Introduction to Marketing Marketing Application Assignment Kaitlyn Kelly
Table of Contents Corporate Information Page 3
SWOT Analysis: External Forces Page 7
Internal Forces Page 12
Marketing Objectives Page 17
Hair by Neiman’s- Marketing Mix Strategies Page 20
Hair by Neiman’s- Action Plan Page 23
Hair by Neiman’s- Evaluation of Marketing Plan Page 26
Corporate Information Company Address: Neiman Marcus, Inc. One Marcus Square 1618 Main Street Dallas Texas 75201
Customer Profile: Demographics: Although Neiman Marcus caters to both genders and all ages, the most common customer is women from the age of 40-65. She is typically of Caucasian descent, with an income of $500,000+ annually. She comes from a prestigious family background and is married with children. (Her spouse and children also buy their apparel at Neiman Marcus). She owns multiple houses and an expensive car. She has graduated from a well known university and is a career woman who is on her way to retirement, if not retired already. Psychographics: She lives a luxurious lifestyle. She vacations in Europe and tropical locations. She likes to donate her free time to charity events and various parties. Geographic: She lives primarily in an urban or suburban environment.
Mission Statement: Neiman Marcus Stores will be the premier luxury retailer recognized for merchandise leadership and superior customer service. We will offer the finest fashion and quality products in an exceptional environment.
Stated Corporate Goals: Neiman Marcus strives to serve the unique needs of the luxury market and to be recognized as a premier luxury retailer dedicated to providing customers with distinctive merchandise and superior service.
SBUs: The Neiman Marcus Group includes the two luxury retailers: Neiman Marcus: Luxury retailer Bergdorf Goodman: Luxury retailer Horchow: Home furnishings CUSP: Contemporary specialty boutique Last Call: Discounted merchandise
Management Organization: Burton M. Tansky: President and Chief Executive Officer, The Neiman Marcus Group, Inc. Karen W. Katz: President and Chief Executive Officer, Neiman Marcus Stores Executive Vice President, The Neiman Marcus Group, Inc. James Gold: President and Chief Executive Officer, Bergdorf Goodman Gerald Barnes: President and Chief Executive Officer, Neiman Marcus Direct James E. Skinner: Executive Vice President and Chief Financial Officer, The Neiman Marcus Group, Inc. Nelson A. Bangs: Senior Vice President and General Counsel, The Neiman Marcus Group, Inc. Phillip L. Maxwell: Senior Vice President and Chief Information Officer, The Neiman Marcus Group, Inc. Marita O'Dea: Senior Vice President and Chief Human Resource Officer, The Neiman Marcus Group, Inc. Wayne Hussey: Senior Vice President: Properties and Store Development, The Neiman Marcus Group, Inc. Wanda Gierhart: Senior Vice President, Chief Marketing Officer, The Neiman Marcus Group, Inc.
Products & Services Offered: Neiman Marcus is a leading luxury goods retailer in US. The company operates through multi-channel retail formats including specialty retail stores and direct marketing. The company's key products and services include the following: Women's Apparel: Casual, Tops, Pants and shorts, Skirts, Suiting, Swimwear, Intimate, Outerwear Men’s Apparel: Shirts, Trousers, Swimwear, Activewear, Suits, Polos & tees, Tie Children’s Apparel: Girl’s apparel, Boy’s apparel, Swimwear, Shoes, Jewelry, Accessories, Toys, Kids' bed & bath Shoes & Handbags: Thongs, Sandals, Wedges, Pumps, Flats, Boots, Handbags, Satchels, Shoulder Bags Jewelry & Accessories: Sunglass, Scarves & wraps, Hats & gloves, Belts, Diamonds, Pearls, Earrings, Necklaces, Bracelets, Rings, Watches, Beauty & Fragrance: Skin care, Bath & body, Hair care, Accessories, Fragrances, Home fragrances, Men's grooming Home & Entertaining: Furniture, Bedding, Tabletop, Lighting, Décor, Rugs, Curtains, Travel, Desk & stationery, Kitchenware
SWOT Analysis: External Forces Competition Opportunities: Neiman Marcus already plans to open new stores in Topanga, suburban Seattle, Walnut Creek and Sarasota. The company can continue to open more stores and reach a larger customer base by penetrating further in its existing market. Last year they renovated the Chicago Neiman Marcus and Bergdorf Goodman stores. The company can continue to remodel store locations to ensure a better shopping experience for consumers, which will ensure their return. Although competitors also have catalogues, Neiman Marcus is famous in the industry for theirs. Neiman Marcus, Inc. has successfully established themselves with a large number of store locations, catalogue and online. Since the company is already famous for their annual Christmas catalogue, they would surely be successful if they decided to issue additional catalogues throughout the year. Threats: Intense competition has a negative effect on the companyâ€™s margin and profitability. The major competitors of Neiman Marcus, Inc. include: Saks Incorporated, Barneys New York Inc. and Nordstrom Inc. for distribution of luxury fashion brands. The company also competes with specialty retailers, traditional and high-end department stores, national apparel chains, vendor owned proprietary boutiques, individual specialty apparel stores and direct marketing firms.
