Finlatics Investment Banking Experience Program Project-2
Sustainable Fashion Company
1. The product of this Sustainable Fashion Company lies in the First Stage of Commercialization Stage among
the five stages of Company life cycle. In this stage, the company has already launched its product in the
market. The product is getting traction but the company is yet to discover the perfect product market fit
and wants to accelerate usage and sales. Sustainable women wear designed with a longer average life
using eco-friendly recyclable materials due to this they are a little more expensive than normal fast fashion
products. The idea has been developed into an actual product and product has launched into the market
and product is getting positive response to limited launch sales. Now, it’s time to find perfect product
market fit and accelerate sales through building the brand of product (sustainable women wear).
This shows that the product need funding and expertise to generate High Sales Growth in the market by
building brand value of its product.
SWOT Matrix
Strength Weakness
• Sustain the environment • Cost management
• Optimum utilization of Resources • Marketing and distribution
• Societal impact • Brand (Quality) Awareness
• Tax-Incentives
Opportunity Threat
• Attract new customer and increase • Lack of Awareness of benefits
sales. • Lack of clarity in policy
• Helps in achieving long-term • New entrants
economic growth.
2. As, the cloth industry becoming the third most polluting industry in the world, sustainable fashion has
become an upcoming trend for conscious consumers. Unfortunately, in India most of the people are not
that conscious of environmental issues and not aware of sustainable products and its benefits. The factor
that attracts most of the consumers in market is the price, and after that brand of the product. As, it is
really challenging to keep cost low of sustain product and sell in the market therefore, we need to develop
a perfect plan for brand building of the product and attract consumers.
-Create Quality Conscious Consumers we need to create quality awareness in consumer through
marketing strategy. It is bit difficult to reduce cost of sustain products so; we would have to sell expensive
products to consumers. Customers can have the same products available at lower rates, so; we will try to
highlight benefits, not just features of the product. Highlighting the benefits of the features helps all
consumers understand the utility and significance of the features they must compare while shopping for
sustain products.
-Affordable Sustainable Clothing the fashion industry will take into consideration what younger
generations like to wear. While younger and following generations are inclining toward sustainable and
eco-friendly products, a major percentage of them are not ready to bear their increased prices. Considering
the sentiment of the largest demography of buyers, eco-fashion brands should be more focused on
producing affordable sustainable clothing that can benefit everyone on the planet. So, Cost Reduction is
the major challenge for this company so; focus more on cost management and how to make product
affordable for customers.
-Labor Issues in the fashion industry, it’s common to employ labor at a low wage, and most of the time,
wage-per-piece of cloth. Laborers are usually paid below the minimum living wages. Sometimes, they are
compelled to work long hours to earn a subsistence income for their daily needs. It often leads to
manufacturing substandard products. Better working conditions and higher pay can show some ray of
hope for the workers as well as fashion brand manufacturers to overcome the problem.
-Environment Awareness this is going to be a really challenging how to create environment awareness in
consumers through marketing strategy. As, we have already discussed above people are less conscious for
eco-friendly products. So, we need to create an advertisement through which we can create awareness for
environment in consumers and made them to buy sustain product. We can use the strategy which has used
by PATAGONIA (Patagonia is an apparel retailer known for its upscale outdoor clothing and various
environmental sustainability efforts.). Patagonia used a marketing strategy to create quality awareness in
consumers “Don’t Buy This Jacket” The advertisement talked about the cost to the environment of one of
the company’s best-selling fleece jackets, asked consumers to reconsider before buying the product, and
instead, opt for a used Patagonia product. In spite of this, the company saw its revenue grow about 30%.
3. A convertible note is ideal for the selected portfolio as it is still at its commercialization stage. The perk of a
convertible note is that the valuation of the start-up is difficult at early stage. To safeguard investment and
harness maximum potential from it, an investor use convertible note. This allows the start-up to align its
objectives and start operating towards the bigger picture instead of immediately trying to bring in a large
chunk of sales to impress potential investors. From an investor’s perspective, this note acts as a shield
against potential losses while still keeping faith in the product. Building Brand value and acquire customers
of sustainable women wear is the biggest obstacle of the company is facing, as an investor, I would create
some milestones for the company to achieve in order to lay a path to help their vision come to fruition
whilst still protecting my investment.
