Market Analysis - Yale University



The I Do Foundation’s Charitable Wedding Services Venture

The I Do Foundation’s Charitable Wedding Services (CWS) venture develops powerful cause-related marketing programs for major wedding retailers that generate greater revenues for retailers while capturing a percentage of wedding sales for charity. Intense retailer competition, high product margins, and high couple spending in the $70 billion wedding industry create a unique and lucrative market opportunity for CWS’s cause-related marketing programs.

CWS already has proven the potential for its cause-related marketing services through pilot programs with major national retailers. CWS has the opportunity to expand these successful pilots to national programs for its retail clients. Over the next three years, CWS will generate over $18 million in charitable donations for charitable organizations across the country.

CWS helps major retailers develop Charitable Registry Programs through which stores offer to donate a percentage of registry spending to charity. With each gift purchase raising donations for charity, a Charitable Registry Program creates powerful incentives for higher gift spending and provides stores with a compelling sales tool for attracting bridal customers.

CWS has conducted successful online pilot Charitable Registry Programs with 9 major stores (including Target, JC Penney, and Linens ‘n Things) and 500 couples. Retail clients experienced increases of 40%-60% in spending on registries in the pilot and over half of the stores raised their donation rates. CWS is now poised to expand to develop in-store program integrations for retail clients and has set the following goals for 2004:

1. Close online pilot program contracts with 1-2 new retail clients (2 new clients already closed).

2. Begin first Regional Store Integrations of the Charitable Registry Program for 1-2 clients.

3. Extend CWS’s cause-related marketing services to national bridal boutiques and florists.

CLIENT PHASE 1: CLIENT PHASE 2: CLIENT PHASE 3:

Over 2.4 million couples get married each year spending over $70 billion at their weddings. Of those couples, 91% register for gifts, generating $19 billion in gift registry spending annually. With almost $30,000 of spending at the average wedding, bridal customers represent one of the most coveted market segments in the retail industry. Retailers view bridal registries as the perfect opportunity to begin a life-long relationship with a couple.

The once-in-a-lifetime aura of weddings lowers engaged couples’ price sensitivity, allowing vendors to garner extremely high sales margins and fueling intense competition for customers. With retailers constantly seeking compelling sales tools for their bridal services, the wedding industry presents the perfect opportunity for CWS’s cause-related marketing programs.

• Increased Registry Purchases: Charitable Registry Programs encourage couples to inform their guests about their registry and motivate guests to buy from the participating retailer.

• Compelling Marketing and Sales Tool: Charitable Registry Programs are a powerful customer acquisition mechanism for stores that are constantly seeking to differentiate their registry services.

• Positive Public Relations Benefits: Charitable Registry Programs create numerous opportunities for retailers to brand themselves in the media as good corporate citizens.

CWS seamlessly integrates the Charitable Registry Program into retailers’ existing bridal services. CWS provides retailers with a streamlined service package that includes:

1. Program Setup Consultation

2. Technical Systems Integration

3. Customer Support

4. Associate Support and Training Materials

5. Donation Management and Disbursement

The retail clients manage all ongoing program materials development, associate training, and program promotion, which enables CWS to avoid costly integration and maintenance expenses.

CWS’s experienced and passionate management team has worked closely with its advisors to develop a highly specialized product for major wedding retailers. Key competitive advantages include a solid first-mover advantage, established nonprofit partnerships, a robust technical infrastructure and an existing public relations platform. The most likely competitive threat to CWS comes from the retailers developing in-house Charitable Registry programs. CWS will capitalize upon scale advantages and growing brand legitimacy to keep retailers from undercutting the venture.

Peter Murray – Executive Vice-President – Founder and former President of a Philadelphia-based business development center with over 20 staff; Co-founder of the I Do Foundation; strong wedding industry knowledge/contacts and a proven sales record with major retailers.

Larry Miller – Director of Technology – Former project manager for DigitalWave, CDNow, and Aquent Consulting; has lead the Foundation’s technology team for over two and a half years.

In addition, the Foundation’s Executive Director, Bethany Robertson, and several board members are heavily involved in leading the CWS venture. CWS will hire five additional staff members over the next year, including a CEO and Sales Director.

