Madewell Project by Andrea McCarrel

THE NEW TABLET CATALOG TAP TO ORDER

iPad Application

table of contents EXECUTIVE SUMMARY ........................................................................................................01 COMPANYSUMMARY/HISTORY..................................................................................................02-07 MARKET POSITIONING...................................................................................................08-09 CURRENT MERCHANDISE/DISTRIBUTION ................................................................10-11 COMMUNICATION/PROMOTION....................................................................................12-17 NEW STRATEGIC INITIATIVE........................................................................................18-26 MARKET ANALYSIS..........................................................................................................27-35

table of contents TARGET CONSUMER ......................................................................................................36-40 COMMUNICATION/PROMOTION PLAN ....................................................................41-44 FINANCIAL PLAN ............................................................................................................45-50 MOCK-UP...........................................................................................................................51-53 CONCLUSION .......................................................................................................................56 APPENDIX................................................................................................................................57-67

Executive Summary J. Crew has experienced immense success through direct marketing and sales initiatives such as catalogs. For this reason, in 2011 the J. Crew company introduced a catalog for Madewell. This project is determined to take the needs of the younger, eco-friendly, tech-savvy consumer of Madewell and create an interactive iPad application of the catalogs. This application will allow consumers to view the catalog and place orders with a couple of swipes and taps. The catalogs are an effective marketing tool, but the tap-to-buy concept will result in more revenue, and virtual sharing of products through the social media share options. The key success factors of this intitiative would include higher revenue, improve conversion rates of m-commerce, and a high percentage of mindshare and outreach to new consumers.

Company History Madewell is a privately held company and a division of the J. Crew Group that is the modern day interpretation of an American denim label founded in 1937. Introduced in 2006, Madewell is targeted to the younger female customer due to the lower price and style. With a friendly, “general store” atmosphere, the antique décor naturally reflects the stores authenticity and its timelessness. Madewell is a retail store that is part of the J. Crew Group. The company originally began as a denim work wear manufacturer in 1937. This is something they claim proudly and state that it gives them more experience in the denim market. It is also posted on their website under “All About Madewell.” Unlike J. Crew, Madewell targets young adult women from 21 to 30 years of age. However, when browsing through their product selection, it is obvious that the two companies have a similar take on producing casual American staples. Madewell operates 29 stores from coast-to-coast and plans on opening two more (one in Illinois and another in Michigan). Primarily, most locations are found on the east coast. However, there are five locations in California alone, because California is one of the foremost locations of style innovation. Young adults here see fashion as a form of art and are eager to wear their own creations. Most of the states with Madewell locations have a similar climate: cold, snowy, and harsh during winter. This is reflected in Madewell’s primary product selection of sweaters, jackets, and

Company Summary AT A GLANCE

The launch of Madewell came as J. Crew was seeking to grow the company amid a revival of its brand following years of struggling with an identity crisis and a string of executive defections. Step inside any Madewell store across the country and you'll notice a friendly general-store vibe and antique décor that naturally reflect the authenticity and timelessness of the clothing. In addition to Madewell's brick-and-mortar stores, madewell.com (launched in 2010) is a strong sales driver. Madewell has also been making a further play in the digital space with a robust social media presence.

Company Summary

AT A GLANCE •Revenue: US$ 1.722 billion (FY 2011) •Operating Income: US$ 214.0 million (FY 2011) •Net Income: US$ 121.5 million (FY 2011) •Key People: Millard (Mickey) Drexler – Chairman and CEO Jenna Lyons – President and Creative Director •Specialties: retail, jeans, specialty apparel, denim •Headquarters  - 770 Broadway New York, NY 10003 •Website: www.madewell.com  •Industry: Apparel & Fashion •Type: Privately Held •Company Size: 501-1000 employees •Owners: TPG Capital and Leonard Green & Partners

-Jenna Lyons (right) has been the Company’s President, Executive Creative Director since July 2010. Ms. Lyons joined J.Crew in 1990 as an Assistant Designer and has held a variety of positions within the Company, including Designer from 1994 to 1995, Design Director from 1996 to 1998, Senior Design Director in 1999, Vice President of Women’s Design from 1999 to 2005.

Company Summary

Millard Drexler, who was formerly CEO of Gap and is revitalizing J. Crew Group Inc. as its chairman and CEO, is developing a new chain of casual women’s clothing stores called Madewell. J. Crew officials confirmed a Women’s Wear Daily report published Tuesdaythat the New Yorkbased clothier unveiled the first Madewell store in August of 2007 in Dallas, followed by another store in Los Angeles.

"We're jeans-makers, and have been since 1937.” 1: Everything at Madewell begins with a great pair of jeans.

2: They started out as a workwear company back in 1937, so they know a thing or two about denim. 3: Today, their jeans are known and loved for their vintage details, expert construction and unbelievable fit. 4: No matter what the season, you can always count on finding the perfect pair-just check out the amazing selection in their Denim Bar). 5: They also have tons of downtown-chic essentials to pair with your jeans...