Economics Opportunities: With the current economic recession, the company can start incorporating less expensive merchandise into their stores. Instead of only selling a few more expensive items, they can expect to sell larger quantities of lower priced items. And although Neiman Marcus may have a harder time selling luxury retail goods than they have in the past, their most faithful clients will always continue to spend money. Threats: In July 2008 the federal minimum wage increased from $5.85 to $6.55 per hour. Considering Neiman Marcus, Inc. employs a total of 17,000 people, the increase in labor cost has impacted profitability. In addition to the extra employment costs, several proposals are under consideration to introduce a system of mandatory health insurance. Also, the current economic recession has affected consumer debt levels, reduced availability of consumer credit and has lead to inflation in interest rates. This means customers are less confident with their spending and likely to purchase luxury retail goods.
Nature Opportunities: Organic and eco-friendly merchandise has become popular in the market in the past five years. The company can start selling more environmentally friendly clothing in every store location. This will appeal to the customer by making them feel like their purchase is going towards a good cause. They will want to buy the article of clothing if they know they are making a healthy choice for the environment. 8
Threats: This past year temperatures have been cooler than average for each season. If the spring and summer seasons continue to be colder than usual, less clothing from those seasons will sell. Items such as swimwear, shorts or skirts do not sell for full price, this will have a negative effect on the company’s overall profit.
Politics Opportunities: Neiman Marcus, Inc. hosts several charity events, including the Crystal Charity Ball held every December. There are also several “gifts that give” items in the company’s annual Christmas Book, from which a portion of the proceeds are donated to a deserving charity. Although the company already participates in many charity events, there is always room for more of these services. The company could do a special promotion involving a specific brand. When the customer purchases an item from the brand a percentage of the sale would help fund a nonprofit organization. Shoppers are more willing to spend money when they know that their purchase is helping out a charity. Threats:
Due to the high prices of much of its merchandise, Neiman Marcus is sometimes called "Needless Markup." Some animal-rights activists claim Neiman Marcus' fur sales contribute to the unnecessary deaths of millions of animals every year. The company’s substantial amount of debt has also been an issue for potential investors.
Regulations Opportunities: Instead of paying a large number of part time employees a minimum wage, it would benefit the company to increase the number of full time workers and pay them with a commission based structure. This will offset the recent rise in minimum wage. Threats: Since Neiman Marcus currently employs a total of 17,000 workers, the recent increase in labor costs has negatively impacted the company because it now has to spend more money on employment costs. Right now several proposals are under consideration to introduce a system of mandatory health insurance, which will also decrease profit. In addition, groups such as PETA claim that it is inhumane to farm animals for fur. Fur is a large division of the company, and if they were no longer able to sell it they would be losing a great amount of sales.
Technology Opportunities: Many customers are starting to spend more of their time and money shopping on the internet rather than in the actual store locations. The company can use technology by advertising and selling items on the web. Inventory can be better managed with computer and data systems, so that sales associates will know exactly how many of a particular item, size, style and color are available to be sold. This will also come in handy when the company decides to reorder certain styles. The company utilizes an electronic data interchange (EDI) technology with some of its vendors.
Threats: Technology is constantly being updated. It is expensive to use the latest most up to date form of technology. As soon as the company invests time in new technology, it becomes out of date.
Society Opportunities: With the current economic downturn, customers are less willing to spend as much as they used to. Sending out a coupon book and promoting store-wide sales would encourage customers to walk into the store and make a purchase. The company can also start incorporating some less expensive clothing lines on the floor. This is also a great opportunity for the Last Call branches to expand. Threats: Neiman Marcus holds a high standard or luxury apparel, and some customers may be afraid to walk in the store due to intimidation. They also may think it an inconvenience that to make a purchase there, you must have an American Express card or a Neiman Marcus card.
