Marketing Plan Fashion Marketing-Final Presentation Shina Ahluwalia Professor Marcie Cooperman
Contents 01
J.C r e w O v e r v i e w
Introduction to the company
02
Situatio n al Analysis
Overview of the company’s Situational Analysis Report
05
The four Ps Proposed 4 Ps to support the marketing plan
06
Targ et M ar ket Effect on the Target Market
03
Marketi n g Objectives
Intent of the new marketing plan and the marketing objectives
07
Situatio nal Analysis Effect on the Situational Analysis
04
Marketing S t rate g i e s
Strategies to accomplish the marketing objectives
08
Bran d Identity Effect on the brand identity
Introduction J.Crew Group, is an American lifestyle brand with preppy fashions and chic styles for the whole family. The brand has a unique product mix – formal
J.Crew
attire, jeans, outerwear, swimwear and accessories. It has recently ventured into home goods market too and has added pillows, blankets, beddings, towels and candles to its assortment of products. They try to be the perfect mix of classic styles and fashion savvy merchandise. J.Crew has more than 550 retail stores including 113 Madewell stores. The company also has some presence overseas – in Canada, UK, China and Japan.
Situational Analysis Overview F i n a n c ial C o n d iti o n
B ran d I d e ntity The brand once known for offering a perfect mix of
that it is carrying since 2011. Although the retailer
fashion and classic styles is now facing an identity crisis.
successfully negotiated a deal to restructure a debt: $567
J. Crew’s core customers feel the brand is no longer
million in bonds that would have come due in 2019; the
relevant to them as the quality has slipped notably and
amount due is now cut in half and it has two extra years,
it has lost its basic aesthetic sense of style.
until 2021, some industry critics fear the brand might sink
Introduction of J.Crew Mercantile with lower price
under debt load.
points also did not sit well with the loyal customer base. The brand diluted its image and coerced its customers to
Management & Culture J.Crew is yet again in news as industry speculates the future of the fashion retailer with CEO Jim Brett and CMO Vanessa Holden leaving the company in November 2018, after only 16 months on job. Last year, CEO Mickey Drexler had stepped down and creative director Jenna Lyons and head of menswear design Frank Muytjens had announced their departures. The constant shake-up of the leadership dwindles the confidence in the brand.
look out for other options. J.Crew’s decision to sell its products on Amazon at lower price points is further making the brand much more accessible and giving the impression of a cheaper brand. Customers would no longer buy from J.Crew retail stores if they have access to the same brand’s merchandise on Amazon at lower price points. The company’s original customer base is fleeing the brand as J.Crew struggles to maintain its identity.
Situation Analysis
The biggest problem for J.Crew is a $1.7 billion debt load
Situational Analysis Overview Strengths
J.CREW High Price
Strong product portfolio
Strong brand name in US
Extensive network of retail outlets
E-Commerce lets the company reach out to more than 100 countries
Improved customer service like free
High Quality
Low Quality
shipping, personal stylist Brand endorsed by Michelle Obama
Weaknesses Customers complained of decline in quality Brand strayed away from its basic aesthetic sense of style Limited global presence Company relies heavily on US economy as major retail stores are in US Mobile shopping app not introduced; the current app is for employees only
Low Price
Situational Analysis Overview Opportunities
J.CREW
According to McKinsey FashionScope, by 2025 55% of apparel and footwear sales will originate outside of North America and Europe. The Asian online apparel market alone is projected to reach US $1.4trillion by 2020.
World population is aging - Between 2015 and 2030, the number of people in the world aged 60 years or over is expected to grow by 56%. The United States is ranked among the top countries in the world for the elderly. Plunkett Research estimates that 68% of American women wear a size 14 or above. The plus-size apparel market is growing faster than the overall US apparel market and is is projected to grow to US $24 million by 2020.
Threats Trade War: Imposition of border tax by US on Chinese manufactured goods will have a huge impact to 41% of Apparel consumption in US by pushing the prices up significantly. US apparel retailers with combined revenue of $1.5 trillion have come together and signed a letter to our current President to avoid the trade war with China. Unfavorable Demographics: Over the longer-term millennials will need to make up for the boomers who, had propped up the retail sector for more than a decade. Most studies suggest millennials will be more price-sensitive and less status conscious than the cohorts ahead of them. Cyber Attacks: With an increased usage of online platforms to shop, companies need to be prepared for any cyber-attacks that could bring down the entire supply chain or steal customer sensitive information.
Marketing Objectives For the success of any marketing plan it is imperative to set well-thought and relevant marketing objectives. These objectives will be the foundation for the marketing strategy. Considering the prevailing scenario at J.Crew the following three marketing objectives should be prioritized: Retain Exisiting Customers Increase Sales Build Industry Authority
Marketing Objectives 1.