Mission:   Madewell is proud to be part of the J.Crew Group and fully shares its commitment to outstanding quality and exceptional service. We continuously dedicate ourselves to bringing inspiration, creativity and unparalleled expertise to Madewell, making growth opportunities endless.   Whether you are a recent college graduate ready to embark on your career or a professional looking for an exciting opportunity, we offer a wide array of challenging career paths. We offer a dynamic, collaborative, creative, high-energy atmosphere and seek individuals who are ambitious, inspired and determined to personally grow as we develop our company.    What is Madewell?  Effortlessly cool, totally original, and full of downtown-chic essentials.   Entirely modern, but appreciative of the past (we started out in 1937 as a work-wear company, so we're a jeans maker with more than 70 years of serious history). Somsack Sikhounmuong – Madewell’s new designer as of August 12th, 2013. Sikhounmuong is a J. Crew alumni and was brought in to orchestrate a slight revamp to the Madewell brand. Somsack has replaced previous design Kin Ying Lee and they are calling this change “Madewell 2.0.” He began at J. Crew 12 years ago as an associate designer of handbags and then went on to become director of accessories and then switched over to apparel. He graduated from Parsons in 1999 and has worked for Diane Von Furstenberg as well as a freelance designer. -Vision is to take what is great about Madewell and capitalize on that. He wants to clean things up a bit and elevate the product, focus on making things a little more classic-based. He is going to “focus on the best things Madewell does.”

COMPANY summary SWOT ANALYSIS

Strengths:

•Part of J. Crew, well run business •Strong Financial Backing •Expanding retail presence •Robust social media presence •Ships to 100+ locations from e-commerce •Madewell has appreciated a lot in recent years •Strong portfolio of employees •Brand loyalists include First Lady of the US

Weaknesses: •Stores are not worldwide •Currency conversions/shipping rates for global orders •No m-commerce

COMPANY summary SWOT ANALYSIS

Opportunities: •Growing conversion rates on tablets •especially iPad •Global expansion •Expansion into global markets •Designer collaborations •More extension into quality leather products •Such as shoes and handbags Threats:

•Fast Fashion •Faster and more common changes in trends •Ever-changing tech trends

Company Summary SWOT ANALYSIS

According to the SWOT Analysis conducted, it is apparent that the J. Crew company represents more strengths than weaknesses. The company is strong financially, they have a strong clientele presence, and Madewell is contributing more and more to the J. Crew company. However, while Madewell has a strong catalog, brick and mortar, and e-commerce presence, a huge weakness lies in their lack of m-commerce. In their industry, there is a large opportunity on m-commerce channels; especially tablets. Technology trends act as a threat in the industry to retailers who are not caught up with the current channels of distribution. In other words, if a retailer is not participating in m-commerce, consumers will shop elsewhere.

MARKET POSITIONING PRICE/ACCESSIBILITY MATRIX $$$

ANTHROPOLOGIE

MADEWELL ASOS High Accessibility

Low Accessibility

URBAN OUTFITTERS LUCKY TOPSHOP GAP FOREVER 21

Among its competition, Madewell is one of the most expensive brands. It is also on the low/mediocre side of accessibility in comparison to comparible brands. Expanding into m-commerce would help Madewell stack-up better against the competition.

mARKET pOSITIONING PRICING // DISTRIBUTION

Madewellâ&#x20AC;&#x2122;s pricing is relatively high in comparison to competitors. However, it does correspond with the high quality of Madewellâ&#x20AC;&#x2122;s merchandise. The brand is regarded highly for its quality, hence the name Madewell. The brand is known for high quality jeans and sweaters, especially. Consumers are willing to pay a higher price point for Madewell jeans because of the history, reputation, and quality. Their distribution channels consist of catalog, e-commerce, and brick-and-mortar. Among the competitors researched, the other retailers that have the biggest advantage over Madewell are competitors who utilize m-commerce.

current merchandise PRODUCT CATEGORIES

Madewell, Inc. offers womenâ&#x20AC;&#x2122;s apparel and accessories. It offers tees and sweats, shirts and tops, sweaters, jackets and vests, dresses, skirts, denim, pants and shorts, shoes and sandals, Sneakers, boots, weather boots, jewelry, swim wear, and accessories. The company offers its products through its stores in Costa Mesa, Glendale, Los Angeles, and San Francisco, California; Farmington and Greenwich, Connecticut; Miami Beach, Florida; Atlanta, Georgia; Annapolis, Maryland; Boston and Natick, Massachusetts; Short Hills, New Jersey; East Hampton, Huntington Station, and New York, New York; Charlotte, North Carolina; Columbus, Ohio; King of Prussia, Pennsylvania; Austin and Dallas, Texas; McLean, Virginia; Seattle, Washington; and Washington, the District of Columbia, as well as online. It also ships its products to Canada and Japan. The company was founded in 1937 and is based in New York, New York. As of December 31, 2006, Madewell, Inc. operates as a subsidiary of J. Crew Group, Inc.

"J. Crew Launches New Line To Women: Madewell Clothing Stores" J. Crew is privately held but its debt is publicly traded. Private-equity firm Texas Pacific Group, which owns a majority stake in J. Crew, filed last year an initial public offering of as much as $200 million in common stock. The retail said last year it plans to postpone its initial public offering to this year.

current distribution

Currently, sales are divided by “stores” and “direct.” Direct includes online sales and catalogs. Both channels have increased in revenue every year for the past three years. Expanding the “direct” category by adding m-commerce would add to the already increasing net sales. The increasing profits every year also reprsent the company’s financial stability that would enable the production of a tablet application.

communication & promotion TRADITIONAL ADVERTISING

Madewell is currently promoting their Fall/Winter 2013 collection with the traditional catalog that Madewell as well as the entire J. Crew company utilizes to advertize each collection. Madewell has featured celebrities in their past catalogs, 2012 included Solange Knowles, a musical artist and fashion icon who is admired majorly by the young female generation that typically shops Madewell. For the 2013 catalog, Madewell’s new designer Somsack Sikhounmuong has appointed French model Caroline de Maigret. Sikhoumuong stated in an article to fashionista. com “She’s almost like the perfect [Madewell girl] – she’s a woman who’s artistic; she loves fashion but doesn’t live for fashion; she wears it in a sort of personal way” Maigret quoted in an interview that the one article of clothing she cannot live without is a pair of jeans, the one piece of clothing that Madewell is based off of and is known for. The Madewell catalog features Maigret wearing the new collection on the streets, inside an apartment and in a working environment, completely encapsulating the Madewell customer and the lifestyle they live everyday.

