Brand Extension by Ashley Weil

Hayley Larson, Ashley Weil, & Sara Spicer FASM 215- Professor Roy Brand Extension

Table of Contents Executive Summary- pg. 3 Company Summary- pg. 3-11 a. A summary of the company’s history, current status and growth plans b. Brand identity matrix c. Current positioning in the market Market Analysis- pg. 12-25 a. The size of the accessories retail market of your proposed extension, in the proposed geography b. The key players c. SWOT, PESTEL, Porter’s 5 Forces d. Positioning for proposed extension Target Consumer- pg. 25-29 a. Demographic information for the proposed extension’s target consumer b. Lifestyle/psychographic information 4P’s Strategy for Proposed Extension- pg. 30-37 a. Product strategy b. Pricing strategy c. Placement strategy d. Promotion strategy Conclusion- pg. 38

1. Executive Summary Clover Canyon is a brand that captures the California lifestyle aesthetic perfectly. The brand is only two years old but already is established among many celebrities and is sold in many high-end department stores. Clover Canyon’s colorful aesthetic and repeated patterns provide the perfect base to design a jewelry extension. Focusing on precious metals and gemstones the line will be launched in Bloomindale’s and Nordstrom’s in California and will be sold exclusively on our online site for ecommerce. Our aim with the extension is to provide our customer with easily accessible jewelry options to go with their Clover Canyon clothing purchase. Having a jewelry extension immediately available that directly interacts with the brand saves our consumer from having to shop to find jewelry that coordinates with our clothing line. Our expected outcome is to successfully appeal to our current customer base and drive new sales with the millennial generation. We want to give our customers a real California lifestyle experience, focusing on the colors found in the California landscape and a clean-cut professional style. Key success factors for our brand include being made in America, having a celebrity following, and being distributed to high-end department stores. Some threats would be that our competitors are more established in the jewelry business and the jewelry market is easy to break into because it is fragmented, the threat of new competition would be high. 2. Company Summary (a). Clover Canyon, the three-year-old brand, is determined to make their name known. Rozae Nicols, the designer and creator of Clover Canyon is doing so by

incorporating her own aesthetic of casual elegance with easygoing, hand-cut designs in dynamic prints, according to an article from the New York Amsterdam News (David, “Clover Canyon’s Geometric Prints”). Nicols launched the Clover Canyon brand in 2011 as a lower-priced alternative to her own line, Rozae R.N, which she has not continued with since 2011. Designed and produced in house in Los Angeles, California, Nicols has made sure each collection at Clover Canyon echoes the diverse, jubilant spirit, which California has to offer, through bold, intricate prints and streamlined silhouettes, as described by Dana Nover, from communications at Clover Canyon (Nover, “Story of – Clover Canyon”). While Nicols uses that design aesthetic, many reviews and critics such as New York Amsterdam News, Tranoi Preview, Style.com and Fashion Anarchist.com, along with many others, sum Clover Canyon into one word; jubilant. When Harpers Bazaar asked Rozae Nicols back in 2012 about Clover Canyon, she called it “a great journey so far.” (Pieri, “Buzzy Brand Q&A: Clover Canyon”). She also expressed to Harpers Bazaar on what she had in mind when she designs for Clover Canyon and she said “We have a very youthful attitude, we don’t want the collection too serious or classical, we want a youthful edge, but done in a sophisticated way so young women in their teens are embracing it as well as women in their 20s-50s.” (Pieri, “Buzzy Brand Q&A: Clover Canyon”) Rozae Nicols is definitely reaching that ideal customer with her unique designs and not the cliché patterns that come from the same inspiration as other brands. She finds inspiration from all things California. Clover Canyon had a very

successful SS14 show in New York a few weeks ago too, according to Amanda David from Amsterdam News, who said: “Taking cues from architects John Lautner and Charles and Ray Eames, the line’s signature prints took hold upon sculptural shaped pieces such as bell shaped crop tops, cocoon coats, and sharply cut A-line skirts and dresses. Glassy interiors from the days of midcentury modern are also echoed in the unexpected use of transparent embossed rubber. Other innovative materials included perforated leather, laser cut neoprene, and filmy organza layers. While prints were more influenced by artists, architecture made an appearance as well, with a blueprint of a well known California modern creation known as the Jamie House used as a pattern” (David, “Clover Canyon’s Geometric Prints”). Not only does their SS14 collection remind us of that California dream that we all have, but the modern architecture and modern art that California also has to offer. Clover canyon currently distributes to 341 wholesalers in the USA, 23 in Canada, 76 in Europe, 35 in the Middle east/ Asia, 18 in Asia, 15 in Australia, and 15 in Central America and the Caribbean. Clover Canyon is consistently growing in the fashion market from year to year. Announced on October 11, 2013, it was stated that “the Los Angeles-based women’s designer brand will replace a mix of general business and packaged software with the all-in-one fashion business management solution that promises to improve visibility and execution across the entire concept-to-consumer fashion lifecycle”, according to PR.com. According to

Clover Canyon CEO John Parros, “To support our rapid growth, we needed more robust and sophisticated systems. In FashionManager, we found an all-inclusive solution provides us with all the tools needed to manage all of our development, fabric inventory, cutting, sewing, and global distribution. It will enable us to more effectively manage and execute the entire flow of our business. RLM’s deep experience and proven track record in the fashion industry was also important to our decision.”

(b.) Brand Identity

Brand as a Product:

Brand as an Organization:

Clover Canyon trades exclusively in

Clover Canyon as a business organization can

women’s wear:

be described as:

•

Bottoms

•

Gradually emerging into the market

•

Tops

•

US, California Based

•

Dresses

•

Made in House

•

Jackets

•

Privately Owned

•

Swimwear

Brand as a Symbol:

Brand as a Person:

When thinking of Clover Canyon

If Clover Canyon were a person it would

these are examples of what comes to

be a woman that would be described as:

mind:

•

Current

•

Clover Symbol

•

Modern

•

Dresses

•

Elegant

•

Prints

•

Humorous

•

Neoprene

•

Passionate

•

Global

•

International

•

Strong

•

Jubilant

•

Colorful

$5,000 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

Lovers + Friends Cameo Susana Monaco Ella Moss Alice & Trixie Textile Elizabeth Wildfox Autumn Cashmere Citizens of 7 For All Mankind Parker Free People Black Halo MICHAEL Michael KORS Micheal Trina Turk Catherine Kate Spade New J Brand Current Elliot Diane Von Rachel Zoe Rachel Roy Joie Alice + Olivia Sandro Helmut Lang Vince Burberry

Bloomingdale's Clothing

High

Low

(Refer to Appendix page 39)

Neiman Marcus Clothing

High Love, Simdog Cameo Equipment French Connection TEXTILE Elizabeth Alice & Trixie Young Fabulous and Black Halo Amanda Uprichard Talulah Mara Hoffman BCBGMAXAZRIA Smythe Ted Baker London Alexis Cut25 by Yigal Haute Hippie Rebecca Taylor Diane Von T by Alexander Wang Trina Turk Theyskens' Theory Rag and Bone Nonoo Helmut Lang Theory

$4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

Low

(Refer to Appendix page 40) Analysis- For the clothing price and accessibility matrix for primary research we went through all of the retailers that Clover Canyon sells to, Saks Fifth Avenue, Nordstrom, Bloomindale, and Neiman Marcus. Bloomingdale’s and Neiman Marcus break their women’s clothing categories down into different lifestyle categories, Clover Canyon is located in the contemporary category. In order to find our most direct competitors we took all of the contemporary designers from Bloomindale’s and Neiman Marcus and found their entry-level price and their highest price.

Saks Fifth Ave. Clothing $6,000 $5,000 $4,000 $3,000 $2,000

High

$1,000

Low

(Refer to Appendix page 42)

Nordstrom's Clothing

Theory

Alice And Olivia

Rag & Bone

Each X Other

Rag & Bone Jean

Tory Burch

Robert Rodriguez

Jolie

Lela Rose

Just Cavalli

Elie Tahari

Elizabeth and James

Milly

M Missoni

Burberry

A.P.C.

