty-free. ○ Made in the USA; from initiation to end product ○ Produced with a focus on creating jobs in the markets we operate in (10% net profits to cotton farmers) 4
- 5. Marketing Entry Strategy Leve Jeans’ main Market Entry Strategy is via Costco, America’s third largest retailer. Additional market entry portals via Amazon.com and LeveJeans.com. ● Costco is the nation’s third-largest retailer which had $129.03 billion in U.S. revenue in 2017, with clothing as one of its top five sellers ● Costco requires “top of the line” merchandise and Leve Jeans is prepared to offer the very best jeans ● Costco offers access to customers in two ways: retail stores and Costco.com ● Costco’s reputation is based on offering only the highest quality and value ● The average Costco member is college educated, owns a home and earns $100,000 a year ● Costco shoppers represent families with 76% individual/family memberships ● Leve Jeans will also be sold on Amazon.com and LeveJeans.com 5
- 6. Market Segmentation Leve Jeans is not only an innovative and a socially responsible denim manufacturer, but also a customer centric company. Leve Jeans will create brand loyalty and establish a personal connection with its customers. Considered age, income, education, lifestyle and beliefs. ● Gender - Strong, smart and independent females ● Age - 17 to 54 but all young at heart regardless of age ● Income - $30,000 and above ● Education - College educated ● Occupation - business professionals, business owners, entrepreneurs ● Lifestyle/Beliefs - Independent, conservationist, fashion savvy ● Benefit - Fashion, comfort, style, easy of wear, environmentally conscious 6
- 7. Our Customers- Creating Value ● Responsibility to the Customer ○ Exceptional quality and value based denim jean products ○ Comfort, fashion, style and wearability ● Partnering with the Environment ○ Eco-friendly ○ Recycle ○ Limiting global footprint on the planet ● Anticipating Customer Needs ○ Interact with Customers real time and on social media ○ Generate and maintain customer analytics ○ Forecast and anticipate future customer needs and demands 7
- 8. Leve Jeans - Marketing Plan & Strategies for Growth Leve Jeans uses recycled and repurposed denim that is collected, cleaned, and processed using all natural methods that are chemical free and environmentally sustainable. Leve Jeans come in a range of styles, shapes, and cuts that are specifically made for women ages 17 to 54. Leve Jeans seeks to differentiate itself from the competition while remaining competitively priced with other upscale designer brands. 8
- 9. Strategic & Tactical Marketing Plans Strategic Marketing Plan Product Features: ● Environmentally friendly while producing a superior product ● Buyback program eco-friendly model ● 10% Philanthropy model Tactical Marketing Plan Product Features: ● Revolutionary spandex blends ● Sunny spring sale 2 for 1 ● Service: Boutique stores in outlets ● Buyback programs for used jeans ● In-store measurements ● Digital fitting rooms (video below) ● Leve Jeans rewards program 9
- 10. Social Media Marketing Strategy To amplify the brand message for Leve, capture customer feedback, and share important product news and stories, all popular media channels will be used extensively. Twitter Examples ● @LEVE_JEANS_USA ● #LEVE_GenuinelyGreen ● #LEVE_EcoFashion 10
- 11. Our Brand: What we offer ● Styles: Modern classics with variety of customizable options ● Quality Construction with exceptional details and finishes ● Fit standards that are consistent and appropriate for our target audiences 11 Leve Jeans - Product Line & Price Product Line ● Trashy Chic ● Dirty Denim ● Green Washed ● “DYO” Design your OWN Price ● Teens: $50 and up ● Women: $99 and up
- 12. 12 Leve Jeans - Product Place & Promotion Place ● Online Storefront ● Key store product placement ● Social Media targeting Promotion ● “Look Good, Feel Good” program ● Sponsorship ● PR Campaign
- 13. Competitive Advantage Why Buy Leve Leve is focused on providing women that want great looking jeans without the impact to the environment. Look good and feel good without the risk of harmful toxins or harming the environment. “Jean-ome” Traceability Program ● Biodegradable ● Eco-Friendly ● Socially Responsible 13
- 14. SWOT Analysis - Internal Factors Strengths - Internal/Positive ● Innovator and Market Segment Leader - creating a more sustainable future for fashion and green marketing. ● Social Awareness and Brand Image - Strong resonation of green practices across target market. ● Diversified Distribution - A diversified supply chain with both horizontal and vertical integration allows Leve to act in a lean fashion, to keep operational costs low while providing a quality product its customers will purchase and a brand they will support. 14 Weaknesses - Internal/Negative ● Competition - Denim market is already dominated by several large and well established brands. These brands have a loyal customer base, which could cause Leve’s growth to be stagnant or slow. ● Limited target market/portfolio - Leve has a limited market for it’s product, and it’s portfolio isn’t as expansive as its peers. ● Limited Physical Presence - Leve’s limited physical presence further segments its potential customer base.