COMMUNICATION & PROMOTION DIGITAL

Madewell has a robust social media presence and advertises daily on many outlets featuring pictures from their catalog, merchandise from their collections, street style and outfit inspiration ideas. "We engage third parties to serve advertisements on our behalf across the Internet and to provide analytics services. These entities may use cookies, web beacons and other technologies to collect information about your use of our websites, such as your IP address, web browser, pages viewed, time spent on pages, links clicked and conversion information. This information may be used by us and others to, among other things, analyze and track data, determine the popularity of certain content, deliver advertising and content targeted to your interests on our websites and other websites and better understand your online activity." -madewell.com

Madewell Musings is the blog that can be accessed through madewell.com. This blog is used to extend the lifestyle aspect of the Madewell consumer. Examples of blog posts: style icons, museums of the moment, seasonal playlists, and travel oriented pieces.

communication & promotion

Instagram - @madewell1937 115k followers 104 Posts/219 Following Posts include merchandise, street style, behind the scenes, inspiration #madewell – 30,782 posts Post 4-5 a week Facebook – 244,949 likes 2,788 ‘talking about Madewell” Posts 3-5 times daily. Includes photos of merchandise, look books, inspiration and street style Twitter – 41,685 followers 1,742 Following, 2,592 tweets Post 6 times daily Posts include links to merchandise, website and inspiration Google+ - 273,708 followers Circles – 272,855 people Post 2-4 times daily Pinterest – 53,922 followers Following 186 17 boards, 826 pins, 382 likes Youtube – 933 Subscribers 29 Videos Last upload was 7 months ago

communication & promotion DIRECT MARKETING

Madewell utilizes direct marketing with daily email notifications and mail delivered catalogs. When a person visits the Madewell website for the first time, a pop-up encouraging you to sign up for their emailing list appears in the center of the screen. “Get the latest school, sign up for our emails.” By entering your email address Madewell now has the opportunity to contact their customers daily with promotions, new arrivals, sales and other marketing strategies that allow the customer to keep Madewell in their minds. Madewell is sure to state that by giving them your email you will “be the first to know about all things Madewell,” offering the customer a personal connection to their company. The Madewell catalog is offered by requesting one online through their website. To receive a free catalog from Madewell a form in the same window allows you to fill out your information that will allow them to send you one as soon as the next one is available. Madewell has made an effort to send out post cards to their consumers. The postcard includes a coupon along with a personal message.

communication & promotion DIRECT MARKETING

When a customer chooses to sign up for emails from Madewell the response Madewell sends to the person is not typical of a retailer. About a week after signing up the consumer will receive an email with the subject, “Hi there, we’re Madewell.” Once the email is opened an image appears containing the text, “Hey, nice to meet you. A little but about us: Madewell originally started making denim way back in 1937. That tradition continues today with the love and attention to detail we put into every piece we make – right down to the last stitch. But even we can’t live on jeans alone. And that’s where everything else comes in. Here, a few favorites that make us, well, us.” A link to “explore Madewell. com” is directly beneath this text along with images of various merchandise items, a social media promotional image to have you follow them on Instagram and Facebook and then even more merchandise. This email alone shows the attention Madewell as a company puts into the importance of direct marketing. The subject line was friendly and captivating and lead me to open the email rather than throwing it in the trash.

COMMUNICATION & PROMOTION PROMOTIONAL SALES

Currently, Madewell is offering 25% off all sweaters with code KEEPCOZY through their online website. The Madewell website also offers free shipping on all orders. The 25% off all sweaters is going on in stores as well through out the week, ending Sunday, November 10th, 2013

NEW STRATEGIC INITIATIVE KEY OBJECTIVES

The Madewell app is going to serve as another channel of distribution. This tablet introduction is going to be a new and interactive for customers to buy the product. Marketing is going to be a big objective through out this app as well. While the consumer is browsing through each catalog, they will have the ability to add it to their cart, add it to their Madewell wish list and share it through Facebook, Twitter, Tumblr or Pinterest. Direct marketing because of the catalog. A push notification every time a new catalog comes out. The virtual closet - The virtual closet is going to be the Madewell wish list the customer will be able to create through the app. If the consumer is not interested in making a purchase while looking through the catalog or the app, they will have the option to create their own virtual closet. As they scroll through the pages they have the ability to add an item from an image to their wish list and save it.

HOW IS THIS DIFFERENT? This is going to be released like a catalog. Able to receive a push notification every time a new one comes out and gives people a reason to go on to the Madewell app not just another outlet to shop. When you are browsing through a catalog, people are able to love many different items, this app will allow them to purchase what they love through the convenience of their iPad, while continuing to be interactive with Madewell.

