f or
Customer Profile The Millennial Customer
The Millennial customer this project targets is a female between 18 and 29 years of age. Born between the ‘80s and ‘90s—the age of technology— she is extremely comfortable using social media. Updating her Facebook status, creating a new workout playlist on Spotify and pinning new pictures to her “Royal Wedding” Pinterest board are all on her weekly agenda; and you may just find her doing all of those things simultaneously.i Her income ranges between allowances from her parents to $45,000 a year. With this type of income, she is intentionally frugal about all of her purchases, yet maintains a passion for quality. This customer has never been married. Her education and career are important and take priority over most everything else in her life. Fashion is fast paced and so is she. Trend conscious and technologically savvy, this customer is constantly searching for the latest and greatest to discuss with her friends. Her youth grants the Millennial customer the flexibility to travel for work or school often. While she resides in the major cities and suburbs of the world, she can always be found in cyberspace. The Millennial customer is a confident, self-expressive and open-minded individual. She chooses to be eco-friendly whenever possible and enjoys feeling like she has done something to make the world a better place. Her health is of importance to her, far more than it ever was for her parents.
Quality relationships are critical to this customer. She expects brands to reach out to her with a clear value proposition in the form of discounts, sales and new product offerings, which she receives via e-mail, Facebook, Twitter, Instagram or Pinterest. While shopping, she demands respect and a memorable experience because if not, she will go find what she is looking for elsewhere. She makes sure to stay connected at all times, whether it is with her family, friends, favorite bands or favorite brands. She is very receptive to new ideas and will make impulse purchases when prompted by discounts or coupons. She is a frequent subscriber to many brands and will happily provide contact information to places she think will offer something of value in return. Shopping at JC Penney would allow her access to good quality products at a reasonable price. With 1,100 JC Penney locations, this customer may easily access the products that she wants. Touching, feeling, interacting with the clothing and trying on different sizes to get the best fit is simple with easily accessible locations. This customer can go in to purchase what she wants, without forgetting to grab a new tube of her favorite bareMinerals mascara, replacing the one she just ran out of. When her iPhone alerts her of her little brother’s birthday next week, she can pick him up a new pair of Levi’s on her way out. JC Penney provides a one stop, walletfriendly shop satisfying all of the customer’s wants and needs.
SWOT Analysis
Strengths
Weaknesses
- Carry many strong private label brands
- JC Penney atmosphere and store environment
- Good quality merchandise
are not attractive to the Millennial customer
- Competitive and accessible pricing strategies
- Absent in Millennial customer’s mind
- Success of newly implemented Joe Fresh
- Store merchandising and website do not come
Brand
across as up-to-date
- Sephora locations in many stores
- Recent negative press about Ron Johnson
- Large store real estate to create space for
tenure as CEO
Millennial customers
Opportunities
Threats
- Development of apparel section of website
- Other large stores such as Macy’s, Kohl’s and
i.e. addition of street style updates, trending
Belk
fashions and how to recreate at JC Penney
- Popularity of E-commerce stores such as
- Consistent execution of social media presence Amazon.com and Ebay.com for one stop - Development of smart phone application i.e. scannable rewards, mimicking new additions to website - New exclusive and private label brands - Development of strong web presence - Ability to deliver value message to Millennials through promotions and discounts
online shopping
American Apparel is a vertically integrated manufacturer and retailer of clothing for men, women, kids and dogs focusing on fashionable, accessible, and solid-colored basics. The brand is well respected and has established a sound relationship with Millennial customers. American Apparel prides itself on manufacturing their product in the United States, more specifically, Downtown Los Angeles. It focuses on creating a beneficial, positive environment for all of its customers, employees and shareholders. American Apparel believes that integrating their manufacturing, distribution and creative processes keeps their company expertly efficient.ii This company is also committed to sustainability. As noted on the company’s website, By concentrating our entire operation within a few square miles, American Apparel has a smaller carbon footprint than our competitors. We recycle almost all our manufacturing waste (over 150 semi truck loads per year) and as of 2012 we are virtually landfill-free. Our solar panels offset as much as 20% of our electrical usage, and we ship the majority of our goods to our worldwide stores via excess space on passenger flights and busses, minimizing our environmental impact.iii Not only are they environmentally friendly and sweatshop free, but their products speak to Millennial