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- UCLA, Marketing Principals and Practices
- Presentation by:
- Adrienne Papp
- June 7, 2006
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- TARGET MARKET
- ECONOMIC ENVIRONMENT
- COMPETITION
- PRODUCT
- PRICE
- PROMOTION
- PLACE
- BREAKEVEN POINT
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- ��������������� Demographics
- �������������� UNITED STATES OF
AMERICA
- High net-worth individuals:����������
2.5 Million
- Corporations and Institutions:������������ 2, 800
- Government Offices:������������������������������� 52
- Hotels:�������������������������������������������������
500
- Country and Golf clubs:�������������������������� 300
- Universities/Collages:���������������������������� 200
- Art collectors/Art Consultants:������������� 2, 000
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- �Characteristics of Individuals
- Income: $ 1 Million +
- Age:
- Silent Generation (born before 1945)
- Baby Boomers (born between 1946-1964)
- Generation X (born between 1965-1978)
- Geographic Location:
- East Coast : From Boston to Washington
- Great Lakes Region: Greater Chicago, Toronto
- West Coast: Southern California, Bay Area
- Aspen, Veil and surrounding area, Colorado
- Las Vegas area, Nevada
- Some of the richest Zip codes in the US
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- Psychographics:
- Elite Individuals, High spenders, Businessman, CEO-s, Celebrities
- Values and Lifestyle (VALS)
- Actualizers: successful, sophisticated, �take-charge�, high self-esteem
people with abundant resources. Diverse and rich life-styles.
- Achievers: career and work-oriented people. Image is important, they
favor prestige products to demonstrate success to their peers.
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- Target specifically
- Celebrities
- CEOs of Fortune 500 companies
- Business Executives
- Owners and Investors
- City Councilmen who purchase public sculptures
- Real Estate Developers
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- � ��������������Corporate Characteristics
- Income: The combined market value of Publicly Traded Companies is
approximately $20 trillion. These are large, midsize and small
companies. Our main focus will be Fortune 1000 companies, banks and
insurance companies.
- Generation: These companies represent a generational history from Silent
Generation to Generation E
- Geographic Location: Our territory is the US, although a significant
number of these companies are global.
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- Psychographics:
- These companies have a long track record of success and a positive cash
flow. They place great emphasis on prestige. Image projection and name
building is important.
- They must have good standing with the public and often feel obligated
to support good causes, such as the arts. They take pride in attaching
their names to monumental sculptures for advertising or decorative
purposes. They like donating pieces of art usually for exposure.
- They like to demonstrate wealth through elegant office designs, (see
interiors of Doe); often have sculpted portraits of historic and
significant personalities displayed in their offices (see portraits of
Doe.)
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- ����� Characteristics of
Governmental��� Agencies
- These are State and Federal Offices across the U.S.
- These agencies often have budgets to place sculptures in many public
areas for decorative or educational purposes.
- They use sculptures to make positive statements and send symbolic
messages.
- The Federal Government commissions sculptors to make pieces symbolic of
the United States and place them in foreign countries either as a gift
or as a �presence.�
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- �Characteristics of Hotels
- All of these hotels are expensive five star hotels.
- Some of them are chains like the Four Seasons, The Ritz Carlton, The
Fairmont, and have presence in many international
- ��� cities.
- Some of them are single ones, but owned by the same company or
individual. The Bellagio, The Wynns and The Mirage are all under the
same ownership.
- These hotels always have landscapes and prestigious interior decoration
that are often sculptures.
- Their psychographics are very similar to that of our high net-worth� individuals, especially that their
mission is to serve the �rich and famous.�
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- ����� Characteristics of Country
and Golf Clubs
- These clubs have members of very high net-worth individuals.
- They thrive to accommodate their clients in the most comfortable,
upscale and pleasant environment to cater to their life style.
- Characteristics are basically the same as those of the hotels and
individuals.
- Any landscape sculpture may pose as their �logo�, any artistic interior
architecture will pose as an invitation to new clients by presenting
exclusive taste and an inviting�
�you will love to be here� environment.
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- Characteristics of Universities and Collages
- These institutions usually use a lot of landscape architecture
- The sculptures tend to be commissioned works of portraits of historic
figures, philosophers, doctors, writers, poets, teachers and founders of
institutions.
- Interior sculptures also tend to be educational or demonstrate a
positive message.
- Usually these schools have yearly budget for outdoor and indoor
decoration.
