michael stars_blueprint_824

michael stars : strategic blueprint

thank you. at ISCI communications, we understand that trust is earned gradually, and that progress is made by not only uncovering the truth — but about gaining agreement + understanding about how best to use the implications of those truths to achieve your business goals. in this process, i have worked with you to facilitate a host of strategic discussions. in that process, i have seen + heard a great deal. throughout this document, you’ll see sections marked with this symbol: i they designate where we have received + incorporated input + feedback from the group +/or their teams. as a result, i believe we have brought both an objective — and subjective — strategic, straightforward approach to the development of a comprehensive marketing blueprint the whole team can use to navigate + manage the business strategies associated with product mix / merchandising, product development, sales / channel effectiveness + efficiency and, of course, marketing.

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as truth is uncovered, trust is earned... as accord is reached, progress is made.

planning : session objectives these sessions were undertaken with several specific identified aims. explore + articulate: • a definitive consumer profile: • want / expect her to be • demo • psychographic • lifestyle indicators • consistent brand identity to inform + drive • product development • advertising • merchandising • fixturing • cohesive wholesale / retail strategy • shared, articulated vision for company growth + success (esp michael) and strategies to achieve them • very telegraphic, topline strategic vision blueprint • plan for how best to reconcile brand legacy + heritage with “move forward” vision / plan

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how do you evolve a wellknown, firmly-established brand from what it has been into what it will be next?

planning : business objectives in 2008, michael stars had its best year in its history. in 2009, the company experienced significant drop off in sales. ultimately, the stated corporate business objectives are straightforward: • build business from current sales levels ($30MM) annually to $100MM in sales over the next 5 years.

• in order to achieve this, we will not only explore current product / market dynamics, but immediate and longer-term strategies for growth: • wholesale — specialty stores — majors • retail — stores — online • planning + merchandising • marketing + advertising

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building the blueprint • business objectives • business planning overview • the role of a brand • articulating the brand • SWOT analysis • KPI (key perfomance indicators) • competitive landscape • the michael stars’ targets + customers • sales | channel drivers - retail - wholesale - ecom • alignment strategies - marketing strategies

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what great brands do

whether the product is sneakers, coffee, apparel -- or a brand called you -- building a great brand depends on knowing the right principles. a great brand: • is in it for the long haul.

• can be anything.

• knows itself.

• invents (re-invents) an entire category.

• taps into emotions.

• is a story that’s never completely told.

• has design consistency.

• is relevant.

H e lp +

SWOT analysis SWOT analysis is a great tool to help

Strengths

Opportunities

a client reach its objectives. this is a strategic planning tool. it helps the business focus on key issues. SWOT is the first stage of planning and looks at the Strengths, Weaknesses, Opportunities and Threats involved in a project or business venture. strengths and weaknesses are internal aspects. this means that they are within the control of the business. they may refer to aspects of marketing, finance, manufacturing or organization. opportunities and threats are external factors. this means that they are outside the control of the business. these may include the environment, the economic situation, social changes or technological advances, such as the internet. a business can create opportunities and counter threats by making the most of its strengths and addressing / mitigating its weaknesses.

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H in d e r -

Internal External

Weaknesses

Threats

H e lp +

strengths michael stars’ strengths include:

Strengths

Opportunities

i • a strong national brand which appeals to key consumer groups. iconic brand status: known for best-in-class quality standard tee, affordable luxury • 25 year old category pioneer • shine: we developed this fabric, it is @ 20% of our total tee shirt business, we are known for it.

• celebrity following without paid celebrity spokesperson • loyal customer base nationally • i know, i trust: consistent + quality product.

• expansion into sweaters has been great • one size – single size strategy has: - been easy for buyers to embrace - allowed MS to control inventory/production • garment dye means lots of (too many?) colors - product not likely to shrink • fast to ship (12 day turn)

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H in d e r -

Internal External

Weaknesses

Threats

H e lp +

weaknesses a company has to acknowledge its weak-

Strengths

Opportunities

nesses in order to improve and manage them. this can play a key role in helping it to set objectives and develop new strategies. weaknesses may include:

i • shine: fabric looks dated. we need to find a way to update this since it is such a part of our heritage.