Retain Existing Customer: The brand that was once considered a powerhouse of American preppy fashion is losing its foothold because the loyal customers are leaving the brand. Moreover, considering the current financial situation of the company, it is far more cost effective to win back and retain the original customer base, rather than acquiring new customers. According to Bain and Company, a 5% increase in customer retention can increase a company’s profitability by 75%. Refer the retention vs acquisition cost comparison.
2. Increase Sales: J.Crew’s massive $1.7 billion debt and plunging sales makes it utmost important for the company to carefully strategize and increase its sales by 2021, the extra time bought with debt restructuring. Increasing sales will not only help J.Crew in paying off its debts, but it will also boost customer confidence in the brand. Refer the chart for the same store sales trend.
3. Build Industry Authority: In order to increase its brand equity J.Crew must work on being the industry leader and once again establish its authority in the products it was once known for – the cardigans and/or chinos.
SMART Marketing Objectives Marketing objectives are a brand’s defined goals. It is therefore important to check if the objectives are SMART: Specific: All the three objectives are clearly defined and their corresponding importance highlighted
Measurable: Salesforce and Evergage both let you calculate and improve customer retnetion rate. It is thus recommended to use one of these softwares to monitor any effort made to achieve the first objective. The sales curve is regularly monitored by any company, so the success rate of the second objective will be easily notably after 2-3 fiscal quarters. The third objective can be measured by monitoring the company’s market share. Any growth in the figure derived by company’s total revenues divived by industry revenue will let you know the success of the last objective. Achievable: The set objectives are very much achievable with the help of right tools and continuos monitoring. This will leave room for any tweaks to be done. Relevant: The objectives resonate with the brand’s core values. They are also the need of the hour – to rebuild the tarnished brand image and to generate revenue Time-Bound: It takes 6-9 months to see the impact of the new marketing strategy. Thus it will be pragmatic to set the timeline of 4 fiscal quarters for this campaign.
Why do customers leave? The economist Theodore Levitt wrote “The purpose of any business is to create and keep a customer”. The adjoining graph shows that the primary reason for the customers to leave your brand is that they believe you no longer care about them. Customer satisfaction and loyalty have a strong correlation and in today’s digital world it is all the more important to continuosly earn your customer’s loyalty as they can be your most loyal brand ambassadors.
Most significant retail revenue drivers According to KPMG, customer retention is cited as the biggest revenue driver. The most predictable source to increase revenue comes from the existing customers because: A. It involves lower cost of marketing to reach out to your existing customers. B. The conversion rate tends to be higher if you are able to win their confidence in the brand. C. Profits are expected to be higher because the company won’t need to offer as many discounts as it would usually do to attract new customers.
Marketing Strategy To accomplish the proposed marketing objectives, the following marketing strategies should help J.Crew regain its lost position in the market: Build an Online Brand Community – ‘The Crew Group’. Re-launch ‘cardigans’ as it’s hero product. Leverage personalization and provide extra-ordinary customer service. Launch an innovative Augmented Reality enabled mobile app. Extend geographic reach to build brand awareness in Asia through social media marketing Include baby-boomers in the target market when promoting J.Crew has a lifestyle brand for the family Encourage fashion bloggers and influencers to contribute and promote the brand community. Encourage celebrities to wear the brand to establish industry authority in the long run.
Marketing Strategy
High Price
Proposed Positioning Map
The objective of the proposed strategies is to win back customer loyalty by focusing on the areas that matter most to the J.Crew
High Quality
Low Quality
customer. High quality merchandise at the competitive price point will help regain the lost trust in the brand. Re-launching cardigans as the unique selling point will help the old customers relate to the brand and prompt them to shop again. Building an online community ‘The Crew Group’ will not only bring together the loyal customers, but also strength the social media presence of the company. If used effectively, the community can be used for evangelism marketing. A research in UK found that personalized emails using purchase history and user preferences have a higher impact. Sending out thank you note and feedback surveys after the purchase is another way of telling the customer that the company cares for them and their opinion matters.
Low Price
Marketing Strategy Contd.
Communicating with the target consumer on a personal level and addressing their concerns via Twitter, SnapChat or email is quite essential in today’s world where customer expectation is high. Providing extra-ordinary customer service can greatly boost customer confidence in the brand. J.Crew will be much behind the competition in launching its mobile app, so it is of paramount importance to step up the game. Launching Augmented Reality enabled mobile app will empower customers with convenience. This will also help gain free publicity as very few fashion brands are embracing the new technology. To increase the revenues a brand should be quick to tap on to the social changes affecting the target market. Thus, including baby-boomers will expand the customer base and generate more sales. Finally, encouraging celebrities and fashion influencers to wear the brand will help establish industry leadership.