CWS’s revenue structure centers on service relationships with retail clients. In addition to the donated percentage of sales, retailers pay a 1% fee to CWS for program support and donation management. These fees are the sole revenue stream for CWS (100% of the retailers’ donations go directly to couples’ selected nonprofit organizations).

As a targeted and simple cause-related marketing service, CWS maintains a streamlined cost structure – the majority of CWS’s expenses come from salaries for sales and program integration staff and an experienced CEO. To date, CWS has raised $163,000 ($93K on hand) and requires an additional $220,000 before becoming cash flow positive in the summer of 2005.

Summary Projections

| |FY 2004 |FY 2005 |FY 2006 |

|Management Fee Revenue* |$68,330 |$1,183,200 |$1,635,075 |

|Cost of Sales |$39,860 |$1,041,515 |$1,450,845 |

|Operating Expenses |$235,058 |$761,179 |$1,134,882 |

|EBIT ($ in thousands) |($195,198) |$280,336 |$315,963 |

|Operating Margin |NA |24% |19% |

* Only includes the 1% management fee paid by stores, not the donations made to nonprofits

Charitable Donations Raised by CWS

|FY 2003 |FY 2004 |FY 2005 |

|$438,340 |$7,594,050 |$10,449,900 |

Business Description

I. OVERVIEW

Charitable Wedding Services (CWS) helps major wedding retailers develop cause-related marketing programs that enable retailers to increase customer spending and attract new bridal customers while generating resources for charities. Over the next three years, CWS aims to enable 3-5 major retailers to develop Charitable Gift Registry Programs in stores across the country. In addition, CWS will expand its cause-related marketing program into the floral and bridal gown markets, serving at least one bridal boutique chain and one major florist company by 2006. Over the next three years, these programs will raise over $18 million in charitable donations. CWS is a revenue-generating project of the I Do Foundation, a national nonprofit organization dedicated to encouraging charitable giving through weddings.

I Do Foundation History

The I Do Foundation is a Washington, DC-based nonprofit organization founded in 2001 to encourage charitable giving at weddings. Working with national media sources and wedding industry leaders, the I Do Foundation educates engaged couples about opportunities to have a socially-conscious wedding. The Foundation has developed an online system that enables couples to select donations in place of traditional wedding gifts and provides grant management and donor services. Couples can also create charitable guest favors, where the couple makes a donation in honor of each of their guests in place of traditional wedding favors.

While the Foundation’s media and online efforts have been extremely well-received, the real opportunity for social change within the wedding industry lies in capturing a share of the $70 billion spent on items ranging from wedding dresses to gift registries. In recognition of this opportunity, the I Do Foundation began developing the CWS model in 2002 in an effort to apply cause-related marketing strategies to the wedding industry.

The CWS program is closely aligned with the I Do Foundation’s mission, and the income earned will contribute significantly to the long-term sustainability of the organization. In addition, the program will greatly increase traffic on the I Do Foundation website, creating opportunities to encourage couples to use the Foundation’s other charitable wedding services.

The Creation of CWS

CWS replicates the successful charitable wedding registry model pioneered by The Wedding List, a retailer purchased by Martha Stewart in 2002 with stores in NYC, Boston, and London. During the two years in which this program was offered, the Charitable Registry program was an enormous success for The Wedding List, increasing registry purchases by up to 50% and creating a powerful tool for attracting new couples to register with the store.

After Martha Stewart bought the The Wedding List at the beginning of 2002 (The Wedding List folded soon thereafter), the I Do Foundation contacted Gregg Renfrew, The Wedding List’s former CEO, to assess the possibility of replicating the innovative model with other major retailers. Working closely with Ms. Renfrew and other wedding industry advisors, the I Do Foundation reached out to retailers across the country to develop pilot Charitable Registry Programs through the I Do Foundation’s website.