• vision | planning: evaluating + understanding which categories make the most sense as brand extensions: • men’s and kids’ launched and died • maternity: if developed property, this could be its own thriving successful business • not keeping up with the competition: we are not the only women’s t shirt brand in the market. competition appears to be more contemporary, more modern, faster reaction to trends, overall speed to market • we need to be willing to take risks if we are going to thrive. failure to “evolve” has been a huge issue.

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H in d e r -

Internal External

Weaknesses

Threats

H e lp +

weaknesses i

• because we have not yet identified

Strengths

Opportunities

who “she” is, there is no cohesiveness across the brand. it is also evident in our ad campaigns.

• MS is notorious for looking back, not forward • very high turnover in the design department. this does not allow for consistency.

• ensuring consistent production quality has also been a challenge.

• one size fits most….at one point may have been a success, but now is becoming an issue for everyone to wear. a large girl thinks it’s too tight and a smaller girl thinks its too large…

• we are married to old processes that aren’t efficient and extremely expensive.

• we can interpret trends 6 months off the runway (not credible to believe ms can show trends at 3 months off runway)...”

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H in d e r -

Internal External

Weaknesses

Threats

H e lp +

opportunities

i

Strengths

Opportunities assessing our market landscape allows us identify the opportunities ripe within it — and the strategies for taking advantage of them • by repackaging core products (essentials), create ability for buyers to see more offerings + complementary category expansions.

• have a clear point of view. by narrowing choice (e.g., more limited style/color combinations) we can create demand – take on the narrow and deep approach to help raise our productivity of each style.

• sizing: we are missing sales across all styles by not sizing. we are forced to carry more styles in varying fits further diluting our productivity. no brand can fit a 0 – 10 in 1 size and maximize their sales.

• yarn dye / pc dye: we work under a garment dye model. we can expand our assortment with yarn dye (woven) and pc dye option without entering into different categories of business.

• brand extensions + brand migrations: explore possibility of creating a new brand that we own but customers do not affiliate directly with michael stars (i.e- splendid and ella moss)...to broaden reach.

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H in d e r -

Internal External

Weaknesses

Threats

H e lp +

threats

Strengths

Opportunities if a company is aware of possible external threats, it can plan to counteract them. by generating new ideas, a company can use a particular strength to defend against threats in the market.

• social trends – changes in fashion trends (and how customers view michael stars responding to them) drives brand perception ... and ultimately, sales • market forces: • more competitors entering the low to mid price luxury t-shirt segment. michael stars needs to reinforce its unique qualities to compete with these.

• varied customer needs means has meant varied (and sometimes disparate) business strategies + approaches to product / brand development • economic factors – the recession affects consumer spending; subsequently disposable income reduces. preserve + increase market share.

as michael stars addresses these issues (in many ways), it will be better able to manage weaknesses and threats to achieve our stated objectives.

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H in d e r -

Internal External

Weaknesses

Threats

i

brand audit : attributes michael stars is:

michael stars is not:

•

known for basics

•

a creative force

•

one size

•

fashion-forward

•

color / garment dye

•

sweaters – cashmere

•

t-shirt

•

casual sportswear

•

casual

•

eyewear

•

choice: tons of SKUs

•

scarves collection

•

dated (outdated?)

•

jewelry

•

affordable luxury

•

activewear

•

good...better... best

•

accessories

•

great quality

•

celebrity cache

•

west coast / CA lifestyle

•

more famous than fortunate

•

modern...contemporary?... •

built for cold weather climates

missy?

