Marketing Plan

This sample marketing plan has been made available to users of Marketing Plan Pro powered by Duct Tape Marketing, marketing planning software published by Palo Alto Software, Inc. Names, locations and numbers may have been changed, and substantial portions of the original plan text may have been omitted to preserve confidentiality and proprietary information. You are welcome to use this plan as a starting point to create your own, but you do not have permission to resell, reproduce, publish, distribute or even copy this plan as it exists here. Requests for reprints, academic use, and other dissemination of this sample plan should be emailed to the marketing department of Palo Alto Software at marketing@paloalto.com. For product information visit our Website: www.paloalto.com or call: 1-800-229-7526. Copyright Palo Alto Software, Inc., 1998-2010 All rights reserved.

Confidentiality Agreement
The undersigned reader acknowledges that the information provided by _________________________ in this marketing plan is confidential; therefore, reader agrees not to disclose it without the express written permission of _________________________. It is acknowledged by reader that information to be furnished in this marketing plan is in all respects confidential in nature, other than information which is in the public domain through other means and that any disclosure or use of same by reader, may cause serious harm or damage to ________________________. Upon request, this document is to be immediately returned to _________________________. ___________________ Signature ___________________ Name (typed or printed) ___________________ Date This is a marketing plan. It does not imply an offering of securities.

Table of Contents
1.0 Marketing Vision ...........................................................................................................................................1 1.1 Goals ...................................................................................................................................................1 1.2 Purpose ...............................................................................................................................................1 1.3 Picture .................................................................................................................................................2 1.4 Gap Dashboard ...................................................................................................................................2 Table: Gap Dashboard ....................................................................................................................2 2.0 Ideal Customer..............................................................................................................................................3 2.1 Market Description ..............................................................................................................................3 3.0 Remarkable Difference .................................................................................................................................3 3.1 Differentiators ......................................................................................................................................3 4.0 Core Strategy ................................................................................................................................................4 4.1 Core Branding Elements.....................................................................................................................4 5.0 Product/Service Innovation ...........................................................................................................................4 5.1 Price Rationale ....................................................................................................................................5 6.0 Marketing Materials ......................................................................................................................................5 7.0 Web Plan ......................................................................................................................................................5 7.1 Social Media Plan ...............................................................................................................................6 8.0 Lead Generation Plan ...................................................................................................................................6 8.1 Advertising ..........................................................................................................................................7 8.2 Referrals ..............................................................................................................................................7 9.0 Lead Conversion Plan ..................................................................................................................................7 10.0 Service Experience .....................................................................................................................................8 10.1 Loyalty Product/Service Offerings ....................................................................................................8 10.2 WOW Process ..................................................................................................................................8 11.0 Marketing Calendar ....................................................................................................................................9 11.1 Monthly ..............................................................................................................................................9 Table: Milestones ..........................................................................................................................10 12.0 Critical Numbers .......................................................................................................................................10 12.1 Sales Forecast ................................................................................................................................11 Table: Sales Forecast ...................................................................................................................11 Chart: Sales Monthly .....................................................................................................................12 Chart: Sales by Year .....................................................................................................................12 12.2 Marketing Expense Budget ............................................................................................................13 Table: Marketing Expense Budget................................................................................................13 Chart: Monthly Expense Budget ...................................................................................................13 Chart: Annual Expense Budget ....................................................................................................14 12.3 Key Marketing Metrics ....................................................................................................................14 Table: Key Marketing Metrics .......................................................................................................15 13.0 Marketing Training Game .........................................................................................................................15 Table: Sales Forecast .........................................................................................................................................1 Table: Marketing Expense Budget .....................................................................................................................2 Table: Key Marketing Metrics .............................................................................................................................3 Table: Gap Dashboard .......................................................................................................................................4

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1.0 Marketing Vision
Local Threads seeks to make a cumulative impact on the buying patterns of Redwood City College students and locals through the viral effect of its marketing, growing sales and membership, and increasing visibility in the community. The marketing of the business will focus on providing value to the customers both through the products sold and information provided through online outlets.