After securing donation agreements with several major retailers, the I Do Foundation created the technical infrastructure and web interface to conduct online pilot Charitable Registry Programs for each retailer. In the second half of 2003, the I Do Foundation worked with 9 retail clients to create Charitable Gift Registries for over 500 couples. These retail clients experienced increases of 40%-60% in spending on registries in the pilot, and over half of these clients have already raised their donation rates. In the first three months of 2004, the I Do Foundation has added two new retail clients, Marshall Fields and REI, and has created Charitable Registries for an additional 400 couples.

Building on Success: Expanding the CWS Pilot Program to Retailers’ Stores and Websites

The mission of CWS is to integrate charitable giving programs into retailers’ existing in-store and online wedding services. In the pilot phase, the Charitable Registry Programs are run through the I Do Foundation’s website. CWS’s growth model is predicated upon integrating Charitable Registry Programs into retailers’ stores and websites in order to capture couples at these points of sale.

CWS has conducted online pilot programs through its website () for major national retailers including Linens ‘n Things, Target, JC Penney, Ross-Simons, and Kitchen Etc. These online pilot programs have enabled the I Do Foundation to streamline its systems for couple services, donation management and disbursement, and store interfacing.

In the fourth quarter of 2004, CWS will build on the pilot programs to begin the first in-store Charitable Registry Program integrations for 1-2 retailers on a regional basis (current pilot programs are exclusively operated through the I Do Foundation’s website). Over the next three years, CWS will develop national in-store Charitable Registry Programs for 3-5 major retailers. In addition to helping stores set up these charitable registry programs, CWS will provide ongoing back-end program support, including managing nonprofit selection by couples, customer service, and donation disbursement.

Over the past nine months, CWS has begun assessing the opportunity to expand these charitable giving programs into other segments of the wedding industry. CWS’s market outreach and analysis have shown a strong demand for charitable programs in the bridal boutique and floral segments.

Growth Opportunities: Adding Bridal Boutiques and Florists

The I Do Foundation has received strong interest from national bridal boutiques and florists who are eager to develop charitable programs. CWS will extend its charitable wedding services to enable these retailers to offer prospective clients the option to have a percentage of their wedding purchases donated to charity. This charitable program will differentiate participating boutiques and florists from their competitors and enable them to close valuable, high-margin wedding contracts.

In the second half of 2004, CWS will begin pilot charitable giving programs with bridal boutiques and florists with the goal of expanding these pilots into national programs in 2005. CWS will first focus on national clients to establish a solid operations platform. Once established, CWS will open up its services to local bridal boutiques and florists across the country. Through its streamlined donation system, CWS will enable any store to easily create “I Do” charitable giving programs.

NOTE: Throughout the rest of this plan, the discussion focuses on the Charitable Registry Programs because they represent more than 90% of projected revenue in the near term. The sales and operations process for boutiques and florists is nearly identical to that of CWS’s gift registry retail clients. For an example of a program integration proposal for these retailers see Appendix F.

The Role of CWS in the I Do Foundation

The CWS venture is a top priority for the I Do Foundation. CWS’s cause-related marketing programs are a critical part of the I Do Foundation efforts to create lasting change in the wedding industry. The Foundation is raising significant funding resources ($163,000 to date) and operational support in the form of office space, phones, web hosting, and Internet connectivity for CWS. In addition, several members of the Board of Directors have been heavily involved in the planning and fundraising for the venture. In 2003, CWS’s budget represented about a third of the total I Do Foundation budget and the venture will represent approximately 50% of the 2004 budget.[1]

Operational responsibilities are divided as follows:

As this chart indicates, CWS will be responsible for developing and maintaining retail client relationships. The I Do Foundation will then manage all stages of the grant-making process using the Foundation’s existing donation management systems.

II. CHARITABLE WEDDING GIFT REGISTRY PROGRAMS DETAILS

Through a Charitable Registry Program, retailers offer to donate a percentage of gift purchases to charity for couples who sign up for the program. Retailers offer the program to engaged couples through their stores and websites. Charitable registry programs create powerful incentives for attracting new bridal customers. The primary value proposition for stores, however, is the Charitable Registry Programs’ proven increase in per registry spending. With couples registering for gifts at an average of between two to three stores, Charitable Registry Programs give retailers an edge over competitors as they push to get guests to purchase from their stores.

Below is an outline of CWS’s cause-related marketing model.