•

charitable / philanthropic

•

reactionary

•

domestic – 100% american

•

fashion...fashion basics

•

risk averse

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brand positioning statement

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for the contemporary woman with a casual beach-chic style, michael stars consistently offers high quality casual luxury apparel, footwear + accessories.

brand audit : product mix apparel

majors

specialty

retail/ecom

(12%)

(71%)

(17%)

• tees

10%

58%

13%

• tee dresses

.003%

2%

.006%

• maternity

.003%

2%

.003%

• noveltee

1%

4%

1%

• sweaters

.009%

2%

1%

• collection

.005%

1%

1%

• activewear

.003

1%

1%

M by michael stars

20%

• lingerie • jackets / coats accessories • bags / totes • jewelry • boots • shoes • scarves

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introduced in 2010, data not available

brand audit : product mix i

sales performance vs. consistency / alignment with the brand • “...retail: spring 2010, the line looked the best it had in a long time. design offered more fashion styles. for the spring season, we were up 30%.

• the customer loved all the new fashion and this obviously translated into sales for us.

• we are selling 70% carryover vs 30% new styles per season... placing a greater emphasis on past seasons’ successes than forging ahead with new innovative designs.

• the idea that styles must “prove themselves” at wholesale before sales will “believe in them and push them at wholesale” continues to foster this rear view mirror driving of the business.

• at retail, where we had typically been selling 70% basics 30% fashion, we were now selling 70% fashion 30% basics. we find it to be most successful when we do not repeat “fashion” styles, but offer newness.

• wholesale is married to hanging on to styles that have been proven in the past, and if a “fashion” style is successful, they continue offering it until is slows down.

• this, particularly with regard to the majors, has not been a successful formula...”

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product maturity in the fashion industry, because trends and tastes change regularly, product life cycles tend to be fairly short. for example, ‘must-have’ fashion items for the summer of 2010 may reach maturity within 2-3 quarters. that said, with so many “carryover” styles, the product life cycle for michael stars products are typically longer than its competitors. this has a direct effect on brand perception, and the overall brand impression it creates about innovation + design. recommendation: • offer fewer carryover styles each season or • package proven styles into group of “essentials” that customers will buy as michael stars staples.

• build excitement + intrigue around new fashion offerings

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competitive landscape michael stars’ competitive landscape: • splendid

• madewell

• james perse

• xara

• 3 dot

• alt apparel

• kain label

• wilt

• velvet

• soft joie

• vince

• gap

• theory

• j. crew

• ella ross

• banana republic

• forever 21

• langston

• target

• alexander wang

• american apparel

• clu

• c&c ca

• monroe

• lna

• alc

• nation ltd

• helmut lang

• juicy couture

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competitive analysis although michael stars was among the first luxury tee shirt brands, the contemporary women’s category in which michael stars sells is now both saturated and highly competitive. while currently michael stars may not be perceived as a particularly innovative, “fashion forward” brand, its pricepoint, brand heritage and sales environments still communicate premium quality + luxury positioning. michael stars is among only a handful of competitors with both wholesale + retail channels. this suggests an even greater need for a clear, articulated brand identity.

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mix by channel

wholesale retail

• wholesale 70%

license

• specialty 60-65 % • majors

int'l dist.

35-40%

• retail

15% - 20%

• currently 12 stores (with expressed goal of opening 3/year)

• ecommerce 5% • license 5% • international distribution 5% • germany • canada • uk • japan

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e-commerce

store base insights current store base questions for sales:

i • what is our breakdown of stores / sales by region?

• how long have we had each account on average by region?

• how often do we acquire new accounts by region?

• how often do we close accounts by region?

• how many times in a year do specialty doors write a michael stars order?

• how many accounts reorder? how frequently in a season?

• for specialty doors by region: what is the penetration by fabric to the total: by: • business segment (t’s, sweaters, noveltees) • by fabric in t’s (supima, shine…)

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who’s that girl : assessing the market michael stars needs to understand: • who is the customer?

• what does she want?

• what else is she buying?

• why is she buying?

• how has the target customer shifted across the brand’s history?

• who was she? who is she now?