Autumn Cash

7 for All Mankind

Citizens of Humanity

Splendid

High Blk Denim

$3,000 $2,500 $2,000 $1,500 $1,000 $500 $0

Low

(Refer to Appendix page 41) Analysis- Nordstrom and Saks Fifth Avenue do not break up their designers this way. We went through our lists of contemporary designers from Bloomingdale’s and Neiman Marcus and picked out contemporary designers from those lists that

were also sold at Nordstrom’s and Neiman Marcus. After we had all of that information we picked out designers that were at the top of the matrix and at the bottom. At the very top of our matrix is Alexander Wang with the highest prices and one of the most accessible. The least expensive and least accessible brand that we found was Whetherly. Our closest competitors are Free People, Dolce Vita, Kate Spade New York, and 3.1 Phillip Lim; these competitors have similarly priced product and are available in many of the stores that Clover Canyon is sold. (c). Price/Accessibility Matrix

3. Market Analysis According to Matt Bodimeade of CompaniesandMarkets.com and Lucintel Co, they created a market research analysis that said: The global apparel and accessories retail market is forecast to experience modest growth over the next five years, reaching an estimated market value of US $1369 billion by 2017, growing at an compound annual growth rate (CAGR) of 4%. Also stated by Polygon, the U.S. Chamber of Commerce/ U.S. Census found that “available data for 2013 indicates that jewelry industry revenues will continue to grow from 2012 levels. Total jewelry sales in the United States for the month of April 2013 grew 17.7% year-over-year, while total U.S. Retail jewelry sales grew by 10.6% in the first quarter of 2013 compared to the first quarter of 2012. Interestingly, retail jewelry sales by U.S. department stores decreased by 2.1% in May 2013 compared to May 2012, an indicator that some consumers may be moving towards independent retailers and online providers for their jewelry purchases.” Analysis- Along with the fashion industry, it is evident according to the statistics that the jewelry market is growing as well. We wanted to make our brand extension into the jewelry market because it’s not something that would dramatically take away from our clothing line. Jewelry seemed to be the most logical extension to develop into.

a) The Key Players•

Anne Klien

•

Haute Hippie

•

Alexander

•

McQueen •

Aqua

•

ABS by Allen

•

Nina

•

Tildon

Kate Spade New •

Nordstrom

•

Ted Baker

York

•

Rachel Roy

•

T Tahari

Lauren Ralph

•

Rachel Zoe

•

TopShop

Lauren

•

Rebecca Minkoff

•

Tory Burch

•

Vince Camuto

•

Schwartz

•

Leith

•

St. John Collection

•

BCBGeneration

•

Juicy Couture

•

Sequin

•

Betsey Johnson

•

Marc by Marc

•

Eskander

Jacobs •

Michael by Michael Kors

DistributionIn the USA there are few distributors for jewelry. Key distributors include Tiffany’s, Zales, Pandora, Avon, Kay, Zad, Swarovski, Tous, Henri Bendel, and Brighton. Many of these distributors are very well know and sell in their free standing stores, as well as distribute inventory to other jewelry stores. Analysis- Looking into the key players in the clothing and jewelry market we’re competing with, along with where their located, it gave us a sense on how we should price and where we should distribute our jewelry. All of the key competitors in both jewelry and clothing can be found in Bloomingdales, Saks Fifth Avenue, Neiman Marcus, and Nordstrom, as well on e-commerce sites. The

distributors can be found in almost every local mall, a mall in a large city, a freestanding store, e-commerce, as well as in boutiques and little stores. This would affect our extension in a huge way, being we donâ&#x20AC;&#x2122;t have a variety of outlets for selling compared to the key players and jewelry distributors. Currently we are selling to our wholesalers, along with department stores, and our ecommerce site exclusively, which is small compared to the vast amount of outlets our competitors have. b) SWOT Analysis-

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Analysis-The strengths in the SWOT analysis are very solid for our brand, the best strength that we have is that everything made for Clover Canyon is made in house, in California. Being American made plays a big role with consumers who are looking to support all American businesses and are willing to pay a little bit more for it. Luckily our target consumer is middle to upper class and has a little extra spending money to spend on American made clothing. Our brand is also established with celebrities and has been seen on celebrities such as Anne Hathaway, Beyoncé Knowles, Holland Roden, and Mandy Moore. This helps us target Generation Y because it captures the lifestyle they are buying into. Clover Canyon is a fresh-faced brand entering the market, which means people, will be looking to us for pieces they haven’t seen before. However, Clover Canyon has an established aesthetic and is already sold in many established retailers such as Saks Fifth Avenue, Nordstrom, Bloomindales, and Neiman Marcus; this gives us an upper hand since we are new to the market. Unfortunately, Clover Canyon is suspect to its fair share of weaknesses one of those ties in with our strengths. Being a new brand is a blessing and a curse, as is being made in house. Being made in house means that we have to charge a little more but because American made clothing is so rare now a days it works to our advantage as well. Clover Canyon has very limited product, which has worked well for us so far, however, it could prove dangerous in trying to acquire new consumers because we do not cater to everyone. Clover Canyon does not have any experience in jewelry or any accessories and that will prove to be a roadblock for our brand extension. Some threats in the industry that the brand could face are similarly priced brands that are more established, intense competition, and counterfeit goods.

With our extension Clover Canyon is trying to bring new jewelry that directly relates to the brand to the table that will make sure our customers stay loyal to the brand. Clover Canyon’s reliance on suppliers and natural resources and economy changes could prove to be a threat as well. The jewelry extension will be made entirely from precious metals and real gemstones, which means the brand will have to rely on natural resources that are available. The economy is bouncing back from the recession but there is always the threat that something like that could happen. Luckily the market allows for many opportunities, the jewelry industry is timeless and often is used to show wealth and status. The use of precious metals and raw gemstones will benefit the brand in marketing towards people who want to see their jewelry to show wealth and status. The jewelry market is growing and is easy to enter because there is a fragmentation, this means Clover Canyon should not have an issue breaking into the jewelry industry. The jewelry market has been growing steadily since 2009 and appears to be continuing on this cycle. PESTEL AnalysisPolitical -Democracy -Checks and Balances -Semi-Unstable Government (Recent Government Shutdown) -Federal Government is clarified in the Constitution -Minimum wage and anti-discrimination laws Economic -World’s largest national economy -Upswing in economy

-Investment pieces -Unemployment decreasing -Market routes and distribution trends Social -People are more interested in fashion and accessorizing -Already popular among celebrities and people look towards celebrities for fashion inspiration -Appropriate for business wear -Consumer attitudes -Ethnic and religious factors -Advertising and publicity Technological: -Precious Metals -One of the most technologically advanced countries in the world -Broadband Internet access -Competing technological development -Licensing and Patents -Information and Communication Environmental: -Possible issues because of the use of precious metals -Prices would reflect the price of precious metals (more expensive) -Would have to be economically friendly in waste disposal -Negative impact on environment (using natural resources) -Reduction of carbon footprint Legal:

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-California Proposition 65 Jewelry Law -Lead in jewelry -Publish List of Chemicals -No Python (Outlawed since 1970) -Code of Conduct for Jewelry -Bill of Rights -Health and Safety Regulations Analysis- The political forces in the PESTEL analysis include, democracy, checks and balances, semi-unstable government, federal government is clarified in the constitution, and minimum wage and anti-discrimination laws. The democracy, checks and balances, and federal government are all positives, no one person has all the power and every separate section has the power to make sure other parts of the government stay under control. However, even with all those positive political influences, the government recently has been slightly unstable. The recent government shutdown leaves society as a whole wondering how stable it actually is. Because there is an enforced minimum wage and antidiscrimination law that means everyone has equal rights to make enough money to support themselves and their families. The promise of a steady income means that people will have money to spend on other products. Economic factors in the brands PESTEL analysis cover the upswing in the economy, which relates to how the economy has been improving since the market crash in 2008. Another economic force in the PESTEL is that the United States has the world’s largest national economy and unemployment in the United States has been decreasing. The national economy refers to the net worth of all goods and services manufactured within a specific nation, it includes the amount of

wages, income, rents, and interest of a nations residents. Clover Canyon will be extending into high-end jewelry which would be more of investment pieces that would withstand time and wear. This is a unique selling point because rather than spending a little money on a lot of pieces that will not last, women can spend a little bit more money on pieces that will last. Advances in technology make it easier to find proper market routes and distribution trends for Clover Canyon’s extension. Clover Canyon’s social section of the PESTEL has a lot to do with how easy it is to advertise a brand to society. Especially through celebrities and the selling of a lifestyle, society tells us to want what the celebrities have and so if a brand can get there product, celebrity exposure that will work wonders for the brands social advertising. The jewelry extension is meant for a more professional aesthetic; therefore it will work well for workingwomen and is another selling point for our brand. Technology is everywhere and the United States is one of the most technologically advanced countries in the world. Broadband Internet access is available to almost everyone in the United States in some way. This makes it easier to make products accessible and to market to consumers. Other technological factors include competing technological development, licensing and patents, and easily shared information and communication. Environmental factors have been in the forefront of media lately and the use of precious metals and gemstones is a factor that might cause issues in our brand extension. Precious metals and gemstones are unique selling points but might cause issues with women who are worried about protecting natural resources. Prices would be higher because of the use of natural resources. Another price

factor would be the addition of price to cover the proper waste disposal to protect the environment to make sure that the brands waste doesn’t attribute to pollution. Working to reduce our carbon footprint is an economic factor that if used correctly could be used to boost our brand. Consumers who are worried about emissions and other pollutants would see the brand doing as much as possible to reduce our impact and would be more inclined to support the brand. Legal factors include California’s strict law concerning chemicals in jewelry, specifically lead. Proposition 65 states that every company must publish a list of chemicals in their products and the lead content must be below a certain number. Also, the use of python in California has been outlawed since 1970; one cannot even take python across the boarder without being prosecuted. The code of conduct for the jewelry business is something that Clover Canyon is going to have to make sure they are up to date on and comply with for business ethics. Some final legal factors are the Bill of Rights and health and safety regulations. The Bill of Rights protects Americans from being exploited by their government. Health and safety regulations protect employees from being exploited by companies. By enforcing health and safety regulations the government is taking steps to make sure the worker is being protected even though it might cost the company more to conduct business within the regulations.