How a Charitable Registry Program Works

1. Stores Offer to Donate a Percentage of Gift Purchases

Through their stores, retailers offer engaged couples the opportunity to sign up for a charitable wedding registry. Under the program the retailer donates a percentage of the couple’s gift registry sales to charity. CWS consults with the retailers on the development of program information sheets and store promotional materials. The retailer chooses the donation rate for the program. In addition to the donation rate, retailers pay an additional 1% to CWS for managing the donations.

2. Couples Choose Charitable Options

When a couple signs up for a charitable registry program at a participating retailer’s store or website, they automatically receive an account with the I Do Foundation that allows them to choose their charitable organization(s). Couples have the option to select a nonprofit from a list of charitable organizations in the store, or to view a broader range of charities later through the I Do Foundation’s online charitable options system. Couples can access their charitable options through the retailers’ website or directly at . The I Do Foundation’s system enables couples in the retailers’ charitable wedding registry program to select or change a charitable recipient and manage their donation options online.

3. Couples Inform their Guests

Guests will hear about the registry through the usual means: word of mouth, bridal showers, and registry enclosure cards. Couples enrolling in the charitable wedding registry program can send registry enclosure cards (see inset) with their wedding or bridal shower invitations to inform guests about their charitable gift registry. The Wedding List was able to get almost 100% of couples to send enclosure cards. Guests make purchases online or at a local store and a percentage of the total amount spent on gifts is donated to charity.

4. Donation Payments

Each month, CWS provides retail clients with statements containing the names and registry IDs for all couples enrolled in the charitable registry program. Each partner then returns a report of registry spending for those couples. CWS invoices the retailers for the donation percentage plus the 1% management fee and disburses donations to couples’ selected nonprofits on a quarterly basis.

NOTE: Although retailers will offer the Charitable Registry Program to all couples in their stores and on their website, couples will need to sign up for the program in order to raise donations. No donations will be made on the registries of couples that have not signed up for the program in the store or online. CWS assumes that 15% of a retailer’s bridal customers will choose to sign up for the program, however, it is likely that many more couples will choose to participate.[2]

Charitable Wedding Programs for Florists and Bridal Boutiques

CWS is extending its service offerings to enable florists and bridal boutiques to create Charitable Wedding Programs. These programs will offer retailers the same opportunity to attract customers by offering to donate a percentage of sales. A detailed program proposal for KaBloom, one of our potential 2004 floral clients, is included in Appendix F.

|Program Phase |Retailer Details |CWS Details |Timeline |

|Phase 1 Pilot Program | | | |

|CWS creates Charitable Registry |Value Proposition: Low-risk opportunity to |Services Provided: Attracts couples to site, |Currently, CWS has |

|Programs for retailers on the I Do |test the potential for Charitable Registry |provides links to client’s registry services, |10 pilot clients. |

|Foundation website. |Programs to increase registry sales rates. |manages charity selection and donation |New Clients: |

| | |disbursement, provides customer service for all |2004: 3 |

| |Fees: Retailer sets donation rate. |users |2005: 2-3 |

| |Additional 1% fee paid to CWS. | |2006: 2-3 |

| | |Staff Requirements: Adding new pilot clients | |

| |Set-up Costs: Virtually no technical or |requires no additional staff. Currently two | |

| |operational costs. |technical staff and one service staff member are | |

| | |easily able to manage the pilots. | |

|Phase 2 Regional Store Integration | | | |

| |Value Proposition: Increased registry sales |Services Provided: Consult with clients on in-store|Clients Moving from |

|CWS helps retailers offer Charitable |will drive clients to start regional store |program setup, manage charity selection and |Pilot to Regional: |

|Registry Programs in stores in a |integrations. |donation disbursement, provide donation-related |2004: 1-2 |

|single region. | |customer service for couples and guests. |2005: 3-4 |

| |Fees: Retailer sets donation rate. | |2006: 2-3 |

| |Additional 1% fee paid to CWS. |Staff Requirements: Each regional integration will | |

| | |require 4 months of full-time work by 2 staff | |

| |Set-up Costs: Stores will develop in-store |members (1 tech, 1 service). If the regional | |

