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American Apparel Business Plan

American Apparel Business Plan for a special event

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American Apparel Business Plan

  1. 1. Marketing Plan By Morgan Cheval, Vanja Dekic & Caroline Szpira ®
  2. 2. Table of ContentsExecutive Summary ........................................................................................................................ 3 Marketing Objectives ...................................................................................................................... 4 Brand Story ...................................................................................................................................... 5 Target Market Size .......................................................................................................................... 8 Revenue Potential ........................................................................................................................... 9 Situation Analysis ........................................................................................................................... 10 SWOT Analysis .............................................................................................................................. 16 Porter’s Five Forces ....................................................................................................................... 18 Competition Analysis ..................................................................................................................... 19 Marketing Strategy ......................................................................................................................... 21 Positionning and Value Proposition .................................................................................................23 Pricing Strategy .............................................................................................................................. 24 Customer Lifetime Value ............ ................................................................................................... 25 Distribution & Sales Startegy .......................................................................................................... 26 Tactics ............................................................................................................................................ 27 Budget ............................................................................................................................................ 32 Metrics ............................................................................................................................................ 34 Calendar ........................................................................................................................................ 35 Summary ........................................................................................................................................ 36 Appendix ........................................................................................................................................ 37 2
  3. 3. Executive Summary Native from Los Angeles, American Apparel is the successful vertical integrated brand. Supporting by a unique and controversial image, the company growth has been increasing since its creation. Attached to its special integration, the company handles every step of its production internally; from the design conception to the clothes sales in order to fit the customers wants. Through its provocative yet genuine image, American Apparel marketing strategies always have had a vanguard and innovative vision of the market. In order to fit that vision and based on our analysis of the market and its competition, as well as the social environment of the typical American Apparel’s customer profiles, the marketing plan presented here consider actions to response to three major goal: - Create a successful event for AA fans with 10,000 attendees and generate more than 1million in revenue by the end of 2014 - Increase AA online community by 20% by the end of 2014 -Develop AA positive brand image by 80% by the end of 2014 With these objectives in mind, our main tactic is the creation of a Social Music Festival for September 2014. The purpose of the event is to offer a unique experience to American Apparel loyal customers and potential prospect. Accordingly, this strategic plan proposes a blend of suitable and intelligent actions to support an original idea to ultimately reach the company’s goals. 3