1.1 Goals
Personal goals for the CEO include: Maintaining steady work on marketing after launch, including 1 hour each morning, 6 days a week. Establishing personal relationships with other business owners and heads of relevant associations that can help Local Threads in terms of visibility and direct referrals. Receiving a living wage from the business from launch, and increasing income from the business every year

Business goals include: Growing sales to $240,000 in the third year Increasing referred customers to 1,190 in the third year

Tactical goals include: Establishing a thorough Web resource, as shown by the number of links to other sites Establishing a useful email newsletter, as shown by the number of subscribers Sponsoring a college a cappella group every year, via a high-profile contest on the Redwood City College campus

Strategic goals include: Obtaining increased customer satisfaction, as shown by the growth of customer testimonials Obtaining increased customer input into sourcing, as shown by the growth of member participation in advisory groups

1.2 Purpose
Local Threads seeks to grow its business in order to return profits to its CEO and founder, of course, but also to have a considerable impact on the buying habits of Redwood City. Through its promotion of the importance of buying local and buying green, Local Threads hopes to raise awareness of the damaging effects of globalization and empower individuals to consider that their individual buying habits have an important, cumulative effect. This marketing plan will guide Local Threads to engage its customers beyond what a traditional clothing store can hope for.

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1.3 Picture
Local Threads will be a funky and accessible store, where customers are not only treated with a smile and courteous attention, but enjoy the complete transparency of the sourcing process through prominent displaying of the story of each supplier on cards with their clothing items. A customer entering the store would immediately learn of the store's difference from the store clerk, and see this difference by reading the many profile cards on its suppliers. This experience would continue at check-out, when the customer learns of ways to share the store with others by being offered cards to take home and to join the membership program so that he/she and friends can all enjoy 10% discounts. Because buying at Local Threads means quality clothing which is unique and makes the customer feel good about their effect on the environment and local economy, it is a no-brainer for the customer to recommend to others to visit the store, especially when those others share the same political inclinations.

1.4 Gap Dashboard

Marketing metrics will be accumulated at least weekly in the POS system and a Gap Dashboard will be viewed on a monthly basis to compare against projected totals which correspond to the key goals for the business. The Gap Dashboard will provide the CEO with an overall understanding of whether the business is reaching his personal, business, tactical, and strategic goals as set, and where problems may lie. Shortfalls in these numbers will be examined for their root cause. The business will be flexible to change projections in some areas, although the net result in sales and income must stay the same for Local Threads to be considered a success by the CEO.

Table: Gap Dashboard

Gap Dashboard Year 1 Personal CEO hours spent on marketing CEO business relationships established CEO income from business Business Sales Referred Customers Tactical New links to other sites on website New email subscribers Entrants in sponsorship contest Strategic Customer testimonials Members on advisory groups 312 105 $33,000 Year 2 312 126 $45,000 Year 3 312 130 $60,000

$121,869 570

$209,004 1,035

$240,354 1,190

210 960 3

100 1,863 5

80 2,142 8

17 0

20 15

25 30

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Local Threads
2.0 Ideal Customer
The ideal customer is a Redwood City College student. Having traveled hundreds or thousands of miles from her home, this student desires to redefine herself over the course of her college time. The fashions of her teen years no longer feel relevant on campus or perhaps her wardrobe requires an update simply due to age. Furthermore, this student develops (or already had) an interest in environmentalism. This movement proposes purchasing locally produced goods. Foreign-made clothes carry a social and environmental cost which the student would gladly avoid. She realizes she cannot purchase the lowest cost clothes with these ideals, but having a store within walking distance from campus and a local focus makes up for higher prices.

2.1 Market Description

The ideal market for Local Threads primarily meets the following characteristics: 18 to 30 years old Undergraduate or graduate student at Redwood City College Works on campus or from an upper-income family (has money for discretionary spending) Believes that individual decisions have a cumulative impact on the environment (that one person can make a difference) Involved in campus activism or a supporter of environmental groups Lives on campus or within walking distance from campus

Secondary markets include staff at the college, young faculty (under age 35), and local residents who do not attend the college, ages 15 to 30 years old.

3.0 Remarkable Difference

Local Threads features only clothing items produced within a 200 mile radius of its location, including mass-produced items as well as items produced by individual designer/producers or craftspeople. The business will advertise the source of all of its items as clearly as the price in order to describe how the item got to Local Threads and how purchasing it will be an environmentally and socially conscious choice. The core message of Local Threads is: "When your clothes are local, the effect is global"

3.1 Differentiators
Local Threads attempts to differentiate itself from other clothing retail stores through its sourcing of its products and by attempting be part of a solution to the ill effects of globalization, rather than part of the problem like most clothing retail stores. To that end, Local Threads promises customers that all of its products are purchased from local producers. Every clothing display includes an information card describing the producer and their story as well as the price of the item. Local Threads promises that there is a low environmental cost to its items because of this Page 3

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local production and reduced use of fuel for delivery, as well as a low social cost as the labor force used to create the clothes is paid legal and living wages.