| |program materials, train associates, and sign|integration is successful, then stores will | |

| |couples up in their stores. Stores will also|integrate nationally. | |

| |promote and market the program. | | |

|Phase 3 National Store Integration | | | |

|CWS helps retailers offer Charitable |Value Proposition: Continued proof of |Services Provided: Consult with clients on national|Clients Moving from |

|Registry Programs in all of their |increased registry sales and a smooth |expansion, manage charity selection and donation |Regional to |

|stores across the country |regional store integration process for the |disbursement, provide donation-related customer |National: |

| |Charitable Registry Program will push clients|service. |2004: 0 |

| |to expand nationally. | |2005: 2 |

| | |Staff Requirements: Expanding the program |2006: 2 |

| |Fees: Retailer sets donation rate. |nationally will require 3 additional months of | |

| |Additional 1% fee paid to CWS. |full-time work by one tech and one service staff | |

| | |member. Ongoing customer support costs for the | |

| |Set-up Costs: Stores will develop in-store |program will equal approximately $2.60 per couple | |

| |program materials, train associates, and sign|(compared with per couple revenue of $25.00, not | |

| |couples up in their stores. Stores will also|including donations) | |

| |promote and market the program. | | |

IV. CWS PRODUCT AND SERVICE OFFERING FOR RETAILERS

CWS provides retailers with several key services for the development of charitable programs[3]:

1. Program Setup Consultation: CWS will consult with each client on program planning, store materials development, marketing integration, and staff training.

2. Technical Systems Integration: CWS will link client’s store systems directly to the CWS database, so that couples can easily join the charitable program at any store.

3. Customer Support: Once couples have joined the charitable program through the store, CWS provides each couple with online tools such as a nonprofit selection system, donation tracking, wedding website creator, and online customer support.

4. Associate Support and Training Materials: CWS provides store associates with training materials, as well as phone and email support for their questions about the program.

5. Donation Management: CWS tracks, manages, and disburses all donations raised through the charitable programs.

The retail clients manage all ongoing program materials development, associate training, and program promotion, which enables CWS to avoid costly integration and maintenance expenses.

Current Retail Clients

The I Do Foundation developed pilot online charitable registry programs for nine retailers in 2003. CWS will build on this client experience to develop full-scale programs for major retailers.

|[pic] |  |3% donated |  |[pic] |  |8% donated |

|[pic] |  |5% donated |  |[pic] |  |5% donated |

|[pic] |  |8% donated |  |[pic] |  |4% donated |

|[pic] |  |4% donated |  |[pic] |  |4% donated |

|[pic] |  |4% donated | |[pic] | |7% donated |

V. CWS VALUE PROPOSITION

CWS is focused on providing retail clients with a powerful tool for increasing sales. Although these clients are interested promoting a positive corporate image, CWS’s increased customer purchases and new marketing opportunities will drive the retailers’ participation in the program.

|Who? |Benefits |Details |

|Gift Registry |Increased Gift Registry |-Pilot programs have created increases in average gift registry purchases of between 40% to 60% for |

|Retailers |Purchases |client retailers. |

| |(see Appendix D retailer |-Charitable Registry Programs encourage couples to inform their guests about their gift registry – a key |

| |benefit for value analysis) |sales hurdle for retailers. |

| | |-Guests have a clear incentive to buy from the participating retailers as opposed to other stores where |

| | |the couple is registered. |

|Bridal Boutiques |A Powerful Sales Tool |-Bridal Boutiques are struggling to get brides to complete sales in their stores as brides move towards |

|and Florists | |online wholesalers. |

| | |-Florists need differentiated service offerings for couples in order to stand out in a crowded market. |

| | |-Bridal customers are extremely high-margin customers for retailers, so stores are always searching for |

| | |sales incentives for couples. |

|All Retail Clients|Bridal Registry Customer |-Unique added-value offering for engaged couples. |

| |Acquisitions |-Improved advertising and public relations outreach to attract new couples to their stores. |

| |Targeted Sales Incentive |-A key aspect of the program is that retailers do NOT make a donation to charity for every wedding |