  4. 4. Marketing Objectives 1. Create a successful event for AA fans with 10,000 attendees and generate more than 1million in revenue by the end of 2014 The event to be created for American Apparel will be a music festival similar to Coachella, H&M Music festival or Outside Lands. AA Music Festival will be targeting Millennials who are already customers of the brand, but also those who might be interested in the bands that will play at the festival. Those people will be targeted as potential/future customers. This event will be first time that AA is associated with music festival. For that reason we are expecting to attract 10.000 people. Due to the limited capacity of the event location, we are not to exceed this number. This population will be reached out prior to event by direct e-mail, at point of purchase weather it is in store or online, through social media, radio, TV commercials and billboards. 1 million in revenue will be reached by the ticket sales and goodies. 2. Increase AA online community by 20% by the end of 2014 AA had 1,506,838 fans on Facebook, 457,424 on Twitter and 25,672 followers on Pinterest as of this moment. Customers will be incentivized in stores or online to join these social platforms and engage with the brand. 3. Develop AA positive brand image by 80% by the end of 2014 AA has relatively negative image due to the controversial behavior of their CEO and their ad campaign involving young models in sexually compromising positions. The festival itself will be the first step in improving this image, since it will be held to support non-profit organizations. Marketing campaigns and PR around event will serve to show that AA is heading in right direction, away from controversy to more humanita- rian actions. The festival will promote responsibility toward nature and encourage the customers to help in their own way. 4
  5. 5. Brand Story American Apparel, first born in 1998, started selling online and then opened a store in Los Angeles, where they still have their factory. The company prides itself with the production of all garments in one factory, unlike their competitors. This goes to their bene- fit because their consumers like to know where their clothes are made and who made them. American Apparel provides over 10.000 jobs and they can produce one million garments in single week in what they call “Sweatshop-Free” environment. They design, manufacture and produce all their merchandise in their factory in Downtown Los Angeles. Their workers are paid up to 50 times more that their competitors pay theirs, and they enjoy benefits such as healthcare, life insurance, free parking, on-site massage and classes of English. An average worker can make $25.000 a year, because they are paid $12 an hour, which is more than a federal minimum. American Apparel guarantees their employees a full-time job, which is usually considered a seasonal work in garment indus- try. They care not just about their employees but their families too. They have onsite medical clinic that can provide pediatric, urgent and preventive care. They are planning to implement a program that will facilitate their employees to be shareholders of the company. They are conscious about the environment and say that their carbon footprint is smaller than the competition. Their factory is equipped with solar panels that produce 20% of their electrical usage. Dov Charney, American Apparel CEO, is involved in every part of the business: marketing, design and manufacturing. He is also associated with several controversial lawsuits. 5
  6. 6. Brand Story (2) Since its foundation, American Apparel has suffered controversy but does it really hurt the brand? The answer is no, it doesn’t really hurt the brand on a big scale. From a small shop where girls start selling t-shirt on the beach, the founder is now at the head of a worldwide phenomenon wholesaler company. What has globally appealed to youngster and metropolitan adults is the authentic sexuality displayed by the brand. Instead of the fake sex appeal seen on other brand, Charney has created true visual of his own employees to features on ads to give a genuine aspect of the brand image: A side of the brand where customers could recognize themselves. This is not new to use sex as an idea to sell products, yet, the visuals used by American Apparel show a liberate generation, people comfortable with their bodies and looking sexy at the same time. The idea behind this is appealing and gets customers appreciation because it’s real. The target relate to the brand through the authenticity built by American Apparel over the past year. Dov Charney calls himself “intuitive designer” and is so involved in the process that he needs to try the garment before it goes to production. This only proves his dedication to the company and the brand itself. Despite his controversial personality he cares about his employees and their families. He is pleased about the increasing number of workers and the fact that they are now shareholders and have direct stake in the success of the company. American Apparel designs and prints their own ads, but those ads are considered controversial and are frequently judged for appearance of underage models in compromising poses. Dov Charney and his team often are personally in charge of model recruiting, sometimes even on street. The models are regular girls, not real fashion models, and sometimes, even people who work in factory appear in those ads. 6