4.0 Core Strategy

The external marketing message of Local Threads uses the statement "When you buy local, the effects are global". The positioning goal for the business is to be seen as a business which is better for the environment and garment makers, compared with other retailers which rely on overseas sweat shops. The results which Local Threads hopes to see from this marketing include: A steady ability to charge prices which are significantly higher than big box retailers like WalMart, Kmart and Target. A loyal following, shown by having at least 500 individuals sign up for "Local Threads membership" in the first three years An ability to source unique items, shown by having at least 25% of inventory being sourced from individual garment maker, student designers, or craftsmen Sales to a significant portion of Redwood City College students, shown by selling to at least 1,500 distinct customers over the first three years and sales reaching $240,000 per year in the third year

4.1 Core Branding Elements

The visual look of the Local Threads brand will be supported by the following: A simple, but striking logo incorporating the "local/global" theme, created by a student designer Color theme including greens and blues to tie in with the colors of the earth Use of this logo and color theme on all advertising materials, business cards, product description cards, and the exterior sign for the shop An informational website featuring the same logo and color theme, along with links to information about buying local and other businesses with the same mission A Facebook page and email newsletter sharing the same logo and color theme Attire for employees consisting entirely of products from the store

5.0 Product/Service Innovation

Local Threads will seek to expand its customer base well beyond diehard environmentalists by offering services and products which engage different groups: Suspects (Those who may or may not be qualified to become buyers - i.e. the entire Redwood City College campus): The website and an email newsletter available for signup on the website or via Facebook offers information on specials at the store as well as links to other local businesses that support environmentalism, local environmentalist activities, and advertisements for environmentalist groups Prospects (Those who enter the store): Small gift items will be offered to entice prospects to make a first introductory purchase. These include clothing accessories (hats, gloves, scarves, socks, belts, etc.) and come with an informational card about the source of the Page 4

Local Threads
product and story of its producer on one side and the Local Threads logo and core message on the other side. These gift items can be wrapped in a recyclable gift bag for customers if desired. Customers (Those who have made a previous purchase): Men's and women's casual apparel, including pants, shorts, skirts, dresses, blouses, shirts, sweaters, vests, and more. Loyal Customers (Customers who return for a second purchase): The Local Threads "Well Dressed" program allows customers to receive 10% off (via a $10 rebate after $100 of purchases) as well as 10% off for guests they bring in whenever they arrive with a group of at least 4 individuals. These services are intended to increase the loyalty of those who are clearly interested in aligning themselves with Local Threads and giving them an easy means to spread the word about the store by bringing friends and referrals in batches to the store.

5.1 Price Rationale

Small gift items, intended for impulse buys or for the casual shopper, are priced under $25 and are located conveniently near the check-out area of the store. Through a survey of Redwood City College students, Local Threads found that under $25 is the right price for college students to purchase gifts for each other, family, and significant others, and that these students will often feel inclined to buy items at this price point without a specific recipient in mind at the moment. Much of the clothing in the store will be priced similarly to a high-quality chain store such as Banana Republic or the Gap. However, individual items may have a range in price (such as skirts ranging from $30 to $100 due to the differences in cost structure between a mass producer and individual craftspeople). Items that are hand-crafted by an individual designer/producer may be priced 50% to 100% higher than a mass-produced item. All products will generally feature a 67% markup over the supplier's price. This is less than the industry standard, but will keep retail prices more competitive as the products are somewhat more expensive to source.

6.0 Marketing Materials

Local Threads' marketing materials include a marketing kit focused on businesses who can provide referrals. The marketing kit includes: Introductory letter from Local Threads management tailored to the specific recipient Overview of the business - mission, business model, and target demographic of Local Threads Customer testimonials, solicited from members of the "Well Dressed" program Two case studies on featured suppliers of Local Threads Description of the referral program

Customer marketing materials include: Store business card for general distribution and personal business card for managers Profile cards featuring each supplier to be given out with purchases of that supplier's products

7.0 Web Plan

The Local Threads website will constitute a valuable resource to potential customers on its own by Page 5