Porters 5 Forces Analysis-

Analysis-The Porters 5 Forces for our brand extension into jewelry includes bargaining power of customers, threat of new entrants, bargaining power of suppliers and threat of substitute product. The bargaining power of customers is high because of price sensitivity among our competitors; we want to make sure our prices are not to high or to low, that way the customer will not have too much of an option in other competitors. Product differentiation also affects the bargaining power of customers because we want to make our product something the customer would not find within the competitors. Making sure we have substitutes available for our customer is essential as well because if we run out of a unit we will make sure there is a backup. Lastly, having buyers incentives is important as well. Making sure the customer knows that why we want them to buy from us and not from the competitor is very important. The customer would more likely want to buy from

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us because we are made completely in house in California, it’s not your average jewelry imported from China or Japan. Threat of new entrants includes time and cost of entry, specialist knowledge, economies of scale and barriers to entry. All of these fall under the category of being high. Specialist knowledge is also at a high because we want to make sure were sticking to our commitment of using precious metals and crystals and having the right person to analyze this part. We are aiming to lower the perunit costs of producing goods and services by increasing in house production more since we already do so with our apparel. Barriers to entry into our proposed market would be the fact that we’re only selling to the Bloomingdales and Nordstrom’s in California and the only ecommerce site we’re using is our own website, clovercanyon.com. This will be high because it is so limited, but we want to be limited for now because our apparel already does well while being limited. Bargaining power of suppliers includes importance of volume, cost relative to total purchases, supplier concentration, size of suppliers, uniqueness of service, and cost of changing. All of these can relate to how much the suppliers are going to supply us with. Luckily, we make all of our products in house in California, making it easier to have a direct relationship with our supplier. The downside to that is, we may run out of people that specialize in certain aspects as we continue to grow in our company with more extensions in the future. Threat of substitute product includes substitute performance and cost of change. The consumer is the one that demands the prices, we listen to the consumer, unless we are following a push model and we set the trends. But cost of change is a high factor in the section because it is forever evolving, value of money is always moving around.

Lastly, the competitive rivalry is high. We have roughly 27 jewelry competitors within our department stores that we share already, before we even emerge into the market. Customer loyalty will be key in this scenario though. We know that with the right promotional strategies, pricing strategies, placement strategies, and product strategy we can hold on to our valuable customers and even gain new ones. Quality difference between our competitors and us will be a factor as well. We are making our jewelry from crystal, precious metals and gemstones, hoping this will overthrow the rivalry within the quality aspect.

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400 350 300 250 200 150 100 50 0

Lauren by Ralph Earrings Necklaces Leith Earrings Necklaces Juicy Couture Earrings Necklaces Marc by Marc Jacobs Earrings Necklaces Michael by Michael Earrings Necklaces Nina Earrings Necklaces Nordstrom Earrings Necklaces St. John Collection Earrings Necklaces Sequin Earrings Necklaces Tildon Earrings Necklaces Topshop Earrings Necklaces Tory Burch Earrings Necklaces Vince Camuto Earrings Necklaces

c) Price/Accessibility Matrix

Nordstrom's Jewelry

Low

24 High

Bloomingdales Jewelry 600 500 400 300 200

Low

100

High

Analysis- The brand plans to launch exclusively on Clover Canyon’s website and in stores with Bloomindale’s and Nordstrom’s. To figure out accurate and competitive pricing we researched all of the jewelry brands that are sold through Bloomindales and Nordstroms specifically. After we had the entry level and highest price point for all of the brands, we looked into brands that have a ready to wear line sold through those brands as well. The brands that sell jewelry and ready to wear lines are included into the price/accessibility matrix as our most prominent competition. The higher priced brands are McQ by Alexander McQueen, Rachel Zoe, Kate Spade New York, and Tory Burch. These brands are all relatively similar in their accessibility; Kate Spade is the most accessible of the higher priced brands. On the lower end of price and accessibility there are brands such as, Rachel Roy, B.P. by Nordstrom, and Leith Clark; Betsey Johnson is in the middle for accessibility and price. Brands that are closest to Clover Canyon in the price/accessibility matrix are Michael by Michael Kors, Lauren by Ralph Lauren, and Topshop. We judged accessibility based on if they were sold in both

Bloomindale’s and Nordstrom’s online or just one. This was an easier judge than to try to judge a product’s overall quality. 4. Target Consumer a) Demographics •

Age 1. Our Extension into jewelry is target towards females, ages 18-35. According to California Demographics, the average age in California for females is 36.5. According to InfoPlease there are about 3,828,006 females between the ages of 20-35 in California as of 2012.

•

Income 1. The target consumer’s income for our jewelry extension would ideally be aimed at the middle class. The median income household in California as of 2010 was $60,883, according California Demographics.

b) Location/Population 1. Being that our apparel line is already made in house, in California, our extension into jewelry is first being launched in the state of California as well. According to California Demographics, California is the most populated state in the United States as of 2012, with a population of 38,041,430. Of this population, 50.3% are females, which according to IndexMundi is 19,134,830 females residing in California. •

Salary 1. In 2011, women in California who are working fulltime and receiving salaries were averaging $751 weekly according to the Bureau of Labor Statistics.

c) Psychographic

1. Our consumers, as told by Clover Canyon, are jubilant, high energy, appreciate art, globally cultured and express diverse passions through her personal style. This is the lifestyle we are aiming towards as our target market for the jewelry line as well. According to the UDayton notes, the upper-middle class prefers buying prestige brands and tends to spend “with good taste.” 2. According to Cotton’s Lifestyle Monitor, most females spend their time shopping at mass merchants or chain stores as of 2013. As statistics show, 25% shop at mass merchants, 22% shop at chain stores, 12% shop at department stores, 13% shop at specialty stores, 11% shop at off price stores, and 6% shop online. As of 2013, Cotton’s Lifestyle monitor has gathered data that 61% of women get their clothing ideas from their current wardrobe, 47% are from store displays, 35% are from online, 22% from relatives, 26% from catalogues, 27% from magazines, 215 from commercials, 19% from TV shoes, and 13% from celebrities. It has been said by Cotton’s Lifestyle monitor that women do not like changes in their fabrics and will notice when it does. They are very loyal to their brands and like the fabrics already used. 3. According to Forbes, a 2012 study, millennial are civically and politically disengaged and are more focused on materialistic values. The millennial generation has more emphasis on extrinsic values, like money, fame and image, and generation y also want instant gratification with our purchases. The average female uses Facebook everyday, and 80% of women in generation Y use social media to engage with brands according to Digiday.

d) Behavioral 1. Currently in America, the average woman spends 399 hours a year shopping, according to NY Daily News. If you take this number and multiply it by the number of females in California, ages 20-35, the population of females in California, spend 1,527,374,413.95 hours a year shopping in total. Out of this time, women spend 6048 minutes shopping for clothing and accessories within the 399 hours. If you take this number and multiply it by the number of millennial females in California, the average women spends about 385,863,004.8 hours. In the United States, according to Statista, the average amount of time a female spends reading magazines is 20 minutes daily. Taken this to account and the population in California, women ages 20-35 spend 76,560,120 minutes in total reading magazines daily. The top 10 magazines these women read in the United States, specifically in fashion, are InStyle, Cosmo and Elle, according to All You Can Read.com. As said by Ad Week, 71% of the millennial generation still reads print magazines as of 2010. Currently in the United States, the number of females that shop online is 193,166,860, according to GoGulf. The average amount of time spent shopping online in females ages 16-34, according to Marketing Charts Online, is 5 hours a week on average. If you take the 5 hours a week and multiply it by the number of females residing in California, ages 20-35, you see that in total they spend 19,140,030 hours a week shopping online. (Refer to Appendix pages 45-65 for case study research)