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- Characteristics of Art Collectors and Consultants
- Art Collectors are great target for direct mail.
- Art Consultants place sculptures in hotel chains, restaurants and new
establishments. They are also excellent target for direct mail
marketing.
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- While the prosperity of the economy is largely uncontrollable, the
people and corporations that comprise our target market have an income
(or net wealth) in the top one to two percent of the world.
- As such, the target market is only moderately affected, even in times of
economic recession.
- In fact, especially during unstable economic times and lowered consumer
spending, an investment in art and sculpture is stable because art does
not lose value.
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- In the Los Angeles area � the home-base of our business, the high demand
for real estate has kept local values rising.
- With rising values and low mortgage rates, many people have (and
continue to) refinance their homes to pull equity from them.
- This increases the available cash for home renovations and remodeling
from people who would not otherwise have the cash or liquidity to
purchase art or sculpture for their homes.
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- Unemployment rates for the (economic) top one to two percent of the
population are very low and certainly not a considerable factor for the
decision to purchase a� Doe piece.
- Considering the above factors, for our target market, economic
investments, desire, and esteem needs are the primary reasons for
purchasing art and sculpture.
- The economic environment, while helpful in especially robust periods, is
relatively inconsequential otherwise
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- Level 1 / Direct Competition
- This level consists of products/producers in the exact same category and
usage: other sculptures/sculptors with the same/similar price range and
quality.
- We must narrow this group by their style, accomplishment and
diversification.
- Contemporary competitors would be Alexander Ney, Robert Irwin, Igor
Mitoraj, Robert Graham, Reno Carollo, William Jauquet, Molly Mason.
However, these artists are classified as having their only one style,
and are not as diverse as Doe.
- Statistically, only 25% of all sculptors in America would fall into the
same category as Doe, which gives us approximately 63 competitors, or
less.
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- Level 2 / Indirect Competition
- This consists of products with similar use, other art-works such as� paintings; expensive photography (Anne
Leibowitz); antique and contemporary interior decoration; landscape
architecture and other art-works.
- �All of these products are in the
same or similar price range and quality measure.
- In 2004 the total number of Fine Arts sold by auction houses, such as
Christie�s, Sotheby�s and Bonham & Butterfield was 63,126 pieces. At
least 50% of these works fall into a lower category of art than ours.
- It is estimated that a total of approximately 200,000 pieces of art are
sold each year, and about 31,563 or 15% would be a level 2 competition
to Doe.
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- Level 3 / Indirect Competition
- This consists of different products with unrelated source, but same
value,� -� collectively referred to as luxury
items,� -� including sports cars, jewelry and
boats. In this category the economic environment would play a larger
part.
- However, our product is not particularly affected by the economy as
pointed out in the Economic Environment section of this presentation.
Even in unstable economic times and lowered consumer spending people
still purchase art and sculpture because it is a lasting investment
unlike �most luxury items, such as
cars.
- Art purchase is a question of individual taste and as such the style of
Doe�s art will be a very big distinguishing factor from his competitors
and will play a very significant part in consumer response.
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- ����� PRODUCT OBJECTIVES,
STRATEGIES AND TACTICS
- Objective
- To reach $ 280,000 in sales.
- Strategies
- ���� We will reach our $280,000
objective by:
- Offering a unique product that is desirable because of the quality
craftsmanship and materials used (i.e. Cambrian black granite)
- Willingness and ability to create a piece to the customer�s
specifications.
- Assurance of customer satisfaction.
- Offering seven diverse product line.
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- Tactics
- Material- Locating and using the highest quality material is crucial to
create a long-lasting and aesthetic piece of art. Finding the most cost
efficient material is important (high quality/lower price.)
- Size � Varies from small to large going over 7 feet tall
- Product guarantee � By using computer 3-Dimensional imaging, Doe
creates a virtual reality enabling the client not only to see the piece
for approval before it is sculpted, but to stage the sculpture into the
very environment it was ordered for.
- Product warranty: all pieces are under warranty for a lifetime. Any
spontaneous breakage or unusual change in patina color will be restored
or the sculpture will be exchanged altogether. The only exception is
natural wear and tear, which in our case would mean that the patina
color ages over time and may become slightly lighter or darker.
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- Product Diversification or Product Line: (by diversification we ensure
market segmentation)
- Exterior sculptures for landscape architecture. �Clamshell, Fisherman�
s Memorial
- Interior sculptures for interior design and decoration �La Gardienne�
- Portraiture for both interior and exterior includes:
- a) Portraits of loved ones, such as children, spouses,���� and family members �Christy
and Sean�
- b) Portraits of historical figures, founders, and celebrities. �King
Roma the 5th�, a classical portrait ordered by the
Tibetans.