Local Threads
listing events, groups, and local businesses that serve the needs of our environmentally conscious target market. The website will create an association between the Local Threads brand name and a deep, authentic interest in supporting local, environmentally-friendly businesses. The website will not sell items directly, but will feature a rotating slideshow with a selection of items available at the store. Customers will be referred to visit the store as purchases cannot be made over the website. The website will be designed at low cost with the help of a college student Web designer. Pages of the website will include: About us - Mission and vision of the store Supplier profiles (with the same stories found on the profile cards) Slideshow of products Directions, hours, and contact information Membership program description Business referral program description College a cappella group sponsorship description and link to the sponsored group Local event listings Organization listings of like-minded organizations Business listings of like-minded businesses

7.1 Social Media Plan

The Local Threads Facebook Page will feature similar information to the Local Threads website, with a few differences: The Facebook Page will allow users to engage directly with the company by posting clothing likes, dislikes and ideas to the Wall, which will be answered directly by the management Users will be invited to become Fans of the Page in order to receive the email newsletter via Facebook and additional updates on green/local shopping tips Discussion topics will be posted by management about living green to encourage users to contribute ideas through discussion forums

8.0 Lead Generation Plan

Local Threads will generate leads for customers through the following means: Radio advertising on Redwood City College radio - Ads will focus on the informative Local Threads website and explain the remarkable difference of Local Threads Print advertising in the Redwood City Gazette - Ads will focus on the informative Local Threads website and the remarkable difference of Local Threads Flyer advertising on the Redwood City College Campus - Featuring images of new clothing items, especially those produced by college students Google ads for keywords such as "local clothing store," "American-made clothing," "green clothing," etc. Website visitors from Facebook page, online listings and databases of Northern California green businesses College students who learn of Local Threads through its sponsorship of a college a cappella group - During the first few weeks of the school year, Local Threads will advertise to the college a cappella groups that it will provide free uniforms to the winner of a drawing between all of the groups which apply. The contest itself will raise awareness of Page 6

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Local Threads, as will the group, which will be required to mention its sponsorship by Local Threads in all programs and on their website for the year. Referrals from the "Well Dressed" membership program - The program will offer 10% off all purchases during a visit where a member brings at least four guests with him or her to the store. Referrals from complementary local businesses

8.1 Advertising
Advertising Channels Advertising Medium Contact Name removed removed removed removed Contact Distributi Cost/ # on Ad removed removed removed removed removed removed removed removed Total CPM

WRCR - Redwood City College Radio Redwood City College Gazette Northern California Green Business Database Google Adwords Local

remove removed d remove removed d remove removed d remove removed d

8.2 Referrals
Local Threads will encourage referrals through its loyalty program - Local Threads "Well Dressed" program - which encourages its members to bring multiple friends, family members, or colleagues with them on shopping outings to Local Threads. When a member brings at least four guests to Local Threads, both the member and the guests receive 10% off listed prices. Both the referrer and the referred customers are incentivized in this scheme, and the referred customers are encouraged to join the program themselves. Professional referrals may be shared with other local or green businesses which sell non-competing items. For example, green crafts stores, cafs/restaurants, and beauty shops. Local Threads will promote these other businesses through its website and ask for the other business to do the same. Local Threads will give 10% off coupons to be given out to customers at these referring businesses and offer to distribute similar offers to Local Threads customers as well at the time of check-out. The hope is that these other businesses serving a similar target market will create mutually beneficial word of mouth.

9.0 Lead Conversion Plan

Lead conversion begins with the informative website, which will be a resource for anyone interested in buying local and buying green in the Redwood City area. The business will maintain the site, continually searching for and adding new stores and resources. The Facebook page for Local Threads will share links of other local businesses as well, serving as an additional outlet for

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this information. The site will encourage users to join the Local Threads email newsletter which will advertise activist resources, green businesses, and events, along with profiles on Local Threads suppliers. The email newsletter will be advertised prominently on the website and Facebook page and sent out every other week.

10.0 Service Experience

Local Threads will engineer its employee training and store around providing assurance and satisfaction to its customers. A defect-free guarantee will contribute as well. Once customers' trust is earned, their loyalty will be encouraged through the "Well Dressed" membership program.

10.1 Loyalty Product/Service Offerings

Customers who return to make a second purchase will be identified by prominently displaying a sign (and reminding customers) that a free gift comes with the second purchase by any customer. To receive this gift, customers must provide their name and email address on their first visit so that there is a record when they return to make a second purchase. The free gift will likely be an inexpensive (under $5 value) product provided for free by a complementary business (i.e. a bar of soap, candle, etc.) After a second purchase, customers will be invited to join the "Well Dressed" membership program. Members of this program who have spent more than $500 in total at Local Threads will be invited to serve on an advisory group which will meet every other month to vote on new clothing suppliers to feature at Local Threads. Both Local Threads and these members will find and propose potential new suppliers. This involvement will provide an additional opportunity for members to support local businesses and will bring these members closer to Local Threads. It will also ensure that there is a built-in customer base for new clothing items, as the top customers will have a direct say as to what is sold at Local Threads.