The Proposed Marketing Mix Product: The new product line will embody the forgotten core value of the brand – high quality merchandise. The apparel collection will have an all American timeless feel to it with a touch of latest fashion trends. The clothes however, will be practical, rather than the runway collection. The trendy touch to the collection will offer versatility – for instance, with a change of accessory or by wearing a jacket, the same dress will be worn at workplace and at lunch dates with equal ease and elegance. Cardigans, however will re-launched as the USP of the brand and will be offered in timeless designs and various materials, making it wearable and sellable around the year. The already launched home section will be continued but will have simple timeless patterns. The bedding, towels and pillows will be offered in high quality fabric made of natural fibers.
In addition to the women, men and kids collection, the brand will also carry timeless collection for baby-boomers. This product line will have a classy and sophisticated feel to it. The selling point for this line will be use of organic cotton and linen rather than polyester. The women wear will be extended to include plus-sizes.
Price: J. Crew will retain the existing mid price points at which it is currently offering its merchandise. The low quality of the products reflected poorly on the price. However, with the improved quality the brand will be able to justify its prices points. Deep discounts currently being offered will be discontinued in an effort to regain the brand’s lost identity. Rather, VIP customers (based on purchase history and lifetime value) will be offered special discounts. This will build brand loyalty over time.
The Proposed Marketing Mix Place: The current brick-and mortar stores will be resurrected to include experiential components. Select stores will have instagrammable pop-ups and few others will have Instagram worthy backdrops. Research firm L2, JLL, Bloomberg consider this as the future of the retail stores – a smart approach to increase foot traffic, increase social visibility and give the consumers a reason to come back and experience something they are eager to share on social platforms. To improve the brand’s image the company will no longer sell its merchandise on Amazon. However, it will reach out to its customers directly and sell through Instagram and Facebook. WeChat account will also be opened to penetrate into the Chinese market. Buying experience on the company’s website will be improved by introducing AI empowered chatbots. Augmented Reality empowered mobile app will likely attract much more traffic from the tech savvy customers. According to a November 2018 report, 62% of smartphone users made a purchase online using their mobile device in the last 6 months.
Promotion: Considering the current financial situation, a TV campaign will be an expensive choice. Social media, however, is comparatively much more cost effective and helps establish trust and brand identity. Social media platforms such Twitter, Facebook and Instagram will be used to promote the brand and connect with the consumers. The proposed brand community, The Crew Group will be launched on all social media platforms. Fashion influencers and loyal customers will be encouraged to promote the community and make it viral by sponsoring various events – Crew Party, Crew Charity Event and so on. This will trigger word-of-mouth marketing for the brand. Instragrammable pop-ups garner millions of followers in a span of few months. This strategy can promote J.Crew as the forerunner brand providing experiential retail. Using local social media platforms brand awareness will be created in Asia, the region projected to surpass US apparel sales. Encouraging fashion influencers to talk about the coveted J.Crew cardigans will also boost sales. Finally, to claim industry authority it will be valuable to have a celebrity wear J.Crew.
Target Market Gauging your target market’s response is pivotal for the success of any
J.CREW
marketing plan.
Marketing Objectives:
The proposed marketing objectives are primarily aimed at improving the customer experience. The first objective is to retain the target market. Only if the brand is successfully able to bring back and retain its customer base, it has the chance of regaining its brand identity. An increase in sales will help boost the consumer confidence and prompt them to shop again. Finally, having established the brand as an industry authority will build a long lasting trust with their customers.
Marketing Strategies: Building the brand community, The Crew Group will bring together loyal customers. Launching activities and events like Crew Party and Crew Charity event will strength the bond the customers feel with the brand. This will give them a sense of belongingness and will eventually develop brand loyalty. Sending out personal email follow ups based on purchase history and user preferences will certainly get a better response from the consumers as compared to sending generic emails. As part of the proposed strategy a thank you note after a purchase will be sent out and this will definitely show the brand in a positive light.
Target Market contd.
J.CREW
Sending out feedback forms will help the brand identity its areas of improvement and it will also let the consumer express its opinion. This way the target market will feel more connected to the brand. Mobile devices are expected to account for 27% of all US retail e-commerce sales. With the mobile apps becoming increasingly popular the target market is likely to respond positively to the proposed launch of AR enabled mobile app. By providing one a kind experience the consumers will be tempted to shop via this channel. Seeing influencers wear and write about the brand provides a creditability and this in turn builds consumer’s trust in the brand.
Marketing Mix: Providing high quality products will definitely help regain the lost trust. The new collection that is proposed to be timeless and versatile is likely to reenergize the customer’s interest. Moreover, introducing cardigans as the hero product will inspire the old customers to revisit the brand. Offering a line for the baby-boomers will truly establish J.Crew as the lifestyle brand for the family. The loyal customers won’t mind paying the original price points if the brand offers better quality and service. Enhancing store experience will give the consumers a reason to visit the store more often. At the same time, opening more channels on social media will empower them with convenience. The proposed promotions activities are likely to engage the target the consumer much more than a TV commercial or a print ad.
