Professional Documents
Culture Documents
Customer Profile
Demographics
Target customers of Heart & Sole have a sense of status, are conscientious of how they look,
and want exceptional service and selection. Our target customer is in her 30’s but, we also want to
draw in the 20-29 year old group and keep the women in their 40’s interested. Our customer is
likely married and may or may not have children. She has an image of always looking her best and
has the discretionary income to back it up. If she works, she is in a business/professional field and
desires an even greater selection of shoes for her daily life. Based on information we have collected,
the target market is adequately represented in and around San Jose, California, known as the capital
of Silicon Valley. Corporate headquarters for lucrative companies like Cisco, eBay, Intel and many
others make San Jose an ideal location for Heart & Sole.
Age
Zipskinny.com
The highlighted areas show us that approximately 26% of females in the San Jose area are
within the target age group of 30-39. The age groups above and below our target are important and
highlighted as well. The women in the 20-29 age group are new and future customers and the
women in their 40’s are where we want our customers to be financially. In addition, the older
demographic offer introductions to their younger family and friends making them valuable to our
profitability.
Income
Looking at the highlighted segments, we can see that the majority of the population make
between $50,000 and $149,000. This statistic is crucial to the success of our store because our
confirms their claim with a median household income at $82,072 for San Jose. Our target customer
Education & Industries
A large segment of the population in San Jose has a Bachelors degree or higher. This fits
well into our consumer profile since ideally these people are making the most money.
1 Company Salaries
2 ZipSkinny
Market Analysis July 30, 2010
The highlighted industries are the focus of our research for men because they generate high
levels of income for the area. The focus of the women’s industry statistics is where our product can
Psychographics
Customers of Heart & Sole enjoy shopping and the status that comes with designer labels.
They are more confident because their shoes are made with exceptional quality and look expensive
and fashion forward. Some of our target customers have grown accustomed to the finer things and
some of them are trying to achieve that image. Our customers expect the latest trends to be
presented to them in an environment that makes them feel part of the fashion world. They come to
our store because they know they will find the shoe that tells everyone they are successful and
outgoing.
Free Time Activities
When our customer walks into Borders to pick up the latest New York Times best seller, she
wants people to notice her. She also reads magazines like InStyle, Vogue, and Lucky to stay current
3 San Jose, CA
Market Analysis July 30, 2010
with the trends and new designers. She’s married but maintains other relationships by going out to
dinner and a movie with her girlfriends every other week; usually an independent film or a romantic
comedy. She doesn’t watch much television because she likes interacting socially in her free time
but, she catches the news almost daily and dresses appropriately for the weather. She listens to
contemporary music of many different genres. She enjoys live jazz music and Cajun food at the
Day In the Life
It’s Friday and Sophia wakes up in her downtown high-rise condo around 8 a.m.; her
husband has already left for work. She climbs out of her California king sized bed that is
fitted with Ralph Lauren linens and heads for the master bathroom. While showering she
notices that she needs to restock her Aveda bath products and makes a mental note to call
the spa for an appointment. After showering she goes to the kitchen for her green drink and
whole grain muffin and turns on the local news for the weather.
Next she calls the Atelier Aveda Lifestyle Spa, named one of the best spas in the
northwest by Vogue4, and makes an appointment for a massage and facial. Using various
department store finds like Chanel, MAC, and Bobbi Brown, she applies her makeup and
then walks into her closet. She dresses fashionably in straight leg Seven Jeans, a cotton t-
shirt, a Marc Jacobs cardigan, and finishes the outfit with a pair of Balenciaga booties.
She takes the elevator down to the parking garage and gets into her Mercedes SL500
convertible. Upon arrival at Starbucks, the barista begins making Sophia’s Skinny Latte
before she orders it. She chit-chats with the regulars here before leaving and calls her
girlfriend to see if she wants to meet at Santana Row (San Jose’s premier retail area) for
Sophia goes to her spa appointment and then meets her girlfriend for lunch. They
sip white wine with their Mediterranean cuisine. After lunch they shop at Anthropologie,
Lulu lemon, Burberry, Gucci, and BCBG. Sophia buys a new skirt and top to wear out that
She heads home to relax before preparing for a night out. When her husband,
David, comes home they talk over a Beefeater martini about their day and proceed to dress
for dinner. They go to Paolo’s, a family owned Italian restaurant that has been a San Jose
favorite for more than fifty years. They get their usual table in a secluded area and wait for
the chef to greet them and describe the special of the night.
After dinner they meet some friends from David’s office for a drink and socialize for
about an hour before heading back to their condo for the night.
Prizm Analysis
Even with a very specific target customer, there are different reasons behind buying
behavior. It is necessary to identify the reasons in order to better serve the customer.
According to Prizm NE consumer analysis, the psychographic of our target customer would
include, The Young Digerati, Executive Suites, and Bright Lites, Li’l City. These segments
The Young Digerati is a group within the ages of 25-44 and lives in the city. They
are wealthy individuals with a median household income of $88, 728. They may or may not
be married or have kids but, they have completed their education at graduate levels and
Market Analysis July 30, 2010
above. “The Young Digerati are tech-savvy and live in fashionable neighborhoods on the
urban fringe. Affluent, highly educated and ethnically mixed, Young Digerati communities
are typically filled with trendy apartments, and condos, fitness clubs and clothing boutiques,
casual restaurants and all types of bars—from juice to microbrew.” Lifestyle traits include:
snowboarding, using expedia.com, watching independent films, and drive an Audi A4. 5
This group of active consumers is our primary target. These people are on the
cutting edge of the social scene with money to spend. They want all the latest and greatest
merchandise to accessorize their lives and spend their free time finding those items. Our
product will appeal to this type of consumer because it is fashion forward and exclusive.
Executive Suites are another PRIZM segment represented in San Jose. They are
upper middle class who span a broad age bracket but are generally under 55. College
educated with a median household income of $76,334, these people live just outside the city
with easy commutes to work and entertainment within the city limits. “…this segment is a
Lifestyle traits of Executive Suites are: shopping at IKEA, racquetball, watching The Office,
This segment drives into the city for work, dining, entertainment, and shopping.