10.2 WOW Process

Prospects who enter the store or those who call the store will always be greeted by the clerk on duty, who will offer to help the customer find anything he or she is looking for. The clerk will also ask if it is the customer's first time in the store. If so, the clerk will explain the difference of Local Threads in just a few sentences so the prospect understands the mission of Local Threads and sees the value of buying locally made clothing. The store will offer multiple mirrors throughout so that outerwear items can be tried on in the store. The store will feature one dressing room where other items can be tried on. These store features help to assure that items fit customers well and they are sure they like the look of items before they purchase. Local Threads will help customers be more comfortable with handmade and amateur-made clothing by offering a defect-free guarantee. If clothing shows a manufacturing defect in the first 6 months, the customer can receive their money back. Local Threads will demand the same from its

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suppliers, and require them to provide refunds for clothing where customers find defects.

11.0 Marketing Calendar

On a daily basis, the CEO will engage in at least one marketing activity. Examples include contacting or having breakfast with a potential referral partner, updating resources on the website, sending an email newsletter, or revising the print or flyer advertising. The CEO will spend 8:30 9:30 am on marketing, 6 days a week (the store opens at 10 am). On a weekly basis, the CEO will review the website's analytics and Google Adwords results in order to adjust the keyword campaign and website content based on what points are attracting and losing customers. On a monthly basis, the CEO will focus on the marketing initiative of the month, as determined by the monthly theme. An average of 20 hours per month will be devoted to this work so that the major marketing initiatives are continually revised and revisited. The CEO will review the Gap Dashboard at the end of each month.

11.1 Monthly
Months 1 2 3 4 5 6 7 8 9 10 11 12 Marketing Theme A cappella group sponsorship contest Website strategy revisit Referral partner push Member initiative Press initiative Radio strategy revisit Email newsletter redesign Member initiative Print ad strategy revisit Membership program improvement Press initiative Member initiative

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Table: Milestones
Milestones Advertising Print ad design Radio ad design, recording Flyer design Pre-launch advertising runs Total Advertising Budget PR Write launch press release Submit press release Total PR Budget Referral Marketing Create referral partner shortlist Design marketing kit Print marketing kit Contact potential referral partners/visit Total Referral Marketing Budget Web Development Plan website Assemble initial resource content Website design Newsletter template design Create Facebook Page Total Web Development Budget Other Logo design Design/print store signage Total Other Budget Totals Start Date 4/1/2010 4/1/2010 4/1/2010 4/15/2010 Start Date 3/15/2010 4/1/2010 Start Date 3/15/2010 3/15/2010 4/1/2010 4/15/2010 Start Date 3/15/2010 3/15/2010 4/1/2010 5/1/2010 4/1/2010 Start Date 3/15/2010 4/1/2010 End Date 4/15/2010 4/15/2010 4/15/2010 4/30/2010 End Date 4/1/2010 4/15/2010 End Date 3/31/2010 3/31/2010 4/15/2010 4/30/2010 End Date 3/31/2010 3/31/2010 4/15/2010 5/15/2010 4/15/2010 End Date 4/1/2010 4/15/2010 Budget $200 $500 $100 $0 $800 Budget $200 $25 $225 Budget $0 $0 $0 $0 $0 Budget $0 $0 $500 $200 $200 $900 Budget $500 $1,000 $1,500 $3,425 Manager CEO CEO CEO CEO Manager CEO CEO Manager CEO CEO CEO CEO Manager CEO CEO CEO CEO CEO Manager CEO CEO Executed By Student designer CEO, student engineer Student designer CEO Executed By Student writer CEO Executed By CEO CEO CEO CEO Executed By CEO CEO Student designer Student designer Student designer Executed By Student designer Student designer, CEO

12.0 Critical Numbers

Critical numbers for the business will be tracked through the following systems: Google Analytics: Will track web visitors and their source (in order to look at referrals from complementary businesses) Facebook analytics: Will track Facebook page visitors and their sources. Walk-ins: Will be tracked manually by clerks, including separate categories for those who make no purchases and those who do. These numbers will be entered into a customer log each shift. Check-out POS system: Will track sales transactions and allow for entry of the numbers from the above systems to have one location with all marketing and sales data. Special fields for referrals, testimonials, and PR mentions will be added to this customizable software, so that these items can be mentioned manually. QuickBooks: Will track cumulative revenue and expenses

