1. Case Study Part 1
A number of celebrities are aware of the connection between fame and fashion. They have developed their own lines of clothing, believing they will have a built-in customer base—their fans. With TV, film, and music success already on her resume, teen-star Hilary Duff did just that in 2003 by starting Stuff by Hilary Duff. Her fashions, including clothing and accessories, are designed for her fans—girls in their “tweens,” ages 6 to 12 years old. Causal t-shirts, skirts, and backpacks are offered in hopes of making Stuff a brand name in fashion.
However, pop stardom does not always guarantee success in the fashion industry. Teen fashion is a specific segment of the fashion industry and is risky because styles go in and out of favor quickly. In addition, the teen fashion marketing is flooded with popular brands such as Abercrombie and Fitch. So how can Stuff by Hilary Duff compete in the world of teen fashion?
ANALYZE and WRITE
Would you classify Stuff by Hilary Duff as a producer or retailer of fashion?
Is Stuff by Hilary Duff a corporation or a small business? Explain you answer.

2. Chapter 3: The Fashion Business
3.1 Types of Businesses

3. Fashion Industry Segments
There are three main segments in the fashion industry.
Primary Market
Secondary Market
Tertiary Market

4. Primary Market
Primary Market – industry segment that includes businesses that grow and produce the raw materials the become fashion apparel or accessories.
Example: Textile Industry

5. Secondary Market
Secondary Market - the industry segment that includes businesses that transforms raw materials into fashion in the merchandise production phase.
The main types of producers in the secondary market include:
Manufacturers
Wholesalers
Contractors
Product Development Teams

6. Tertiary Market
Tertiary Market – the industry segment that includes retail businesses such as stores.
Retailing is the selling of products to customers.

7. Types of Fashion Business Organization
The fashion industry and other industries are comprised of businesses that have one of the three most common types of business organization:
Sole Proprietorship
Partnership
Corporation

8. Sole Proprietorship A business owned and operated by one person.
Risks: Owner takes responsibility for all assets owned, whether used in the business or personally owned.
Taxes: the business profit is taxed as personal income tax at a rate less than the rate imposed on corporations.
Prons and Cons: The most compelling reasons for having this type of ownership is that the owner has the freedom to operate as he or she feels is necessary.

9. Partnership
A business created through a legal agreement between two or more people who are jointly responsible for the success or failure of the business.
Taxes
Personal Liability

10. Corporation
A business that is chartered by a state or legally operates apart from the owner or owners.
Stocks and Shareholders
Taxes

11. Fashion Risks
Risk is the possibility that a loss can occur as the result of a business decision or activity.
Risk Management is a strategy to offset business risks.
Types of Risks:
Economic Risks
Human Risks
Natural Risks
Other Categories of Risks:
Pure Risks
Speculative Risks
Controllable Risks
Uncontrollable Risks
Insurable Risks
Uninsurable Risks

12. Quiz
Which of the following is NOT one of the three main market segments of the fashion industry?
Primary Market
Secondary Market
Tertiary Market
Quadruplet Market
Which of the following is NOT one of the three types of fashion business ownerships?
Sole Proprietorship
Partnership
Corporation
Teams
Which of the following is NOT one of the risks of the fashion business?
Economic
Human
Natural
Increased Sales