Reference no: EM131464888

Read the case and answer the questions that follow. Studying this case will help you better understand how concepts relating to planning can be applied in a company such as Miche Bag. In 2004, a young woman named Michelle Romero spilled a drink on her favorite purse. The purse was stained and she was frustrated. Many women can probably relate to Romero’s situation. Seeing this event as a unique opportunity, she wondered if it was possible to have a purse or handbag that could change its outside “shell” while leaving all the contents in place. With glue and some fabric, she made a prototype right then (www.michebag.com). Thus, the Miche bag was born. The name (pronounced MEE-CHEE) comes from Michelle’s nickname. By 2005, a patent had been established, and the company was in business. The sales of the product have been growing, and there is almost a cultlike following among women, who readily identify when another is carrying a Miche bag. According to the website, the bag is considered “one of the greatest gifts to womankind since waterproof mascara” (www.michebag.com). But to go from a concept to a full-fledged firm, a plan was needed. The company needed a proven business leader, and that person was Corbin Church. He liked the idea and saw potential; he had already started and sold six other businesses, so entrepreneurial experience was on his side. He just needed to determine how viable a product it was. Serving in his new role as Miche’s CEO, he set up a kiosk at a local mall and sought feedback from potential customers. With overwhelming interest, he planned on franchising kiosks throughout the country. Unfortunately, the greatest economic recession since the Great Depression soon hit, and franchising locations in malls was not a sound approach (“Entrepreneur of the Year Finalist”). That’s when he decided to approach the sales of the bag in a different way altogether. Using the direct sales home party method of selling, he recruited what is today a network of thousands of representatives who eagerly sell the product in their own homes. Made famous by Tupperware, the direct sales home party method is very simple, yet quite effective. A person agrees to “host” a party in his or her home. Friends and family are invited; hors d’oeuvres are served; and the product is shown to guests. These partygoers have an opportunity to see and feel the product. Of course, the intent is to convince the guests to buy the product. In return, the host receives either a commission for each sale or free merchandise in exchange for his or her efforts. Miche provides these hosts with all they need to get started. The foundation of the product is four sizes of handbags: Prima, Classic, Demi, and Petite. Along with these is an almost endless array of shells in a variety of textures, fabrics, and colors that can be attached to the bag. Hosts demonstrate the versatility of the bags and the ease with which shells can be traded out, depending on the occasion or preference of the person. A wide variety of companies are now using the direct sales home party approach. Some, such as Kraft, Procter & Gamble, and Kimberly-Clark, are using this approach in conjunction with television advertising (Patton, 2011). Microsoft held house parties to build buzz around its Windows 7 product, and approximately 60,000 hosts attracted near 7 million people (McMains, 2011). This kind of marketing can be incredibly cost effective for companies because often, the only expense involved is that of mailing out a basic kit for the host. And consumers tend to trust a family member or friend who is hosting a party rather than a 30-second commercial. For Church, the thousands of hosts who sell Miche bags not only increase sales but also spread the word about the product in a fast, friendly manner. It’s all a matter of recruiting, which is why the company is constantly seeking new representatives through current hosts as well as through Miche’s website. “Transitioning to this exciting new business structure,” says Church, “will afford a greater number of new representatives the chance to become part of our ground-breaking company, which has experienced explosive growth over the last four years both in the United States and internationally” (“Salt Lake City–Based Miche Bag”). Today, the private company is earning millions of dollars per month through its extensive network of hosts, whose parties continue to expand consumer awareness. As Miche’s website states, “Relax, take your time, and find your inner Miche” (www.michebag.com).

Questions

1. Assess Corbin Church’s plan for selling Miche bags. How was changing his approach from franchising to a direct sales home party approach a more effective strategic plan?

2. Would you characterize Corbin Church’s sales method as a standing plan or a single-use plan? Why?

3. As the economy improves, should Corbin Church change his plan? In other words, should he consider switching to a franchise model of sales?