They might stop by after work on their way home or make an entire day out of shopping in
San Jose on the weekend. Executive Suites are valuable because they live outside the city
and they bring their friends with them when they shop.
5 Market Segmentation
6 IBID
Market Analysis July 30, 2010
Another category of potential customers for Heart & Sole, is Brite Lites, Li’l City.
These are college educated, middle aged couples without children. They have a double
income and spend their extra money on new technology for their homes and vehicles. They
are upper middle class with a median income of $75,255 and have business/professional
careers. Some of their lifestyle traits include: shopping at Crate & Barrel, watching Lost,
Like the other two segments, Brite Lites, Li’l City have a higher than average income
for their age group. They are not conservative with their money and want the latest
technology and items for their lives. Without children, their careers and social lives take
precedence and they dress to impress because they have the discretionary income to do so.
It is important to this group to stay current with the trends and maintain a higher status.
VALS Segmentation
Achievers; “With many wants and needs, Achievers are active in the consumer marketplace.
Image is important to Achievers; they favor established, prestige products and services that
demonstrate success to their peers. Because of their busy lives, they are often interested in a
variety of time-saving devices.”
Experiencers; “Experiencers are avid consumers and spend a comparatively high proportion
of their income on fashion, entertainment, and socializing. Their purchases reflect the
emphasis that they place on looking good and having "cool" stuff.”
Strivers; “Strivers are active consumers because shopping is both a social activity and
an opportunity to demonstrate to peers their ability to buy. As consumers, they are as
impulsive as their financial circumstance will allow.” 8
7 IBID
8 The VALS Survey
Market Analysis July 30, 2010
Achievers, Experiencers, and Strivers have similarities and differences that are
important to us as a business. All three have the desire to use products and services to
demonstrate their success and are active consumers. Our approach to this type of customer
is to make them feel like they are getting a superior product from us. The atmosphere of the
store will be a key part of this approach. The interior and exterior of the store will be
modern, chic, and inviting. Flat screen televisions and images showing runway and ad
campaigns of our featured designers will reassure customers that our product is on trend.
The women who may not have time to research trends for example, the Achievers, will be
relieved to walk into our store and essentially receive a consultation and styling experience.
This also satisfies the Achiever’s need for prestigious products and services as well as the
Experiencer’s and Striver’s who shop for social interactions and entertainment.
There are contrasting factors that need to be identified and compensated for within
the VALS types. For example, the Achiever has less time for socializing while shopping and
once this type is recognized, if possible, an associate should dedicate their full attention to
satisfying this customer. This differs from the Striver who might appreciate being offered a
beverage and a secure place for her bag while she shops. The Experiencer will appreciate
the patience of the associate as she tries on every new style, walks around the store imagining
the different activities she can use them for and repeatedly looking in the mirror from every
angle.
Buying Motivators
Market Analysis July 30, 2010
merchandising products. For the success of the business, the associate must be able to
identify what will encourage the sale. If persuasion becomes necessary, the associate
communicates what will benefit the customer based on what motivates them to buy. We use
Maslow’s Hierarchy of Needs to categorize features of our product/store and relate them to
Because of the nature of our store, our primary consumer’s biggest motivator will be
Esteem. This level on Maslow’s pyramid is defined by a need of respect for oneself and
Some women may prefer a luxury brand because the quality and comfort allows
them to get more done in their day without changing shoes. This motivator falls slightly in
want to feel like they fit within a group and develop friendships with the owner and
associates of retailers. They also want to identify with other women of their stature by their
clothing/shoe choices.
Because designer shoes can be purchased in many stores, we must offer consumers
more than just a product. Based on our psychographic analysis of the primary consumer, we
can assume that the features of our store that will create lifetime relationships with
customers are; Atmosphere and Designer labels. VALS category Experiencers will benefit
from the entertainment that the atmosphere of our store generates, Strivers will have the
cutting edge styles that make them feel part of the fashion world, and Achievers will fulfill
their need to demonstrate their success to others with designer labels, exclusive selection,
Target Market
Market Location
The city of San Jose is home to the hottest retail destination in Silicon Valley for shoppers
and retailers alike; Santana Row. “Located at the intersection of Stevens Creek and Winchester
Boulevards, this European multipurpose neighborhood with loft apartments is, hands-down, the
most charming spot in Silicon Valley.” 9 Santana Row attracts locals and visitors with a mix of high-
end stores like Gucci and Burberry with trendy ones such as H&M and Urban Outfitters. It boasts a
six screen theatre, more than twenty dining establishments, outdoor public areas, and hosts special
“Residents of the townhomes on the upper levels of Santana Row’s blocks can look
from their windows and balconies and see something pretty much like real life on the
streets below: fitness freaks on their way to the health club at dawn, mothers with
strollers sitting in the parks in the mid-morning sun, business people business-
9 Leong
Market Analysis July 30, 2010
lunching at sidewalk cafes at noon, and San Jose residents of different sorts arriving
to dine, drink, shop, buy a book, watch movies or dance until late at night.”10
Heart & Sole is prepared to introduce itself to this thriving consumer community as its new
and exciting fashion forward shoe boutique. The residential units in around Santana Row provide
the opportunity to develop personal relationships and brand loyalty with our customers.