- 15. Swot Analysis -External Factors Opportunities - External / Positive ● Growth/Expansion - Leve has much opportunity to grow their brand and customer base in the US and abroad. ● Partnerships/Endorsements - As Leve’s brand expands, partnerships and endorsements are an opportunity to help further expansion. ● Manufacturing/Product Diversification - Leve’s current strategy is to manufacture in the US for women of a specific demographic. In the future, opportunity exists to expand manufacturing locations and product offerings. 15 Threats - External / Negative ● Market Saturation - Leve’s largest external threat is operating in a market which is saturated with competition. Leve is competing against clothing companies with larger operating budgets and R&D teams which can easily clone Leve’s product and green marketing strategy. ● Increasing Labor Costs - Labor rates are increasing worldwide. As Leve strives to focus on corporate social responsibility and green marketing, their labor rates must remain competitive with, if not ahead of their peers.
- 16. SWOT Analysis - Recommendations ● Predictive Market Research - Investment in predictive analytics, big data mining and market research will allow Leve to not only react to trends and competitive forces in their market, but to predict and drive the trends in their market ● Customer Feedback - A customer feedback mechanism which incentivizes customers to provide open and honest feedback should be implemented. This will allow Leve to show a true customer focus, while using this feedback to gain a competitive advantage in their market. ● Expansion and Diversification - Leve should prepare a diversification strategy, such that if and when they decide to expand and diversify their manufacturing and product offerings, they are prepared to act. 16
- 17. Investment Requirements and Financing Strategy● Protecting Profits and Financing Strategies ○ Future contracts ○ Recycled Leve Jeans ○ Private equity funding 17
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- 21. References Costco Annual Report. (2017). Retrieved from URL http://investor.costco.com/Mobile.view?c=83830&d=10&v=100 Draving, R .(2016). Demographics of People Who Shop at Costco Retrieved from URL https://www.startups.co/answers/1599/what-are-the-demographics-for-people-who-shop-at-costco-and-other-wholesale Goldbach, M., Back, S., & Seuring, S. (2003). Co-ordinating Sustainable Cotton Chains for the Mass Market. Greener Management International, (43), 65-78. Hustvedt, G., & Bernard, J. C. (2008). Consumer willingness to pay for sustainable apparel: the influence of labelling for fibre origin and production methods. International Journal Of Consumer Studies, 32(5), 491-498. doi:10.1111/j.1470-6431.2008.00706.x Ives, C. (2008). Top 20 Eco Friendly Clothing Fabrics. Retrieved from http://www.greenecoservices.com/top-20-eco-friendly-clothing-fabrics/ Jeans, L. (2018). Leve Jeans (@LEVE_JEANS_USA). Retrieved from https://twitter.com/LEVE_JEANS_USA Levi Strauss & Co. SWOT Analysis. (2013). Levi Strauss & Co. SWOT Analysis, 1-8. Meyers, T. (2008). trend: green. Entrepreneur, 36(12), 57-61. Mochari, I. (2018). Is This Strategy More Effective Than a Killer Startup Story? Retrieved from https://www.inc.com/ilan-mochari/tata-harper-transparency.html Organic Hotspots. (2017) Retrieved from URL https://www.ota.com/hotspots 21
- 22. References Continued….. Ralph Lauren in-store tech l Digiday. (2016). Retrieved from https://www.youtube.com/watch?v=vFF95SvTfRE Tennant, M. (2006). CHIC SUSTAINABILITY. Corporate Knights Magazine, 4(5), 12-15. Verchot, M. (2014). 10 reasons to go green starting NOW. Retrieved from https://www.treehugger.com/htgg/how-to-go-green-why-to-go-green.html Webb, F. (2013). Rubbish jeans: how Levi's is turning plastic into fashion. Retrieved from https://www.theguardian.com/sustainable-business/rubbish-jeans-levis-plastic-fashion White, R. L. (2017). 6 Reasons Why Fashion Marketing Rules Social Media. Retrieved from https://trackmaven.com/blog/6-reasons-why-fashion-marketing-rules-social-media/ 22
Editor's Notes
- This is the marketing class #6340 of spring 2018 with Sara, Mark, Chris, Derrick, David, Jonathan and Luke. We are very excited to present a green marketing plan for Leve Jeans; an eco- friendly, all-organic and sustainable brand that is produced and marketed with eco-friendly practices and low operational impact on the environment.