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Local Threads
12.1 Sales Forecast
Products are divided into four categories: Handcrafted apparel - Relatively high-priced, handmade and individually crafted specialty items Women's items - Items from local companies for women Men's items - Items from local companies for men Small gift items - Items under $25 which are appropriate for gifts or impulse buys

The business is expected to grow sales 15% in year 2 and 3 due to a continued focus on advertising and the viral effect of the Local Threads "Well Dressed" membership program. Direct costs are the prices Local Threads pays to its clothing suppliers which are expected to average 60% of the sale price (roughly a 67% markup). We expect sales to drop off significantly in the summer months, when the regular college population is on break, and to rebound once the academic year starts up again in fall.

Table: Sales Forecast

Sales Forecast Year 1 Unit Sales Handcrafted Apparel Women's Items Men's Items Small Gift Items Total Unit Sales Unit Prices Handcrafted Apparel Women's Items Men's Items Small Gift Items Sales Handcrafted Apparel Women's Items Men's Items Small Gift Items Total Sales Direct Unit Costs Handcrafted Apparel Women's Items Men's Items Small Gift Items Direct Cost of Sales Handcrafted Apparel Women's Items Men's Items Small Gift Items Subtotal Direct Cost of Sales 279 545 409 938 2,170 Year 1 $150.00 $75.00 $50.00 $20.00 Year 2 470 939 705 1,644 3,757 Year 2 $150.00 $75.00 $50.00 $20.00 Year 3 540 1,080 810 1,890 4,321 Year 3 $150.00 $75.00 $50.00 $20.00

$41,813 $40,867 $20,433 $18,756 $121,869 Year 1 $90.00 $45.00 $30.00 $12.00

$70,451 $70,451 $35,225 $32,877 $209,004 Year 2 $90.00 $45.00 $30.00 $12.00

$81,018 $81,018 $40,509 $37,809 $240,354 Year 3 $90.00 $45.00 $30.00 $12.00

$25,088 $24,520 $12,260 $11,254 $73,121

$42,270 $42,270 $21,135 $19,726 $125,402

$48,611 $48,611 $24,306 $22,685 $144,213

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12.2 Marketing Expense Budget
Most expenses will remain steady and rise with inflation. The expense which will grow faster is the membership discounts offered. This expense is shown on the books to demonstrate the amount clothing will be marked down. As the membership program grows towards its goal of 500 members, these discounts are expected to rise in tandem with unit sales. Expenses will focus on college radio, which reaches both college students and locals. Other inexpensive areas include the email newsletter, which is just the cost of Constant Contact for email blasts. We expect some expenses, such as college sponsorships and membership discounts, to decrease or stop entirely during the summer months, when our regular college student customers are out of town.

Table: Marketing Expense Budget

Marketing Expense Budget Radio Advertising Newspaper Advertising Flyer Advertising Online Advertising College Sponsorships Membership Discounts Email Newsletter Other Total Sales and Marketing Expenses Percent of Sales Year 1 $6,000 $2,400 $1,200 $2,400 $900 $1,399 $1,200 $6,000 -----------$21,499 17.64% Year 2 $6,300 $2,520 $1,260 $2,520 $945 $2,365 $1,260 $3,000 -----------$20,170 9.65% Year 3 $6,615 $2,646 $1,323 $2,646 $992 $2,720 $1,323 $3,000 -----------$21,265 8.85%

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Local Threads

12.3 Key Marketing Metrics

Certain key marketing metrics require additional explanation: Leads: Includes all new walk-ins, Web visitors, and Facebook page visitors. We will attempt to estimate and eliminate the overlap between these groups. Leads Converted: This conversion rate is expected to drop as the website increases its visibility significantly over the first three years. Many Web visitors will not become customers either because of geographic distance or because they are less qualified than before. However, the overall effect on leads will be positive because of lead growth. Average Transactions Per Customer: Each month, a new customer is expected to make .25 purchases, or 1 every 4 months (3 per year). The remaining metrics are all expected to rise over the first three years as an effect of increasing sales and the viral effect of marketing efforts.