| | |purchase. Retailers only make donations on wedding purchases by those couples who choose to sign up for |

| | |the program and select a nonprofit recipient through the I Do Foundation. |

| | |-This ensures that retailers only make donations when a couple is interested enough in the program to |

| | |select a charitable recipient. |

| | |-Store associates can choose to use the Charitable Registry Program with some clients and not with |

| | |others. |

| |Customer Loyalty |-Charitable giving options greatly increase customer loyalty + satisfaction. |

| |Improved Corporate Image |-CWS strives to promote its corporate clients as good corporate citizens and community-minded companies. |

|Engaged Couples |Make a Purchase; Make a |-When every dollar spent raises donations for their charity, couples have the satisfaction of knowing |

| |Difference |their spending is making a difference |

| | |-Couples sign up for the program at their local store and can select their charity there or online |

| |It’s Easy; It’s Free |through the I Do Foundation. |

| | |-CWS’s convenient services are provided at absolutely no cost. |

| |Flexible Charity Selection |-Couples can choose from the Foundation’s carefully screened nonprofit partners or select their own local|

| |Options |organization. |

| |Convenient Wedding Planning |-CWS provides every couple with online planning tools and a personal wedding website creator. These |

| |Services |services help simplify the wedding planning process. |

Market Analysis

"We have observed a growing trend of couples adding a charitable focus to their weddings. It's a meaningful way to start their married life together."

-- Millie Martini Bratten, Editor in Chief of BRIDE'S magazine

|Number of Couples who Marry Each Year |2.4M |

|Total Size of Wedding Industry |$70B |

|Average Spending/Wedding |$30,000 |

|Potential Market for CWS cause marketing programs |1.2M couples/yr |

|Potential Spending in CWS Market |$35B+/yr |

Key Industry Statistics[4]

I. WHY WEDDINGS?

The I Do Foundation was created to capitalize upon the unique opportunity that weddings provide for raising charitable donations. The wedding industry has several key characteristics that make it the perfect industry in which to launch successful cause-related marketing programs.

Industry Size

Each year, approximately 2.4 million couples get married, feeding a steady $70 billion industry. The constant addition of new couples intent on having the wedding of their dreams has created a nearly “recession-proof” market.[5] As an indicator of the industry’s strength, while most other magazine markets saw significant revenue drops in 2000 and 2001, advertising revenues for major bridal magazines actually increased by 6%-11%.[6]

The size and stability of the wedding industry present CWS with a lucrative target for cause-related marketing programs. Catalyzing charitable giving trends in such a large and dense consumer market has the potential to raise hundreds of millions, if not billions, of dollars for charity.

High per Customer Spending

With almost $30,000 of spending at the average wedding, bridal customers represent one of the most coveted market segments in the retail industry. Replenished on an annual basis, wielding substantial budgets and facing a firm deadline, engaged couples are hungry for information and poised to make purchases. According to Modern Bride magazine, during the six months prior to and the six months following a wedding the average couple will make more buying decisions and purchase more products and services than at any other time in their lives.

High per customer spending is critical for successful cause-related marketing programs. Most cause-related marketing programs are focused on sales of a single product line or class of purchases by partner retailers. For CWS, a single customer spends $6,000 on gift registry purchases alone, with the opportunity for capturing double or triple that amount through other wedding services. These high spending rates enable CWS to more easily cover program management and marketing costs.

High Gross Margins

The once-in-a-lifetime aura of weddings lowers engaged couples’ price sensitivity, allowing vendors to garner extremely high gross margins. Bridal boutiques enjoy extremely high sales margins – some dress manufacturers require that vendors sell their dresses with at least a 200% mark-up[7]. Caterers and florists usually charge “wedding fees,” which set their wedding package prices at 30%-50% higher than for other products. Even gift registry retailers, who are limited by the pricing in the rest of the store[8], highly value registry customers because bridal registries represent the perfect opportunity to begin a profitable life-long relationship with a new family.

High gross margins make cause-related marketing programs much more attractive for wedding retailers and service providers. Increasing sales rates and attracting new couples is incredibly valuable to wedding companies, and a 5% donation rate is relatively small in comparison to their total gross margin.