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- Product Line cont.
- Gold sculptures - Investment in gold, especially favored by bankers,
private equity placement firms and high net-worth individuals �Gold Falcon�
- Architectural Interiors, examples are:�
a) basin carved out of stone for bathroom decoration. b) stairway
decoration. �Nude� which is a 6� tall western red cedar piece holding
a stairway.
- Commissioned art-work, which in all cases is custom-made and
site-specific, making up 90% of Doe�s work. �Megaptera of �
- Photography � Doe chooses mother-child subject for his artistic
photography and makes large prints for sale. He also has a line of
sculptures representing the same subject. �Newborn., Mother-Child�
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- Notes about the Product
- Doe is noted for his diverse product line, which enables him to
penetrate various market segments. The diversification of Doe�s craft
and style is unique and usually ensures that the customer buying his
art will commission him in more than one area of design.
- His �work is an elegant
sculptural fusion of traditional and contemporary, in a variety of
media and stylistic forms, reflecting elements of other creative
expressions: structure of architecture, movement of dance, rhythm of
music, color of painting and subtle emotions of poetry. His signature
piece is the �Freedom�, which he became famous for.
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- Price Objective:� Gross profit of
75%.
- Calculated as follows:
- Cost of Goods Sold (COGS) =25% of Sale Price
- So Gross Profit = (Sale Price-COGS)/Sale Price=75%
- Price Strategy: Use market skimming to position our product in the
high price, high quality segment.
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- Price Tactics:
- Following is the break-up of how we are going to achieve our objective
depending on the product:
- Carved materials(limestone/marble/granite �Wings of Prey�): Marble is
more expensive than granite, but granite takes twice as long to carve,
which pushes up the cost of tooling. Therefore, careful evaluation for
cost sensitivity prevails all undertakings. Approved vendors for
well-priced materials, depending on the materials needed are:
- Montoya Sculpture Supply, FL
- Sculpture House, NY
- Dodd Marble, CA.
- The average cost of a product made from carved materials is 15% of
the sale price.
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- Bronze casting (�Jade Princess") is a long, step by step process
and is more labor sensitive than material sensitive. In this case we
must look for a low foundry price for casting, yet high quality, which
will also include bronze material cost. The artist submits the model
in clay, carved wood or stone, all of which is a negligible expense as
these materials are inexpensive. Foundries are the following,
dependent on type of sculpture:
Monterey Sculpture Center
Art Works
Art Foundry
Froistad Atelier
�The average cost of a
product of bronze casting is 25% of the sale price.
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- Fabricated sculptures (�Daring Children�): Includes labor and cost of
materials that can be very inexpensive such as steel and aluminum or
very expensive, such as stainless steel. The cost of stainless steel
is transferred over to the buyer as an expense. It is realistic to say
that, with the exception of stainless steel, the cost of materials
will be negligible, and the only significant cost would be the charge
for labor.
- The average cost of a fabricated sculpture is 30% of total selling
price.
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- PROMOTION OBJECTIVES, STRATEGIES AND TACTICS
- Objective
- Create Image / Awareness ( make the artist into a celebrity, create an
image that the product is in demand)
- Create name recognition, positioning
- Create 650 Exposure (This year we need to sell 13 sculptures, with a 2%
response rate, we need to create 650 exposures)
- Close sales
- Increase sales
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- Strategy
- 1. Media Exposure
- 2. Gallery Exhibitions
- 3. Professional Exhibitions
- 4. Public Relations
- 5. Direct Mail (includes �bundled� advertisement)
- 6. Internet advertisement
- 7. Architectural Bookstores
- 8. Create free exposure by displaying sculptures
- 9. Museum Exhibitions
- 10.Donations in return of exposure
- 11.Art-Festivals
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- Tactics
- 1) Media Exposure:
- Advertise in the following magazines at various times of the year.
Address the Christmas Holidays (both shopping and vacation seasons),
construction and remodeling seasons, such as spring and fall. Run the
ads as many times as budget of $20,000 allows, which is about 2-3 times
in each. Show photo image with the artist and/or without (various for
various magazines) and add contact information. Schedule interviews with
the artist, and/or PR presentation of unveiling a monumental piece. PR
should be for free.