Milestone1
Measuring brand value & awareness is one of the trickiest marketing KPIs to track. It is difficult to estimate
its effectiveness and do ROI calculation. There are two important components to determine Brand value
and measure consumer awareness for respective brand would be Direct Traffic rate and conversion rate.
Reviewing the growth of Direct Traffic over a specific time period gives you information on your brand
awareness growth. Conversion rate will show the percentage of users who have completed a desired
action (Purchase Product). The first milestone is to advertise about respective brand and product and
create loyal customer base. The parameters would be set as follows:
Direct Traffic: 20000
Conversion Rate: 2.5%
Milestone 2
After the advertisement of product we need to create environment awareness program to create demand
for sustain fashion product to protect environment. We can create instagram & facebook campaign
#sustainenvironment #eco-fashion #Greenbusiness. We could increase brand value of respective product,
acquire loyal customer base and generate high rate of sales growth. The parameters would be:
Direct Traffic Rate: 30000
Conversion Rate: 5%
Milestone 3
Tapping the market is not enough; the product must capture the mass marketability share. Instead of a city
or state, we are going to sell product globally through digital marketing. Therefore, the following milestone
considers multi-fold growth in the consumer base. So, now the new parameters are as follows:
Direct Traffic: 50000
Conversion Rate: 7%
Milestone 4
Company’s product has already achieved a significant market share in its line of business. Protecting its
market share could be a 4th milestone. Stability of product and growing at the same time is the next step or
milestone for the company. New parameters are as follows:
Direct Traffic Rate: 80000
Conversion Rate: 10%
The company should reach the 4th milestone in approximately 4 years.
Initial Investment Conversion Rate at per Conversion of users (%) Convertible Note
milestone (%) (in 4 years) conversion rate (%)
50,00,000 2.5 <3 25%
50,00,000 5 6-3.1 18%-20%
50,00,000 7 8-6.1 12%-15%
50,00,000 10 12-8.1 6%-9%
From the above mentioned table, we have taken the conversion rate (%) as it determined sales growth and loyal
customer base as the milestone. The initial investment that we are looking to make in the company is RS.50,
00,000 and the time period of the investment is 4 years. From the table, we can see the respective conversion rate
that is applicable to the investment and how they are range bound and based on the conversion rate (%) company
is generating. In first case, in case the company takes 4 years to reach the first milestone itself, the conversion rate
of convertible note would be 25%. In second case, if the company takes 4 years to reach the second milestone
itself, the conversion rate of convertible note would be 18%. In case company takes 4 years to reach at the third
milestone, then conversion rate of convertible note would be 12% and if company takes 4years to reach at the 4th
milestone then conversion rate would be the 6%. We have kept the conversion rates, range bound in each of the
cases as they would depend on the % of conversion rate on websites in 4 years.
4. For a sustainable women wear, the customer acquisition cost will be mainly driven by placing digital ads
across a range of media to installation. Boosting social media posts, Google ads and having a well-designed
website can deliver a significant pay-off. Primary cost will be faced by company is b-2-b costs like printing
brochures for publicity and providing promotional discounts.
Customer Acquisition Cost = Total marketing expense is given period
No. of consumers acquired in a given period
Total marketing expense to achieve milestone 1: RS. 500,000
Number of customers acquired till milestone1: 500
Customer acquisition cost = 500000
500
Customer Acquisition Cost= Rs. 1000
Customer lifetime value helps determine the value of the customer to the company. The customer lifetime
value can be calculated using three variables- average value of customer’s purchase, customer purchase
frequency and time period of a customer’s purchase. For this sustainable women wear, the value of this
variable will be as follows:
Customer Lifetime Value= Average value of customer’s purchase X Frequency of Customer Purchase
Time period of a customer purchase
Price per women wear = Rs 700
Average value of customer’s purchase for = Rs 700
Frequency of customer purchase = 1
Time period of a customer purchase = 1 year
Customer Lifetime Value = 700 x 1
1 Customer Lifetime Value = RS 700
Avg. value of No. of times a Time Period of CAC Total CLV Net Profit on
Customer’s customer will customer Customer
purchase purchase purchase
(cumulative)
700 1 1 1000 700 -300
700 2 2 0 1400 400
700 3 3 0 2100 1100
700 4 4 0 2800 1800
Company incurs Rs 1000 acquisition cost per customer and earns Rs 700 per customer to achieve milestone1. As
shown in the table above, the company starts making profit in 2rd year. This indicates that the business needs to
keep a customer loyal for at least a year in order to make some profit on it.
