MissFit: Tearsa Coates and Teruko Production

Synopsis

With a blend of qualitative and quantitative analysis the case presents scope of discussion and

analysis in a suitable manner. Tearsa Coates, founder and president of Philadelphia,

Pennsylvania- based company, had a mission to promote female teen fitness and to build self

esteem. She developed a product, the Missfit interactive fitness kit that featured a DVD which

allowed users to choose their workout from options including yoga, cardio kickboxing or hip-

hop dance by selecting their music from nine different soundtracks.

After competing for a spot on a popular home shopping home network QVC Inc., Coates’

Missfit was chosen as a product to feature. At the same time, Coates approached a local Borders

Book retailer and had the opportunity to put that product on that store’s shelves. The QVC offer

was an uplifting opportunity to sell MissFit to the viewing world. On the other hand, the

inventory the QVC offer demanded would require Coates to raise a major investment of cash.

She was worried about the QVC option. Selling MissFit through Borders Books would require

fewer inventories and open the retail distribution channel. Coates was in a dilemma in choosing

between the options.

However, the article conveys that it is always challenging to bring out an innovative product in

the market.
Problems Identified:

The major problem that we came across in this case was Coates dilemma; whether to accept the

QVC offer or reject it and go with the bookstore retail offer? Or accept both the offers? Well,

there are other problems which are listed below:

 Coates had difficulty managing the financial aspect initially. Though she was able to raise

some amount that would not be enough to sustain the business.

 Coates lacked distribution relationships with retailers. She had to accept the deals under

some preconditions such as accepting all unsold products, paying within 180 days for the

inventory that sold minus a percentage (at least 6%) for expected returns, etc. Problem

was faced regarding the decision on how she would sell all that merchandise along with

the shipping costs.

She had two choices whether to go for QVC prime time TV which required an inventory

of 20000 or local vendors in Philadelphia which required fewer inventories.

 Another problem was to convince corporate sponsors and persuade the children’s parents

to let them participate in the trailer. Coates had to meet with each parent personally and

provide information about her company and intent.

 Coates hired interns and that would not ensure effective performance and could create a

problem. Thus she should be careful about this.

  The company’s financial projections seem to be quite ambitious. The first year’s sales

projection is ok but that of second year has been expected to be very high. This too could

be a problem.

 Website of Missfit came across with problem, when middle of the project the company

folded.

Recommendations:

 Coates should try and build up a good distribution channel and a firm relationship with

the retailers. A more reliable physical distribution network would mean a lot to her.

 She can initially start with the border book store offer because it requires lower units and

fewer inventories. After she raises some money with that she can then go for the QVC

offer.

 The pro forma income statement shows an ambitious sales projection. The company

should try and redo it to come up with a more realistic projection.

 Coates should also approach banks for credits and loans. That way she would be able to

establish her credentials and people would believe her.

 Going to other cities would provide exposure to her product.

 It is better if she hires professionals and trained employees.