Internal Forces: Strengths & Weaknesses Customer Profiling A. Demographics Strengths: Neiman Marcus is able to appeal to a diverse demographic because it sells products for women, men, children as well as home décor. The average person who shops in Neiman Marcus is a Caucasian career woman in her thirties to fifties with a high income. Neiman Marcus is a “one stop shop” for her because when she goes shopping, she can purchase items for her entire family. The company is also appealing to families with a lower income can shop for discounted apparel at Last Call. Weaknesses: Due to the high price point of the company’s merchandise, few people can afford to shop there. The company has potential to only do will in the more wealthy parts of the country. B. Psychographics Strengths: Neiman Marcus’ clientele has a luxurious lifestyle. Sales associates cater to the customers, and it makes them feel more important and at home. Because of this, the company has an impeccable reputation and a loyal clientele.
Weaknesses: Customers might feel intimidated to shop at such a company with such a luxurious reputation. They might not feel worthy to look around at the less expensive merchandise that the company is selling C. Geographic Strengths: Neiman Marcus does well in urban downtown shopping areas as well as suburban areas. They have forty different locations. If customers want to shop at the store but do not live close enough they have the option of shopping by catalogue or online. Weaknesses: Due to the high price point and type of merchandise sold in Neiman Marcus, the company will only be successful in an urban or suburban location. Consumers who live in other parts of the country do not typically spend that type of money or wear that style of clothing. D. Behavioral Buying Traits Strengths: Neiman Marcus clientele is extremely loyal. They make frequent shopping trips to the store and spend a large amount of money each time. Weaknesses: Consumers with a smaller income may not even attempt to walk into the store.
Product Mix Strength: Neiman Marcus carries a large variety of brands for their customers to choose from in each department. If the customer wants to purchase a particular item that the specific location does not carry, they have the option of having it special ordered for them. Weaknesses: Since many designers are focusing more on lower end brands right now, it leaves the company with less options.
Pricing Strategies Strengths: Neiman Marcus only sells merchandise at a higher price point. This is what they are known for. They have an outstanding reputation for their great luxury designer brands. Weaknesses: Partially due to the high price point of the company’s merchandise, they have a lower inventory turnover rate. In the current recession customers are less willing to pay a higher amount for their apparel—and the “fast fashion” trend has made it much easier for them to do this.
Promotion Strengths: Neiman Marcus is known for their decorative window and in-store displays and annual Christmas Catalogue. They also offer their customers a specialized 14
Neiman Marcus credit card, which makes the customer feel privileged and important to the company. Weaknesses: Over the past decade the company has been advertising less frequently. They do not typically advertise in fashion magazines, which means that the public is less aware of what the company has to offer.
Distribution Strengths: Neiman Marcus has forty store locations spread throughout the country, as well as several outlet stores. Each store is set up to sell specific designers that will do best for the specific location. Weaknesses: Since the company sells their merchandise at a higher price point, it makes it impossible to have successful store locations in less wealthy parts of the country. There are several states that do not even have a Neiman Marcus.
Management Structure Strengths: Burton M. Tansky is the President and Chief Executive Officer of the entire company. Underneath him are several Directors followed by several Vice Presidents. These employees are in charge of specific regions and govern the managers of the individual stores. With such a large group of individuals in charge of the company it makes it easy to fix potential problems they might encounter. 15
Weaknesses: With the current recession, it is unnecessary to have such a large group of people in charge of the company.
Suppliers Strengths: The suppliers work close with the company by keeping track of inventory and special orders. This way they have a good idea of what types of items will be successful in each specific store location. Weaknesses: The suppliers sell the merchandise to the company for a high price, so if a certain article does not sell, they lose money. Also, most of the suppliers work with other retailers as well, so they might not always have the companyâ€™s best interest at heart.
Marketing Objectives Product Objective A: To increase product offerings. Strategy #1: To focus more on contemporary lines instead of mainly focusing on an older age group. Tactic a: Create window displays include more contemporary brands that will appeal to a younger crowd. Tactic b: Include a larger variety of contemporary clothing in each store location. As of now the areas dedicated to contemporary clothing are not very large. Strategy #2: To add a signature salon in each major store location. Tactic a: Advertise the salon as a great place to receive a high quality, relaxing beauty treatment. Tactic b: Sell products inside the salon while offering special deals on the beauty products sold in the beauty department of the company. For example, guests receive ten percent off all Clinique Cosmetics on the same day as their appointment.