NEW STRATEGIC INITIATIVE RATIONALE/JUSTIFICATION

We want to create a tablet app for Madewell because the target customer of the company is a young female interested in fashion. In the age of rising digital technology, the Madewell consumer should have the opportunity to experience the company, not just buy it. With the introduction of a tablet app, Madewell has the chance to connect with their customer on a new level. An interactive and digital experience can include styling features, shopping features, the Madewell blog and other social media outlets. Madewell has a robust social media presence and an app is the next step the company can take in order to let their customer inside of their world. Madewell is the sister store to J. Crew, the less popular yet just as cool retailer that targets the younger generation, the generation of computer and smart phone users. By releasing the app as a catalog, Madewell will be able to send push notifications to each consumer every time a new one comes out, which is every two weeks. The ability to click and shop will give the consumer a convenient, relaxing and fast way of shopping. As they scroll through the pages, a sweater that captures their attention can be shared, added to the cart or virtual closet with the swipe

NEW STRATEGIC INITIATIVE RATIONALE/JUSTIFICATION

of a finger. Because tablet usage peaks during leisure time and shopping habits rise during then, the interactive catalog will be a great way to integrate digital media and a classic idea into one. We are doing this because Madewell needs to branch out as a company. They need to create a way for their customer to experience the company on a new level, keep them intrigued and interested while shopping and browsing the merchandise of the store. Madewell is competing with retailers targeting the same customer and with the rise of technology, Madewell can stay on top with an app for the tablet.

NEW STRATEGIC INITIATIVE RATIONALE/JUSTIFICATION

Best Practice: By introducing a tablet app into the Madewell brand, the customer will now be able to experience Madewell as a brand and a lifestyle rather than just a consumer. The best practice is utilizing social media, technology and digital interactiveness to involve the Madewell consumer and keep them coming back to the store, the website and every other outlet of the company. Best Practice Competitors: -SEPHORA -URBAN OUTFITTERS/ANTHROPOLOGIE -FOREVER 21 Industry Trends: A brick and mortar store just is not enough for a retailer to survive nowadays. Incorporating technology and social media is crucial to fashion and the tablet is the latest technology that is only going to advance. Retailers need to get on board and find new ways to attract their customer with the use of the tablet. As for communication, building a sense of community between the retailer and their customer is something that is so important for any type of retailer. The tablet gives retailers the opportunity to interact with their consumer, get them involved and allow the customer to feel apart of the company or the brand. The tablet is only getting bigger and better, retailers will grow and advance along with technology and the tablet will allow them to do so.

NEW STRATEGIC INITIATIVE RATIONALE/JUSTIFICATION

•In October 2013, tablet shoppers converted at 5.03%, smart phone shoppers 2.45% and desktop shoppers 3.48%. Mobile devices accounted for 22.7% of sales on networks, desktops 77.3%. Tables accounted for 14.6 of total sales. •As tablets dominate Android tablets in both sales and conversion, retailers would do well to ensure their web sites are optimized for viewing and shopping on iPads. iPad conversion rates are far superior to those of Android tablets. Android tablets are becoming increasingly popular in terms of people browsing the Internet but these people are less inclined to purchase. The demographics of each device are likely to have a bearing on the propensity to purchase as well as how much device users spend. •On average – 55% of mobile commerce sales occur on tablets while 45% are from smart phones.

NEW STRATEGIC INITIATIVE PLAN FOR EXECUTION

•The revenue generated by some apps is impressive, but only a small percentage of apps actually make enough money to cover their costs. •An iPhone or iPad app typically takes anywhere between 2 weeks to several months to build – depending on the complexity. It is not just about coding Requires: Design, Coding, Testing, Infrastructure, Validation & Project Management •Design – Expect weeks of work to build all the app screens and cannot be off-shored. $50-$150 hour – U.S. based app designers are likely to bill a couple of thousand dollars to create a basic app. Several of thousands of dollars for a higher-end app with many screens that need to be designed. •Coding – Takes about several weeks or months to write the code. Can be off-shored and several outlets in Asia and Europe do this for a living. Offshoring requires a lot of coordinating (managing teams of a different language is likely, different hours and other customers asking for same thing.) U.S. based teams cost more but are easier to deal with. •Testing – Need to spend days playing with app to identify bugs and what could go wrong to avoid bad reviews in the app store. Could take one person a couple of days or five people two weeks depending on complexity. A lot of “back and forth.” •Infrastructure – Most likely app will contain interaction with external serves. This is critical for app to success because of slow server response and/or overloaded servers will likely lead to bad reviews and poor sales even if app is great. Need to invest money and expect monthly fees that have a direct impact on revenue.

NEW STRATEGIC INITIATIVE PLAN FOR EXECUTION

•Validation – Last step before launching, and passing validation can take anywhere from a couple of days to several weeks depending on the amount of Apple guidelines the app may be infringing. •Project Management – Has to do with how many third parties and other people that are involved. For a Simple App: Design Work Average - $6,000/ 1 week of work Server Development - $12,000/ 2 weeks of work App Writing - $12,000/ 2 weeks of work Project Management/Hosting Fees for a Year - $35,000 (includes debugging and unforseen delays) For a high-end App: Design Work Average - $30,000 Server Development - $150,000 App Writing - $30,000 Total - $200,000

NEW STRATEGIC INITIATIVE PLAN FOR EXECUTION

The plan for execution makes sense for Madewell. First, the branding is accentuated all the way through launch. Launch will occur just before the holidays of 2015.