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Analysis- We believe the target consumer information we have found fully supports our extension into the California area, aiming at the female millennial generation. California is the most populated state in the United States, with 16,996,756 females total and 3,828006 of that number are within our target market range. The average household income we are aiming at is targeted at the middle to high-class household. Our jewelry pieces are affordable and attainable to this crowd. This age group is mostly in college or finishing college and has a mass amount of student debts. But according to Forbes, that even without jobs and with debt, the average female student spends $784 on clothes and accessories per month. We chose California to begin our launch into jewelry because it is our home base. Being we make all of our garments in house, we chose to make our jewelry in house as well. Since we are focusing on our target female consumers in California, we will be able to see how open they are to buying our jewelry. The millennial female consumer we are targeting would be a jubilant, high energy, globally cultured female that appreciates are and likes to invest in our pieces as wearable art. Itâ&#x20AC;&#x2122;s been proven that the average millennial woman likes to spend their time shopping, window-shopping, or shopping online during their leisure time, this is an advantage to us. With statistics showing that females like to shop in mass merchants or department stores, Bloomingdales and Nordstrom will be best to launch our product in, as they do cater more to our generation y target consumer, more so than Saks and Neiman Marcus. The statistics of women who read magazines and are on networking sites will help us aim where our promotions should be targeted, and where they will get the most attention. The millennial generation has been said to be more materialistic and more absorbed in their appearance, so extending into a jewelry line will be successful within our

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target consumer. Looking at the amount of time women spend shopping for clothing and accessories in a year and applying that to our millennial generation in California, the amount of time spend for all of them is very high. This will work to our advantage if they like to shop in department stores. They will spend most of there time in department stores and will find our jewelry there now. Applying all of these traits and characteristics to our millennial target consumer will help us succeed in our extension. 5. 4P’s Strategy for Proposed Extension •

Product Strategy

Clover Canyon is extending their brand into the jewelry industry. Sticking to there California aesthetic, it will be a perfect fit. When creating this line, we thought about the California waters and how on the ocean you can sometimes see “crystals on the water”; titling our collection California Crystal. We have 4

necklaces, 1 bracelet, 1 ring; a pair of stud earrings and a pair of drop earrings. Each piece is made with crystals, appropriately fitting our California Crystal extension. We wanted to put our company into jewelry so that our customer won’t have to go far to find the right jewelry to go with that perfect dress they just purchased from Clover Canyon.

•

Pricing Strategy When pricing our pieces for the extension, we referenced the jewelry price and accessibility matrix. The jewelry price and accessibility matrix has a rough estimate of where we would like to fall in relation to our competitors. From the price and accessibility matrix we found three closest competitors and took their separate entry and highest prices for every jewelry item. After we had an idea of our competitors price ranges we began to price our product. Our three closest competitors are Michael by Michael Kors, Lauren by Ralph Lauren, and Topshop. Our goal was to stay roughly below Michael Kors, roughly even with Ralph Lauren, and priced higher than Topshop.

•

Placement Strategy (distribution) Clover Canyon’s jewelry line is planning to be released and sold at all of our wholesale stores, located in the state of California, which totals out to be 64 boutiques. Two department stores that we already have an established relationship with and are currently carry our clothing line, will be releasing our jewelry line as well. There are 11 Bloomindales and 32 Nordstrom’s in California. Our jewelry will only be sold at Bloomingdales and Nordstrom’s in store and not on their online website. To make our jewelry more accessible

for other consumers, we will be selling it on our ecommerce site exclusively for the United States consumer. Analysis- Being we are a California based brand and made in house, we though California would be a good market to first launch our brand extension into, before we release it into our other wholesales around the United States and eventually, internationally. Launching it first in our home state would give us a sense of how the jewelry market works in highly populated and fashionable areas. With that information we can see what profit we generate from California consumers, before we extend it any further than that. Already having established relationships with our wholesalers and department stores, we will be able to do promotions with them and trunk show events, post launch. From the demographics, many millennial shoppers prefer department stores. Bloomingdales and Nordstrom’s have an abundance of contemporary wear and cater more so to generation y, we thought this would be a good fit to launch our line in. •

Promotion Strategy (communication) We will let our consumer know about our extension through a variety of outlets. With spreading the word, we’ll be posting on our Facebook, Instagram, Twitter, every social media website that will capture the millennial attention. With our knowledge and demographic research, it shows that the millennial generation uses social media everyday, and checks every outlet frequently. We will also be posting our invite on every social media website listed in our promotional plan, along with bloggers, to help get the word out. Post launch to keep our extension up and out there, we will have a trunk show in Bloomingdales, along with a sample sale two months later. Our launch

party will have an exclusive piece there for consumers to purchase. Our launch event will be held one week before Valentines day, so then the women in Generation Y can see our pieces, and ask their significant others for piece of jewelry from our new collection to celebrate the holiday.

The advertisements we will be using to help promote our jewelry extension pre-launch would be pages in magazines about our jewelry, along with including a promotional code for a percentage off the product or free two day shipping. The magazines we chose are InStyle, Comso, and Elle. We picked these magazines because they are the top read magazines by the millennial.

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For Instyle, we are planning to do a whole page on the jewelry for our launch. Post-Launch we will have apiece featured on the front page by whoever is featured that month on the issue. Cosmo launch will have a featured page with an interview with Rozae Nichols, and her thoughts and comments about the new jewelry extension. Post-launch Cosmo will feature a promo code for a jewelry piece in their magazine. For the Launch, Elle will also be featuring a page solely on our jewelry line. Post launch we plan on being on the front page, as well as having a promo code included within the magazine. These tactics will appeal to all of the millennial generation, along with the promo codes post launch keeping our sales up. We decided to go with blog advertising as well to help get the word out there. Clover Canyon has been featured on the Zoe Report, Refinery 29, and Who What Wear many times. We figured since we have an established relationship with them already, we could also use them to help promote. For Rachael Zoes blog, we will have her post a picture of our invite pre launch, and then have her attend as wel, which will bring more people to our launch event and more publicity. Both Refinery29 and Who What Wear will post the invitations on their website, and talk about the extension into jewelry. After the launch, we will have each blog post pictures from the event and talk about how it went and what the jewelry was like. Post event, we will have Rachel Zoe offer a promo code on one of her style of the day posts. We will have Refinery29 do a giveaway with one of our products. Who What Wear, will also post a “Style of the day” with our pieces being featured as well. Social media marketing advertising we plan on reaching out to our consumers on four different platforms. We are focusing on Facebook,

Instagram, Twitter, and Pinterest. From the research gathered from our target consumers, a lot of millennial’s spend their time “pinning” and that’s how most of them get their inspiration for jewelry ideas and clothing ideas. On these platforms pre launch, we will be posting our invitations, and having people “like” our page for a promotion code, or “retweet” for a chance to win a meet and greet session with the designer, Rozae Nichols. Later we will be doing giveaways with product, or free 2 day shipping within the USA for “liking” our page.

6. Conclusion In conclusion, our extension for Clover Canyon would be a high-end jewelry line targeted towards 18-35 year old women. Our designs would be inspired from Clover Canyon’s already existing clothing line, and would be available through Nordstrom’s and Bloomingdale’s and exclusively on Clover Canyon’s website. Our line consists of three necklaces, plus an exclusive necklace only available at the launch party, one ring, two bracelets, and two pairs of earrings. Our launch date is on February 14, 2014 and will first start out in California. We expect our extension will be very successful and look forward to expanding the company beyond apparel.

Works Cited Danubio, Jeanne, and Nikhil Sharma. "Unlocking Success with Digital Shoppers." WARC. Esomar, Sept. 2013. Web. 17 Nov. 2013. Geoffrey Precourt, Geoffrey. "The Move to Mainstream: Key Trends in US Multicultural Marketing." WARC. Event Reports, Nov. 2011. Web. 17 Nov. 2013. "Get California Demographics." California Demographics. Cubit Planning Inc., n.d. Web. 17 Nov. 2013. Macy's, Kmart, Marks & Spencer, and Makro Cash & Carry. "Increase Sales (Department Stores)." WARC. WARC, July 2012. Web. 17 Nov. 2013. "U.S. Retail Jewelry Industry Update 2013." U.S. Retail Jewelry Industry Update 2013. U.S. Chamber of Commerce / U.S. Census, 2012. Web. 17 Nov. 2013.