Market History
As the third largest city in California behind Los Angeles and San Diego, San Jose has a rich
history beginning in 1777 as the state’s first civil settlement. It was the first state capital in 1849 and
“…grew into the center of commerce for an agricultural region known as ‘The Valley of Hearts
Delight,’ full of stone fruits such as apricots, peaches, plums, and nectarines.”11 The Gold Rush
caused an increase in population and the as the town grew the orchards receded. “Technology
replaced farming after WWII, when soldiers returned home, earned college degrees in engineering
and focused on the emerging electronics industry-leading to the birth of Silicon Valley.”12
After the war, the business community made efforts to attract companies to the area. The
population increased dramatically as a result. “Between 1950 and 1975, the population increased
from 95,000 to 500,000 and the size of the City increased from 17 square miles in 1950 to over 120
square miles in 1970.”13 IBM established west coast headquarters in San Jose by 1950 and others
began moving in as well. By the 1960’s the economy of the region was dependent upon electronic
industries. Today, more than 6,600 technology companies are headquartered in San Jose employing
10 Hess
11 San Jose History
12 IBID
13 A Brief History of San Jose
14 About San Jose
Market Analysis July 30, 2010
and the world. For the last three decades a system called
future economic growth. In addition, the city offers business resources and services to newcomers
Geographic Analysis
San Jose is the largest city in the Bay Area about 50 miles southeast of San Francisco.
Incorporated area of the city is 178.2 square miles of which 3.3 is water. Outside the city is Mt.
Hamilton with its highest peak at just over 4,000 feet and the lowest elevation is sea level.
Two miles out of downtown is the Norman Mineta San Jose International Airport and the
city has an extensive freeway system. In addition, it is served by Amtrak, Cal train, ACE, and a local
The location of Heart & Sole, in the Santana Row center, is conveniently located at the
junction of two major Interstates; I-280 and I-880. The accessibility of the shopping area from the
surrounding neighborhoods and San Jose’s commitment to conscientious use of land makes it an
Climate
The average temperature of San Jose in the summer is in the 70’s and the average during the
winter is in the 50’s. The warmest month of the year is July with high temperatures in the mid 80’s
Market Analysis July 30, 2010
but the climate of this area is generally mild. There are approximately 300 days of sunshine in the
Santa Clara Valley where San Jose is located and rain is evenly distributed throughout the months of
the year.
www.worldexecutive.com
The benefit of this mild climate to our business venture, especially with 300 days of
sunshine, is that the weather will not likely be an excuse for people to stay home. The outdoor
public areas and events taking place at Santana Row will encourage people to shop and have fun.
Market Scope
As a major metropolis, San Jose naturally adopts surrounding and suburban areas as its own.
People inevitably commute into and out of the city on a daily basis and this can influence how we
The zip code 95132 is an area to the northeast of downtown and represents our primary
consumer with a median age of 34, and the ratio of females is almost equal to males. The average
value of homes in the zip code is around $650,000 and median income $95,000. 91% of people
Zip Code 95138 represents our primary consumer on the outskirts of the city. Within this
area there is a higher population of women, average age is 33 years, and the median house/condo
value is $846,000. The average salary of residents is $116,000 annually. The percentage of people
The hours of Heart & Sole will be consistent with the surrounding establishments of Santana
Row. Since it’s a mixed use development there are customers throughout the day and up until late
evening. The residential units are a possible supplement to the otherwise off hours of traditional
Market Size and Growth Rate
This chart gives us an annual growth rate for San Jose of 1.2% and total growth since the
year 2000 of 8.8%. Currently the population of the city is over a million people and continues grow
steadily maintaining its position as the tenth largest city in the country.
15 City-Data.com
Market Analysis July 30, 2010
Attractive Features
• San Jose has a median income level that is significantly higher at approximately $80,000 per
year than the national average at $61,000. The discretionary income available in the city is an
• Transportation to, in and around the city is supportive to local businesses. There are two
airports, three railway systems, as well as an extensive freeway system. In planning new
developments, consideration has been taken that most of the population drives a car to and
from destinations.
• Headquarters of major corporations such as Intel, eBay, Cisco, and Adobe are located in San
Jose. The city has the highest concentration of technology companies in the world.
• Santana Row is the premier shopping destination in the Santa Clara Valley. Since opening in
2002 the success of the development has sparked more consumer interest and created a
• Mild weather in the region encourages people to seek entertainment outside their home.
Santana Row has weekly events like outdoor concerts, fashion shows, al fresco dining, and
an outdoor theatre.
Difficulties of Market
• As the tenth largest city in the U.S., congestion could discourage consumers from travelling.
Even with the best transportation systems, traffic is a problem in big cities and can affect
business activity.
• Cost of living in San Jose is very high compared to the national average. The U.S. average is
100 and the index for San Jose is 162.9. Although the average income of families in this area
• Located near the San Andreas Fault, there is potential for damage to the store and financial
loss. The last reported damage to the city from an earthquake was in 1989.
• Besides Santana Row, there are eight other shopping centers/malls within the city limits.
This suggests not only more customer competition but competitive lease terms as well.
• High end shoes may not be the most lucrative market in the struggling economy. Value
Existing Demand
• The market for contemporary/better and bridge categories of women’s shoes in Santana
Row is currently underserved. The price range for these brands is between $100-$1500
dollars.
• Current offerings include true designer brands like Gucci, Ferragamo, BCBG, and Donald
Pliner which retail into the thousands of dollars. Also represented are the budget and
moderate brands that retail from $30 to $150 for example, Steve Madden, Star Ling, and
Jessica Simpson.
• The anticipated success of Heart & Sole relies on the idea that the primary consumer is
looking for contemporary styles/brands that have a reasonable price. She may have a few
pairs of shoes that cost over a thousand dollars but the majority of her collection is exactly
• Also contributing to the success of our store will be the environment of our store. The
unique atmosphere will draw women in who want to find out what’s in store for next season
• Heart & Sole will offer a select variety of brands and styles specific to our target market. We
will retain a factor of exclusivity by carrying styles that are not offered at other shoe stores in
Market Analysis July 30, 2010
Santana Row. This retail strategy is already practiced in the development which will help
Competitive Analysis
The Competition
In the surrounding areas we have identified Donald J. Pliner, Salvatore Ferragamo, and
Donald J Pliner: Donald J Pliner is a world renowned shoemaker known for fashion forward
styles. Our target customers wear heels on a regular basis as well as other potentially uncomfortable
styles of shoes, Pliner’s fashionable selections are known for extraordinary comfort as well, therefore
making him our competitor. Pliner carries the same categories of women’s shoes in his store as
Heart & Sole for the same target market of 20-49 years of age. His collection is sold in specialty and
upscale department stores and his concept store in San Jose is one of only five in the United States.