• who do we want/expect her to be moving forward?

i “...this is the root of what we are trying to establish: • 25 years ago, we had a young & sophisticated customer. she is now 50+, has a child in her 20s and we need to be appealing to a 25 year old again.

• who is buying now is not who we need to be designing for • would love to see us have a complete demographic profile: age, education, salary, buying habits...”

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who’s that girl : assessing the market i • “back in the day, we were one of the few companies that offered great quality tees at a price. affordable luxury is what we were known for. we attracted the 30-something woman who wanted to look hip. our customer was younger then.

• rather than deciding what we want to be and who we want to design for, we try to compete with the splendids of the world, which is contemporary, and also fulfill the needs of that same customer we have had for years and who is now in her 50’s or 60’s.

• we are trying to be all things to all people and we fall short because that is not possible.

• because we have not yet identified who she is, there is no cohesiveness across the brand. it is also evident in our ad campaigns.

• the customers we reach have aged as our owners have.

• it is mainly missy currently, should be 24-31...”

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who’s that girl : assessing the market i consumer survey (retail)

• how satisfied are you with your purchase?

• how satisfied are you with the service?

• how satisfied are you with our company overall?

• how likely are you to buy from us again?

• how likely are you to recommend our product to others?

• what did or didn’t you like about the product or service?

• do you look to us for fashion or basics?

• what do you think of michael stars?

• price, quality, fit / osfa, product mix, retail environment • re: these, how would you compare MS to other brands?

• where/how do you wear michael stars?

• with jeans, going out, to work?

• why do you come to michael stars?

• how did they find us?

• why do you come back?

• what aren’t you getting from ms?

• who else / what other brands are you buying?

• what does the brand mean to you?

• where do you buy?

• role of fashion in your lives / trendiness • how long do you wear a garment?

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who’s that girl : assessing the market i what we want to know from current specialty store + department store buyers:

• why do your customers continue to buy ms • how do you feel about 1 size? do they have trouble finding the style to fit them?

• how many colors do you need to make a ms presentation?

• what bottoms do you sell her to wear with a ms top?

• what age/ demographic is your ms customer? has it changed over the years?

• what other products do you wish you had from ms?

• would you buy a ms bottoms assortment? outerwear assortment?

• who do we hang next to?

• what are the best selling t’s in your store? how has our rank changed?

• what do you think of the ms label, hangtag, overall image?

• do you want or need MS POP materials? fixture, topper, signage, campaign visuals • do you buy noveltees?

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target consumer : defining the market a word about your target consumer. there are women who buy michael stars products...

• they may range in age from 18 to 60 • they range in economic, cultural + socio economic background • they may have purchased michael stars tees for years.

• they may have great awareness of + allegiance to the brand.

• they may want michael stars apparel to wear to work or to camp or for a night out. these women are your consumer... though not all of them are your target. your target consumer is the woman you are designing for. she is...

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target consumer : defining the market the michael stars target consumer: • is 28-38 years old • is a sexy fit mom • may work (but not in an east coast corporate style environment); casual office, if office at all • is educated • shops in department stores and is loyal to her local boutique • is comfortable (economically); has her own money • is in good shape (works out, body-conscious) • cares about quality • is well read, but reads US weekly, too • is not fashionista (but fashion-conscious) • is epitomized by celebrities like jessica alba, courtney cox, nicole richie, katie holmes, jennifer garner

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growth strategies : wholesale specialty stores that michael stars’ specialty business is up this past year is a positive. still, to achieve growth in this segment, we must: • increase reach : open new doors... increasing the total number of specialty stores that sell michael stars’ products • increase penetration : (average order) among our existing stores

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growth strategies : wholesale majors in addition to the economic realities that fueled the difference in sales between 2008 and 2009, another primary factor was the “softening” of the nordstom business. in order to “re-build” sales production, michael stars should employ a strategic concerted effort to open new major accounts. while this seems an obvious growth strategy, it has several implications: • with majors increasingly private labeling more of their own “basics,” they are turning to michael stars (and its competitors) for more contemporary, fashion-forward products... a demand which the company has been hard pressed to meet.