NEW STRATEGIC INITIATIVE LONG-TERM BENEFITS

In the past year, traditional e-commerce conversion rates have diminished as tablet conversion rates have risen. Of tablet conversion rates, iPad beats Android and Kindle Fire considerably. Long-term benefits for this initiative would consist of higher conversion rates, more profit for J. Crew, and more generated mindshare. The initiative includes a social sharing element where users can select a product and choose to share the garment on various social media outlets. This allows consumers to share the brand with their peers. Consumers can also tap the product to create virtual closets (or wishlists) to save product that they are considering for future purchase. The application also allows shoppers to make purchases directly from tapping the product and selecting the cart icon.

MARKET ANALYSIS

Google created Google Catalogs, a tablet app that functioned on both Android and iPad, brought traditional catalogs together. As of August 15, 2013, Google decided to retire the application from tablets. The catalog application was not successful on tablet; however, Google has continued the catalogs concept on the web. The Google Catalogs application never made it beyond the United States. The sales were so poor, some argue, because consumers react better to applications specific to brands. Consumers generally respond better to applications that focus on the specific brand. For example, consumers would rather buy online, through m-commerce, or view product through catalog marketing from one brand. The concept of Google Catalogs creates a skewed image for the consumer because the application encourages consumers to concentrate on multiple brands at once.

MARKET ANALYSIS KEY PLAYERS

Sephora has developed an amazing multi-channel, integrated customer service initiative within their company that serves as a best practice for any consumer-facing industry. The tablet app, their smart phone app, the website, the catalog and their in-store experience all accommodate their consumer and benefit their business on so many levels. Sephora was founded in 1970, a beauty-retail concept with a unique, open-sell environment featuring an ever-increasing amount of classis and emerging brands across a broad range of product categories. Sephora is a retailer located in 27 countries with about 1,3000 stores and their customer is loyal for many reasons. Sephora enforces many cross-channel CRM initiatives that are not about making money, but making sure their customer is apart of their brand, appreciates what they do and what they offer and is able to experience Sephora rather than just shop it. Obviously, Sephora has put a lot of money into the development of their app; however, it has brought them a whole new type of success. I think it would be really beneficial to stores such as Madewell and J. Crew. Because I have been focusing on a tablet app for the brand Madewell Iâ&#x20AC;&#x2122;ve found so many reasons why it would be beneficial to them as a retailer. Madewell has a huge social media presence, an amazing blog and their target customer is the young female consumer who has grown up with technology. An app does not need to be about shopping, Madewell can incorporate their already incredible blog and community within the app while introducing new ideas â&#x20AC;&#x201C; maybe a way to style different outfits, introducing a virtual closet to create wish lists or even a simple tool that allows the user to find the nearest Madewell location. Madewell, or any retailer, could seriously grow as a business with the tablet being introduced to their company.

MARKET ANALYSIS KEY PLAYERES

ASOS: Fashion Up is ASOSâ&#x20AC;&#x2122; monthly interactive magazine that is downloaded on the iPad. Fashion Up features all the content from the ASOS magazine plus exclusive video extras, competitions, and the chance to send in personal photos to be featured on the app. The app is well designed and very easy to navigate and the customer has the option to tap the style they like and shop for it straight from their device. This app is mainly about style inspiration. Fashion Up does not include social media connections or an archiving feature.

MARKET ANALYSIS KEY PLAYERS

Free People: iPhone app. Able to make purchases, look through like a catalog and see what is trending. You cannot buy from their catalog. Must shop normally as if online on a computer. Anthropologie: The Anthropologie app has four sections: Shop, Play, Social and Catalog. The shop features online exclusives and everything that is featured on the e-commerce website. The play feature allows the customer to upload their own photos to add to the pages along with fashion columns and “bird’s eye views” on their items. The Social tab is about their other social media outlets, however, it is not about connecting with them or sharing but about browsing their photos and albums uploaded to Facebook. The Catalog is just the digital version of their monthly catalog that can be read and flipped through on the tablet.

MARKET ANALYSIS DIRECT COMPETITION

1. GAP 2. Anthropologie 3. Urban Outfitters 4. ASOS 5. TopShop 6. Forever 21 7. Zappos

These respresent some of the top m-commerce competitors of Madewell. All of these competitors utilize iPhone apps, but Gap does not utilize iPad e-commerce and the ASOS iPhone app does not reserve orders or complete sales. Urban Outfitters and Anthropologie represent the highest functioning competitors over all channels. Both participate in iPhone, iPad, brick-and-mortar, e-commerce, and catalog sales.

MARKET ANALYSIS INDIRECT COMPETITION

1. Sephora 2. Sharper Image 3. Aveda 4. Starbucks 5. Amazon 6. Groupon

Madewell consumers also spend money on upscale make-up, skin products, lifestyle products, coffee, and local deals and activites.

mARKET ANALYSIS

Twitterific Twitterific, the most popular twitter app in the App Store, was solely built with sweat equity. Craig Hockenberry, the man behind Twitterific, recently revealed how much work was required to build the app: about 1,100 hours. At $150/hour, Twitterific for iPad costs about $165,000 for the code only (the iPad app also used existing code valued at roughly $20,000). On top of that, the design phase cost was about $34,000. Finally, project management, testing, and other costs were around $16,000. When you add all these numbers together, the cost to build Twitterific is around $250,000 â&#x20AC;&#x201C; note that this app does not even use a backend support system, which would have likely doubled the development costs. FLUD and other newsreaders FLUD, the popular news reader, was also built mostly via sweat equity. Compared to the competition, the team behind FLUD is very lean, as just like Twitterific, only two coders are behind the app. To put things in perspective, Flipboard has $13 million invested and 16 people, and Pulse News has a full-time staff of 5. FLUD has 2 coders. The developers didnâ&#x20AC;&#x2122;t give much details about the cost of their app, but given the number of hours put into the app, the app would have likely cost at least $200,000, if the folks behind FLUD would have used a third party to build it. The app costs $4 and sold about 20,000 copies to this day, so the gross revenue for FLUD is around $80,000. Nice if you do the work yourself, not so much if you pay someone to do it.