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- a) Magazines and Newspapers
- Architectural Digest
- Aspen
- California Homes
- Western Interiors
- Robb Report Luxury Homes
- American Art Review
- Antigues & Fine Art
- Elle Decor
- Los Angeles Times
- The New Yorker
- Business Week
- Chicago Tribune
- New York Times
- Habitat
- Home & Lifestyle
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- b) Other Professional Publications (mostly local publications)
- ��� Advertise in form of images in
as many publications and as many times as budget of $ 4,000 allows.
(About 20 exposures) Mainly do press releases and interviews here.
(Press release on his �new art-books� and perhaps the unveiling of his
monument �Wings of Prey�, as PR and free of charge)
- Art News
- Art World News
- Art Business News
- Popular Photography
- International Artist
- Metropolis
- Digital Fine Art
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- Digital Output
- Fine Furnishings International
- Flash Art
- Hospitality Design
- Art Forum
- Architecture
- Art in America
- c) List him in professional directories, (these listings are usually
free or use $2,000) such as the
- The Franklin Report
- The L.A. Home Book
- Information Source: Audit Bureau Circulation; Traffic Audit Bureau;
Internet search, etc.
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- 2) Gallery Exhibitions
- Organize one gallery opening a year with reception. Invite the clientele
of the gallery and target audience from our list.
- As galleries usually have limited resources to purchase, give pieces on
consignment in the introductory period. Only chose those galleries that
are upscale and are selling in the same price range.
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- List of some galleries around the States includes:
- Artist in Residence
- Artist�s Woods
- Design Company
- Mienso Gallery
- Markamfee Gallery
- Quigley
- Lynn�s Gallery, Nantucket
- Golden Deco Gallery
- Visions Fine Art Gallery
- James Ratliff Gallery
- Exposures International
- La Louver
- The Lowe Gallery
- Information Source: Gallery Guides of States/Cities.
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- 3) Professional Exhibitions
- Schedule Doe in two or three annual Professional Exhibitions, such as
- Elegant Interior Decoration and Landscape Show
- The Los Angeles Interior Design and Antiques Show
- Artbrewery � LA
- Bergamott Station - Santa Monica
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- 4) Public Relations
- Make him a celebrity, build on previous exposure, create sensation, use
celebrity contacts to make statements.
- a) Create interviews on
- Television
- PBS
- KCET
- Local Public Channels
- Jay Leno, by creating sensation and doing a sculpting trick on the show
- Other talk shows, by creating sensation based on his previous exposure
- Architectural TV Shows
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- Radio
- All local radio channels (Interviews�)
- �Write script of interview,
carefully verbalize all information, and be to the point, yet very
descriptive. Be sensational. The new Michelangelo, etc�
- �b) Introduce him to Consulates
and Commercial Offices
- Information Source: Nielson rating Services
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- 5) Direct Mail
- Use direct mail to our target audience and distribution channels. See a
list of these targets under �Target Market� and �Place � Distribution
Channels� in this presentation.
- Purchase specific and narrow lists from Direct Mail Houses, such as list
of owners of Porsche, Mercedes, BMW, yachts, million dollar properties
and jewelry.
- Use the services of Standard Rate and Data (charges a flat $ 600/year
for providing search engines and databases of lists of companies
administering addresses) and obtain lists from Art Galleries and Art
Communities.
- � (Budget: $ 2,000)
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- Marketing Materials used in direct mail:
- 1) There is 1,000 copies of�
high-end, glossy �art-books�/catalogues printed, showcasing a
couple of pieces of Doe�s work, his Biography, Pricelist (detachable), a
two-page PR on his most famous piece as well as lists of his exhibitions
and accomplishments.
- We also printed flyers and three different business cards that go with
the booklet in the form of:
- Continuity
- Similarity
- High quality medium
- Tasteful pick of colors and arrangement
- Cost: cost of printed material is included in our $ 70,000 one time
investment or fixed cost.�
Printing cost for catalogues is $ 7/each.
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- 2) Print electronic business cards
- that will showcase the entire �art-book� and images of any new
sculptures that he may have made recently. List his web address and all
contact info including the name of his Art and Marketing Director
representing Doe exclusively. The card will also accommodate sculptures
in a staged home environment and virtual projections. These cards can be
a hand-out, or an electronic transmission via email.