customers. They implement competitive pricing, good quality product and fashionforward merchandise. Qualities like these are exponentially important to Millennial customers. Partnering with a credible brand like American Apparel will grasp the attention that JC Penney yearns for from the Millennial customer. Partnering with an already well-established brand will yield the best results. This is not only a popular trend with fashion department stores as of late, it is far more effective than introducing an entirely new brand to JC Penney stores. With just over 285 stores in 20 countries, American Apparel storefronts have not yet met current market demand. The impact of store placements within JC Penney locations will create that much more momentum for the brand. Women’s sportswear building block essentials will be the showcased product line in JC Penney stores for spring/summer 2014. Many of these items appeal to both genders and allow for cross-over shopping. The product line will include basic tank tops and T-shirts, tennis skirts, full
trouser pants, graphic sweatshirts, plaid button-down shirts and trench coats with prices ranging from $19.99-$100.00. Basic tank tops and T-shirts are American Apparel essentials as well as essentials to any spring/summer collection. They provide building blocks for outfits, allowing the Millennial customer to customize her outfit by adding what she deems necessary. With sportswear and active wear largely impacting the fashion industry today, brands are developing collections centered on sportier clothing. Tennis skirts will provide the Millennial customer with a unique and on-trend bottom. Slouchy, voluminous trousers and oversized trench coats were seen all over the runways during the recent spring/summer 2014 shows. Millennial customers are aware of this having watched the shows on their iPads and by recieving the instant trend report text messages. Blogs commonly accessed by Millennial customers feature current runway fashion, making trends like these important. Graphic sweatshirts and plaid button-down shirts are extraordinarily popular in street fashion today. Street style blogs are more popular than ever and constantly watched by fashion conscious Millennial customers. Top designers are picking up on these trends as well. All of these featured products are current, on trend and agree with the aesthetic of American Apparel. Millennial customers will want these pieces.
Marketing Plan Target Market Strategy In order to reach the Millennial customer, JC Penney will further develop their website, Smartphone application and social media presence. JC Penney will focus on developing personal relationships with Millennial customers. Leandra Medine, also known as “The Man Repeller”, will sponsor a contest centered around Instagram and the new American Apparel for JC Penney line. Implementation of strong e-mail marketing campaigns and strategic placement of this new brand in storefronts will round out the marketing strategy. Value Promotion Value is extremely important to both the JC Penney and Millennial customer. Customers will be able to join the “American Apparel Club” where they will receive reward points for their
purchases, both online and in-store. They are also able to attain points by posting images to Instagram in American Apparel for JC Penney merchandise and tagging American Apparel for JC Penney. The ongoing reward points will be captured through the JC Penney Smartphone application. For every 50 points obtained, the customer will receive a $10 voucher towards their next purchase via an electronic coupon through the JC Penney application on their Smartphone. Customers will be able to scan their Smartphone at the store to receive this discount.
The American Apparel for JC Penney Smartphone application.
This allows for consistent value promotions and the creation of customer loyalty. To enhance customer loyalty, the more points earned will result in a higher member status. The membership levels will start at “Newbie” and then go to “Prime”, with the highest level being “Preferred”. The more reward points you earn, the higher the level you achieve. Preferred members are the first to receive exclusive updates on new and upcoming merchandise and special events. Prime members will be notified next, with Newbie members notified last. Notifications of other discounts, coupons, sales, and limited-time only deals will be emailed to the customer, as well as shared on Instagram, Twitter and Facebook on a weekly basis. Promotion In order to attract the Millennial customer to American Apparel for JC Penney we will create a fashion film showcasing the brand. The film will walk through a day in the life of the collection. Millennial consumers want to see the satisfaction gained from the products they buy and this will visually represent and reinforce that feeling of importance. According to Social Media Today, over 100 million Americans watch online video daily.iv Fashion films are
becoming exceedingly popular and can help prove a brand’s presence, impact and reach. They can also be viewed from Smartphones, tablets and computers alike. This fashion film debuting the new American Apparel for JC Penney collection will be strategically placed on the home page of the JC Penney website. This is done in an effort to capture the attention of the consumer and reinforce JC Penney’s resurgence in this specific apparel market segment.