MARKET Analysis Things to keep in mind: •If you have a great idea, and happen to be a developer, sweat equity is the way to go, as the costs to sub-contract an app is high, even for low-end apps. •If you are unable to code, and decide to use third parties, expect to spend at least $35,000 on your app. If you have high expectations for your app, expect to triple that cost, easily. •Only a small percentage of apps in the App Store generate revenues of at least $35,000. •Apple keeps 30% of your revenues! Similarly, Uncle Sam will want his cut at the end of the year as well. •Simple Enterprise iPad App Development Cost: $50,000 (+/- 20%) •Medium Enterprise iPad App Development Cost: $100,000 (+/- 20%) •Complex Enterprise iPad App Development Cost: $150,000 (and up) •Updates: Twice a year •Forrester estimated in 2012 that the average amount spent on a typical customer mobile app ($50,000 to $150,000) turns out to be just 35% of the true two-year cost. •An app developed today will need to be updated in the future for changing business processes and for operating system updates. It will need to be ported to any new platforms you want to support. According to MGI Research, most mobile apps will experience at least four major update cycles stemming from operating system and device updates in the 20122014 time frame.

"She's not trendy; she’s effortless; she’s a little more downtown; she’s casual. her makeup bag would have chap stick and like an eyeliner; she’s not that fussy; she’s not trendy. She just loves classic things and is drawn inherently to familiar things, you know? Like the sweatshirt we’re offering, the t-shirt. the kind of thing she grew up wearing or saw her mom wearing, or her dad wearing. It’s that kind of familiarity, which is just cool.."

TARGET CONSUMER

The Madewell customer is described as a younger market than J. Crew. However, Millar Drexler (the CEO and chairman of the J. Crew Group) has been quoted as saying that the target market is “skewed younger, but not teenage.” The company does not believe that a specific age group is an accurate target market description for their customer base. She is educated with a Bachelor’s Degree (or higher) and works in a creative career field. She probably makes a moderate income and lives in a colder, east coast climate. As opposed to many of the other stores targeting a similar market, Madewell emphasizes key staple, classic, and of-quality items. Return shoppers of Madewell value timeless and ageless casual merchandise. She likes clean lines, modern silhouettes and cuts, and an affordable price range. When shopping, the customer can feel satisfied buying one or two items and she does not feel the need to overspend. This is good because that leaves the consumer satisfied and with a desire to return.

TARGET CONSUMER DEMOGRAPHICS

Age: J. Crew Group targets its clothing and apparel towards 18-35 year olds. Income: Targeted income level tends to be upper-middle class and higher. Race: Clothing and apparel is geared towards the white/Caucasian segment of the population. Gender: Males and females are both targeted, with a slightly greater emphasis on the female consumer. Family Life Cycle: Appeals to the bachelor, single woman, working mother/ father, and the family with children. Region: Large populated areas and locations where income levels are high, such as New York, Los Angeles, San Francisco, Chicago, Dallas, and other metropolisâ&#x20AC;&#x2122; are targeted because of the abundance of people (J. Crew, 2001). Low populated, rural areas of the country are not targeted as part of the product market.

TARGET CONSUMER LIFESTYLE/PSYCHOGRAPHIC

SEGMENT

22 Young Influentials Midscale Younger without Kids Once known as the home of the nation's yuppies, Young Influentials reflects the fading glow of acquisitive yuppiedom. Today, the segment is a common address for younger, middle-class singles and couples who are more preoccupied with balancing work and leisure pursuits. Having recently left college dorms, they now live in apartment complexes surrounded by ball fields, health clubs, and casual-dining restaurants.

Lifestage

02 Young Achievers Young, hip singles are the prime residents of Young Achievers, a lifestage group of twentysomethings who’ve recently settled in metro neighborhoods. Their incomes range from working-class to well-to-do, but most residents are still renting apartments in cities or close-in suburbs. These seven segments contain a high percentage of Asian singles, and there’s a decidedly progressive sensibility in their tastes as reflected in the group’s liberal politics, alternative music, and lively nightlife. Young Achiever segments are twice as likely as the general population to include college students living in group quarters.

TARGET CONSUMER BEHAVIORAL INFORMATION

The Young Influentials and Young Achievers are a very liberal group. They enjoy nightlife and playing racquetball. This group of young consumers shop at Best Buy, watch comediec films and television shows. They drive Mitsubishi Eclipses or Jeep Patriots. They care about the status of brands, but they are still driven by nostalgia. Today, this group represents millennials. Their purchasing power is on the rise today, as they are young professionals just out of university.

Psychographic Segmentation: Products may be created or based on, and marketed in accordance to social class, lifestyles, attitude, and interests.