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- 3) Collaboration with Architects, Interior Designers and Landscape
architects by:
- �� Showcasing �bundled� products
for promotion, such as projections into landscapes of houses and
buildings. See our joint services with Ron Firestone, a recognized name
in architectural design. Lake Arrowhead insertion, Shopping Moll
insertion. These images will also be printed on the electronic card in
a slide-show format.
- 4)There is also a complete ADVERTISING CAMPAIGN in development for Doe.
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- 6) Internet Advertisement
- His website can be viewed at www.website.com. An upscale, classy, and
esthetic design that is still under construction.
- Create exposure by
- ����� Pay-per clicks (Goggle,
Yahoo, etc.
- ����� News and blog
- ����� Cross linking.
- ����� This would ensure that his
site pops up at all relevant searches and under numerous keywords,
such as: art; sculptures; interior decoration; exterior decoration;
landscape; sculpting; portraits,etc�
- Estimated cost: $ 2,000
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- Post his sculptures on EBay Featured items
- Post his sculptures on sites of auction houses, such as Bonham and
Butterfield, etc�
- List him on sites relating to sculpting, such as
- www.guild.com
- www.World Artist Directory.com
- www.South Coast Luxury Place.com, etc.
- Email to already existing clients for follow-up, create extension of
exposure.
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- 7) Architectural Bookstores
- Doe�s �art-book� is displayed at present at the Hennessey and Inglass
Art and Architecture Store in Santa Monica.
- Create more exposure by doing same with other stores.
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- 8) Create free exposure by displaying sculptures
- Sculptures are currently placed on display in Rodeo Drive (Rodeo
Collection Building) in a prominent doctor�s office. These sculptures
are our Mother-Child Subject/ Product line
- Sculptures are also displayed in designers and architect�s offices.
- Display sculptures at highly visited places by affluent clientele, such
as Jose Eber, Spa and Salon on Rodeo Drive where we are to exhibit �Jade
Princess.�
- Display at least 13 sculptures a year (currently 6 + 1 Photography is
displayed)
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- 9) Museum Exhibitions
- Same principle as galleries.�
Exhibit once a year.
- 10)Charity Events and Donations
- Donate two pieces to charities in return of exposure, i.e.: we are
scheduled to be listed as donors with Saint Jude�s Children�s Hospital.
They organize expensive $ 500/ person events for 800 or more well to do
people who will buy the donated items at the gala dinner, which will
finance the charity.
- 11) Presence at art festivals
- Once a year.
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- Budget allocation in total:
- Magazines and Newspapers:���� $
20,000
- Professional Publications:��������
$�� 4,000
- Direct Mail Lists:���������������������
$�� 2,000
- Internet���������������������������������
$�� 2,000
- Total:������������������������������������� $
28,000
- CONCLUSION: We build on Doe�s name and recognition in Canada and use all
media exposure from the past by reference. We create �sensation� based
on the �Story of Wings of Prey� and refer to him as �a Michelangelo of
modern times.� We emphasize the fact that art is an investment and as
the artist reaches name recognition the value of his pieces increase.
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- Objective: Employ 100 salespeople on a commission only basis, exhibit
and sell at ten galleries on a commission basis, and exhibit on five
internet sites to sell Doe�s art and sculpture.
- Strategies:
- Hire salespeople.
- Choose and contract with galleries.
- Choose channels through which to advertise and sell the product lines
on the internet.
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- Tactics:
- Make contacts with potential salespeople in various fields:
- Work with high-end (over $1 million projects) architects on a 10%
commission basis.
- Work with interior designers on 10% commission basis; focusing on
high-end designers.
- Work with real estate developers, on a 10% commission basis, to add as
an element of landscape design:
- Shopping centers
- High-rise office buildings
- Casinos
- City Centers
- Country clubs
- Major hotel chains such as the Four Seasons, the Ritz Carlton, the
Summit, and the Peninsula
- Restorers of antiques on 10% commission basis
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- Investment Bankers on a 10% commission basis
- Doctors who would exhibit a piece in his or her office for a 10%
commission basis
- Auction houses on a 15% commission basis
- Contact, visit, and discuss the opportunities for exhibitions and sales
at galleries in areas of economic wealth
- Select galleries and employ them on a commission basis, between 30-50%
- Target high net worth individuals, those with over $1 million in assets
(business acquaintances; friends, data source lists, and word of mouth)
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- Focus on likely consumer characteristics:
- Extravagant spenders
- Businessmen, Senior Executives
- Celebrities
- Successful career and work-oriented individuals
- Sophisticated individuals
- Well-educated individuals
- High self-esteem individuals
- Abundant resource individuals
- People with a taste for the aesthetic
- People to whom image is important � they favor prestigious products
and services that demonstrate success to their peers.