American Apparel for JC Penney fashion film on JC Penney’s apparel homepage.
Sections featuring stories will also be added to the JC Penney women’s apparel portion of the website. One section will be devoted to covering street style trends all over the world. Another section will relate to street style while focusing on how to create outfits that are “trending” with current JC Penney apparel offerings. A section entitled “Style Gallery” will be added underneath individual product offerings. This will feature user-uploaded photos of customers wearing the above garment and showcasing how they have chosen to style it. All of these sections will be consistently updated with current data. All of these updates to the JC Penney website will also be featured on the JC Penney Smartphone application to ensure a seamless experience for the customer. Millennial customers want engagement, stories and meaning from brands all in the palm of their hand. Strong social media presence is increasingly critical in today’s marketplace. American Apparel for JC Penney will be advertised on JC Penney’s website as well as their Twitter, Facebook, Pinterest, YouTube and Instagram properties. Customers will be made aware of new product offerings, discounts, coupons, sales and limited-time only deals via these social media platforms and e-mail marketing campaigns.
Leandra Medine of “The Man Repeller� will sponsor an Instagram competition featuring the new brand. This contest will consist of posting ensembles created from pieces from the new brand. After two weeks, Medine will choose a 1st and 2nd place winner who will both receive $100 gift cards to JC Penney. Leandra Medine will also advertise this contest on her personal website, manrepeller.com, and social media platforms (Instagram, Twitter, and Facebook). This partnership opens the door to be the first of many partnerships with influential trendsetters in the fashion industry.
American Apparel for JC Penney Instagram competition host Leandra Medine.
American Apparel for JC Penney will be strategically placed next to Sephora in storefronts. This will leverage the positive response that Sephora has generated with Millennial customers for JC Penney.
Competitive Analysis
Target has developed a significant business with the Millennial customer. Recently Target has been collaborating with featured designers to create collections for their stores. Some of the designers have included Proenza Schouler, Thakoon, Missoni, Jason Wu, Prabal Gurung and Phillip Lim. By having limited time only, special collections designed by well-known designers, Target has been able to entice the Millennial customer. One of Target’s biggest strengths is creating a sense of urgency with the Millennial customer. When promoting these collections with limited time only dates, an overwhelming importance grasps the minds of the Millennial customers and gets them to the stores to be a part of this special experience. Excitement to purchase is created. Target also gets a hold on the Millennial customer by providing competitive pricing. By creating these collections and pricing them at much lower prices, Millennials can now take part in the “designer experience”. Target manages to bring in designers that are speaking to the Millennial customer at that moment. This is critical in the company’s success. Loyalty is another byproduct of this business model. With a couple of successful collaborations, customers are excited to see which collaboration is coming next. Millennial customers keep up with the news and research what designer may be featured next in the store. JC Penney should absolutely consider this business model. For the American Apparel for JC Penney brand, JC Penney can deliver its good value message through its consistent value promotion strategy. JC Penney will work with American Apparel to occasionally develop limited time exclusive collections, on top of the basic collection available in stores, mimicking the urgency and excitement generated by Target’s designer collections. Nordstrom is another major retailer who has successfully marketed to the Millennial customer. Recently, Nordstrom introduced the British chain, Topshop, to stores. While doing so,