Price Objective A: To expand the target market of the company. Tactic 1: Incorporate lower price point lines in the store. This way the company will attract the usual high end customers while selling to the average consumer at the same time.
Tactic 2: Adding a larger number of contemporary designer lines to the stores. Instead of mainly appealing to an older crowd, the company will now attract younger consumers as well. Objective B: To make it easier for customers to purchase goods. Strategy #1: To allow customers to use credit cards other than the Neiman Marcus Card or American Express. Tactic a: Create an agreement with other credit card companies such as Visa, Discover and MasterCard allowing Neiman Marcus to accept them as payment. Tactic b: Advertise to the public that we now accept credit cards other than the Neiman Marcus Card and American Express.
Promotion Objective A: To increase catalogue sales. Strategy #1: To create a small catalogue for each season. Tactic a: Send a free catalogue to a mailing list consisting of customers that spend the most. Tactic b: Customers have the option of requesting a catalogue to be mailed to their house by clicking on a button online. Objective B: To expand the budget for advertising by ten percent. Strategy #2: To spend the extra money advertising in magazines. Tactic a: Create a two page spread to be features in Vogue twice a year: February and September. Tactic b: Create exciting window displays each month. The company should be known for their innovative and eye catching store fronts.
Place Objective A: To expand store locations. Strategy #1: To open new store locations in new states and new countries. Tactic a: Open stores overseas, such as highly populated European cities like London and Paris. So far, Neiman Marcus only has store locations in the United States. Tactic b: Open a store in every state in the country. So far, there are only forty three store locations in thirty nine states. There are many urban cities that could potentially make a large profit if a store was opened there. Objective B: To update the current store locations. Strategy #2: To revamp the current store locations. Tactic a: Shut down individual store locations (one at a time) to remodel the look of the store. Many of the stores that were opened a long time ago are extremely outdated looking. Tactic b: Give the outside look to the store a younger look in the more urban locations. Instead of having the window displays only appeal to an older crowd, attract the younger customer by putting more contemporary and flashy clothes in the windows.
Hair by Neimanâ€™s Marketing Mix Strategies
Product Starting in Fall 2010, Neiman Marcus will be introducing a signature hand-made hair accessory line called Hair by Neimanâ€™s. There will be over thirty different hair pieces including decorative headbands, bows, clips, combs and brushes, as well as many other hair accessories. The look of the product will be targeted towards contemporary aged women. Over the past five years hair accessories have become extremely popular, both on and off the runway. Although Neiman Marcus already has a small collection in stores now from some of their carried designers, the company believes it is important to launch their signature line of hair pieces in order to stay on top of the trends.
Price The price range of Hair by Neiman’s will start at $25.00 and end at $85.00. Since each hair accessory is hand-made, the price is dependent on the amount of time and skill gone into the specific piece. The company feels strong about keeping the product under $100.00 in order to keep it as an “add-on” purchase that the customer decides to buy on top of their other items with little hesitation.
Promotion Starting August 1, 2010, there will be a gift with purchase with a write-up attachment explaining the new line. Every single purchase made in the month of August will include one hand made hair clip designed by Hair by Neiman’s. The sales associate ringing up the purchase will explain the new line to the customer. Magazine advertisements will also be used. The September and December, 2010 issues Teen Vogue Magazine will each feature advertisements specifically for Hair by Neiman ‘s. The advertisements will be within the first twenty pages of the magazine, and they will be colorful and playful.
Product placement will be used when Neiman Marcus works with the CW network to have the hair accessories be featured on shows like Gossip Girl, 90210 and The Vampire Diaries. This way, teenagers and young adult woman will be exposed. Most of all, Neiman Marcus is going to encourage sales associates to participate in personal selling. They want their employees to mention the new line to as many potential buyers as possible. Consumers are completely unaware of Hair by Neimanâ€™s because it is just being introduced. In order for customers to consider buying it, they need to be informed on the type of product it is. They will learn this from the sales associates that mention it to them on the sales floor and checkout desks.
Place The product will be placed mainly near the check out desks in the contemporary, lingerie, and cosmetic departments. Although the target customer is 16- 25 years of age, we want mothers who are buying clothes for their daughters to see the hair accessories as well. Not only will they buy a few for their daughters, but they will also maybe buy one for themselves as well. There will be a point of purchase display set up in the middle section of the contemporary section also. The mannequins in the window displays will also be wearing the hair accessories. Hair by Neimanâ€™s will be seen nation-wide in store locations.