Salvatore Ferragamo: Ferragamo is one of the most internationally recognized Italian brands
known for luxury and quality craftsmanship. Our customers enjoy the status of designer brands and
association with celebrity style and his shoes are repeatedly on the red carpet. His styles are fashion
forward and contemporary and attract age groups 30-39 and 40-49. The brand is sold in specialty
and upscale department stores and the company has 46 stores throughout the United States.
Burberry: Burberry is well-known for the trench coat but carries a variety of luxury goods for
example, designer shoes, in their stores including their San Jose boutique. Our customers want the
luxury brands and labels at a reasonable price. Burberry is a designer brand but carries many styles
in the bridge category priced under $1000. Burberry is carried in specialty and upscale department
stores and in their own boutiques and outlet stores in the U.S.
Composite S.W.O.T.
Heart & Sole has compiled a condensed and co-related chart of non-redundant, non-
repetitive areas of strategic interest and implication to this new business venture. The emphasis
resides in how obstacles as well as those to better leverage company growth. Our top three
Strengths Weaknesses
Competitors Competitors
• Companies have brand loyalty • Corporate stores are associated with high
• Companies are well established with prices
unlimited capital for staying current with • Corporate policies can create a negative
the trends; business and product experience for customers
• Carry broad selection of their brand • Lack of multiple brands can be seen as
because they are corporate stores lack of variety
Heart & Sole Heart & Sole
• New business will create new brand • Markup has to cover all business
loyalty expenses
• Extensive product and business trend • Private ownership includes risk of failure
resources enable smart use of capital • New business does not have immediate
• Carry exclusive selection specific to recognition, have to draw customers in
target customer
Opportunities Threats
Competitors Competitors
• Online shopping • Corporate store threatened by privately
• Location encourages success of high-end owned business
brands • Recession can limit success potential
• Personal shopping for prominent • Located outside downtown San Jose
customers Heart & Sole
Heart & Sole • Corporate store has glamorous appeal
• Custom website for online shopping • Recession can limit success potential
easier to use and expands customer base • Located outside downtown San Jose
• Good location for success of new
businesses
• Exciting store fronts will develop
recognition and interest
Indirect Competition
The lifestyle of our target customer suggests that they spend a significant amount of their
business as indirect competition. Indirect competition in the area includes the many restaurants and
bars in Santana Row like Roux Louisiana Kitchen, Thea Mediterranean, and Maggiano’s Little Italy.
Some of the more influential retail competition is Borders, Best Buy, and Crate & Barrel. There are
Market Analysis July 30, 2010
also ten salon/spa establishments, several wine bars and coffeehouses all competing for the
Marketing Environment
Economic & Political Issues
National
Market Analysis July 30, 2010
The nation’s economic condition is in currently in a delicate stage. The Fed reported, in
August last year, confidence in an economic recovery for the second half of 2010 but, recent reports
rising, which is an indicator that the local economy in San Jose will be more stable than other parts
of the nation because the city has the highest concentration of technology and software companies
in the nation. Since our target customers are employees and family of software giants like Cisco and
The government has been directly involved with the stimulus of the economy and is
considering more measures to ensure stability. Chairman of the Federal Reserve, Ben Bernanke has
been quoted as saying, “We are ready, and we will act if the economy does not continue to improve,
if we don’t see the kind of improvements in the labor market that we are hoping for and
expecting.”17
According to Cathy E. Minehan, a former president of the Federal Reserve Bank of Boston,
“We’re in a lousy middle between the economy picking up on its own and falling off a cliff,” she
said. “And that makes policy-setting really hard.”18 Statements like this are of concern to Heart &
Sole because consumers have less discretionary income during bad economic times and spend less
money.
This means more available consumer credit which is beneficial to a new business like Heart
& Sole. Luxury purchases are sometimes out of budget range for some customers but, with a credit
card, the purchase can still be made. For the past year, consumer spending was increasing slowly
every month but according to the Commerce Department, “…figures, which were seasonally
adjusted, showed that personal income was steady in June, compared with a slight 0.3 percent rise in
May. It was the lowest level this year and the first time in nearly a year that personal incomes have
not risen compared with previous months.”19 Chris G. Christopher Jr., IHS Global Insight’s senior
principal United States economist, said in an interview, “The problem with this type of a situation,
where consumers become more concerned with reducing debt and constraining spending, is you
have no idea how long it will last,” he added. “It could be one month or one year.”20 Ultimately the
consumer decides how long they will cut back on spending. Our plan to open our store in an area
less affected by the recession is part of a strategy for a successful business venture during harsh
economic times. Our marketing strategy, catered specifically towards our target customer, is another
part of the plan and helps us to look past some of the negative connotation associated with small
business ownership.
State
18 Chan
19Hauser
20 IBID
Market Analysis July 30, 2010
California has been at a budget impasse for two years and issues continue to go unresolved.
The state deficit is currently $19 billion and Governor Schwarzenegger has come under scrutiny
look elsewhere for assistance. Private loans and other resources have been helpful to
California business owners who have grown used to the economic problems of the
state. The recession has forced millions in spending cuts, most of which have been
Regardless of economic crisis, California is still a high wage earning state and
the map below shows that the nation’s highest earners are located in California and
21 Lin
22 IBID
Market Analysis July 30, 2010
“The map above shows the distribution of pay levels across all U.S. metro regions. The
highest-paying metro pays more than double the lowest-paying one ($66,780 vs. $30,670). In fact,
there are roughly two dozen metros which have half the pay level of the highest-paying region. That
highest-paying region is San Jose ($66,780).”23 The distribution of higher wages in the country is
concentrated in California.