Nordstrom took advantage of its large real estate, creating miniature Topshop stores within Nordstrom itself. Topshop has enabled Nordstrom to attract a younger customer. Nordstrom has traditionally catered to an older, more established clientele. Topshop is extremely popular with Millennial customers today, therefore attracting them to Nordstrom stores. This is a prime example of the importance of the retailer-designer collaboration. Both Topshop and Nordstrom provide up-to-date, good quality product. The upscale reputation of Nordstrom is maintained with this collaboration. Excitement is created with this partnership as well. Topshop, before teaming up with Nordstrom, only had four stand-alone locations in the U.S. With the brand’s skyrocketing popularity in the U.S., the need for more brick-and-mortar stores was evident. Nordstrom was able to capitalize on this opportunity. JC Penney should undoubtedly take this business model into account. American Apparel for JC Penney will be allocated a large area in stores to develop its own store environment, creating its own shopping identity just as Topshop for Nordstrom. Visual Presentation It is extremely important that the visual presentation of American Apparel stays true to, and accurately reflects, the brand that is American Apparel. JC Penney customers should be able to easily recognize the brand. Millennial customers want the authenticity of American Apparel, not a line that has been diluted with another brand. American Apparel’s visual presentation is modern, yet simple and basic. Stores are typically white and accessorized with geometric shapes. The clothing serves as the main decoration in the stores whether it is covering the walls or displayed on centerpieces. The entire back wall of the visual presentation will appear as follows:
Flat screen televisions displaying lifestyle videos of interest as well as lookbook snapshots showcasing the brand will be featured in the display. No physical retail counter or cash register will be present in the American Apparel store. Sales associates with tablets will check out customers. The American Apparel for JC Penney store set-up will be strategically placed beside Sephora, providing easy access to the correct product for the Millennial customer. Advertising Campaign Approximately 8% of the sales forecast will be devoted to launching the new brand. When developing an advertising campaign, JC Penney should focus on channels familiar to the Millennial customer. Social networks have high engagement, desirable demographics and target a very specific demographic. According to the Business Insider, Americans aged 18-24 were spending an average of 20 hours per month on social networks as of July 2012. Also, Twitter and Facebook have passed the 50% mobile usage mark.v Banner advertisements on the sides of the website pages are common and effective. Advertisements through company posts can be just as effective and fundamentally costless. Tweeting on Twitter, posting a comment on Facebook and positioning a photo on Instagram are all very frugal ways to promote the introduction of the new brand. Also, once the post is generated on either platform, others can share the post and the word spreads to masses of people in a matter of minutes.
American Apparel for JC Penney banner advertisement on Refinery29.com.
JC Penney will place banner advertisements on Refinery29.com, TheSartorialist.com and Harper’sBazzar.com. The Sartorialist is considered the number 1 most influential fashion blog, with Refinery29 coming in close at number 6.vi Harper’s Bazaar is an influential and popular
magazine with Millennial consumers. The cost of one month of these banner advertisements is estimated around $47,000.vii As mentioned previously, JC Penney will create a fashion film advertisement. This video will be featured on the JC Penney homepage and will walk the viewer through the experience of buying and wearing the collection. It is important to Millennial customers to see the functionality of the products they are purchasing. As well as featuring this video on their own website, costing very little additional money after its creation, JC Penney should strategically place this video on important websites including Elle.com. When going to the homepage of Elle Magazine, the American Apparel for JC Penney fashion film will automatically appear and begin playing. This cost is estimated at $15,000 per month.viii Advertising through commercials on Hulu, the online television and movie site, will also be implemented. The estimated cost for one month of commercial placement on Hulu is $134,000.ix The American Apparel fashion film should also be advertised on YouTube. With an estimated cost on 30 cents per view and the hopes of initially attracting somewhere around 20,000 viewers, this advertising act will cost close to $6,000.x Advertising through email marketing should be utilized as well. Announcements, stories, background information and pictures of the collaboration process and set up will be shared. Email advertising will become increasingly important as the brand recognition develops. With an estimated 500,000 JC Penney subscribers receiving these emails, the cost can be estimated around $3,500 a month.xi
JC Penney is on the threshold of a new future. The Millennial customer is very much at the heart of that future. American Apparel for JC Penney has the power to be the catalyst that will propel JC Penny in to the 21st century and beyond.
