Grutzen Watches is a start-up watch producer and distribution company. It aims to target niche markets in the luxury watch industry. It will take advantage of the German manufacturing and engineering used in the creation of the watches. There are many potential markets in this industry that want stylish, high quality goods, but they don’t think they can afford them.
The company intends to grow and export its products in the United States. They also want to make GrutzenWatches, the top selling European watch in Western U.S.A., the number one seller of European watches. Their long-term goals are: a 20% market share, brand image and brand equity through advertising, sustainable 55% profit margin and luxury watches.
The Company
Grutzen Watches Inc. is an international private company. Production takes place primarily in Germany. For the short term, sales and marketing focus on the United States – California.
Ownership is divided among three principal individuals who are putting up the initial investment. These include: Franz Grutzen – head of production department, Henry Winster – head of American division and sales and marketing division, and Walter Young – vice president of American division.
German factory is located in Frankfurt, Germany at 210 Autoroute 17. The factory has a 1,000-square-meter area and should be adequate for the company’s initial three years of growth. Henry Winster’s Los Angeles home at 343 Palm Avenue will be the place where the watches will be distributed. The watches will be initially sold in upscale watch stores in Los Angeles and San Francisco.
GrutzenՉ۪s sales team will consist of Henry Winster as well as two freelancing sales representatives. Communication between Henry Winster, U.S.A., and Franz Grutzen, Germany will allow for order processing.
The Products
The initial product line will be elegant analog watches with sporting characteristics, able to be used to depths of 100 meters under water. Two versions of the watch will be released by the company: the “sport” and the “night”.
Our pricing strategy will initially be to undercut our main competitors by 10% using a market penetration strategy. Then, pricing will be adjusted to be directly competitive with the other major competitors. Expect the price per watch to range from $100 to $200.
Market
The timing is perfect to get into the high-end watches industry. In the United States, mid-level European watches have seen a 50 percent increase in purchase over the past two year. This trend is expected to continue.
A recent trend that is important is the fact that potential watch buyers will spend more on watches due to their enhanced image appeal. A company with a strong brand image in this sector will have a competitive edge. Grutzen is determined to leverage its high-quality and affordable prices while still pursuing the innovative branding styles that are necessary.
Financial Considerations
The startup cost of the company is $226,000 Owners’′ equity will provide $171,000. An additional $30,000 of funding will be made up of short-term borrowing and long-term loans. Rent, research and development, inventory and strong cash accounts will make up the majority of start-up expenses. The Break-even Analysis shows Grutzen Watches will be able to make a steady profit by the second year.
1.1 Objectives
- Grutzen Watches has been voted the best-selling European watch.
- In the end, luxury watches will be produced in addition to the reasonably priced line.
- To achieve a 5-5% profit margin.
- To reach a 20% market share within the U.S.
1.2 Mission
Grutzen Watches manufactures wrist watches in the United States. They are initially located in California. First, the company will establish its reputation as a high-quality watchmaker, then it will start selling luxury watches with higher profits.
1.3 Keys to Success
To succeed Grutzen Watches must:
- Sell and build high-quality products.
- Achieve 100% customer satisfaction.
- Marketing helps to establish brand image, brand equity, and build brand awareness.