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Table: Key Marketing Metrics
Key Marketing Metrics Revenue Leads Leads Converted Avg. Transactions/Customer Avg. $/Customer Referrals PR Mentions Testimonials New loyalty program members Year 1 $121,869 42,769 20.00% 0.25 $56 570 8 17 237 Year 2 $209,004 78,746 15.00% 0.25 $60 1,035 10 20 250 Year 3 $240,354 90,558 10.00% 0.25 $65 1,190 15 25 300

13.0 Marketing Training Game

Local Threads clerks will be carefully chosen based on their competence, past retail experience, and connection with the Local Threads social mission. As time goes on, students who are customers will become additional employees, and student employees will refer their friends to apply as well. Being able to be selective about store clerks will allow the Local Threads CEO to manage with less direct supervision of clerks. Each clerk will receive training over the course of two weeks including: The core message of Local Threads How to treat customers The membership program The referral program The website and Facebook page Other advertising and marketing initiatives

By ensuring that clerks are familiar with all of these areas, they will be able to make independent decisions and better help customers to engage with the business, whether by suggesting they become members, encouraging them to subscribe to the email newsletter, or referring them to resources on the website. Clerks will be given a test on these topics before they can work unsupervised in the store.

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Appendix
Table: Sales Forecast
Sales Forecast Month 1 Unit Sales Handcrafted Apparel Women's Items Men's Items Small Gift Items Total Unit Sales Unit Prices Handcrafted Apparel Women's Items Men's Items Small Gift Items Sales Handcrafted Apparel Women's Items Men's Items Small Gift Items Total Sales Direct Unit Costs Handcrafted Apparel Women's Items Men's Items Small Gift Items Direct Cost of Sales Handcrafted Apparel Women's Items Men's Items Small Gift Items Subtotal Direct Cost of Sales 0% 0% 0% 0% 20 40 30 70 160 Month 1 $150.00 $75.00 $50.00 $20.00 Month 2 21 42 32 74 168 Month 2 $150.00 $75.00 $50.00 $20.00 Month 3 22 44 33 77 176 Month 3 $150.00 $75.00 $50.00 $20.00 Month 4 23 46 35 81 185 Month 4 $150.00 $75.00 $50.00 $20.00 Month 5 12 20 15 30 77 Month 5 $150.00 $75.00 $50.00 $20.00 Month 6 13 21 16 32 81 Month 6 $150.00 $75.00 $50.00 $20.00 Month 7 13 22 17 33 85 Month 7 $150.00 $75.00 $50.00 $20.00 Month 8 28 56 42 98 224 Month 8 $150.00 $75.00 $50.00 $20.00 Month 9 29 59 44 103 235 Month 9 $150.00 $75.00 $50.00 $20.00 Month 10 31 62 46 108 247 Month 10 $150.00 $75.00 $50.00 $20.00 Month 11 32 65 49 113 259 Month 11 $150.00 $75.00 $50.00 $20.00 Month 12 34 68 51 119 272 Month 12 $150.00 $75.00 $50.00 $20.00

