Eddie Bauer is experiencing rapid declining sales1) Eddie Bauer does not 2) Increasing returns from 3) Customer Relationshipunderstand who their Catalog channel, a synergy Management problemscustomers are management problem · Eddie Bauer· 70% of · Channel Management currently has no merchandising is lead to increased CRM system in male across all returns because place channels, however consumers can now · Eddie Bauer is 80% of all purchases return any product to having trouble are done by females any channel getting the proper· Target market for · 65% of total catalog CRM employee’s to Eddie Bauer sales were returned work for them currently is leaving a profit of because educated, affluent, $185MM competitors or 40 year old, married getting to them first and active men and women· Gearing a small · Poor management · The absence of a marketing budget to understanding of fully operational the wrong target synergy has led to CRM system leads to consumers leads to higher returns and less management less purchases chance of resale confusion on who to market what product to
Eddie Bauer takes the strong position of a high quality, timeless and upscale clothing brand etched from rich roots in the high end outdoor segment 1920 Rugged, outdoorsy and tough Tr an sit io n to 1980 Family oriented, Genuine and down fashionable and to earth old fashioned Tr an sit io n to 1999 Casual wear for men and women over 30Outdoor sporting Manufacturing, Specialty clothing Cataloging togear, tennis catalog, store, focused mass audiencesequipment and expedition gear, catalog approach, and providing upcustomer service fishing and male/female to date casual hunting customers wear to men and women 1920 2000
An Eddie Bauer customer has changed over the years to women becoming the main gender segment who purchase Eddie Bauer products Retail Store Catalog I-Media Characteristics of EB retail Characteristics of EB catalogCharacteristics of an EB online shopper: shopper:shopper: · 7% of US population that · Divided into three segments:· 50/50 split male and female walk buy a EB store actually Catalog only purchasers =· 50% of I-media sales were to purchases something $200MM (500,000 new customers · 70% of customers are customers)· 68% of 88% who shopped EB women 45% of store stock is · Catalog and store online did not purchase geared to women purchasers = $300MM anything · Women that shop for men (500,000 customers) and find something for · Extreme Loyal catalog and themselves (TARGET) store = $13MM (26,000 customers) · Women’s products = 70% of goods sold · 75% of phone calls were women Eddie Bauer is expelling energy, money and time to the following customers, when the return on investment is not yielding what they anticipate Eddie Bauer Primary Target Market should be: · Women ages 30+ · Married · Who buy clothes for their husband because their husband doesn’t Secondary Target is based on ent have time to buy clothes pm velo consumer spending segment via t De · High income families rke brand loyalty: y Ma on d ar · Husband works many hours · Men via women purchase from Sec · FHH makes most purchases in the multiple channels (2+) spending $500+ family · Men via women purchase from multiple channels (2+) spending $200+
Closing the Catalog and focusing on the store front and I-media revenue streams does not fit with the Eddie Bauer brand and does not increase profitsClosing the catalog will not The positioning of this strategy does not fit withincrease profits: the core competencies of Eddie Bauer the Company and the Brand:1) The catalog generates close to 25%of overall revenue and overall net 1) Eddie Bauer is as successful as it is todayprofit because of the catalog driving in new business2) The catalog has over 3.7MM 2) In order for I-media to be as popular as hopedcustomers the catalog will have to drive traffic to the I-media site3) The catalog is Eddie Bauer’s mainmarketing tool Eddie Bauer’s Positioning within the market using this strategy: Eddie Bauer is a customer driven clothing company that takes pride in developing the latest high quality timeless fashion pieces for our loyal customers. Does this positioning fit with the following criteria?Decision CriteriaDoes the strategy fit with the primary target market andsecondary market?Does the strategy help lower returns from the catalogchannel?Does the strategy begin to build a CRM system? No catalog means no traffic to I-media (central hub of CRM)Does the strategy fit with Eddie Bauers brand promise ofproviding excellent customer service and innovativecasual fashion wear for men and women?Will the strategy affect Eddie Bauer’s brand image of highquality fashion?Is the strategy profitable over time? Without the catalog as the main generator of new business it may be difficult to have profitable growth over timeDoes the strategy increase Eddie Bauer’scompetitiveness?Will the strategy be easily implemented across all No, there will be an excess of products from the catalogchannels? channel, that will not be able to be soldWill management be able to adopt the strategy withrelative ease?