- “Leve Jeans” is an all-natural and 100% organic clothing company that designs, sources, produces and markets stylish, high quality sustainable denim for young girls and woman. Leve is looking to expand its small family-owned business store located in Dallas, Texas to create a greater presence of the company’s product offerings’ and brand awareness, locally as well as throughout USA. Leve Jeans aims to become a leading destination of quality eco-friendly denim jeans by moving with market trends and catering to customer preferences in specializing denim products that customers want to buy. Unlike traditional clothing stores, where jeans are secondary to the main business, we want Leve’s all-natural denim to win popularity within the local market segment here and become consumers’ favorite brands to wear. Synopsis: We are an innovative, dynamic and a socially responsible denim company determined to meet the eco-fashion needs of our consumers and reduce our carbon footprint. Mission: At Leve, we believe in implementing safe business practices to conserve the planet, do no unnecessary harm, and make quality organic jeans that are minimally processed and inherently more sustainable. We want to provide our consumers an alternative to denim fashion with eco-friendly, customizable solutions that are not only good for the environment but also fashionable trendy. Vision:We hope to lead by example, inspire, and educate to create a sustainable future and improve the social, economic and environmental well-being of the community.
- Because of the global demand of conserving the planet along with its resources, government forcing firms to become more environmentally responsible and the growing concern of consumers becoming more environmentally conscious with their products, Leve Jeans must modify the current business plan to reflect the demand for green practices, or risk losing customers to competitors pursuing a green strategy. Therefore, the environmental issues must be integrated into our firm's corporate culture. By imposing green marketing, we are incorporating environmental conscious process throughout our production cycle. Our denim products are produced from recycled materials found on earth, we reduce wastage through production and our denims being biodegradable that when disposed, do not pollute the environment. Not only do we make our products more attractive to consumers by product modification but also reduce the many expenses associated with manufacturing and selling our products, including packaging, transportation, energy/water usage, and on modified green marketing efforts to spread brand awareness and gain new consumers. This can help our company gain a competitive advantage in the marketplace.
- Leve jeans for young girls and women are made with eco-friendly materials found in nature that are recyclable and sustainable. Our jeans consist of recycled plastic bottles, and 100% organic and recycled cotton that are processed with reduced levels of fertilizers and pesticides cutting out harmful chemical impact on the planet which in turn help save our water, air and environment. The eco-friendly fibers in our denim product line are also hand-dyed with reduced water, dye and energy. Not only do our designs pose no harm to the environment but all our designs are also cruelty-free. We make sure the products are pure and natural using materials found from earth and that no animals have been harmed during the production. We also don’t use any animal related products of any kind; our jeans contain no feathers, no leather, no silk, and no wool. Leve jeans directly source their fabrics, and work to reduce their carbon footprint and minimize water waste during all stages of their production. Plus, our denim is crafted in mills that adhere to the standards of the Better Cotton Initiative, meaning it's better for both people and planet. Our denims are proudly manufactured in USA from the initiation to end product. We aim to create jobs in the market that we operate in: of the production of sustainable apparel that is good for the environment. We are also committed in donating 10% of our net profits to local cotton farmers responsible for harvesting and grazing of cotton used in our products.