Appendix

Bloomingdales Clothing Research

High Low Lovers,+,Friends $172 Dolce,Vita $187 Cameo $198 Soft,Joie $218 Susana,Monaco $230 Akiko $253 Ella,Moss $278 Splendid $298 Alice,&,Trixie $326 Ali,Ro $328 Textile,Elizabeth,and,James $328 Bailey,44 $330 Wildfox $336 Aiko $358 Autumn,Cashmere $363 Madison,Marcus $372 Citizens,of,Humanity$375 Mara,Hoffman $384 7,For,All,Mankind $385 Equipment $388 Parker $396 PJK $448 Free,People $450 Torn,by,Ronny,Kobo$450 Black,Halo $498 French,Connection $498 MICHAEL,Michael,Kors $525 Erin,Fetherston $550 KORS,Micheal,Kors $556 BCBGMax,Azria $598 Trina,Turk $678 Ted,Baker, $748 Catherine,Malandrino $795 Halston,Heritage $795 Kate,Spade,New,York$798 Nanette,Lepore $798 J,Brand $895 Milly $925 Current,Elliot $985 Rag,and,Bone $990 Diane,Von,Furstenberg $995 Nonoo $1,100

$163 $88 $126 $78 $230 $132 $88 $40 $275 $258 $145 $95 $48 $130 $286 $195 $148 $180 $168 $108 $176 $78 $20 $208 $345 $48 $70 $245 $390 $68 $68 $55 $275 $95 $128 $146 $85 $95 $98 $70 $125 $350

Rachel,Zoe $1,100 Rebecca,Taylor $1,195 Rachel,Roy $1,198 Cut25,by,Yigal,Azrouel $1,200 Joie $1,228 Elizabeth,and,James $1,295 Alice,+,Olivia $1,496 Tory,Burch $1,795 Sandro $2,255 Marc,by,Marc,Jacobs $2,258 Helmut,Lang $2,295 Rebecca,Minkoff $2,300 Vince $2,400 Theory $2,795 Burberry $4,495

$195 $215 $198 $250 $28 $245 $154 $95 $150 $78 $90 $168 $48 $65 $115

Neiman Marcus Clothing Research

High Low Love,+Simdog $68 Wildfox $108 Lovers+++Friends $168 Cameo $198 Robbi+&+Nikki $198 Soft+Joie $198 Equipment $248 Ella+Moss $258 Free+People $268 French+Connection $288 PJK $298 Splendid+Apparel $298 TEXTILE+Elizabeth+and+James $299 Susana+Monaco $319 Aiko $325 Alice+&+Trixie $325 Bailey+44 $328 Madison+Marcus $328 Young+Fabulous+and+Broke $345 Dolce+Vita $385 Ali+Ro $388 Black+Halo $390 Maison+Scotch $395 Parker $396 Amanda+Uprichard $425 Kelly+Wearstler $450 Torn $478 Talulah $482 Autumn+Cashmere $495 Troubadour $515 Mara+Hoffman $560 Erin+Fetherston $595 Nha+Khanh $595 BCBGMAXAZRIA $598 Rebecca+Minkoff $598 Cusp+by+Neiman+Marcus $695 Smythe $695 Whit $698 Laveer $725 Ted+Baker+London $735 Korovilas $792 Alice+by+Temperley $795

$62 $74 $154 $119 $88 $88 $178 $62 $48 $48 $88 $38 $198 $149 145 $216 $130 $216 $150 $187 $228 $345 $49 $187 $124 $295 $220 $192 $275 $245 $198 $195 $295 $138 $78 $28 $495 $248 $515 $175 $297 $395

Alexis $880 Rachel+Zoe $895 Sachin+++Babi $895 Cut25+by+Yigal+Azrouel $995 Elizabeth+And+James$995 Halston+Heritage $1,095 Haute+Hippie $1,095 Joie $1,098 Catherine+Malandrino $1,190 Rebecca+Taylor $1,195 Robert+Rodriguez $1,295 Nanette+Lepore $1,298 Diane+Von+Furstenberg $1,300 Carven $1,390 Faith+Connexion $1,450 T+by+Alexander+Wang $1,450 Just+Cavalli $1,495 Milly $1,495 Trina+Turk $1,495 Skaist+Taylor $1,595 Versace+Collection$1,650 Theyskens'+Theory$1,695 Alice+++Olivia $1,698 ALC $1,750 Rag+and+Bone $1,795 L'Agence $1,895 3.1+Phillip+Lim $1,995 Nonoo $1,995 10+Crosby+Derek+Lam $2,100 MARC+by+Marc+Jacobs $2,158 Helmut+Lang $2,295 Vince $2,400 J+Brand $2,495 Theory $2,795 McQ+Alexander+McQueen $2,975 Herve+Leger $4,200

$97 $195 $295 $275 $245 $177 $225 $28 $275 $195 $88 $198 $135 $390 $207 $78 $295 $175 $188 $245 $295 $195 $117 $244 $115 $250 $475 $295 $325 $168 $90 $48 $185 $65 $225 $600

High Low Blk+Denim $215 Habitual+ $230 Whetherly $235 Splendid $238 Frame+Denim $269 Twenty8Twelve $285 AG $295 Enza+Costa $295 Ella+Moss $298 Citizens+of+Humanity$299 Textile+Elizabeth+and+James $325 Equipment $368 7+for+All+Mankind $395 Bailey+44 $416 Black+Halo $435 Autumn+Cash $440 Free+People $600 BCBGMax+Azria $648 A.P.C. $660 Halston+Heritage $695 Rachel+Roy $748 Burberry $750 Opening+Ceremony $755 Rachel+Zoe $875 M+Missoni $895 Smythe $895 Tracy+Reese $895 Milly $925 MSGM $950 Current+Elliot $985 Elizabeth+and+James$995 McQ+by+Alexander+McQueen $995 Rebecca+Minkoff $998 Elie+Tahari $999 The+Kooples+ $1,015 Rebecca+Taylor $1,095 Just+Cavalli $1,135 Zadig+&+Voltaire $1,160 Carven $1,190 Lela+Rose $1,195 Victoria,+Victoria+Beckham $1,195 Marc+by+Marc+Jacobs $1,198

$190 $170 $106 $38 $199 $285 $168 $155 $108 $158 $195 $178 $159 $108 $345 $95 $20 $178 $135 $295 $178 $115 $195 $175 $245 $495 $195 $195 $215 $84 $195 $295 $78 $178 $95 $250 $195 $285 $230 $295 $775 $88

Nordstrom Clothing Research

Jolie $1,228 Haute+Hippie $1,295 Miss+Wu $1,295 Robert+Rodriguez $1,295 Helmut+Lang $1,345 RED+Valentino $1,395 Tory+Burch $1,395 DVF $1,400 Faith+Connexion $1,430 Rag+&+Bone+Jean $1,485 Theyskens+Theory $1,495 Veda $1,540 Each+X+Other $1,560 A.L.C $1,595 3.1+Phillip+Lim $1,650 Rag+&+Bone $1,695 T+by+Alexander+Wang $1,695 Sandro $1,730 Alice+And+Olivia $1,795 Alexander+Wang $1,895 Vince $2,200 Theory $2,675

$108 $39.97 $195 $245 $240 $175 $95 $175 $178 $70 $145 $825 $155 $125 $115 $70 $80 $110 $185 $395 $48 $225

Saks Fifth Avenue Clothing Research

High Low Citizens.of.Humanity$258 Splendid $268 Textile.Elizabeth.and.James $268 AG $295 Madison.Marcus $306 Young.Fabulous.and.Broke $317 Whit $379 Ali.Ro $387 AIKO $390 Bailey.44 $398 Torn $398 Rachel.Roy $468 Kelly.Wearstler $495 Parker $572 ERIN.Erin.Fetherston$595 7.for.All.Mankind $650 Trina.Turk $698 L'Agence $795 Black.Halo $800 Kate.Spade.New.York$848 Rachel.Zoe $895 Smythe $895 Current.Elliot $985 10.Crosby.Derek.Lam$995 Burberry $995 Cut25.by.Yigal.Azrouel $995 BCBGMax.Azria $998 Halston.Heritage $1,095 J.Brand $1,096 Rebecca.Taylor $1,195 Joie $1,228 Catherine.Malandrino $1,295 Elizabeth.And.James $1,295 Robert.Rodriguez $1,295 Sachin.+.Babi $1,295 Nanette.Lepore $1,298 M.Missoni $1,495 Milly $1,495 Alice.And.Olivia $1,496 Haute.Hippie $1,595 Just.Cavalli $1,645 T.by.Alexander.Wang $1,695

$168 $46 $195 $108 $284 $123 $218 $208 $105 $66 $192 $278 $220 $165 $245 $155 $248 $150 $298 $188 $150 $495 $128 $255 $650 $195 $68 $125 $150 $195 $28 $225 $125 $185 $195 $134 $195 $150 $117 $115 $195 $74

Rag.and.Bone $1,795 RED.Valentino $1,795 Tory.Burch $1,795 A.L.C $1,894 Diane.Von.Furstenberg $1,900 Carven $1,975 A.P.C. $2,130 Vince $2,175 Elie.Tahari $2,198 Marc.by.Marc.Jacobs $2,258 Blk.Denim $2,295 Rebecca.Minkoff $2,300 Theyskens.Theory $2,495 Theory $2,675 Herve.Leger $2,690 Helmut.Lang $2,695 Opening.Ceremony$2,875 McQ.by.Alexander.McQueen $2,975 3.1.Phillip.Lim $3,950 Alexander.Wang $5,000