Situational Analysis The times are turbulent for the company with the looming debt
J.CREW load, unstable management and the current brand identity crisis.
Marketing Objectives:
It is of utmost importance for the company to raise revenue in order to pay off its debts. This cannot be done unless the brand wins back its fleeing customers and re-establishes its lost position in the market. Thus the three objectives set in the marketing plan resonate with the need of the hour.
Marketing Strategies: The proposed marketing strategies taps onto the opportunities presented in the situational analysis report. Penetrating into the Asia market via social media will boost the brand’s presence internationally and increase the company’s sales. This in turn can help improve the prevailing financial condition of the company.
Almost Here?
Launching best in class mobile app will turn the company’s weakness (as mentioned in the situational analysis report) into one of its major strengths. Additionally, this will also improve the brand’s image and position it as a digitally empowered brand. By launching a brand community and encouraging the fashion
Situational Analysis cont.
influencers to talk about the brand will give some confidence in the brand, the very thing that is being shaken up currently with the continuous management shake-up.
J.CREW Marketing Mix:
The proposed marketing mix takes into account most of the facts highlighted in the situational analysis report. The new product lines with high quality and more aesthetic designs will help overcome the company’s stated weaknesses. Extending womenswear to include plus-sizes and introducing a line for the aging population will let the company respond to the socialcultural trends early on as compared to its competitors. Launching the cardigans as the company’s USP will help J.Crew distinguish itself from Banana Republic, its close competitor. The newly launched home line is also something that is not yet offered by BR. Cutting down on deep discounts and providing additional sales channels will increase the company sales, which will improve the financial situation of the brand.
Almost Here?
Promoting the brand on social media platforms will let J.Crew be in charge of its position and respond to any rumors rising because of the current management changes. This will provide more transparency to the consumers and in turn build trust.
Brand Identity There are innumerable articles claiming that J.Crew is gradually losing its identity. It is therefore, indispensable to evaluate the
J.CREW
proposed marketing plan to determine its response to the brand’s identity.
Marketing Objectives:
The consumers relate to the brand because of its distinct identity. Hence retaining the existing customers will mean that consumers still relate to the brand and this will strength the brand’s identity in the market. The ultimate marketing objective to build industry authority has been set with the sole objective of reclaiming the lost position in the market and retaining the brand’s identity because it will emphasis the what company stands for – high quality American lifestyle brand at competitive price point.
Marketing Strategies: Promoting ‘cardigans’ as the unique selling point of the company will be vital step towards strengthening the brand identity. This will help the brand distinguish itself from its competitors and having its own identity. Moreover, J.Crew was once known as a powerhouse for the cardigans. Thus re-launching the relatable
Brand Identity continued product will make the brand more relevant to the target consumer. To retain its brand identity it is of paramount importance that the company clearly communicates what unique products it is offering and also makes sure that its offerings are aligned with the brand image the company wants to establish. Reaching out to the consumers with a personal touch and providing exceptional level of customer service will further strength the brand’s identity. All the marketing efforts should thus be consistent with the sole purpose of strengthening the brand’s image – the launch of a futuristic mobile app will convey the message that J.Crew puts its customers first and strives to provide best in class experience.
J.CREW Celebrity endorsements always help revitalize the brand’s image. Encouraging fashion bloggers and influencers to talk about the brands will further the efforts to regain the brand’s identity because this brand was once worn by the First Lady.
Marketing Mix: J. Crew was constantly subjected to identity crisis because of its depleting quality and lack of relevant designs. The new product line proposed will thus help the company in retaining its identity. Once the designs are more relevant to the customers, the brand will be able to reclaim its lost position.
Brand Identity continued
J.CREW Marketing Mix cont.:
It will be critical to provide high quality merchandise because the product offering is a key element in crafting a brand’s identity. Moreover, introducing classy and timeless pieces to baby-boomers will further strength its position in the market. The aim is to have the consumers identity the brand with its fashionable yet practical and timeless pieces that have an all American feel to it. The brand was also tarnishing its image because of lower price points. Therefore, cutting down on deep discounts and rewarding the VIP customers will be step towards regaining the lost fame.
J.Crew was once known for its exceptional service. Resurrecting the retail stores and providing them more than just apparels will build on to the elements that form the brand’s identity. Introducing AR powered mobile app and directly connecting with the customers on social platforms will help consumers identity the brand with its core value of providing quality service. Targeted promotional activities on social media will re-instate the fact that J.Crew understands its consumer, it is still relevant to them and is very much a part of their lifestyle.
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