City
For the last three decades a system called Smart Growth has been in place to balance and
protect future economic growth. In addition, the city offers business resources and services to
newcomers in San Jose, promoting further economic growth in the coming years. “The economy
23 Florida, Richard
Market Analysis July 30, 2010
may be slowing but Santana Row, one of the most ambitious retail developments in the Bay Area,
continues to thrive and dominate as Silicon Valley’s premier spot to set up shop.”24 Because of San
Jose’s dedication to keeping jobs and revenue in the city, business in San Jose is doing well despite
the recession.
Top 20 Regional Employers
24 Kato
25 San Jose
Market Analysis July 30, 2010
Legal/Regulatory/Tax/Licensing Criteria
County Clerk
Business Structure
Zoning
Market Analysis July 30, 2010
Business Tax
• All persons or companies conducting business is San Jose must pay the business
license tax
• Tax is required prior to commencement of business in San Jose
• Basic tax rate $150.00
• Businesses employing more than eight people pay an additional $18.00 per additional
employee
• Seller’s Permit
o Intending to sell or lease goods requires a permit or, resale number
o No fee
o Before calling have ready: business plan, proposed location, personal finance
statement
26 Guide
Market Analysis July 30, 2010
Social Issues
Educational Level
Educational Achievement:
(among people 25 years or older)
zipskinny.com
According to zipskinny.com, for people who are 25 years and older within zip code 95134,
86.6 percent of residents have a High School diploma or higher and 50.5 percent have a Bachelors
degree or higher. This statistic is above the national average for educational achievement in the U.S.
It is important for us to analyze this information because our target consumer makes an above
average income which is typically characteristic of someone with a Bachelors degree or higher.
People within this educational bracket have more discretionary income and a higher level of
employment. They spend more money on entertainment and social functions at restaurants located
around the area of Heart & Sole; they also attend more formal functions like corporate dinners,
museums, and community events where they will be wearing our product.
Market Analysis July 30, 2010
Family Size & Structure
Relationship
San Jose, CA
Estimate Percent
Total Population 964,695 964,695
Population in households 896,472 92.9%
Householder 288,750 32.2%
Spouse 155,521 17.3%
Child 285,493 31.8%
Other relatives 106,476 11.9%
Nonrelatives 60,232 6.7%
Unmarried partner 15,961 1.8%
Households by Type
San Jose, CA
Estimate Percent
Total households 288,750 100%
Family households (families) 208,192 72.1%
With own children under 18 years 106,500 36.9%
Married-couple family 155,494 53.9%
With own children under 18 years 80,249 27.8%
Male householder, no wife present, family 17,750 6.1%
With own children under 18 years 7,756 2.7%
Female householder, no husband present, family 34,948 12.1%
With own children under 18 years 18,495 6.4%
Nonfamily households 80,558 27.9%
Householder living alone 63,475 22%
Householder 65+ years 17,104 5.9%
Households with individuals under 18 years 116,380 40.3%
Households with individuals 65+ years 57,926 20.1%
Average household size 3.10
Average family size 3.63
factfinder.census.gov
Family size and structure is relevant to our business venture because we want to make
ourselves known through advertising and events in the community. Knowing the structure of the
household can clue us in on where these people may be spending their time and money allowing us
to penetrate those areas. Our target customer is married between the ages of 20-49 which puts them
at an appropriate age for having children in the home. Looking at the charts we can see that 92.9
Market Analysis July 30, 2010
percent of the population live in a household and within the household, 53.9 percent are married
couples living with children under the age of 18. Children under the age of 18 will be influenced by
the purchases of their parents and will likely become customers of our store as well.
Birth Rates
Planning for future customers of Heart & Sole can also be helped by analyzing birth rates in
the county of our location. In comparing the statistics for the region with those of the state we can
find out if they have similar trends and make better predictions. The chart below shows a dramatic
decrease in the birth rates between 1996 and 2000 for the state of California as a whole but, Santa
Clara County remained stable for that period. As the rate begins to climb in the preceding years the
trend is congruent for both the county and the state but the county begins to taper off while the
state continues to grow. Santa Clara’s birth rates have remained steady throughout periods of
California’s spikes and drops which is good for our business because we can assume the rate will
LIVE
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
BIRTHS
CALIFORNIA 538,628 524,174 521,265 518,073 531,285 527,371 529,245 540,827 544,685 548,700
SANTA
CLARA 26,646 26,416 26,659 26,266 27,612 27,076 27,060 26,997 26,537 26,553
COUNTY
ca.gov
Market Analysis July 30, 2010
Housing
Factfinder.census.gov
There is a total of 301,826 housing units in San Jose according to Census.gov and of those,
95 percent are occupied. The median value of owner occupied homes is significantly higher than the
national average at $678,100. Although this statistic suggests that the cost of living is much higher in
San Jose, it also signifies that the people living here are earning more money and with the percentage
of occupied housing being higher than average as well, we can assume that the income of the people
living here is adequate for the higher cost. These statistics support our calculations that the target
Market Analysis July 30, 2010
Poverty
A very small percentage, 9.9 percent, of the population in San Jose lives below the poverty
level. According to zipskinny.com, only 2 percent of the whole population is unemployed which is
below the national average. These are the ideal circumstances for embarking on a business venture
during a less than ideal economic situation. The statistics imply that the city is less affected by the
Crime Rates
Crime by Type
The\
Auto The\s
Burglaries
Assualt
Robberies
Arson
Other
city-data.com
According to Morgan Quitno Press State and City Rankings, San Jose is ranked the #1 safest
city with a population of 500,000 or more in 2006.27 Theft is the most common crime in the city
and between 1999 and 2008 the rate has decreased from 15,151 to 13,612 (per 100,000) according to
27 America’s
Market Analysis July 30, 2010
the city-data.com crime index. Having an exceptional record in this area is supportive of business
Cultural Issues
Ethnicity
Race
Hispanic/Latino: 15.3%
White*: 46.6%
Black*: 5.3%
Native American*: 0%
Asian*: 28.4%
Hawaiian/Pacific Islander*: 0.2%
Other*: 0.2%
Multiracial*: 3.4%
Zipskinny.com
San Jose consists largely of White, Asian, and Hispanic people. It is important for us to
analyze the ethnicity of the target customer to enhance our advertising function and be respectful of
their traditions. The national average for the population of White people in a community is 75%,
according to Americantowns.com.28 With only 46.6% of our population being white, the city is
under the national average and more diverse than the average community. All of the calendar
holidays such as Christmas and Labor Day will be considered and used for promotional purposes.