Separating the catalog from the retail store and I-media will prove to be a logistical nightmare Separating the catalog from the other channels does not fit the · The over stock of catalog items will not Eddie Bauer brand: be re-sold and therefore will be a major hit on the bottom line 1) Eddie Bauer will lose sight of · Spending over a year trying to their target customers implement the idea of synergy and deciding now to not be synergistic will 2) Separating the channels means lead to employee confusion and re-branding each channel customer confusion separately, which takes time, money and patience 3) This is a very high risk strategy, with minimal reward and high potential of client loss No real differentiating position from the previous strategy Eddie Bauer’s positioning within the market using this strategy: Eddie Bauer is a customer driven clothing company that takes pride in developing the latest high quality timeless fashion pieces for our loyal customers. Does this positioning fit with the following criteria?Decision CriteriaDoes the strategy fit with the primary target market andsecondary market? High potential of losing sight of target marketDoes the strategy help lower returns from the catalogchannel?Does the strategy begin to build a CRM system? All channels are separate, therefore separate CRM is neededDoes the strategy fit with Eddie Bauers brand promise ofproviding excellent customer service and innovativecasual fashion wear for men and women?Will the strategy affect Eddie Bauer ’s brand image of highquality fashion?Is the strategy profitable over time? N/A data not available to checkDoes the strategy increase Eddie Bauer ’scompetitiveness?Will the strategy be easily implemented across all Building channel brands are not easy, getting noticed inchannels? channels that are unfamiliar is difficult (I-Media)Will management be able to adopt the strategy withrelative ease?
In order for Eddie Bauer to increase sales a three prone strategic plan should be implemented Phase 1-Change Target Market · By focusing 70-75% of our marketing efforts on women Eddie Bauer can increase sales because we are marketing directly to decision makers · The first goal of this phase is to increase traffic to the retail store and catalog phone purchases through I media · The second goal is to increase sales to women who are purchasing clothes for there significant other either in the retail store or through the catalog/I-media Gender Comparison Chart of Purchasing Via Channel (in millions) 5 4 3 Women 2 Men 1 0 Store Catalog I-MediaPlan of Action: Showcase female products in the front of the store to increase the amount of visits into the1) Make the store front more appealing to storefemale shoppers inside shopping malls2) Within the store have 60% of merchandisegeared towards women and 40% geared Women are impulse buyers, if the right sizetowards men and colour are on hand, there is a greater chance of purchase3) Increase SKU’s for women’s sizes and colours4) For specialty sizes and colours; retail stores If the sizes are specialty sizes that are not inwill have non-sellable products for the purpose stock, the value of having at least one sampleof sizing only, purchasing of these products can size for a women to try on is huge as Eddiebe done through the catalog or I-media Bauer will increase the chances of a catalog purchase5) The catalog images will be a 50/50 splitbetween the latest men and women fashions
Keep the idea of a synergistic brand image in the customers eye, but in terms ofmanagement combine the catalog and I-media logistics together and keep the retail store separate Phase 2- Lower the risk of returns · Eddie Bauer is losing a great deal of money because of the idea of synergy between all channels. This leads customers to return catalog bought items to the retail store which then have an increased chance of not being purchased · The main goal of this strategy is to lower returns to the retail store of catalog purchase items by separating the retail store bought items from the catalog and I- media items Ratio of purchases to return in the catalog channel via gender Purchases Women Purchases Men Returns Women Returns Men *Returns were estimated on gender buying behaviour* · The catalog and I-media hub will be in Seattle where all global purchase orders for these two Plan of Action: channels will be distributed · The retail store distribution will be separate from the two other channels to avoid 1) Introduce two distribution hubs one for confusion and lost product during returns the 600 retail stores and the other for all online and catalog purchases Catalog and I-media returned items will be shipped 2) Develop a promotion strategy where to the Seattle distribution hub through free shipping vouchers given to customers who want to returned catalog items are offered as a exchange the items discount on I-media before next seasons catalog gets distributed 3) Introduce skimming pricing for new season goods and lower the price point of last season The left over stock from last season will be offered products through a special catalog section at a lower price point to encourage loyal and value and I-media customers to purchase an older item at a discounted cost, therefore preventing unsold returns
Develop a CRM strategy to transform a value customer into a loyal customer Phase 3- Develop a CRM System · Eddie Bauer the brand is known for high quality and timeless clothing items, these brand attributes must be shared to a larger audience and not just the loyal followers · Over 90% of profits come from value customers who don’t necessarily know the Eddie Bauer brand · The goal of the CRM system development is to transform a value customer into a potential loyal customer by understand their buying behaviours and targeting their needs and wants for Eddie Bauer items Segment Analysis based on consumer spending habits Type of Customer Spending amount Percentage of Eddie Profit (estimated on per year Bauer Customers average spending of segment) Value $200-$500 90% $1,743MM Loyal $500-$1000 1% $26MM Other >$200 9% $150MM Plan of Action: 1) Increase the salary of a CRM veteran and retain his knowledge to develop the CRM system By Changing 30% of value customers to 2) Focus the CRM strategy on loyal customers will turning value customers into loyal return over customers via targeted promotions $800MM in overall profit 3) Encourage frontline staff to extract customer information to build CRM database Type of Customer Spending amount Percentage of Eddie Profit (estimated on per year Bauer Customers average spending of segment) Value $200-$500 60% $1,046MM Loyal $500-$1000 31% $1,801MM Other >$200 9% $150MM *Estimated numbers, a thorough investigation of consumer spending is needed to calculate true potential growth