Hair by Neimanâ€™s Action Plan Gift with Purchase: During the month of August a gift with purchase will be given to every female customer. There does not need to be a specific amount sold in order to receive this gift. The gift will be one hand-made hair clip designed by Hair by Neimanâ€™s. The clip will be attached to a write-up explaining the new line. The sales associate ringing up the purchase will explain the new line to the customer. Strategy: The gift with purchase and attachment will create brand awareness for Hair by Neimanâ€™s. Also, each sales associate will be required to explain the new line before giving the gift to the female customer. Hopefully this way the customer will look at the hair accessories and make a purchase the next time they are shopping, if not that same day.
Magazine Advertising: The 2010 September Teen Vogue magazine will feature an advertisement for the product. The advertisement will be within the first twenty pages of the each magazine. It will have a distinct flirty feeling by using a bright and playful color story. There will be a second advertisement placed in each of the 2010 December issue Teen Vogue Magazine. This advertisement will have the same look and give out the same feeling as the first.
Strategy: By advertising in this type of print magazines the company will be able to communicate to their main target market for the product: young women from the ages of 16 to 25. By advertising during two different months the consumer will be exposed to the product at different time periods, which will remind them to shop for the product.
Product Placement: Neiman Marcus will work with the CW network to have the hair accessories be featured on the new fall seasons of shows like Gossip Girl, 90210 and the Vampire Diaries. Many of the female characters on these shows wear fashionable clothing and will accessorize with Hair by Neimanâ€™s. Strategy: Using product placement on these shows will expose the hair accessories to the teenagers and young adult woman who watch them. Hopefully, viewers will be interested enough to go to the CW Network website and look up the product.
Personal Selling: In July Neiman Marcus sales associates will attend a mandatory staff meeting where they will be introduced to the Hair by Neimanâ€™s line. They will each spend time learning specific facts about the product. At the end of the meeting a test will be assigned to them in order to determine their level of knowledge of the new line. If they do not get every question right they will be required to take it again until they do. They will also be given a hair accessory from the collection to wear to work. Now they are trained to participate in as much personal selling for Hair by Neimanâ€˜s as possible. Strategy: Personal selling will be the most important promotional technique used to introduce the new line. Customers will be aware of a new product they have never
heard of before because of the knowledgeable and helpful staff. If the sales associate wears one of the hair pieces to work, the customers will most likely inquire about it.
POP Displays: There will be displays placed in various places around the contemporary and cosmetic departments, as well as the check out desks. The displays will be specifically designed for the Hair by Neiman â€˜s line. Strategy: Although the target customer is 16- 25 years of age, the company wants mothers who are buying clothes for their daughters to see the hair accessories as well. Not only will they buy a few for their daughters, but they will also maybe buy one for themselves as well. These POP displays will draw attention to the product.
Budget The budget for the Neiman Marcus Promotions Team will start off at $100,000.00. After the trial phase, the budget will be equivalent to 10% of the sales profit made by the Hair by Neimanâ€™s line. This includes projects, events, supplies, salaries and equipment needed for any of the promotions.
Pre-Test The first six months of the product launch is considered the pre-test phase. Everything included in the promotions is part of the pre-test. The company will observe and analyzing the findings.
Hair by Neiman’s Evaluation of Marketing Plan Post Testing Online Surveys: Each woman who makes a purchase in the five month time span after the release of Hair by Neiman’s will be asked to enter their email address into the computer system. On January 1, 2011 an online survey about the new product line will be sent to the email addresses. The survey will include basic questions asking about how satisfied the customer is with their Hair by Neiman’s purchase. In-store Surveys: Starting on January 1, 2011 customers will be asked to fill out a survey about how they feel about the new line. Questions will be similar to those on the online survey, except there will be more asked about how familiar they are with the Hair by Neiman’s product. Questions about promotions used for this product will also be asked on this survey.
Analyzing the Data After collecting the data from the surveys, the company will focus on two topics: how aware the public is of the line and how pleased the consumer is with their purchase. Once these questions have been answered, the Neiman Marcus Team will decide on whether or not to keep the line in stores, and changes to make to the line and promotion strategies in order to increase popularity and sales. 26
I created this assignment as a freshman (2010) in my Introduction to Fashion Marketing class.