- Costco provides a strategic partnership with a retail leader who is best known for quality, value and customer service. Costco has over 700 stores which are located in suburban areas that are heavily populated with savvy and affluent homeowners. Costco is the nation’s third-largest retailer which had $129.03 billion in U.S. revenue in 2017, with clothing as one of its top five sellers Costco requires “top of the line” merchandise and Leve Jeans is prepared to offer the very best jeans Costco offers access to customers in two ways: retail stores and Costco.com Costco’s reputation is based on offering only the highest quality and value The average Costco member is college educated, owns a home and earns $100,000 a year Costco shoppers represent families with 76% individual/family memberships Leve Jeans will also be sold on Amazon.com and LeveJeans.com
- Leve Jeans will appeal to the strong, independent, free thinking female who knows what she wants with regards to her clothing as well as the environment. Our customers range in age but are all young at heart and want to look good no matter what the occasion. The Leve Jeans customer is a capable professional who realizes the value of an education and demands quality and value. Gender - Strong, smart and independent females Age - 17 to 54 but all young at heart regardless of age Income - $30,000 and above Education - College educated Occupation - business professionals, business owners, entrepreneurs Lifestyle/Beliefs - Independent, conservationist, fashion savvy Benefit - Fashion, comfort, style, easy of wear, environmentally conscious
- Offer quality and value in a fashionable product for our customers. Manufacture and deliver products in an environmentally responsible way. Use predictive modeling and historical data to predict future customer needs. Responsibility to the Customer Exceptional quality and value based denim jean products Comfort, fashion, style and wearability Partnering with the Environment Eco-friendly Recycle Limiting global footprint on the planet Anticipating Customer Needs Interact with Customers real time and on social media Generate and maintain customer analytics Forecast and anticipate future customer needs and demands
- Leve Jeans uses recycled and repurposed denim that is collected, cleaned, and processed using all natural methods that are chemical free and environmentally sustainable. Leve Jeans come in a range of styles, shapes, and cuts that are specifically made for women ages 17 to 54. Leve Jeans seeks to differentiate itself from the competition while remaining competitively priced with other upscale designer brands.
- Strategic Marketing Plan Product Features: Environmentally friendly while producing a superior product Buyback program eco-friendly model 10% Philanthropy model Tactical Marketing Plan Product Features: Revolutionary spandex blends Sunny spring sale 2 for 1 Service: Boutique stores in outlets Buyback programs for used jeans In-store measurements Digital fitting rooms (video below) Leve Jeans rewards program
- To amplify the brand message for Leve, capture customer feedback, and share important product news and stories, all popular media channels will be used extensively.
- Our Leve brand offers luxury, comfort and trendy styles. Our ultra-comfortable denim comes in a variety of styles that are modern classics with options such as high rise to mid-rise: straight-leg silhouettes, skinny, flare bell bottoms and classic boyfriend cuts. Our denims are soft and durable. fashionable, flattering, and will last for years to come; wash after wash. Each of our product lines are customizable to consumer’s fashion preference and body size. We also offer a “design your own” (DYO) program that lets consumers choose their perfect style, fit, wash and color. It even lets consumers pick the threading color, choice of hardware and patches tailored to offer a unique style to fit any personality. The product is targeted to women in the 17-54 age range with both cost and the environment in mind. That is something typically not seen within the eco-friendly industry. The lines were designed with both looking good in mind. The product lines include: Trashy Chic Dirty Denim Green Washed “DYO” Design your OWN All jeans are “Green Washed” in a unique denim dyeing process that Leve utilizes. The Archroma Advanced Denim dyeing process, which is a liquid sulfur dye that is uses 84% less water, 30% less energy, and 25% less CO2 than conventional jeans. The Green Washed line of jeans, employs only this wash and no other alterations resulting a pure jean. Leve also utilizes recycled plastic in the material. Leve understands that “plastic waste is a huge problem; global bottled water consumption is more than 29 litres per person per year, and recycling rates are low — 29% in the US and 51% in Europe.” (Webb, 2013) We want to encourage consumers to both recycle and know that we live by our vision. Pricing for Leve jeans starts at $50 for our Teen jeans primarily in the “Dirty Denim” and at $99 for our Women's jeans. This puts us squarely in competitive position with other popular brands such as Lucky Jeans, Rock Revival, Buckle among others.
