Finlatics Investment Banking Experience Program Project 2

Sustainable fashion company

1)

It looks like the chosen proposal is in the "Early-Growth" stage of the company life cycle. This
is backed up by the fact that limited launch sales in niche-high-end markets got much positive feedback.
The company has already started making sales and is starting to grow its customer base and market
presence. In this phase, we have to look at whether this company can scale up in the current market
using different marketing strategies.

Strengths: Weaknesses:
 Unique selling point of sustainability in  Undetermined product-market fit.
fashion.  Slightly higher product prices due to
 Positive initial responses and traction in sustainability.
high-end markets.  Brand building challenges.
 Utilization of eco-friendly materials and  Limitation in fashionable clothing due to
recycling practices. sustainability component.

Opportunities: Threats:
 Growing global demand for sustainable  Competition in the sustainable fashion
products. industry.
 Expansion into larger markets and e-  Economic factors affecting consumer
commerce. spending.
 Collaboration with established sustainable  Maintaining quality and sustainability
fashion brands. standards as the business scales.
 Increasing awareness among consumers of  Changes in consumer preferences could
the environmental and social impact of the impact demand for sustainable fashion
fast fashion industry. products.
 Potential to expand into new markets,  New competitors with better alternatives.
such as menswear and children's wear.

2)

The major challenge here is Brand building, which can be tacked by various methods mentioned below;

 To connect with customers emotionally and talk about the brand's journey toward sustainability.
 Be clear about where the things come from and how they are made.
  Teach people about how fast fashion hurts the earth. Also, tell them how it is important to move
towards sustainability in the future.
 Create a strong brand personality and messages that will connect with your ideal customers and
this can be done by creative marketing and advertising strategies.
 Spend money on advertising and marketing to get the company's name and its products out
there.
 Get new users by working with other brands and people with a fan base.
 Make educational content about eco-friendly fashion to get more people to know about your
brand and its purpose.

One of the examples is Everlane. As a sustainable fashion brand, Everlane has been able to build
a strong name and attract customers who are willing to pay more for eco-friendly goods. Everlane has
been able to do this by being open about its prices and supply chain and selling durable, high-quality
goods.

Another problem with a brand is the high cost of manufacturing. To overcome this problem,
let’s take the example of Patagonia. Patagonia's success comes from being real, making good products,
and giving back to the community. Customers are loyal to the brand because it cares about the
environment, making good products, and helping the community. Through vertical integration, recycled
materials, efficient production, and product repair programs, Patagonia has lowered the prices of eco-
friendly clothing, making it easier for more people to buy it. Patagonia's strong brand and cost-effective
sustainability tactics show other businesses how to do well when they want to be green.

3)

As sales have not started yet in the real market, they can go directly into online sites like Myntra,
Amazon, Flipkart and many others websites, which can lower the cost of the store. Or else they can
come with the store in the high locality area. But there is always a fear of whether the product is enough
for the customer. So first, doing business online will be a feasible option for them. Which can give them
what is customer feedback in all seasons. Because they only launch their product in niche-high-end
markets, he wouldn’t know the responses from the other market sections. Depending on that, the first
milestone will be 10,000 units of apparel sales.

If they get liked by the customers, from the second year onwards, they should standardise the
production method to reduce the production cost. Also, more money should be spent on marketing,
which will be a crucial part of growth. In the second year, the milestone will be 25000 as the company
will grow exponentially as the marketing rule.

From the third year onwards, the company will focus mainly on scaling and marketing in different
segments. The company also ensured the tie-ups and branding to expand quickly in these years. So
milestones are according to set.
 Initial Milestones each year Note
Investment Conversion
Convertible Rate (%)
50,00,000 10,000 24%
50,00,000 25,000 16% -23.9%
50,00,000 50000 10% -15.9%
50,00,000 90000 6% - 9.9%
50,00,000 150000 5%

4)

To figure out CLV, a business needs to guess how much money each customer brings in each year and
how long those customers stay with the company. Let's say the business makes Rs.2000 a year from
each customer and that the average customer stays with the business for 5 years.

The company must ensure that the CAC is less than the CLV. Let's say the marketing cost to achieve
10000 sales, which is bought by assuming 10000 customers, is 5 crore. So our CAC will be 5000 rupees
per customer.

No. of times a
Avg Value of
customer will
customer’s CAC Total CLV
purchase Net profit on
purchase
(Cumulative) customer
2000 1 5000 2000 -3000
2000 2 0 4000 -1000
2000 3 0 6000 1000
2000 4 0 8000 3000
2000 5 0 10000 5000

For the CLV to be higher than the CAC, the business must keep the customer for at least 2 years. This
makes sure that the plan for getting new customers is profitable.