Santa Barbara Custom Apparel is a custom logo apparel store located in downtown Santa Barbara, California. Santa Barbara Custom Apparel creates custom logoed apparel for the local surfers and thousands of tourists that visit annually. Jimmy Jennings aka “Jimmy J” is the owner of Santa Barbara Custom Apparel. Jimmy J will be launching a new product and service that will expand SBCA’s business globally.
The new product is direct to garment printed t-shirts. Direct to garment printing or DTG is the process of printing a multi-colored design directly onto a t-shirt. DTG printers use specialized inkjet technology that can apply designs directly onto the t-shirt using a full CMYK color spectrum. DTG printing will allow SBCA to print full-color designs on demand and sell one-off t-shirts. In the past SBCA used traditional screenprinting that limited the ink colors to 3-4 in a design. Screenprinting also increased the amount of printed inventory SBCA had to warehouse, since the minimum sized order is 12 shirts.
The new service will be internet based DTG printed t-shirts. Customers will choose online the design they like from thousands of custom designs created by SBCA. Customers will have their shirt printed and shipped on the same day they order. Shirts will be able to ship anywhere in the world.
The three different methods that SBCA used to determine there are needs and a global market are; executive judgment, market tests and competitors.
Jimmy J has been selling t-shirts for over 30 years and used his executive judgment and intuition to determine there is a need for t-shirts worldwide. Many surfers from all over the world visit the Santa Barbara beaches yearly and purchase SBCA’s t-shirts. The foreign surfers always ask Jimmy J when his t-shirts are coming to their country. The repeated t-shirt requests over the years gave Jimmy J the idea to expand worldwide
SBCA performed a market test to see if there is a global market for custom landscaping t-shirts. The market test was the surfing communities of Australia. SBCA set up a Facebook Page targeted to the Australian surfing demographic. SBCA posted all their surfing designs and did some minor changes to reflect the Australian surfing culture. The designs were a hit and SBCA was able to sell 1,200 t-shirts to surfers along the coast of Australia. SBCA realized there is a market and they should invest in a DTG printing facility in Australia. Once the Australian printing service opens up and becomes profitable, SBCA can expand to other countries.
The competition in the global custom t-shirt market is Vista Print. Vista Print also has DTG printers and online ordering like SBCA’s proposed business venture. Vista Print has an online t-shirt designer that allows the customer to create their designs. SBCA has studied the designs by Vista Print and determined they are basic and do not target the surfing market. Vista Print can ship globally via the USPS. The difference between Vista Print and SBCA is their target market. SBCA wants to target surfers in beachside communities, whereas Vista Print targets any consumer that wants to make a t-shirt. SBCA will have thousands of trendy surfing designs that have proven themselves over 30 years.
Design selection is a competitive advantage SBCA will have with their DTG printer. They can offer thousands of different designs for their customers. In the past SBCA had to inventory the t-shirts with the prints already on them, which made it impossible for them to take their shirts globally. The DTG printer allows them to have all their designs online and print the shirts as the orders come in.
There are two inherent risks when launching the online DTG printing services. The first risk is setting up DTG printers in different countries. The investment is around $400,000 per location, depending on the country. SBCA will test market the country first by shipping t-shirt orders from the United States. However, there is no guarantee that sales will continue to support the investment of the DTG printer.
The second risk is with online ordering. SBCA will have to market their website to drive business to it. Search engine marketing does not always guarantee sales. The algorithms of Google or Bing may not direct traffic to their website. SBCA’s online marketing could also be in jeopardy if certain countries censor their site. SBCA will make an enormous investment in equipment and staff and not have the amount of orders to keep it going.
The CRM will be tied in with their web-site, Salesforce.com and Quick Books. The order comes from the website and then automatically goes into our production queue. The production line talks to the digital printer, artwork database and the inventory database. At any point a customer can inquire on their order status. The order will be shipped using UPS or a local shipper of the country. The tracking numbers will be imported into Quick Books and then the customer will be emailed a shipment confirmation. Quick Books will be used for all our accounting and bookkeeping functions. Salesforce.com will be used for our customer database. The customer service department will follow up with a phone call to see how the customer liked their order. They will use Salesforce to send email campaigns with daily t-shirt specials.
The CRM will be able to track daily sales throughout the world, since it will be an internet based database. This will link customer service departments around the world, which will give 24 hour customer support. The sales will be tracked real time by the CRM. SBCA will know sales by the minute. This real-time data will make it easy to make business decisions regarding sales and marketing.
The distribution channel for SBCA will be from the producer to the consumers. The regional trade alliances for Australia is the Asia Pacific Economic Cooperation (APEC). Since China is a member of APEC, it will be easier for SBCA to import blank t-shirts into Australia from China. The environmental forces in Australia are similar to the United States regarding customer preferences in custom t-shirts. The surfers in Australia have the same taste in designs, which makes it a positive environment to enter Australia. The economic forces of Australia are stable and similar to the United States. SBCA does not have to worry about any economic instability in Australia. SBCA will be using Facebook to promote the t-shirts in Australia and there is no governmental regulatory forces that censor Facebook.
The global supply chain will be an advantage to SBCA. Since the blank t-shirts are coming out of China and the days in transit will be much less. The lead time to receive the blank shirts will be decreased by 2 weeks.
The pricing strategy SBCA will use is competition-based pricing. T-shirt pricing can be sensitive and must be in align with their competion. The average selling price of a custom printed t-shirt is $20.00 – $25.00 each. SBCA has custom exclusive designs, so they will be able to demand prices that are closer to $25.00.
The costs of launching direct to garment t-shirts will be expensive. The cost of the printer is $250,000. There will be costs to rent the building for the printing operation. The online t-shirt designer has development and programming costs associated with it. The operation needs 3-4 employees to run the printing operation. The advetising and marketing costs will have a montly cost, since SBCA plans to use radio and magazine advertisements. Overhead costs will be expensive since the t-shirt dryer uses a substantial amoutn of electricty per month.
The customer will accept the pricing since SBCA is printing premium custom designs. These are one of a kind designs that the competition does not offer. The designs are the key to having the consumer accept the higher price of $25.00 for a t-shirt.
The competitor that SBCA will be against is Vista Print. Vista Print provides printed t-shirts worldwide. Their t-shirts sell for $19.95, however, the customer has to upload and create their own design. SBCA has custom designs so they are not a direct competitor of Vista Print. However, Vista Print has set a standard price of a printed t-shirt at $19.95. SBCA with their quality quality designs and customre service will be able to price higher than Vista Print.
The two mass media channels SBCA will use are surfer magazines and local radio. SBCA chose these forms of media based on different market segmentations. Since they are selling surf designs, the surfer magazines will hit the target demographic of surfers between the ages of 16 – 32. SBCA chose local radio as a geographic segmentation. The radio advertisements will only play in towns located near surfing beaches.
The two types of social media SBCA will be using are Facebook and Instagram. Facebook was chosen based on psychographic segmentation. Marketing on Facebook allows SBCA to target customers that have the attitudes and lifestyles of surfers. This segmentation also targets the Experiencers since the shirts are cool and trendy. Instagram was chosen page so SBCA can upload all their designs for everybody to view. This segment was also a psychographic segmentation based on the surfer lifestyle.
The two sales promotions SBCA will use to promote their shirts are coupons and contests. The coupon will be used to attract new customers. The first coupon would be two shirts for the same price as one shirt. There would be a coupon code to be entered on the website at checkout. The contest would be “Create a Shirt Contest.” SBCA would have customers come up with their own artwork and post it on Facebook. The winner would get their artwork printed on shirts and earn royalties for each shirt sold.