$3,000 $3,000 $1,500 $1,400 $8,900 Month 1 $90.00 $45.00 $30.00 $12.00

$3,150 $3,150 $1,575 $1,470 $9,345 Month 2 $90.00 $45.00 $30.00 $12.00

$3,308 $3,308 $1,654 $1,544 $9,812 Month 3 $90.00 $45.00 $30.00 $12.00

$3,473 $3,473 $1,736 $1,621 $10,303 Month 4 $90.00 $45.00 $30.00 $12.00

$1,800 $1,500 $750 $600 $4,650 Month 5 $90.00 $45.00 $30.00 $12.00

$1,890 $1,575 $788 $630 $4,883 Month 6 $90.00 $45.00 $30.00 $12.00

$1,985 $1,654 $827 $662 $5,127 Month 7 $90.00 $45.00 $30.00 $12.00

$4,200 $4,200 $2,100 $1,960 $12,460 Month 8 $90.00 $45.00 $30.00 $12.00

$4,410 $4,410 $2,205 $2,058 $13,083 Month 9 $90.00 $45.00 $30.00 $12.00

$4,631 $4,631 $2,315 $2,161 $13,737 Month 10 $90.00 $45.00 $30.00 $12.00

$4,862 $4,862 $2,431 $2,269 $14,424 Month 11 $90.00 $45.00 $30.00 $12.00

$5,105 $5,105 $2,553 $2,382 $15,145 Month 12 $90.00 $45.00 $30.00 $12.00

60.00% 60.00% 60.00% 60.00%

$1,800 $1,800 $900 $840 $5,340

$1,890 $1,890 $945 $882 $5,607

$1,985 $1,985 $992 $926 $5,887

$2,084 $2,084 $1,042 $972 $6,182

$1,080 $900 $450 $360 $2,790

$1,134 $945 $473 $378 $2,930

$1,191 $992 $496 $397 $3,076

$2,520 $2,520 $1,260 $1,176 $7,476

$2,646 $2,646 $1,323 $1,235 $7,850

$2,778 $2,778 $1,389 $1,297 $8,242

$2,917 $2,917 $1,459 $1,361 $8,654

$3,063 $3,063 $1,532 $1,429 $9,087

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Appendix
Table: Marketing Expense Budget
Marketing Expense Budget Radio Advertising Newspaper Advertising Flyer Advertising Online Advertising College Sponsorships Membership Discounts Email Newsletter Other Total Sales and Marketing Expenses Percent of Sales Month 1 $500 $200 $100 $200 $100 $100 $100 $500 -----------$1,800 20.22% Month 2 $500 $200 $100 $200 $100 $105 $100 $500 -----------$1,805 19.32% Month 3 $500 $200 $100 $200 $100 $110 $100 $500 -----------$1,810 18.45% Month 4 $500 $200 $100 $200 $100 $116 $100 $500 -----------$1,816 17.62% Month 5 $500 $200 $100 $200 $0 $60 $100 $500 -----------$1,660 35.70% Month 6 $500 $200 $100 $200 $0 $63 $100 $500 -----------$1,663 34.06% Month 7 $500 $200 $100 $200 $0 $66 $100 $500 -----------$1,666 32.50% Month 8 $500 $200 $100 $200 $100 $141 $100 $500 -----------$1,841 14.78% Month 9 $500 $200 $100 $200 $100 $148 $100 $500 -----------$1,848 14.13% Month 10 $500 $200 $100 $200 $100 $155 $100 $500 -----------$1,855 13.51% Month 11 $500 $200 $100 $200 $100 $163 $100 $500 -----------$1,863 12.92% Month 12 $500 $200 $100 $200 $100 $171 $100 $500 -----------$1,871 12.36%

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Appendix
Table: Key Marketing Metrics
Key Marketing Metrics Revenue Leads Leads Converted Avg. Transactions/Customer Avg. $/Customer Referrals PR Mentions Testimonials New loyalty program members Month 1 $8,900 2,000 20.00% 0.25 $50 20 4 0 2 Month 2 $9,345 2,200 20.00% 0.25 $51 25 0 0 5 Month 3 $9,812 2,420 20.00% 0.25 $52 30 0 0 10 Month 4 $10,303 2,662 20.00% 0.25 $53 35 0 0 15 Month 5 $4,650 2,928 20.00% 0.25 $54 40 1 1 20 Month 6 $4,883 3,221 20.00% 0.25 $55 45 0 1 25 Month 7 $5,127 3,543 20.00% 0.25 $56 50 0 2 25 Month 8 $12,460 3,897 20.00% 0.25 $57 55 1 2 25 Month 9 $13,083 4,287 20.00% 0.25 $58 60 0 2 25 Month 10 $13,737 4,716 20.00% 0.25 $59 65 1 3 25 Month 11 $14,424 5,187 20.00% 0.25 $60 70 0 3 30 Month 12 $15,145 5,706 20.00% 0.25 $61 75 1 3 30

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Appendix
Table: Gap Dashboard
Gap Dashboard Month 1 Personal CEO hours spent on marketing CEO business relationships established CEO income from business Business Sales Referred Customers Tactical New links to other sites on website New email subscribers Entrants in sponsorship contest Strategic Customer testimonials Members on advisory groups 26 5 $2,000 Month 2 26 6 $2,000 Month 3 26 7 $2,000 Month 4 26 8 $2,500 Month 5 26 9 $2,500 Month 6 26 10 $2,500 Month 7 26 10 $3,000 Month 8 26 10 $3,000 Month 9 26 10 $3,000 Month 10 26 10 $3,500 Month 11 26 10 $3,500 Month 12 26 10 $3,500

$8,900 20

$9,345 25

$9,812 30

$10,303 35

$4,650 40

$4,883 45

$5,127 50

$12,460 55

$13,083 60

$13,737 65

$14,424 70

$15,145 75

100 25 3

10 35 0

10 45 0

10 55 0

10 65 0

10 75 0

10 85 0

10 95 0

10 105 0

10 115 0

10 125 0

10 135 0

0 0

0 0

0 0

0 0

1 0

1 0

2 0

2 0

2 0

3 0

3 0

3 0

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