  7. 7. Brand Story (3) American Apparel is building image through controversy. They are not the first company to use sexual content to sell their products but they are not running from the reputation they created, like other brands are doing. As mentioned, the brand didn’t use agencies to create strategies, so that it was important for American Apparel to creative employ within their company. These people have maintained the true aspect of the brand and kept it looking trendy. This strategy to avoid presence into their marketing decision lead them to be careful about advertising in the right place and about maximizing their image recognition while not appearing lo-fi. Nonetheless, through its development, American Apparel has showed creative and ambitious marketing strategy. For ins- tance, they were the first retailer to have a store on the parallel virtual website They also communicated directly to customers via Email to get individual dieback on the merchandise. They built their image as a friendship with a consumer, entering in genuine conversations with them. Shopping at American Apparel is different from shopping at stores such as H&M, Urban Outfitters and Abercrombie and Fitch. Their stores are full of colorful garments that have no marketing or logos displayed on them. Penthouse covers adorn stores, but they are from a more innocent era. They do explore sex to sell their clothes but in a more tame way than some other companies. Their clean design and “lack of identity” is what helps them stand out among the competitors. Their image speaks to generation of liberal people who are comfortable with how they look. In this seek of conversation and exchange with the consumer, they engage with their customers, ask questions, and encou- rage active participation. They promote the idea of community, starting from their employees to the fact that their clothes are produced locally. They feel like a neighborhood company, not a global corporation. References: -- -- http:// -- American_Apparel.pdf --
  8. 8. Target American Apparel’s main target is the Millenials (also called Gen Y). Millennials make up about 23% of US the population. It is estimated that 13.4 % have not moved out of their parents’ house. This could be due to the fact that the unemployment among Millennials is nearly twice the national average. A typical millennial spends about 5% dollars less than a typical American, according to Bureau of Labor Statistics. However there are some categories where they spend much more that other groups. They spend about $50 per capita more on alcoholic beverages, $400 more on personal services and nearly $100 more on furniture. Millenials buy and use products to make a statement about who they are.[1] According to Heather McGhee is the director of the Washington office of Demos, Millennials are more diverse than Ge- neration X or Baby Boomers. The unemployment among them is nearly twice the national average.[2] Metro areas such as New York, Los Angeles, Chicago, Dallas and Houston have the largest number of Millennials. There are 3,262,509 Millenials in Los Angeles and its suburbs. [1] [2] Market size 8
  9. 9. Revenue Out of the 3,262,509 Millennials, 10,000 people are expected to show up at our first AA Music Festival. This is 0.3% of total Millennial population of Los Angeles. We are expecting this number to increase each following year of the festival. The price of the ticket for AA Music Festival will be US $70. Goodies and Merchandise will be available for purchase before the event in stores and online, and at the event itself. Official limited edition AA Music Festival T-shirt will cost US $20 and we are expecting 75% of total visitors will buy this product. Some American Apparel’s models will be walking around the festival to show people the new collection items. All models will be wearing a QR code that will allow people to scan them and be able to buy the whole outfit directly from their smartphones. Pop-up AA stores will also be displayed all over the event to allow the customers to buy AA items and we are expecting that 30% of total visitors will spend US 50$. Other collector goodies such as caps, mugs, glasses, and hoodies will be available and we are expeciting that 60% of total visitors will spend US $10. All drinks and food will come from AA sponsors/ partners so we won’t expect any revenue from it. Potential Total revenue from the ticket sales will be US $725,000. Total revenue from T-shirt sales will be US $150,000. Total revenue from pop-up stores will be US $150,000. Total revenue from goodies will be US $60,000. TOTAL REVENUE US $1.085,000. 9
  10. 10. Situation Analysis The US Branded Retail Apparel Industry (“Branded Apparel”) is currently valued at $37.7Bn (1) The US sale for this industry is expecting to grow in line with GDP and international growth is estimated to remain significantly higher than domestic growth. There are two main point on which companies should focus for future value creation in the industry; which are: an opportunity for increased operating margins (due to a favorable sales mix move towards the online channel) and the opportunity to expand in international and less developed markets. The ever-increasing worldwide demand for cotton has created the threat of lower gross margins. The low level of differentiation between the individual firms in the industry and the fragmented nature of the industry results in a very competitive environment, which make difficult for the industry to outperform the overall market. Due to globalization and a rise in brand awareness the branded apparel industry has benefited from demographic shifts and changes in consumer preferences over time. Because more and more fashion is emerging as a means of self-expression, consumers are increasingly choosing apparel with brand images or logos over private label. The United States represents the world’s largest branded apparel market having an estimated share of 29.26%, followed by Europe and Asia (2). Yet, growth in emerging