The Asian population makes up the second highest race in San Jose and we will consider the
Chinese New Year as well as the Ching Ming Festival when planning promotions since these are two
Asian Holidays. The Hispanic population is prominent in the region as well and some holidays to
consider for the group are Cinco de Mayo, Carnaval, and the Quinceañera.
Local Attractions
The nightlife and community events in the area affect not only our product mix/offering but
also how and when we operate and our advertising campaign. In order to get our name into the
subconscious of the consumer, we must be in all the places where they are. This means that we
infiltrate the community by including ourselves in the activities of the community. Listed below are
some of the events, venues, museums, clubs, restaurants, and bars that we will use to familiarize the
Religious Issues
Denomina&onal Groups, 2000
Unclaimed
Catholic
Other
Evangelical Protestant
Mainline Protestant
Orthodox
The majority of the population does not claim a specific religious affiliation. This affects our
promotional department because with this information we know that most people will not be
offended or put off if we focus a campaign around holidays that they do not celebrate. Since we
have a very diverse community, it will suit our store to give promotional periods a general/seasonal
name for example, Winter Sale instead of Christmas and Spring Sale instead of Easter. Catholic
holidays are very similar to Christian but, a promotion related to Lent could be incorporated to
Technological Advances
The POS system we will use in our store will be helpful in personalizing the shopping
experience for our customers. Their addresses, email and residential, will be in the system for us to
use when sending out promotional items like card mailers, and upcoming events. It will also allow
us to track the purchases of the customer and send out messages when their favorite brand has a
markdown. The POS system will also use perpetual inventory systems to reduce errors and make
The internet will be an important and revenue boosting aspect to Heart & Sole. Special
attention will be made that the website is user friendly, clear, and attractive to our customers. There
will be links to Facebook so that the customer can share her favorites with her friends. On the
store’s own Facebook page will be links to the available selections, and alerts for promotions and
events. We will use Facebook because it is user friendly and in July of 2010 Facebook reached over
500 million active users.29 Also, Facebook headquarters are located in the nearby city of Palo Alto
Environmental Issues
Leadership in Energy & Environmental Design or LEED, is the most commonly used rating
system for green planning, architecture, and building sustainable structures.30 Since our structure is
already in place, we will not be building anything on the exterior but any interior renovations will be
LEED certified. Recycled materials will be used for the interior design elements, LED lighting will
be used throughout the store and low flow plumbing fixtures as well. We will take any steps
possible to lower our carbon foot print in the community. San Jose offers incentive programs to
businesses as well.
“The City of San José, Pacific Gas & Electric Company, and Ecology
Action have joined forces through Silicon Valley Energy Watch
(SVEW) to help Santa Clara County take advantage of cost-saving,
energy-efficient technologies. The program offers free energy audits,
targeted retrofits, technical assistance, education, training, and more.
Target audiences include municipal governments, non profits, small
businesses, community organizations, professionals, and residents.
We will connect eligible customers to the broad range of audits,
rebates, and technical support available to help you save energy and
save money. Specific program offerings are listed on this web page.”31
29 Facebook
30 Brook
31 Energy
Market Analysis July 30, 2010
Marketing Strategy Plan
Kelley Pace
Market Analysis July 30, 2010
Promotional Plan
Image Statement
Customers will first be attracted to the creative window displays which will feature the
bestselling trends of the current season and a sneak peak of an upcoming trend. Heart & Sole will
carry boots, flats, platforms, pumps, sandals, special occasion, and slippers for women within the
Upon entering the store the customer will be greeted by a salesperson who will allow the
customer the chance to take in their surroundings which will include flat screen televisions on either
side of the store showing runway collections of featured designers. While the customer is browsing
the oak and glass shelves with shoes placed appealingly upon them, the sales person will offer them
The wood floors will have a design built in to lead the customer around the store and there
will be full length mirrors on either side of leather seating areas when they are ready to try on. Full
service fitting will be provided by associates for the ultimate shoe shopping experience including a
Artwork in the store will consist of ad campaign photos of current and upcoming trends
placed near the shoe display for that particular designer. Black will be a naturally contrasting accent
color for seating and other features around the store. Flowers from the nearby Citii Florist will be a
We have chosen wood and glass as our main materials for the store because wood gives
warmth to the environment and glass gives the shoes a prestigious display. The wood will come
from two local business owners; one who specializes in eco-friendly hardwood flooring, San Jose
Market Analysis July 30, 2010
Hardwood Floors, and the other, Southern Lumber, has been in business for over a hundred years
and specializes in exotic and local species of wood. It is necessary for our materials to come from
local businesses because San Jose is especially supportive and conscientious of small business
ownership. Our image will bring success because the environment will be beautiful, warm, and
Marketing Mix
Product
Heart & Sole will carry several brands and designers to give the customer the best selection
of their favorite trends. Inventory will include but is not limited to; Jimmy Choo, 3.1 Phillip Lim,
Tory Burch, Elizabeth and James, Dolce & Gabbana, Manolo Blahnik, Salvatore Ferragamo,
Burberry, Yves Saint Laurent, Valentino, Jeffrey Campbell, Via Spiga, Stuart Weitzman, Fry, UGG,
and KORS Michael Kors. Depending on the season, trends, and availability we may not carry all the
brands during any specific period but instead choose specific styles from each vendor to provide our
www.tomspencer.com
Market Analysis July 30, 2010
Since many of our brands are designer and high end labels, our shoes will range between the
introduction and maturity stage of the product life cycle with emphasis on the growth stage. Our
customers are innovators and early adopters and our inventory will reflect their taste. Using the
internet to forecast future trends we will be able to test market perhaps new colors or materials in
our store as well as some of the more risky styles that other stores will not take a chance on. We will
monitor the collections and assortments of the stores around us to ensure that we have styles that
are limited or otherwise absent. Our reputation will be built upon our ability to offer what no one
else has.