$115 $195 $95 $134 $125 $235 $175 $48 $98 $88 $75 $178 $165 $85 $740 $90 $120 $150 $115 $365

Bloomindales Jewelry Research

Low

High

Aqua Rings Earrings Bracelets Necklaces

25 28 24 28

30 60 48 68

ABS@by@Allen@Schwartz Rings Earrings Bracelets Necklaces

55 25 35 55

65 95 150 250

148

Rachel@Zoe Rings Earrings Bracelets Necklaces

125 95 475 195

165 250 475 525

Rebecca@Minkoff Rings Earrings Bracelets Necklaces

78 48 68 78

98 148 198 248

148

Ted@Baker Rings Earrings Bracelets Necklaces

59 89

79 125

68 32 32 58

78 98 198 378

T@Tahari Rings Earrings Bracelets Necklaces

38 25 38 50

45 50 95 150

Lauren@by@Ralph@Lauren Rings Earrings 20 Bracelets 32 Necklaces 48

78 128 228

Marc@by@Marc@Jacobs Rings Earrings Bracelets Necklaces

48 42 28 58

78 98 198 228

Michael@Kors Rings Earrings Bracelets Necklaces

65 45 65 95

145 95 175 295

Juicy@Couture Rings Earrings Bracelets Necklaces Kate@Spade@New@York Rings Earrings Bracelets Necklaces

45 Â

Nordstrom Jewelry Research

Low High Alexander0McQueen Rings 135 Earrings Bracelets 285 Necklaces 435 Anne0Klein Rings Earrings Bracelets Necklaces BCBGeneration Rings Earrings Bracelets Necklaces Betsey0Johnson Rings Earrings Bracelets Necklaces BP. Rings Earrings Bracelets Necklaces Eskandar Rings Earrings Bracelets Necklaces Haute0Hippie Rings Earrings Bracelets Necklaces

16 18 26

28 18 28

45 20 25 35

395

295

135 295 435

Kate0Spade0New0York Rings Earrings Bracelets Necklaces

48 32 32 48

35 50 80

Low High Lauren0by0Ralph0Lauren Rings Earrings 22 Bracelets 32 Necklaces 34

28 48 66

Leith Rings Earrings Bracelets Necklaces

45 45 65 68

Juicy0Couture Rings Earrings Bracelets Necklaces

Marc0by0Marc0Jacobs Rings Earrings Bracelets Necklaces

22 20 26 26

38 48 48

48 42 28 58

395

Michael0by0Michael0Kors Rings 85 Earrings 45 Bracelets 65 Necklaces 95

295

Nina Rings Earrings Bracelets Necklaces

35 75 40

78 128 128 378

64 128 128

30 20 34 48

38 58 48

58 68 178 228

115 95 295 195

95 155 235

Nordstrom Rings Earrings Bracelets Necklaces

18 28 28

128 128 88

275 335

20 25

38 38

Tildon Rings Earrings Bracelets Necklaces

20 18 28 32

28 22 36 38

Topshop Rings Earrings Bracelets Necklaces

15 15 15 90

25 28 34 149

Tory0Burch Rings Earrings Bracelets Necklaces

95 58 95 95

125 95 250 295

Vince0Camuto Rings Earrings Bracelets Necklaces

20 20 28 32

68 48 88 198

St.0John0Collection Rings Earrings Bracelets Necklaces Sequin Rings Earrings Bracelets Necklaces

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Unlocking Success with Digital Shoppers: The e-commerce barriers and enablers that you need to consider Jeanne Danubio and Nikhil Sharma ESOMAR Congress, Istanbul, September 2013

Unlocking Success with Digital Shoppers: The e-commerce barriers and enablers that you need to consider Jeanne Danubio and Nikhil Sharma Nielsen Introduction Success in the digital shopping environment requires a deep understanding of shopper needs, how a product category gets shopped and the ability to cost effectively deliver a product to the consumer. The digital revolution has transformed industries like music, books and travel almost entirely because e-commerce solutions delivered shopper needs in ways that traditional channels couldn't match. Gone are the days where we had to buy an entire album because of a particular track. With iTunes, it is so much easier and economical to customize a personal music library and deliver it digitally. It is much more convenient to visit travel sites such as Expedia or Travelocity to research, compare and make purchases, rather than visiting a travel agency. In publishing, Amazon's endless book selections, authentic reader reviews, personalized book recommendations and e-book options are hard for brick-and-mortar bookstores to match. Amazon's edge in giving shoppers tailored and relevant choices as well as highly competitive prices has forced traditional booksellers like Borders to close. So are consumer packaged goods next in line? Is digital technology a friend or foe to retailing in consumer shopping goods (CPG)? What is necessary to win with the shopper across physical and online channels? Nielsen's research uncovered key ways in which shoppers engage with digital technology along the path to purchase. This research explores the path to purchase from the perspective of the increasingly connected shopper. We investigate the benefits/barriers to digital adoption of key consumer product categories and how to integrate digital touch points to achieve success both online and in-store. Our results illuminate the role that various digital touch points play in influencing shoppers' purchase decisions. Shopper needs: Fundamental truths about shopping Digital technology is widely pervasive today and will only continue to grow at a rapid pace into the future. Over 274 million Americans have access to the Internet. As of March 2013, more than 60% of the 237 million mobile phone owners had Downloaded from warc.com

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smartphones (Nielsen Mobile NetView Panel, Q1 2013), and 84% of smartphone owners were using these devices for shopping activities like finding stores, making lists, checking prices, researching products, sharing content and purchasing (Nielsen Mobile Shopping Report, Q1 2013). Amidst these activities, people continue to want to satisfy three fundamental needs when they shop: convenience, choice and value for their money. Convenience is the ability to deliver a shopping solution that requires less time and effort. Choice is simply more variety to cater to a broader set of consumer needs. Price-value is the level of quality delivered at a certain price point. For nearly two centuries now, retail formats have evolved to better address these needs. (See figure 1.)

Figure 1: Retail formats evolved in response to fundamental shopper needs Ample evidence suggests that these needs have been responsible for retail evolution. Shoppers who found the need to visit multiple stores to buy consumables and household products inconvenient, migrated to supercenters introduced by Meijer for a 'one-stop-shopping' experience. Convenience stores also offered an alternative to supermarkets for shoppers on 'grab-and-go' trips. In recognition of shoppers' desire to economize, Walmart focused on lowering supply chain costs, increasing efficiency and providing value to shoppers in terms of everyday low prices. More recently, shopper needs for natural or ethnic products have emerged. Retailers like Trader Joe's recognized this need for choice early on, and implemented a culturally-tailored approach to offer unique product selections to a fast growing multicultural group in the population. They have grown into a $9.5 billion company in a relatively saturated retailing environment and have managed to transform a trip to a Trader Joe's store into an experience (Supermarket News, July 2012). Are clicks, then, destined to replace bricks in CPG as they have in other industries? E-commerce has undoubtedly grown at an impressive rate, but in 2012, it accounted for less than 3% of total CPG sales. We believe that while digital will continue to play an increasingly important role in the CPG industry, online shopping will not completely replace trips to stores any time soon. Ecommerce does offer a few benefits and has enjoyed some success, particularly with shoppers in densely populated urban settings that are seeking convenience. However, brick-and-mortar stores also enjoy key advantages over e-commerce and have curbed e-commerce from gaining widespread adoption. As illustrated (figure 2), both virtual and physical stores deliver convenience, choice and price-value to shoppers in their own way.

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Figure 2: Both online stores and brick- and- mortar stores deliver against fundamental shopper needs While e-commerce may not replace traditional grocery shopping in the immediate future, the reality is that in an industry with modest growth like packaged goods, e-commerce will likely grow at the expense of more traditional channels. More broadly, digital also provides an opportunity for marketers to engage with shoppers 'everywhere and exactly where' in order to influence shopping decisions in their favor. We evaluate how you can unlock this opportunity in CPG through the lens of where people buy and how people shop. Where people buy: The role that category plays in e-commerce While e-commerce may not account for a dominant share of CPG sales today, it is still the fastest growing retail channel. Nearly 9% of shoppers in the U.S. claim to have purchased a CPG product online in the past three months, a number that has increased by 1.4 times in just twelve months (Nielsen Digital Shopping Survey, Q2 2013). We project e-commerce to grow at a 25% annual rate through 2015 and more than double its current share of total CPG sales. (See figure 3.)

