Grutzen Watches (a start-up producer and distributor of watches) is located in New York. Its strategy is to serve the upscale niche markets of the watch industry. It will benefit from the German engineering and manufacturing that went into the production of the watches. This industry offers many opportunities for those who desire stylish and high-quality goods but cannot afford them.
It is the firm’s intention to build and export its products to the United States and to make Grutzen Watches the number one selling European watch in the Western U.S. To do this the company’s long-term goals are to to achieve a 20% market share in the U.S, build brand image and brand equity through marketing, achieve a sustainable 55% profit margin, and eventually produce luxury watches in addition to the initial, moderately-priced line.
The Company
Grutzen Watches (international corporation) is privately owned. Production takes place in Germany and sales and marketing are focused on the United States – California – for the short-term future.
The initial investment is made by three individuals. These include Franz Grutzen’s head of production, Henry Winster’s head of American and sales and market divisions, and Walter Young’s vice president for American division.
The German factory is located at 210 Autoroute 17, Frankfurt, Germany. The factory covers 1,000 square meters. It should be sufficient for the company’s first three years of growth. Henry Winster’s home at 343 Palm Avenue, Los Angeles, California will receive the watches and distribute them. In Los Angeles and San Francisco, the watches will initially be sold in high-end watch shops.
Grutzen’s sales force will consist of Henry Winster and two freelancing sales representatives. Henry Winster in America and Franz Grutzen Germany will communicate to facilitate order processing.
The Products
The brand’s initial product line will feature elegant analog watches featuring sporting characteristics that can be used down to 100 meters. The company plans to release two versions, the “sport†watch and the “night†watch.
Our pricing strategy will be initially to lower our main competitors by 10 percent using a marketing penetration strategy. The pricing strategy will then be modified to be competitive with other major competitors. The price per watch will be approximately $100-$200
The Market
Entry into the high-end watch industry comes at a propitious time. The purchase of European watches at mid-level and high levels has increased 50 percent over the last two years in the U.S., and this trend is expected continue.
One of the most significant trends in recent times is that potential buyers of watches are more likely to spend more because of their increased image appeal. Therefore, a company that can build a substantial brand image in this industry gains a significant competitive advantage. It is the aim of Grutzen to capitalize on its high quality and reasonable price while pursuing the innovative styles necessary for brand building.
Considerations for Financial Planning
The startup costs of the company will amount to $226,000. Owners’#8217 will contribute $171,000. Another $30,000 in funding will consist of short-term borrowing, and the rest will be long-term loans. Rent, research and development, inventory and strong cash accounts will make up the majority of start-up expenses. Grutzen Watches’ Break-even Analysis indicates that they will be able make steady profits in the second and third years.
1.1 Objectives
- Grutzen Watches has been voted the best-selling European watch.
- To eventually produce luxury watches in addition to the moderately priced line.
- To achieve a 5-5% profit margin.
- To gain a 20% share of the U.S. market
1.2 Mission
Grutzen Watches manufactures wrist watches in the United States. They are initially located in California. The company will first establish its image as a quality brand and then begin to sell luxury watches with higher profits.
1.3 Keys to Success
To succeed Grutzen Watches must:
- You can build and sell high quality products.
- Achieve 100% customer satisfaction.
- Marketing helps to establish brand image, brand equity, and build brand awareness.