• by its own admission, michael stars does quickly not interpret runway trends • with historically heavy reliance on carryover styles, majors are not likely to see michael stars as fresh or innovative • as a result, majors may also be missing out on new winners from michael stars (sweaters, linen, sportswear, etc.)

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growth strategies : wholesale majors recommendations • during line planning + development, consider a design + merchandising approach to better appeal to the specific demands of this channel. this may include re-conceiving + re-engineering of: • the sales collateral • the sales meeting • the showroom • create more competitive “incentived pricing” (read: discounts) to sell into these retailers in a more meaningful way

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growth strategies : retail retail stores the role of retail for michael stars seems underfulfilled. the michael stars stores are the greatest + most comprehensive opportunities for full expression of the brand. retail stores are — and should be — an integral part of the growth strategy for michael stars. for the evaluation + growth of current + future retail commitments: • have a clear point of view that echoes the brand positioning within + throughout the stores. this should include fixturing, decor, etc.

• establish specific perfomance benchmarks for success and profitability.

• provide full complement of “head-to-toe” options within this channel • use this channel more aggessively as a laboratory. establish tests for possible line extensions + promotional offers • allow this channel to be more competitive... so that it may be more profitable: • allow markdowns on store carryover styles • offer “exclusives” at retail • retail pricing strategy

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growth strategies : planning + merchandising • plan tees with the target consumer as the focus: introduce variable fits, trends.

• add additional leggings + soft bottoms: can be a growth category to complement the tops we are selling her • invest further in casual sportswear: sweatshirts, knit and woven sportswear should be the growth opportunities.

• essentials elaborate on our new essentials category of business: this is 50% of our business and can penetrate even more if we market this as a concept + design into any holes in the assortment. consider quarterly programs “summer essentials,” “fall essentials” that can have a mix of basics and tried and true carryovers.

• sweaters are a great year ‘round opportunity. build into multiple channels (good, better, best) with carrying price points. weights are key. create opportunities for depth in categories by layering in multiple weights of knits.

• consider a retail test on a couple of types of outerwear for fall 11: leather, cozy lined, water resistant. this can be a new category of luxury casual dressing without getting too technical. also allows us to build q3 and q4 in cold weather climates

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growth strategies : planning + merchandising • consider a retail test of swim + cover-ups for summer 11: if we aspire to beach chic and are so cal based, this is a natural product extension. we make beach bags, sun hats and flip flops…

• evaluate validity of certain product lines as natural complements + extensions of the brand: • “collection” -- do dresses + tailored sportswear fit within the michael stars brand definition.

• should “noveltees” be the part of the line that’s “dressier”

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growth strategies : sales michael stars brand point of view • define “key items” on the line plans: design into styles that should be seasonal volume and add styles that are more exemplary of the articulated brand position and consumer — styles that exemplify our POV. • create a corporate POV that matches the consumer profile. budget + plan accordingly what we can affect at minimal cost. carry this throughout: • corporate showroom: fixtures, lighting, music, signage • retail store: model the same look from the wholesale showroom in the retail stores • update web to reflect the same aesthetic as showroom and retail doors • clearly define price tiers: good, better, best to be able to bring in better fabrics • consider updating the main label + hang tag to reflect our defined POV

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marketing + advertising

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marketing + advertising

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marketing + advertising focus of current + recent advertising campaigns feels very product-driven, less editorial. while this may be a great strategy for helping michael stars feature products in line sheets + sales collateral, a more conceptual editorial perspective is warranted. future campaigns should be more about “i want to be her” rather than “i want that shirt.” if you achieve the former, the latter will naturally follow. recommendation • develop advertising + marketing that is more “aspirational,” less product-driven. this will go a long way to fuel impressions of the brand.

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michael stars : strategic blueprint