Figure 3: Online consumer packaged goods (CPG) sales will grow at a robust rate: U.S. online CPG sales ($ billions)

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People shop very differently online than they do in a store. While baskets with multiple items are common-place in a store, 60% of shoppers purchase only a single category at a time when buying online (Nielsen Digital Shopping Survey, Q2 2013). If CPG marketers want to drive online sales, the reality is that category matters.

Figure 4: The majority of e-commerce purchases include only one category Source: Nielsen Digital Shopping Study, Q2 2013 Some categories are better candidates for selling online than others. Categories in the lead are diapers, diet aids, vitamins and skin care with online sales significantly above the average for CPG products. Many of these categories are relatively expensive non-food products with a steady usage rate. In contrast, categories like carbonated beverages, dairy, liquor, beer, produce and frozen food have a very small proportion of sales online. These categories can encounter physical barriers to ecommerce due to factors like refrigeration, perishable concerns and weight that are cost-prohibitive for shipping. Based on our research and analysis of online purchase data, we identified two barriers and two enablers that translate into convenience, price-value and choice for a shopper, and collectively determine how successful a category can be in ecommerce. Barriers and enablers to e-commerce Urgency barrier Some categories face a pronounced urgency barrier, the overwhelming shopper desire to buy and use at once, without waiting to have the product delivered. For confections, the consumption need is often immediate. Convenience can be paramount and the nearest store suffices for that shopper mission. Inspection barrier Downloaded from warc.com

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This barrier is especially relevant to perishable food such as fresh produce and food requiring refrigeration. Concerns about spoilage can discourage online purchasing because they negatively affect the product value proposition if items get discarded. The need to inspect certain products drives people to a store and they tend to buy other products that they need while they are there. Therefore the inspection barrier has a secondary effect on the entire basket. Stock-up enabler Products with predictable consumption rates and a long shelf life such as diapers or dog food lend themselves to online purchasing programs such as Amazon's Subscribe and Save. Shoppers enrolled in such programs are automatically shipped specific products on a periodic basis, and also provided with other incentives such as preferred customer discounts, coupons and new product information. Meanwhile, retailers and manufacturers enjoy the ancillary benefit of building brand loyalty via these automatic replenishment systems. Price enabler As for price factors, online retailers enjoy several cost advantages over brick-and-mortar operations, particularly related to overhead. Lower costs of doing business often convert directly into lower consumer prices or steeper discounts for digital shoppers, which allows marketers to retain price sensitive shoppers in a more profitable way. Considerations affecting the digital investment decision for retailers include how online delivery charges and overall pricing align with offline retail alternatives. Keeping the barriers and enablers in mind, we expect personal care categories like vitamins, skin, hair, feminine and baby care; pantry staples like coffee and cereal; and paper products like bath tissue and kitchen towels to win in e-commerce if manufacturers and retailers collaborate to deliver price-value, choice and convenience. Conversely, e-commerce growth in snacks, frozen foods, condiments and beverage will be relatively slow. In response, brick-and-mortar retailers, who were skeptical of e-commerce, are increasingly making it a strategic goal. Savvy retailers are expanding their online offerings and experimenting with new ordering and delivery options. They are developing strategies to cater to shoppers that don't have time to make grocery trips, or prefer to avoid long checkout lines or crowded parking lots. For example, some retailers are allowing shoppers to order online or from an app on a connected device and pick up the products in-store at a convenient time. Others are including 'did you forget' style reminders for online shoppers to promote cross-merchandising and build baskets, while performing a service for customers. While the vast majority will continue to do a bulk of their grocery shopping in a store, the multi-channel shopping era that combines offline and online shopping is here. There will not be a massive or sudden flight from brick-and-mortar stores to online grocery shopping in the next few years, akin to what has occurred in other industries. However, some categories will experience faster e-commerce growth than others, and if these are trip driver or basket builder categories, then retailers definitely need to find ways to mitigate the loss. We contend the winners will be those who quickly recognize how shopper demand is evolving due to changing demographics and rapid advances in technology, and are able to align formats, assortment, promotions and communication to deliver against the core shopping needs of choice, convenience and value for their dollar. How people shop: The importance of touchpoints in digital shopper marketing

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E-commerce in the CPG industry is in its nascent stages in many markets. However, digital technology does present significant potential for timely and personalized marketing. Shoppers do engage in other activities like checking prices and researching products online. Moreover, rapid proliferation of technology certainly provides marketers with a myriad of ways to interact with shoppers. Amidst this increasingly complicated marketing landscape, where should you invest in digital? Are websites more effective than coupon sites? Should you prioritize social media engagement over developing mobile apps? These are indeed difficult questions to answer. Nielsen's recent research set out to answer these questions in the CPG industry. Our results illuminated the role that various digital touchpoints (websites, social media sites, blogs and coupon sites) play in influencing shoppers' purchase decisions for various CPG products. We discovered that shoppers often default to only using certain touchpoints depending on what they are purchasing. It is important for marketers to understand what the relevant touchpoints are for their products, and the specific shopping decisions they influence. There are interesting differences across categories and people in terms of whether emails, blogs or websites work best. Based upon our analysis, several key principles emerged: People utilize a variety of media and sources of information, and these vary by category and demographics. An integrated approach, leveraging traditional and digital touchpoints, is most effective. Focusing solely on a social or mobile strategy is not prudent. Strategies must recognize which digital touchpoints are effective. Using them judiciously in concert with traditional marketing efforts is key to success.

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Figure 5: Digital touchpoints vary by shopper type Source: Nielsen Digital Shopping Study, Q2 2013

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Figure 6: Shoppers use different touchpoints for different categories Source: Nielsen Digital Shopping Study, Q2 2013 Intuitively, one may think that categories more suited for e-commerce also do a better job of marketing digitally to shoppers. We, however, uncovered a different reality. Categories are currently at very different stages of establishing and engaging an online audience. The level of e-commerce development is not always a good indicator of how effective these categories are in digital shopper marketing. Marketers that are able to prioritize the right touchpoints across digital platforms to reach, engage and influence shoppers have significant upside. Effective digital shopper marketing requires that marketers identify decisions shoppers make along the path to purchase when they intend to buy specific products, and then determine the right mix of digital touchpoints to influence those decisions.

Figure 7: Health and beauty and baby care products have high digital engagement and online purchase rates Source: Nielsen Digital Shopping Study, Q2 2013

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Figure 8: Use media to influence shopping decisions along the path to purchase Case Study: Diapers vs. Baby food An examination of the path to purchase for diapers versus baby food provides an interesting perspective into the different role of digital technology for two seemingly related categories. At first glance, more shoppers use digital media when shopping for diapers (62%) compared to baby food (54%). This suggests that diapers are more successful in digital shopper marketing (Nielsen Digital Shopping Survey, Q2 2013). However, a closer look reveals that shoppers of baby food utilize different digital touchpoints compared to diapers. Mobile apps play an important role in diaper purchases, but not in those of baby food. Conversely, social networks are more influential in baby food purchases. It suggests that marketers of diapers have room to further optimize their digital strategy, either by trying to make certain touchpoints work better for their products, or by focusing on a smaller set of more influential touchpoints, e.g. blogs and mobile apps. Similarly, baby food marketers that have evidently enjoyed some success in digital shopper marketing might have even more opportunity to influence certain decisions or activities along the path to purchase, e.g. planning trips and accessing deals.

Figure 9: More shoppers use digital when shopping for diapers compared to baby food Source: Nielsen Digital Shopping Study, Q2 2013

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Figure 10: Different digital touchpoints matter for baby food compared to diapers on the path to purchase Source: Nielsen Digital Shopping Study, Q2 2013 We live in a digital world and digital marketing can provide significant opportunities to connect with shoppers on a personal and relevant level. However, the increasingly complex multi-platform retail environment requires mastery of online, mobile, social, traditional and in-store media vehicles and the ability to assemble the right tactical mix. Marketers tuned-in to the digital advantage will bolster consumer engagement and involve shoppers in a more vital, authentic way at every decision point along the path to purchase. In the future as shoppers begin to want continuity between the online and offline experience, they will exercise their online expectations in offline environments. How to win with digitally savvy shoppers Retailers The message to retailers with regard to e-commerce and digital shopper marketing is clear - embrace the trend and make digital a core element of your overall strategy. In order to succeed, retailers should: 1. Recognize shopper needs Online shopping and digital shopper marketing are changing shoppers' expectations and behaviors. Keep in mind that shoppers will continue to seek convenience, choice and price-value, and they will find the channel that best delivers against these needs. Don't let the fear of cannibalization dissuade digital shopper marketing efforts as your shoppers may switch to competitors if you do not offer a complete shopping experience.