- Art and sculpture collectors
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- Develop online resources for sales
- Enhance existing www.website.com website
- Develop a seller account on EBay and list products and services for
sale
- List products for sale at online auction houses.
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- Physical Product Distribution
- John Doe owns his own large delivery truck.
- United Postal Service delivery
- A local messenger service
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- ��� Doe has a $70,000 one time
investment. His annual �fixed cost� is 50% of sales.� �Fixed�
cost� in our case consists of cost of marketing.� His annual �variable cost� is an
estimate 25% of revenues.� The
�variable costs� include: foundry, patina, cost of various materials,
plus labor cost for his workers.�
Using the breakeven point formula (total sales = fixed costs +
variable costs + investment) sales of $280,000 must be made in order to
breakeven. (Variable 25% , or $ 70,000 of sales;� plus fixed� 50% or $ 140,000 for marketing;� plus 25% or $70,000 which in our case
is a 100% return on investment that would otherwise be net profit) This
leaves us with a breakeven point. Note that Doe�s overall cost after the
initial investment is all VARIABLE taken that no cost occurs unless
there is a sale. At that point 50% will be fixed cost for marketing, and
25% will vary depending on the material used.
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- In order for us to achieve the $ 280,000 in annual sales we have to sell
6.3 sculptures/ year using the mathematical average by adding up the
sales prices of already existing and sold sculptures and dividing that
figure by the number of items sold.�
Using a very conservative figure and excluding his most expensive
pieces (a $ 450,000 original and $170,000 museum edition sculpture)� we must sell 13.1 sculptures a year.
This also assumes that Doe does not receive any commissioned orders at
all in the first year.
- Taken the sales history of him making 90% of his pieces by larger
commissioned orders it is very realistic to say that with proper
marketing selling 6.3 sculptures would break us even.
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- Further, the artist either pays 50% commission on sold items, and incurs
no fixed cost except material cost, or pays a fixed marketing cost of $
70,000 plus 35% commission. Never both, which, in this case, leaves him
with $ 70,000 profit (this would pay back his one time investment of
exactly $ 70,000), or $42,000 profit (in the case of fixed marketing
expense plus 35% commission) from a $280,000 sale/year. In both cases
the cost of doing business is about $ 7,000 / year, which is
insignificant and we omitted that for simplicity. The current way of
operation is 50% commission on sold items and no fixed cost.� If we maintain the sale of 13
sculptures per year, the artist makes $ 70,000/yearly. However, the
nature of his business is such that with one commissioned work he can
make double our target $280,000 in sales, which we can achieve with good
promotional and marketing efforts. It would only be a question of time.
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- Following the formula used in this presentation, his true business model
excludes fixed cost in the text book sense and he only operates on 75%
variable cost of sale price.� A
fixed percentage of 50% of this variable is a �fixed� marketing expense;
25% or less is �fixed� material cost. Yet both of these are variables
because the amounts all depend on the sale.
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- Marketing Budget:
- The standard monetary allotment for the art industry spending on
advertising and promotion is around ten percent of total sales.� As such, for the first year of
business, a promotional budget of $28,000 has been set (which is 10% of
the price objective of $280,000).�
A reinvestment of 10% each year would further increase revenues
in time, taken the fact that the artist will have achieved name
recognition. We will at that point switch to market penetration strategy
and push the price as high as possible
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- BREAKEVEN POINT IN Doe�S CASE
- 25% variable (within which some cost is FIXED, but it only exists when
there are sales)
- 50% �fixed� variable ( in his case the set up of his business requires
marketing to be present and fixed at all times and his cots from sales
is a fixed percentage )
- 25% net profit
- 25% one time investment (25 % of the Breakeven Gross Income)
- 25% (investment) + 25% (variable) + 50% (fixed variable) = 100%
- $70,000��������������� +
$70,000����������� + $140,000��� = $ 280,000
- This means return on investment.
- ___________________________________________________________
- Once investment is, at any given time, returned:
- 25% (variable)�� + 50% (fixed
variable) + 10% (advertising) + 15% (profit) = 100%
- $ 70,000������������ +
$140,000���� + $28,000���������������� + $42, 0000���� = $280,000
- Assuming that there is no growth rate, a $ 42,000 + any amount that
might come from variable will be realized as Net Profit.
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62
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63
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64
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65
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66
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