- Leve will utilize an online store to primarily drive sales of its various lines of jeans. The online retail store will be linked from its variety of social media campaigns on YouTube, Instagram, Facebook,Twitter and others. The main goal will be to drive both content and awareness as well as a path back to make purchases. Social media is a critical aspect of Leve’s product placement. “Fashion and apparel brands have the largest median audience sizes on Instagram (952,000 followers), Twitter (545,000 followers), and Pinterest (18,000 followers). Fashion brands also sport the third largest median Facebook audience out of the 10 B2C industries we analyzed.” (White, 2017) Outside of our online retail store and social media, we see Leve aligning with organizational buyers who represent the same values for sustainability and eco-consciousness. This would include retailers such as Costco, Amazon.com, Nordstroms and alternativeapparel.com. Promotion of Leve Jeans will take on a few various approaches to aid in reaching the market. First we want to really drive home our belief in making an impact on the environment. As part of our Look Good,Feel Good program, our recycling program, women who purchase Leve jeans to exchange them for new jeans and receive a 15% discount on the price of their new jean purchase. By recycling jeans we can reduce our imprint on the environment and expend fewer resources.
- Strengths - Internal/Positive Innovator/Market Segment Leader - Leve is an innovator in its industry and is paving a new path for fashion commerce with its green marketing and organic fashion lines. Brand Image and Awareness - Leve is building an extremely powerful brand image which will strongly resonate with its target market across multiple ethnicities and geographic locations Multiple Distribution Channels - Leve is building a diversified supply chain methodology to be both vertically and horizontally integrated. This methodology will greatly benefit Leve with respect to product manufacturing and distribution Social Media Brand Recognition - Leve is properly leveraging its social media platforms to not only market a brand, but to support and campaign for a more sustainable and eco-friendly future. This message is a message which will resonate strongly with its customer base, and greatly assistance in retaining its target customers Value/Quality/Durability - Not only is Leve creating a more sustainable product, but Leve is also creating a quality product. Leve’s denim is designed to last, and through offerings such as their spring sale and denim trade in/buy-back program, Leve is positioning itself to establish a strong, loyal, and well-educated customer base with disposable income Weaknesses - Internal/Negative Competition - Denim market is already dominated by several big brands. Leve is operating in a highly competitive market segment, so its market share growth might be slow. Lack of Diversity - while Leve is targeting a very specific, loyal and passionate market, this market is ultimately a much smaller market than that of many of its competitors. This lack of target market diversity could further slow, or stagnate, Leve’s growth potential. Limited Physical Presence - Leve’s very specific target market typically embraces e-commerce and social media advertising, but the limited physical presence might add further challenge for Leve. A portion of Leve’s target market might not embrace social media and e-commerce, and although the target market might not be men or older women, the lack of exposure to that audience can limit brand awareness which would stifle opportunities for Leve denim being purchased by a friend or loved one as a gift for Leve’s target market. Duplicate Products - Duplicate/Replica, if done well, can affect brand loyalty and hurt overall sales. A product that is easily duplicated by other more experienced manufacturers may ultimately cheapen Leve’s brand and lessen the message/impact Leve is trying to create. -jw
- Opportunities - External/Positive US Based Growth - Leve is slowly gaining market share in the US, but an opportunity exists for more aggressive brand development to further expand Leve’s US based customer base Corporate Partnerships and Personal Endorsements - As Leve works to develop their US based presence, strategic corporate partnerships and endorsement from individuals with a broad reach and influential platform will help Leve to further communicate their mission and further brand development Foreign and Emerging Nation Growth - Through growth external to the US, Leve will be able to better the lives of those in under developed and emerging nations. As these nations develop, and as they recognize Leve as a company which has bettered their lives, Leve will be able to leverage this brand loyalty to capitalize on the emerging fashion market in these countries Manufacturing Expansion - while Leve is currently focused on “Made in America”, the mission of sustainable corporate social responsibility is one which resonates worldwide, and as the brand begins to strengthen and grow, diversification of manufacturing will allow Leve to generate economies of scale in other regions of the world where their products and brand have a strong image. Product Diversification - Much as other apparel companies who began as a women’s only fashion company have grown their brand with expansion into men’s apparel, Leve could pursue this market segment should the appetite exist. Threats - External /Negative Extremely Saturated Market - The denim market is already extremely saturated with competitors who have a larger footprint, more