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2. Understand the role of categories Online shopping provides opportunities to up-sell and grow the basket. Free of physical or temporal barriers, online shopping environments can provide an expansive product assortment and unexpected items (treasure hunt), incentivizing shoppers to check-in and check-out the merchandise on their own time. Protect categories that drive trip count and basket size by unlocking the barriers and enablers of e-commerce success: Urgency Barrier Inspection Barrier Stock-Up Enabler Price Enabler 3. Optimize digital touchpoints Digital affords new opportunities for personalized shopper communications enabling special offers appealing to unique interests via relevant, resonant messaging. Enjoy a boost in return on investment (ROI) on promotional spending by extending offers to price-sensitive shoppers only, avoiding unnecessary subsidies and precisely calibrating offers to shopper needs and wants. Manufacturers Manufacturers can benefit from joining the digital vanguard as well, developing a loyal following among key constituencies through frequent communication and feedback with shoppers that helps shape and tailor offerings. Factors influencing digital marketing success for manufacturers include: 1. Improve engagement with your shoppers Understand evolving consumer trends and the optimal way to reach your most valuable shoppers, leveraging personalization afforded through digital platforms. Shape offers that reflect the usage patterns and product preferences of your shoppers, like automatic replenishment programs, in order to influence purchase decisions and drive long-term brand loyalty. Recognize where your category fits in a shoppers' mind and the role your products play on a shopping trip. For instance, the degree to which your products are planned or unplanned will matter as shoppers make more purchases online. As shopper attitudes and behaviors toward e-commerce change, manufacturers must determine ways of enticing shoppers to purchase multiple products on an online trip and drive basket sizes that are comparable to in-store purchases. Additionally, create a multi-platform campaign that influences the consumer along the path to purchase by offering more value than strictly promotional offers. Digital will impact your business regardless of whether your products sell online or not. Manufacturers have an opportunity to engage shoppers earlier in the decision process using digital. With effective digital engagement, you can reduce a shoppers' focus on price in-store by building brand equity pre-store. 2. Innovate to drive growth Leverage e-commerce as a channel suited to certain shopper segments, niche product assortment and new product introductions. Understand the new rules of engagement as this channel introduces new competition, but affords the opportunity to maximize new product innovation. Solicit immediate feedback on new formulas and programs, tweaking Downloaded from warc.com

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winners and cutting losses on unsuccessful products; query customers as to pack size and form preferences to create virtually customized offerings. 3. Use digital to collaborate with retailers Leverage digital to proactively tackle the most important issues of your key retail alliances. Online engagement with brands can trigger new trips, expand baskets and influence store choice. Ideas include 'buy it now' links in digital ads, digital shopping lists pre-populated with common purchases, and pop-up stores driving product or retail trial. It is important that manufacturers embrace omni-channel solutions and help their retail partners drive that seamless integration across channels. Otherwise, e-commerce will just become another way of taking price out of the industry and will not benefit either manufacturers or retailers in the long run. Conclusion For the CPG industry, digital shopping represents a transformation that will bring manufacturers and retailers closer to the consumer. Success in the digital shopping environment requires a deep understanding of decisions that different shoppers make along the path to purchase at the trip and product level, the types of information they seek to inform those decisions, and where they choose to purchase. Manufacturers and retailers should measure the impact of digital shopper marketing programs, understand the drivers of success or causes of failure, and continuously adjust these programs to better align with core shopper needs. By leveraging digital and its distinct characteristics, retailers can complement brick-and-mortar operations rather than replace them, building sales on both fronts. Stores will thrive because of digital technology, not in spite of it. For manufacturers, digital is no longer optional. Know your shopper. Engage her through digital media to influence relevant decisions on the path to purchase. Drive her to purchase wherever that purchase might be. References Nielsen Mobile NetView Panel, Q1 2013 Nielsen Mobile Shopping Report, Q1 2013 "2012 Power 50: No. 23 Dan Bane", Supermarket News, July 2012. http://supermarketnews.com/trader-joe039s-market/2012power-50-no-23-dan-bane Nielsen Digital Shopping Survey, Q2 2013 About the Authors Jeanne Danubio is Leader of Global Shopper Analytics, Nielsen, United States. Nikhil Sharma is Vice President of Shopper Insights, Nielsen, United States.

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Four ways to Increase Sales (Department Stores) Insert icon

Insert icon

Macy’s

Marks & Spencer

Makro Cash & Carry

Kmart

The magic of hope

M&S Café

7 percent

Spring style showoff

(USA, 2011)

(UK, 2011)

(Belgium, 2010)

(USA, 2009)

Department store

In-store café

Hypermarket

Department store

Reinvigorate a 150-yearold department store that was under pressure from both discount and specialist retailers

Boost sales at an in-store café in order to retain high-value shoppers and improve customer and staff satisfaction

Leverage the brand’s holiday heritage with a campaign about the magic of Christmas

Use a bold colour scheme, sustainable materials and multiple product access points to create an engaging space

Halt two year decline and increase sales by 3.9%

Go to summary

Increase sales by 26.4%

Go to summary

Increase the frequency of visits from sporadic shoppers in order to increase sales

Build a declining consumer base, increase shopper satisfaction and make the brand relevant to a new audience

Use an unbranded PR stunt to build buzz then use advertising, coupons and competitions to drive store visits and purchase

Leverage women’s fashion to engage styleconscious 18 to 34-yearolds as brand advocates

Grow sales by 300% with 67% coupon redemption

Boost women’s apparel sales by up to 22%

Go to summary

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Macy’s: The magic of hope (USA, 2011) What was the challenge?

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To reinvigorate the image of the 150-year-old American department store Macy’s in order to reverse declining sales and increase loyalty in a market characterised by low consumer confidence and strong competition from both discount and specialist retailers. What was the solution? Identify the brand’s history of holiday activity, e.g. the Macy’s Thanksgiving Day Parade, as a key point of difference and focus communication efforts on Christmas. Create a campaign called ‘Believe’ featuring a little girl’s letter to Santa Claus and engage customers by asking them to write their own letters and post them in Macy’s stores. Use multiple channels including PR, owned media and branded content (in the form of a 30-minute animated TV special) to build mass awareness and solidify Macy’s position as a destination for Christmas. What were the results? Sales increased by 3.9%, reversing a two year decline. Achieved estimated incremental sales of US$25M during the Christmas season. Sold over US$1M worth of ‘Believe’ merchandise including DVDs and books.

View full case study

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Marks & Spencer: M&S Café (UK, 2011) What was the challenge?

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To redesign the cafés in British department store Marks & Spencer in order to reverse a double-digit sales decline, attract more high-value shoppers (café users accounted for around 50% of overall store sales) and increase customer satisfaction. What was the solution? Identify key functional problems such as a confusing queue system, exposed clearing stations, drab decoration and inefficient till layout leading to slow service. Create a bright, inviting colour scheme that would appeal to both adults and children in order to attract the valuable family demographic. Promote movement, self-service and ease of use by offering better access to products and intuitive till placement. Use furnishings and fittings to maintain consistency across retail outlets and reinforce the café’s Fair Trade positioning by using recycled and sustainable materials. What were the results? Café sales increased by 26.4%, generating £10M above predicted sales. Total hospitality income grew by 6% and customer satisfaction improved. View full case study

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Makro Cash & Carry: 7 percent (Belgium, 2010) Creative thumbnail

What was the challenge?

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What was the solution?

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To turn occasional visitors to Belgium hypermarket Makro into regular customers in order to increase sales and create brand differentiation in a competitive, recessionary market.

Focus on promoting more frequent visits and creating top-of-mind awareness among shoppers, rather than attracting new customers. Generate buzz and earned media with a multi-channel, unbranded PR campaign, styled to resemble a bank promotion, offering a ‘7% return’. Reveal that Makro was behind the campaign and activate consumers with discount coupons offering 7% off their shopping, and a competition with a daily cash prize. What were the results? Achieved 67% coupon redemption rates, more than triple the target. Sales increased by 300%, with shoppers spending an average of over €300. The competition boosted incremental store visits and web traffic. View full case study

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Kmart: Spring style showoff (USA, 2009) What was the challenge?

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To use contemporary women’s fashion as a point of communications for American value-priced retailer Kmart in order to increase customer engagement, reach a new audience and enhance the overall brand image. What was the solution? Target style-conscious women aged 18 to 34 who were not current Kmart shoppers but who enjoy shopping, and considered themselves “on trend” and influential in fashion. Engage women with an unbranded casting call in LA and New York, as well as an online competition, giving them the chance to be featured in a national ad campaign. Build credibility and fashion credentials by using the competition winners as brand ambassadors to create multi-channel advertising for TV, owned media, print and in-store. What were the results? Increased sales in key women’s apparel categories by up to 22%. Achieved a 2.9% uplift in apparel sales, leading to improved performance store-wide. Enhanced the brand’s image and generated significant earned media. View full case study

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