markets such as Asia-Pacific is very encouraging for the branded apparel industry. Some of the specificities that define this industry are: highly fragmented, consolidation, outsourcing and seasonality. The branded Apparel market has been suffering for the extended instability in the world economy. Over the last 5 years sales growth has been slimmed down by reduction in household wealth, economic downturns, decrease in consumer confidence, low discretionary spending patterns, and shifting consumer demand to value for money bargains have all. The decline in consumer spending has also decrease retailers’ operating margins. Cheaper private label brands have been offering harsh competition to premium brands as consumers are shifting to lower price points. Other factors that are also expected to drive growth are rapid increase demand from de- veloping markets, especially Asia-Pacific, and sustained growth in the e-commerce channel. (1) (2) Economy 10
  11. 11. Situation Analysis (2) There is no doubt that technology has influenced our lives, almost to the point where there is no going back. It is involved in every aspect of our lives and it is heavily influencing the retail businesses. Today’s retailers are all bout stores, online shopping and mobile connection. However, the future will consist largely of finding and understanding the ways in which customers interact with the brand. The experts of Conlumino are predicting that retail future in next two years will consist of interactive television, augmented reality, in- store technologies, smart devices and image recognition. Internet has changed retail experience to the point where consumers can completely go around the physical store and fulfill their needs for quality and price. The phones are not just supplement but real shopping tool, and there are more and more users each year. Consumers don’t use them any more just for product reviews or comparing prices but to have a real shopping experience. Smart brands know that each device offers different experience, some better than the others, that is why they need to make sure their websites and content can be viewed and read perfectly on each of those devices. Retail industry is influenced by political/legal environment. This environment serves to protect one from another. The laws are crea- ted so companies would not lie in their advertising, alter their products or deceive their customers. External politic can influence the brand if that politic is against exportation/importation. Some brands might have manufacturing fabrics abroad and if the two countries don’t get along the brands can be affected. Also legal issues, such as lawsuits, concerning the brands image can affect it and possibly destroy it. None of the factors mentioned above should be taken lightly, because they all can have great impact on the brand itself. References: Technology Legal/ Political 11
  12. 12. Brands are building their corporate personality through the retail space, but as online retail stores increase in popularity; companies must be more innovative with the physical spaces they have. With the increasingly popular option of online shopping, creating a unique and appealing physical retail atmosphere is key to building and maintaining customers. Still there are other ways to create a strong retail culture and that is to add value to a re- tail space. By offering more than one service in a store, such as coffee or music, a brand is able to offer even more reason for consumers to visit them over and over again. However, the most successful brands recognize more and more consumers are shopping online and offline simultaneously. As a result, they connect with the brand on their own websites, on social networks, on other retailer sites and in the aisles via mobile and store displays. Those who are able to blending these channels will create experiences that are entertaining, helpful, unique and educational. This will only result as value for consumers, and it can be translate into premium product pricing. In-store experience is changing each day, and there are at leas three trends that will continue to grow and evolve in near future: mobile, gifting, and social TV. Consumers have been moving to mobile experiences at a faster rate every year. With their busy schedules, people have less time to spend all day trying and picking clothes in stores. Still this does not mean the brick-and-mortar is doomed to extinction. It is simply more convenient to check the stores web site and see all the items they have in the comfort of your home. Some people prefer to try the clothes before they buy them, but loyal customers of a certain brand know their size and are certain the item will fit them even without trying. Also by visiting brands website they have option to share their taste on other social sites such as Pinterest, thus promoting the brand at the same time. “Social gifting started when Facebook rolled out Facebook Gifts and Amazon announced its Friends and Family Gifting platform. Both Facebook and Amazon are expected to significantly evolve their gifting platforms to be both more personal and relevant for the user and gift recipient. Situation Analysis (3) Social/ Cultural trends 12