Lifestyle: An active, yet working lifestyle is targeted.

Attitude: A carefree attitude is targeted, yet maintaining a serious disposition.

TARGET CONSUMER Benefits Sought Segmentation: Companies may offer different attributes or characteristics within the same product line, based on consumer preference.

Comfort: J. Crew offers petite and tall sizes to accommodate its customers who need special sizes to maintain the look they are searching for (J. Crew, 2001).

Situation Segmentation: Situation Segmentation is conditions under which the consumer is going to purchase the product from the company.

Physical Surroundings: The sales people are pleasant and friendly, without being too pushy. The stores are laid out to be appealing, as well as to be customer friendly. Lighting, music, and floor plans are designed to attractive and pleasant. Most stores are located in shopping malls because of the malls’ controlled environment.

Temporal Perspective: Customers at J. Crew are not haggled into purchasing products. A potential customer is given all the time needed to look over the store before buying a product. Specific products are offered at different times of the year, with regard to seasonal changes and special occasions (J. Crew, 2001).

Usage Segmentation: In order to create a product that is successful, the company may create a loyalty to that product or service. Good Investment: High-quality clothing lines keep customers coming back again and again. “We guarantee everything we sell without reservation (J. Crew, 2001).” Exchange or return, if necessary, at any time or any reason, is available. These factories are what make “J. Crew Fans” out of their customers.

COMMUNICATION & PROMOTIONAL pLAN OMNI-CHANNEL MARKETING PLAN

The omni-channel marketing plan is concentrated highly on online advertisements utilizing SEO and Pinterest. Pinterest is a common platform consumers will utilize to share catalog images. Users will become aware of Madewell’s tablet initiative through the catalogs leading up to launch. Facebook, Twitter, print advertisements, and catalogs will be used towards the end of the marketing plan. They are all shorter term venues that allow the audience to make immediate action such as app downloads. Youtube will be used in the six months leading up to the launch. This channel will be used as an additive to the “Madewell Musings” blog, where users can learn about new music, events, and styling tips. It will accentuate the lifestyle element of the brand until the launch of the new application.

COMMUNICATION & pROMOTIONAL pLAN PRE-LAUNCH, LAUNCH, POST-LAUNCH

Facebook: Advertising, Page images, banners, hashtags Facebook news feeds ads generate 49 times more clicks at 45% less cost. News feed ads have a 21 times higher click through rate than standard web retargeting ads and a 49 times click through rate of Facebook’s right-hand side ads. •A per day budget needs to be chosen for the campaign to run continuously Lifetime budgeting is similar to a daily budget but instead of setting an amount to spend per day, you set a lifetime budget to spend across the finite lifetime of the campaign. Our system will automatically try to spread your spend out evenly across the entire period of time that you’ve selected.

COMMUNICATION & PROMOTIONAL pLAN PRE-LAUNCH, LAUNCH, POST-LAUNCH

One benefit of lifetime budgeting is that our system will also automatically pace your ad spend to make the most of your budget. For example, if you specify $100 USD to be spent for a 10-day campaign, each day will need to spend $10/day. If the campaign only spends $8 on the first day, the system will try to make up the missed amount at a later date within the campaign. When advertising on Facebook you can choose between two cost models: CPC: Cost per click CPM: Cost per thousand impressions (M = thousand in Latin) CPC simply means that you pay when someone clicks on the ad while CPM means that you pay for each 1,000 people who have seen it. Both cost models use a bidding system â&#x20AC;&#x201C; an auction â&#x20AC;&#x201C; and the cost depends on what other advertisers are willing to pay for clicks or impressions from the same demographic.

COMMUNICATION & pROMOTIONAL pLAN PRE-LAUNCH, LAUNCH, POST-LAUNCH

Qwaya is the Facebook ads tool Basic: $79per month / 100 ads daily Premium: $149per month / unlimited ads Business: $249/per month / unlimited ads Catalog Advertising: The last paper Madewell catalog published before the app is released will include an advertisement for the app to get the customers to download it as soon as it is released. Price includes all printing expenses including printing, plates, and digital color proof. FOB Oregon. 60# gloss book, 4 color process throughout, saddle stitch binding, self-cover. A 24 page slim jim catalog  has the same page “real estate” as a 16 page standard size catalog but mails at letter rate. Standard Size - 8-3/8” x 10-7/8”

FINANCIAL PLAN APP DEVELOPMENT

App Development: -The revenue generated by some apps is impressive, but only a small percentage of apps actually make enough money to cover their costs. -An iPhone or iPad app typically takes anywhere between 2 weeks to several months to build – depending on the complexity. It is not just about coding Requires: Design, Coding, Testing, Infrastructure, Validation & Project Management Design – Expect weeks of work to build all the app screens and cannot be off-shored. $50-$150 hour – U.S. based app designers are likely to bill a couple of thousand dollars to create a basic app. Several of thousands of dollars for a higher-end app with many screens that need to be designed. Coding – Takes about several weeks or months to write the code. Can be off-shored and several outlets in Asia and Europe do this for a living. Off-shoring requires a lot of coordinating (managing teams of a different language is likely, different hours and other customers asking for same thing.)