Notes i
Say, My. "7 Ways To Serve -- And Keep -- Millennial Customers." 06 July 2011. Forbes. 09 Oct. 2013. <http://www.forbes.com/sites/groupthink/2013/07/25/7-ways-toserve-and-keep-millennial-customers>
ii
American Apparel. About Us. American Apparel, Inc. 09 October 2013. <http://www.americanapparel.net/aboutus/verticalint/usa/>
iii
http://www.americanapparel.net/aboutus/
iv
Romeri, Monica J. "The Importance of Video in Social Media Marketing." 02 Mar. 2013. Social Media Today LLC. 09 Oct. 2013. <http://socialmediatoday.com/monicaromeri/1265361/video-social-media-marketing-infographic>
v
"Why Social Media Advertising Is Set To Explode." 08 Aug. 2013. Business Insider. 10 Oct. 2013. <http://www.businessinsider.com/social-media-advertising-set-to-explode2013-7>
vi
“The 99 Most Influential Fashion & Beauty Blogs.” Dindeo, Inc. 06 Nov. 2013. <http://www.signature9.com/style-99>
vii
“Advertising on the Internet: Online Banner Advertising and Other Advertising Methods.” Prudens Consulting Ltd. 06 Nov. 2013. <http://www.bmcommunications.com/int_ad.htm>; "Refinery29.com - SEMrush's Main Report for Domain (for Google.com Database)." SEMrush. 06 Nov. 2013. <http://www.semrush.com/info/www.refinery29.com>; "Harpersbazaar.com - SEMrush's Main Report for Domain (for Google.com Database)."SEMrush. 06 Nov. 2013. <http://www.semrush.com/info/www.harpersbazaar.com>; "Thesartorialist.com SEMrush's Main Report for Domain (for Google.com Database)." SEMrush. 06 Nov. 2013. <http://www.semrush.com/info/www.thesartorialist.com>
viii
"Elle.com - SEMrush's Main Report for Domain (for Google.com Database)." SEMrush. 06 Nov. 2013. <http://www.semrush.com/info/www.elle.com>; “Online Video Advertising Moves Front and Center.” 14 May 2013. eMarketer Inc. 06 Nov. 2013. <http://www.emarketer.com/Article/Online-Video-Advertising-Moves-Front Center/1009886>
ix
Marshall, Jack. “What Online Ads Really Cost.” 22 Feb. 2013. Digiday. 06 Nov. 2013.
<http://digiday.com/publishers/what-online-ads-really-cost/>; "Hulu.com - SEMrush's Main Report for Domain (for Google.com Database)." SEMrush. 06 Nov. 2013. <http://www.semrush.com/info/hulu.com> x
Alleger, Jason. "How Much do Ads on YouTube Cost?" 07 Aug. 2012. Penna Powers Brian Haynes. 15 Oct. 2013. <http://www.ppbh.com/how-much-do-ads-on-youtubecost/>
xi
"Simple, All-inclusive Pricing Plans." Emma. 06 Nov. 2013. <http://myemma.com/pricing>
Assortment Plan (9 Core Items)
Graphic Sweatshirt
T-shirt
Tank Top
$44.00 XS, S, M, L ,XL Cream, Navy, Green, Maroon
$22.00 $18.00 XS, S, M, L, XL XS, S, M, L, XL White, Black, Gray, Camel, Yellow White, Black, Yellow, Pink
Plaid Button-down Shirt
Cropped Bomber Jacket
Full Trouser Pant
$60.00 S, M, L, XL Red/Blue, Blue/Green
$80.00 XS, S, M, L, XL Cream, Maroon
$69.00 XS, S, M, L, XL Black, Cobalt
Tennis Skirt
Relaxed Short
Overall Short
$45.00 XS, S, M, L, XL White, Coral, Light Pink
$44.00 XS, S, M, L, XL Black, Sky Blue, Pale Yellow