Price
We will be accommodating the needs of women who have a shoe for every occasion.
Because of this, we will carry a large breadth of styles with less depth in order to provide the best
styles for each category and to maintain exclusivity. Since shoes typically come in pre-packs of 12,
our units of inventory depth reflect the purchase of either one or two pre-packs purchased from
vendors. Our price range will start at around $150 and taper off at $1500. The inventory of our
most expensive styles will be yet more limited to maintain a profit margin.
Boots
Inventory Depth
30
20
10
Boots
0
$150 $250 $350 $450 $550 $650 $750 $850 $950 $1,050
Price Zones
Market Analysis July 30, 2010
Our boot selection will consist of a variety of heel heights from flat to high and shaft heights
starting with ankle booties up to over the knee. Within our price range we can expect to sell the
Flats
Inventory Depth
30
20
10
0
$150 $250
$350 $450
$550 $650
$750 $850 $950
$1,050
Price Zones
The flats category has a lower price point and the charts shows an absence of inventory
beyond the $650 zone. Based on our consumer profile we can expect sell the majority of flats in the
Pumps & PlaCorms
Inventory Depth
30
20
10
0
$150 $250
$350 $450
$550 $650
$750 $850 $950
$1,050
Price Zones
Market Analysis July 30, 2010
This will be our category with the largest depth and breadth because our target consumer
wears high heels frequently and to a variety of functions. Carrying designer brands will allow us to
span a broader price range in this category selling the most in midrange zones and tapering off at the
$850 mark. However, we will offer some styles at the higher price zones but the depth of inventory
Sandals
Inventory Depth
30
20
10
0
$150 $250
$350 $450
$550 $650
$750 $850 $950
$1,050
Price Zones
This category includes flat sandals at the lower price zones and heeled sandals at the higher
price zones. The flat sandals, much like the flat shoes in general will sell mostly around the $250
zone while the high heeled sandals will span the rest of the zones but with less depth of inventory.
Market Analysis July 30, 2010
Special Occasion
Inventory Depth
30
20
10
0
$150 $250
$350 $450
$550 $650
$750 $850 $950
$1,050
Price Zones
The special occasion category will be a profitable one for Heart & Sole since our customers
attend social and career functions that require black tie/formal attire. The price zone for this
category extends all the way to $1050 but the majority of styles carried will be between $550 and
$750.
Slippers
Inventory Depth
15
10
5
0
$20
$40
$60
$80
$100
$120
Price Zones
Market Analysis July 30, 2010
We will offer a small selection of plush slippers that our customers will not be able to resist.
The majority of inventory will be UGG brand and priced between $40 and $100 dollars. We will
Place
The owner and operator of Heart & Sole will be carrying out all of the buyer’s
responsibilities including contacting and negotiating with vendors. Online directories such as
tradekey.com and designerwholesalesource.com will be utilized as well as attending trade shows and
showrooms. Shipments will be made domestically through YRC Shipping, DHL, FedEx, and UPS.
International shipments on the west coast will be delivered to the Port of San Francisco or the Port
of Oakland. From there the merchandise will be sent on a truck the short distance to our store.
International shipments coming from Europe will arrive at the Port Jersey Marine Terminal where it
Promotional Mix
Advertising Strategy
In order to get the most out of our advertising dollars we will focus our strategy on
electronic platforms like Facebook, twitter, and m-commerce. We will take advantage of geo-
fencing, notifying customers of new merchandise and items that have been reduced when they enter
the area around our store. We will count on comparison shop apps for smart phones to show our
better selection of brands carried in the stores around us. Santana Row has recently been added to
the list of applications available to iPhone users. Our strategy is designed specifically for our target
We will advertise our store in the Mercury News, a Silicon Valley regional newspaper. In
addition there will be an ad in San Jose, The Magazine of Silicon Valley. Our store name will be
included in the directory for Santana Row on the website with a brief overview of our store and a
picture.
Direct Marketing Strategy
An invitational mailer will be sent out to businesses and neighborhoods in the area upon
opening the store. Once customers are in the database they will receive notification of upcoming
events and shipments via mail or email, whichever they prefer or both. Customers who develop a
more personal relationship with Heart & Sole will be contacted by phone when a shipment of their
Public Relations
Our main focus for public relations strategy is through noncompetitive cooperative
advertising with other local businesses in the city. We will subtly make it known what businesses we
know and trust in the community by using their products in our store and they will allow us to place
We will be donating funds to the Bay Area Breast Cancer Network located in San Jose as
well as participating in events such as the Survivor Dinner and the running and swimming sport
events. We feel this organization represents an issue affecting a large percentage of our primary
consumer and headquarters are within direct vicinity of our store making relations that much easier.
San Jose is host to fashion events including their own Fashion Week where we will be
involved by donating shoes for the runway looks and/or having our own showcase walking the
runway. Fall Fashion in the Park takes place at Santana Row with four runways, featuring fall’s
Market Analysis July 30, 2010
hottest trends and we will be taking advantage of the extra publicity at that time as well by making
sure our product is placed and our store name highlighted throughout the event.
Networking with local people in the restaurants, bars, and museums will be the public
relations of everyone employed at Heart & Sole. Attending museums, wine tastings, and concerts
locally will be part of our networking strategy and donating tickets to these kinds of events for
giveaways on radio stations like KEZR Mix and KFOG World Class Rock will be element as well.
Personal Selling & Sales Promotion
Employees will be carefully selected as they are a key component of the success of our
business venture. Training will be taken seriously and trainees will be expected to identify with the
image of the store as well as with the image of our customers. Learning to gauge the customer by
their mannerisms and interactions and how to adapt to fit the customer needs will be part of the
training. Our sales staff will be recognized for excellence and will maintain their enthusiasm with
Our promotional events will be limited because our products are high end and discounts do
not compliment designer wares. However, we will have events around the holidays, particularly
ones that involve gifting women for example Mother’s Day, Valentine’s Day, and Christmas. We
will team up with Citii Florist to offer a package deal for those holidays; a gift card for Heart & Sole
embedded in a magnificent arrangement of flowers. We will have invitation only events before
spring and fall featuring new and exclusive merchandise for our most valued customers and for our
top sales person to reap a commission bonus off total sales for the event.