Intense Competition for Customer Acquisition

High gross margins and enormous per customer spending rates fuel intense competition for bridal customers. This competition is reflected by the extremely large advertising expenditures of wedding retailers and service providers. According to Advertising Age, in 1998 the top three bridal magazines generated an average of $191 in revenues per reader, compared to an average of $76 in revenues per reader in the top three travel magazines and an average of $54 in revenues per reader in the top three women's magazines. These rates reflect retailers’ constant struggle to find new avenues to attract high-spending engaged couples.

Getting couples into the store is only the beginning of the challenge for wedding retailers. Couples (particularly brides) do extensive comparison shopping for nearly every aspect of their wedding—from gowns and bridesmaid dresses to flowers and caterers. In addition, most couples register for gifts at more than two stores, which leaves retailers scrambling to attract wedding guests to buy from their registry first.

Wedding retailers are constantly seeking tools to close wedding contracts and increase couple and guest spending. One retail strategy is to develop gift registry incentive programs, including: registry completion programs in which couples can buy items off of their own registry at a 10% discount; gift card programs that reward couples with in-store credit certificates of varying amounts depending on total registry spending; and partner rewards programs that provide registrants with discounts at partner wedding stores. CWS is an effective and flexible variation on these incentive programs that can serve in conjunction with other programs or as a stand-alone promotion.

The Culture of Weddings

Weddings are highly symbolic events. Couples see weddings as reflection of their relationship, and parents often see weddings as a reflection of their family. Consequently, couples are looking for opportunities to imbue their celebration with their values. Moreover, many couples become overwhelmed by the extravagance and cost of their wedding, creating a critical opportunity for CWS’s charitable wedding programs.

II. THE CHARITABLE WEDDING MARKET

"Now, some couples in the post 9/11, post-Iraq-war era are trying to balance the day's sweetness and white-silk idealism with the realities of life beyond the chapel. Some are turning to charity to give their wedding day a deeper social context."

--New York Times, June 8, 2003

As wedding spending rises, engaged couples are beginning to examine expenses more closely. Increasingly, they are considering how to bring a charitable focus to their weddings. Shifting demographics, coupled with a growing consumer preference for products associated with charitable causes, point to an emerging market for charitable wedding services.

Market Size: Charitable Wedding Services

MARKET SIZE: 1.2 million couples per year

TOTAL SPENDING: $35 billion per year

CWS estimates that the potential market for charitable giving at weddings includes 1.2 million couples each year, spending over $35 billion dollars on their weddings:

- 2.4 million couples get married each year spending $70 billion

- Approximately 64% of these couples register for gifts and make wedding purchases from the mid and upper scale retailers targeted by CWS.[9]

- Cause-related marketing research shows that 80% of consumers would switch brands to support a social cause.[10]

CWS enables retailers to target socially-conscious engaged couples in this lucrative market. Socially-focused couples are wealthier and more educated than average. According to Cone/Roper Reports, cause-related marketing has the strongest impact on consumers who have attended college and earn $30,000-plus annually – by a two to one margin these consumers are more likely to have made a cause-related marketing purchase than consumers at large.

Changing Demographics: Charitable Weddings Trend

A number of key shifts in the demographics of engaged couples have helped to fuel a general rise in charitable giving at weddings: [11]

Couples marrying later in life: In 1950 the average bride was 18 years old. In 1970 she was 20. Today the average bride is almost 29 years old and the average groom is over 30.

Couples living together before marriage: Today, almost 60% of couples live together before getting married. Consequently, many couples have already built households and are looking for non-traditional registry options.

Rising average incomes: The average combined household income of engaged couples is $55,880 and over 70% of couples pay for their own weddings and honeymoons. Couples are more independent and wealthy than ever before, creating an opening for alternative gift options.

Rising rate of second marriages: Approximately 30% of today’s marriages are second marriages. These couples are less likely to need traditional gifts as they are often combining households instead of building them from scratch.

With these demographic shifts, couples are looking for alternatives to the traditional gift registry and wedding planning process. As the Philadelphia Inquirer noted in December of 2001, “More and more weddings are incorporating charitable giving – in imaginative ways.”