capital, and established customer bases. Regular price wars exist among competitors, and with Leve being a smaller company, could push Leve out of the market entirely. Low Customer Loyalty - The fashion market is highly fragmented, and much competition already exists. While Leve’s current product offering is unique, other more established brands, with more developed marketing strategies, could emulate Leve’s product at a lower base and negatively impact Leve. Low Barrier to Entry - With e-commerce and global supply chains ever prevalent, new competitors can easily cut into Leve’s profit margin by outsourcing labor to more cost-effective countries, while using green marketing tactics to promote their equally sustainable products at a lower cost. Increasing Labor Costs - Labor costs are increasing worldwide, and with Leve’s goal of sustainability and green marketing, corporate social responsibility will dictate that they must meet or exceed competitive wages. If US based workers demand a wage that is too costly, sales and viability of the corporate strategy will be negatively affected. -jw
- SWOT Analysis - Recommendations Predictive Market Research - Leve must be ready and able to invest in ongoing market research and analysis. This analysis should focus on actively monitoring and managing their risks and threats in the market in which it competes, as well as constantly looking for changing trends in fashion, technology, marketing, competition, and customer needs. Customer Feedback - Leve should incentivize customers to provide open and honest feedback such that they can show a true customer focus, while using this feedback to gain a competitive advantage in their market Expansion and Diversification - While a limited product offering with an extremely narrow customer base is Leve’s current strategy, much opportunity exists in the future diversification. Leve should begin to develop their diversification strategy now, such that when they’re ready to execute on this strategy, they can react in an agile manner. -jw
- Meeting operational short term and long term goals are going to be contingent on how we choose to invest and finance our operations. As a private company with goals of expansion into other markets and eventually to become publicly traded; it is crucial that we examine all areas. Protecting profit margins is dependent on many events that can either have negative or positive consequences. Therefore, we must utilize our materials and distribution channels to our benefit. One option is the use of future contracts because they will help lock in prices with farmers and distributors that will hedge our firm against major weather disasters that destroy cotton crops and potentially cause drastic rises in material used in the production of our jeans. Additionally, some of these contracts are beneficial to the firm by helping achieve economies of scale quicker. In theory, the more of a product we buy the cheaper the product becomes and with the use of contracts to buy or sell materials we need to produce our jeans we offer more protections to our bottom line. Another component of cost and waste reduction is the recycle program which allows our customers to return used and worn pants for a discount on a new pair. We will pay 10 dollars for every returned pair of pants. In contrast, private equity funding is another option in our goal to reach markets quickly and increase production to efficient levels thereby reducing cost and increasing profits. Private equity will help create a strategic alliance with distributors and farmers. Further, they could help our logistics chain by giving funding to buy a cotton farm for the firm or funding the building of a warehouse to manufacture and distribute our clothing.
- In the Short term, Leve will need to target market regions along the entire west coast, Miami region, Northeastern United States, and states of Wisconsin and Illinois because these are the top markets that purchase organic made goods. Based on this information, the population in this regions is approximately 91 million people, we want to capture one percent of the market upon entering the market and grow at a rate of 1 percent month. At this rate, our effective growth rate is 12.68 percent over the year. We decided on a 60 percent total cost of production because of the more expensive materials and time required to create organic clothing. Although we reduce waste, it comes with an added price to materials which is a reason to look for alternative financing strategies that will help Leve remain competitive and reach our sales and growth goals.
- In the long term, the first year will yield approximately 12 percent rate of growth at one percent growth per month compounded. Further, the second year growth rate is 23.5 percent, and the third 33 percent. Overall,during the first year we will see 1.7 billion in sales, the second 2.1 billion and at the end of year three total sales will be 2.8 billion dollars accounting for approximately 10 percent market share of the industry by this time. If we choose to reinvest profits to tackle new markets this number will substantially rise. For instance, one strategy is to invest our profits into purchasing subsidiaries in other regions in the world or negotiating contracts that will allow for production and distribution of LEVE jeans product line in various locations worldwide. Another option is to reinvest profits into R&D with the emphasis of R&D conducted on ways to continuously reduce hazardous waste during the production of products, in addition to developing a stronger product line.