Market Analysis July 30, 2010
Internet Strategy
• Our store website will be used to direct customers to our store but mainly as a way to move
inventory that didn’t sell well, overstock, and other discounted items. Shipping of the clearance
• Our Facebook page will be fashion news and photos of upcoming key shapes and colors and a
way for our customers to get a sneak peak at what we might be carrying in the coming months.
It will be a method of advertising in a sense that the customer has access to a calendar of events,
and a direct line of communication with the staff to express requests or complaints.
• The POS terminal will keep the email and address of our customers and will be used to send out
Birthday specials and aging data base promotions to those who have not made recent purchases.
It will also hold each customers preferences once those have been established.
• Geo-fencing and m-commerce will be used as a strategy counter to our direct competition and
Tactical Plan
Gantt Chart
Scheduled Task Specifics
Prior to Opening
Secure Loan
Finalize loan terms and agreement within 2-4 weeks following business plan approval
Prepare budget for materials, labor, and equipment
Obtain Permits/Licenses
While waiting the 1-2 weeks for loan approval we will begin legal procedures
Obtain building permits and business licensing according to procedures as stated in
Marketing Environment
Consider environmental regulations and zoning laws; proceed accordingly
Order Interiors
Construction Interior
Coordinate with store planner for colors and textures of all interiors
Decide on interior lighting and décor materials
Review budget and make adjustments
Order Inventory
Review back-stock space with Store Planner and plan product organization
Research available merchandise from vendors, layout floor-plan accordingly
Begin negotiations with vendors which could take up to two months; a third and fourth
month is allocated for shipping time
Inventory should be received by July
Review Planograms
Finish merchandising plan with Store Planner after adjustments in inventory and
merchandising areas are made
Research resources for fixtures that are consistent with the desired shopping environment
that will hold the amount of merchandise necessary
Confirm planogram
Market Analysis July 30, 2010
Order Fixtures
Determine human resourcing needs based on store hours, anticipated traffic, and availability
of workforce
Decide on recruiting techniques and contact appropriate people for newspaper ads,
employment agencies, and Santana Row hiring support
Merchandising
Circulate Promotions
Soft Opening
Grand Opening
Following Opening
Market Analysis July 30, 2010
Reach & Frequency Plan
The chart below shows a tentative plan for advertising. The Facebook cost is subject to
change depending on how many hits the banner receives. The mailer is sent out twice a year for
Pricing Plan
Pricing Objectives & Pricing Strategies
Our pricing strategies will fulfill our two main objectives at Heart & Sole:
Increasing market share will be achieved with premium pricing. Our product is unique
because we sell specific lines and styles that the direct competition does not carry. This
competitive advantage will allow us to price the product at the level that will suit our
operational needs. Our target customer enjoys the reputation associated with higher priced
products.
Company growth, our second objective, will be achieved with price skimming. This
strategy is affective in targeting the early adopters and is appropriate for our product offering
and low inventory levels. Our customers are less sensitive to high prices and appreciate our
exclusive selection which will drive sales for Heart & Sole.
Markup & Markdown Plan
Designer shoes are subject to price restrictions which we will abide by. Markup will range
between 200-400% depending on the style and suggested retail price. Freight costs will also be
considered when determining selling price. Shoes coming from Europe will have more expense
Special events, for example Fall Fashion in the Park will yield a lower markup since it is one
of our biggest promotional events. Also, our annual sale will have promotional pricing and carry
lower markup.
Market Analysis July 30, 2010
Markdowns will be minimal because of our high end products. Our website will be
developed specifically to push styles that did not sell well. The majority of markdowns will be sold
Stock Turnover
We are projecting a stock to sales ratio of approximately 3.8-4.2 which means that we plan to turn
Terms of Payment
Paying our vendors on time will yield discounts that we can use to maximize profits.
Accounting will be handled by a third party to ensure the most practical functioning of the budget.
We anticipate terms of payment to be 10 2% 30 with the majority of our vendors. The 2% discount
will be substantial considering the cost of the product. We can assume that we will use some
vendors more regularly than others and all are subject to change considering the nature of high
fashion.
Market Analysis July 30, 2010
Distribution Plan
OffSite Sales
Our customers will be able to use the phone to inquire and order specific styles. There will
also be a customer request form in the store for special orders. The customer will be notified by an
associate when the order is ready and at that time we will ship the product to them or they can pick
up in store. Our website will be used specifically for markdown merchandise. Our m-commerce
application will be used for comparison shopping products carried in the store.
Forms of Payment
Customers will be able to use cash, check, debit or credit cards. The merchant processing
company we will use to facilitate credit/debit services is Flagship Merchant Services. They have
been awarded as the 2010 Gold Award Winner according to toptenreviews.com based on a review
of their features and benefits. The cards they accept are: VISA, Master Card, American Express,
Shipping
We will ship products to our customers with United Parcel Services that are ordered via the
phone, in-store, and the internet. UPS ships nationally, internationally, and they provide a return
label making it more convenient to return an item. Also, they accept packages at their stores, drop-
boxes, and through drivers. They are environmentally conscientious which fits with our target
market in San Jose. They have an eco responsible packaging program intact and are committed to
reducing carbon emissions. “UPS offers a variety of tools to help you demonstrate
Market Analysis July 30, 2010
your commitment to reduce your climate impact, so your package recipients can feel good about
The map shows transit time associated with domestic ground shipments. Prices vary
depending on what zone the package is being sent to and what type of service is requested. We
anticipate a maximum weight of 10-15 pounds which will keep charges low.
ups.com
32 www.ups.com
Market Analysis July 30, 2010
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