The Philadelphia Inquirer is not the only publication to highlight the charitable wedding trend. Charitable wedding activities have received coverage in publications and websites such as: Martha Stewart Weddings, Wedding Bells magazine, and The Knot's Wedding Pages. These articles describe a variety of charitable activities that brides and grooms are already doing, such as:

• Making donations in place of purchasing wedding favors.

• Donating left-over food to local food banks.

• Donating flowers and decorations to retirement homes or hospitals.

• Donating wedding dresses and bridesmaid dresses.

• Doing a service project in place of a bachelor or bachelorette party.

• Using environmentally-friendly products, from the invitations to the napkins.

The rise in socially-conscious wedding planning has helped to convince retailers of the demand for CWS’s Charitable Registry Programs.

Growth in Cause-Related Marketing

The growing interest in charitable weddings is underscored by the broader consumer trend in which customers prefer to do business with companies associated with a good cause. A 2001 Cone/Roper study found that over 80% of consumers are likely to switch to a brand associated with a social cause if price and quality are equivalent. In addition, over 79% of adults surveyed said companies have a responsibility to support charity.

U.S. corporations have responded, increasing their spending on cause-related marketing activities by 400% from 1990 to 1998, according to IEG. This increase has been driven by consistent findings that American consumers change brands and increase spending as a result of cause-related marketing activities. According to Ed Keller, Executive Vice President of Roper Starch Worldwide, in today’s business climate, "Products will have to meet not only the price and quality demands of consumers, but their personal values as well. Given that environment, cause-related marketing is a dramatic way to build brand equity."

III. TARGET RETAIL MARKETS

Wedding Gift Registry Retailers

CWS’s primary targets are major retailers in the wedding gift registry market. The gift market comprises a significant portion of the wedding industry with over $19 billion in gift sales each year.[12] Over 90% of couples register for wedding gifts and average gift spending is over $6,000. An average of 180 guests attend each wedding and most wedding gifts cost between $65-$125.[13]

Department stores have long dominated the wedding gift market with 67% of couples registering at these stores. However, 37% of couples register with mass retailers and 28% with specialty stores, giving these companies a significant market share.

All of these stores are actively seeking additional marketing avenues to reach lucrative, new bridal customers and increase gift registry spending. Moreover, department stores view gift registries for engaged couples as an opportunity to acquire lifelong customers. Consequently, these stores pour significant resources into providing the highest quality bridal registry services.

Market Segments

CWS has divided potential gift registry clients into four market segments:

1. Upper-end Retailers

|Retailer |# of Stores |Market Share7 |

|Crate & Barrel |80 |10% |

|Williams-Sonoma |200+ |5% |

|Pottery Barn |150+ |1% |

|Bloomingdales |34 |3% |

|Restoration Hardware |100+ |1% |

Retailers serving middle and upper income couples provide one of the most lucrative opportunities for CWS. These stores’ gift registries are larger (couples in this demographic receive $6,000-$10,000 in gifts) and individual product margins are much higher than for other retailers. Consequently, these retailers can more easily afford to adopt a charitable registry program.

2. Major Department Stores

|Retailer |# of Stores |Market Share7 |

|Federated |431 |21% |

|May Company |400+ |9% |

|Dillards |200+ |12% |

|Marshall Fields* |64 |9% |

The country’s major department stores serving middle income customers are a solid target for CWS. Federated Department Stores (Macy’s, Burdines, and Macy’s affiliates) dominates this market segment. The large number of stores controlled by each of these retailers would make any one of these stores a major client.

3. Major Mid-Range Retailers

|Retailer |# of Stores |Market Share |

|JCPenney* |1040 |30% |

|Target* |1107 |29% |

|Bed, Bath & Beyond |500+ |7% |

|Linens ‘n Things* |390 |2% |

The largest share of couples register with mid-range retailers. The major limitation of these clients is their smaller average registry size. By managing to attract middle-income clientele, Target has become the fastest growing gift registry provider in the industry.

4. Niche Retailers

|Retailer |# of Stores |Market Share |

|Pier One |1100 |1% |

|Mikasa* |170 | ................
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