$88.00 XS, S, M, L, XL Lightwash Denim
FASM 245 Retail Buying Simulation 6 Month Buying Plan Spring 2014 Focus Product Category: American Apparel for J.C. Penney Spring 2014 Plan Net Sales, Spring 2014: Average Stock, Retail: Inventory Turnover: Planned Reductions, $: Reductions % Sales: Plan IMU %:
2,500 1218.6 2.05 500.0 20% 56.67%
(000's) Net Sales % Fall Plan BOM Stock Stock / Sales Ratio Plan EOM Stock Plan Reductions % Fall Purchases, Retail Purchases, Cost
IMU % =
IMU % =
February 350.0 14% 1190.0 3.4 1350.0 50.0 10% 560.0 242.6
March 500.0 20% 1350.0 2.7 1280.0 75.0 15% 505.0 218.8
Spring 2014 6 Month Buying Plan April May June 400.0 400.0 500.0 16% 16% 20% 1280.0 1240.0 1300.0 3.2 3.1 2.6 1240.0 1300.0 1120.0 100.0 100.0 100.0 20% 20% 20% 460.0 560.0 420.0 199.3 242.6 182.0
14 34 20 0 Profit + Expenses + Reductions - Cash Discounts + Alt. Costs Net Sales + Reductions 100 20 56.67%
0
July 350.0 14% 1120.0 3.2 1050.0 75.0 15% 355.0 153.8
Spring 2014 2,500.0 100% 1218.6 500.0 100% 2860.0 1239.2
(AVG)
Works Cited Alleger, Jason. "How Much do Ads on YouTube Cost?" Penna Powers Brian Haynes. Penna Powers Brian Haynes, 07 Aug. 2012. Web. 15 Oct. 2013. "American Apparel | Fashionable Basics. Sweatshop Free. Made in USA." American Apparel | Fashionable Basics. Sweatshop Free. Made in USA. American Apparel, Inc., n.d. Web. 09 Oct. 2013. "Banner Advertising and Other Advertising Methods." Banner Advertising and Other Advertising Methods. Prudens Consulting Ltd., n.d. Web. 06 Nov. 2013. "Elle.com - SEMrush's Main Report for Domain (for Google.com Database)." Elle.com. SEMrush, n.d. Web. 06 Nov. 2013. "Harpersbazaar.com - SEMrush's Main Report for Domain (for Google.com Database). "Harpersbazaar.com. SEMrush, n.d. Web. 06 Nov. 2013. "Hulu.com - SEMrush's Main Report for Domain (for Google.com Database). "Hulu.com. SEMrush, n.d. Web. 06 Nov. 2013. Marshall, Jack. "What Online Ads Really Cost." Digiday. Digiday, 22 Feb. 2013. Web. 06 Nov. 2013. "Online Video Advertising Moves Front and Center." - EMarketer. EMarketer Inc., 14 May 2013. Web. 06 Nov. 2013. "Refinery29.com - SEMrush's Main Report for Domain (for Google.com Database). "Refinery29.com. SEMrush, n.d. Web. 06 Nov. 2013. Romeri, Monica J. "The Importance of Video in Social Media Marketing." RSS. Social Media Today LLC, 02 Mar. 2013. Web. 09 Oct. 2013. Say, My. "7 Ways To Serve -- And Keep -- Millennial Customers." Forbes. Forbes Magazine, 25 July 2013. Web. 09 Oct. 2013. "Simple, All-inclusive Pricing Plans." Email Marketing Pricing. Emma, n.d. Web. 06 Nov. 2013. "Thesartorialist.com - SEMrush's Main Report for Domain (for Google.com Database). "Thesartorialist.com. SEMrush, n.d. Web. 06 Nov. 2013. "The 99 Most Influential Fashion & Beauty Blogs." Signature9 99 Most Influential Fashion Beauty Blogs Comments. Dindeo, Inc., n.d. Web. 06 Nov. 2013.
"Why Social Media Advertising Is Set To Explode." Business Insider. Business Insider, Inc., 08 Aug. 2013. Web. 10 Oct. 2013.