FINANCIAL PLAN APP DEVELOPMENT

U.S. based teams cost more but are easier to deal with. Testing – Need to spend days playing with app to identify bugs and what could go wrong to avoid bad reviews in the app store. Could take one person a couple of days or five people two weeks depending on complexity. A lot of “back and forth.” Infrastructure – Most likely app will contain interaction with external serves. This is critical for app to success because of slow server response and/or overloaded servers will likely lead to bad reviews and poor sales even if app is great. Need to invest money and expect monthly fees that have a direct impact on revenue. Validation – Last step before launching, and passing validation can take anywhere from a couple of days to several weeks depending on the amount of Apple guidelines the app may be infringing. Project Management – Has to do with how many third parties and other people that are involved.

FINANCIAL PLAN APP DEVELOPMENT

For a Simple App: Design Work Average - $6,000/ 1 week of work Server Development - $12,000/ 2 weeks of work App Writing - $12,000/ 2 weeks of work Project Management/Hosting Fees for a Year - $35,000 (includes debugging and unforseen delays) For a high-end App: Design Work Average - $30,000 Server Development - $150,000 App Writing - $30,000 Total - $200,000

FINANCIAL PLAN RETURNS

This year for the first time for the 2013 edition of the Top 500 Guide, Internet Retailer asked Top 500 merchants about the percentage of products returned and received a response from about 16% of the ranked retailers. Although the numbers vary widely by merchant size, type and merchandise category, the median return rate of 3% is well below some broader industry studies. On average, data compiled from about 50 clients of retail consulting firm Kurt Salmon show that online consumers return 20% to 30% of orders of apparel and other soft goods. That compares to a return rate of less than 10% for hard goods like gifts, home products and toys. Why do people send stuff back? A very important reason why people send stuff back: they ordered multiple articles (38 %), knowing in advance that they would send some articles back. It seems that consumers have no qualms about ordering 3 or 4 sweaters to find one in the right color and size. This is a practice that e-commerce doesn’t mind – Outfittery sends you a box with suggestions, and you can pick and choose as you like (it’s for men only at this time). It’s calculated in. Less ethical are the 13% people who admit that they order some things from retailers knowing in advance that they will send it back. Think designer dresses, shoes, accessories and jewelry that is deemed too expensive to buy, but too nice not to wear to that special party on Saturday. So buy the dress on Monday, get it by Thursday, wear it once at the party and ship it back on Monday. It’s a phenomenon that will probably cause the Samwer’s luxury e-commerce some headaches. The two first categories are simply product related: “I send things back because I don’t like them” (59 %) and “It doesn’t fit” (52 %).

FINANCIAL PLAN BUDGET

FINANCIAL PLAN SALES FORECAST

MOCK UP

The application layout allows consumers to flip through virtual pages of the catalog while interacting by adding items to their cart, sharing, and adding items to their â&#x20AC;&#x153;virtual closetâ&#x20AC;? or wishlist. The icons along the bottom note the menu, information, virtual closet, cart, and checkout tabs. Consumers scroll through the catalog on the surface of their iPad, tapping items to see the name, price, and interactive options. These options result in a more direct buying option than catalog sales which are conducted through the outdated form of telephone call purchases.

Mock up

sharing options

When an application user selects the share (envelope) icon within the product bubble, the sharing options menu will appear. Users can select iMessage, E-mail, Twitter, Facebook, or Pinterest sharing. Users can utilize messages along with the link on iMessage and E-mail. The consumer can utilize hashtags and captions when they share products on Twitter, Facebook, or Pinterest. Consumers who have linked their social media accounts can then share products to multiple social media outlets with just one click. This will maximize audience outreach and generate mindshare among new and existing consumers.

SEARCH WHAT'S NEW CART VIRTUAL cLOSET Categories

new arrivals shop All denim shoes dresses bags

MOCK UP

When shoppers select the menu icon, this menu appears on the left side of their iPad screen, pushing the main catalog screen to the side. The basic shortcuts of search, new arrivals, cart access, and virtual closet/ wishlist can be accessed through the first section of the menu. The categories are then highlighted in the submenu. New arrivals, shop all, denim, shoes, dresses, bags, accessories, tops, and sleepwear are all highlighted. This menu can scroll with one swift upward finger movement on the iPad screen. Consumers can switch back to the main catalog screen by simply tapping back on the image.

conclusion The failure of Google Catalogs occurred because consumers desire the exclusivity and lifestyle aspect of brand specific applications. Madewellâ&#x20AC;&#x2122;s catalog success can be contributed mainly to marketing that lead consumers to e-commerce or brick-and-mortar options to complete actual purchases. According to the lifestyle, behavioral, and demographic information; Madewell consumers are highly interactive on social media. They also are multi-taskers. It is important to catch the attention of consumers and drive sales at the same time with Madewell consumers. This initiative provides the perfect median. Our initiative provides the traditional catalog aspect associated with Madewell and J.Crew; but it also combines the sharing aspect and ease of purchase to which modern consumers have become accustomed. The initiative is designed to generate mindshare and drive immediate sales upon viewing of the new merchandise.

APPENDIX

Market Positioning- Price/Accessibility Matrix

APPENDIX

"Ecommerce Conversion Rates." Smart Insights. N.p., n.d. Web. 10 Nov. 2013.

"Mobile Forms and Applications Blog." Formotus. N.p., n.d. Web. 10 Nov. 2013.

APPENDIX

â&#x20AC;? And Costs from G2 Catalog Design Company. N.p., n.d. Web. 10 Nov. 2013.

APPENDIX

â&#x20AC;? And Costs from G2 Catalog Design Company. N.p., n.d. Web. 10 Nov. 2013.

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