  13. 13. Amazon’s Friends and Family relies on friends’ Facebook data for input on gifting suggestions. This isn’t as powerful as the retai- ler’s own recommendation engine, which is based on more granular data that reflects the shopper’s habits but has the potential to become more accurate in making recommendations in the future. When it comes to Social or Connected TV, Twitter hashtags in commercials and even on TV shows are becoming more prevalent, to a point where it’s odd not to see the social tool at the end of a 30 second spot or at the bottom right hand corner of your fa- vorite show. This is just one of several ways social marketing has bled into TV. Nowadays, retailers can no longer look at TV only as advertising platform that doesn’t affect purchase decisions. Through both the TV and tablets/smartphones, users engage with content in a more dynamic way than ever before, sharing favorite moments, quotes, styles, and trends. “ In order to catch up with these social/cultural trends American Apparel should increased use of ‘in-store’ but mostly ‘online’ so- cial shopping tools, such as shopping through Facebook, Pinterest and Amazon. They should use targeted promotions through various social networks to reach desirable audience; develop rich media for fan access across those same networks; and develop seamless social ‘sign-on’ for ecommerce sites. Situation Analysis (4) Social/ Cultural trends (2) 13
  14. 14. American Apparel has built a strong and genuine relationships with their customers, not only thanks to their great use of media marketing, but also with the help of the different collaborations they went into. There is different of collaborators to the American Apparel brand. Each of them has a specific role in that collaboration and didn’t serve the same goal. There are partners, artists, shops etc. However no franchise has ever been made with the brand yet. They know with who to col- laborate, but they don’t allow people to handle their image alone. Artists: AA often teamed up with artist to conceive their collection. The basic collection is often created with local artists. For example, Petra Collins (artist and collaborator, also founder of online female art collective, The Ardorous designed one of their limited edition graphic t-shirt. The brand motto regarding artist collaboration is “Local artists, ethical manufacturing. That’s Ame- rican Apparel.”(1) Nonetheless, they often associate their brand with well-know creators to create special collection. Among them, we can mention Kesh, (the British, yet L.A. hipster) Kesh, and Sesame street. Association: The brand has a strong investment into different non-profit organizations and support lot of association that is true to the brand equity. The brand committed with the association of defense of USA immigrant “Legalize LA”. Moreover, they have a deep interest for the LGBT rights and teamed up with GLAAD for the LGBT Pride. They launch an exclusive tee line for the month of LGBT commemoration. In 2008 they started with a print now famous “Legalize gay” on tshirts to protest against California’s porp8. Indeed, Even if the company has already show their support to the cause with these past collaborations, they renew their sup- port by creating a 2013 line of clothes that included the bisexual and transgender communities. The campaign features a trans- gender model for the second year in a row. (1) Situation Analysis (5) Collaborators 14
  15. 15. The national Spokesperson of GLAAD reports: «By creating this transgender-inclusive t-shirt and tank, American Apparel is showing that they are not only trendsetters in fashion, but also trailblazers for equality for all LGBT people.» They were the first to enter into this collaboration and strong relation with gay community customer, but now Nike announced it would expand an all-new, LGBT-friendly shoe and clothing line.(1) Presence on tradeshow: The brand often participates to trade show to encounter new artist and connect with the customers as well as new collaborators. Websites: AA is continually becoming more creative in term of social media. One of their latest collaboration on that topic, is their involvement for “digital to print lookbook collaboration”. Indeed, AA through the social website collaborate with fashion community by creating a lookbook of their own style to feature on the website. The advantage of this partnership is not only the window they got with the website, but also crowdsourcing (Which is very impor- tant in building relationship with the consumer). In fact, users can collaborate with the brand by giving review, but also by dis- playing inspiration and personal style. Since its creation, Community members ended up creating over 7,000 looks using Ameri- can Apparel basics. (2) Aside from inspiration, this is a great source of information in term of consumer market research. This is not their first collaboration of this type, earlier they created a series of ads with members of the website Chictopia and held an in-store modeling for customers during the New York’s Fashion’s Night Out, bloggers and and photographers were pre- sent during the event. Music: AA is the first clothing company that made a step into music industry. Indeed, they started to sell worl music as distribu- tor. This first collaboration was with Sebastien Tellier’s,Sexuality Record. AA stores located in Europe and online website started to sell the disc two weeks prior to its release. (1) (2) Situation Analysis (6) Collaborators (2)
  16. 16. S.W.O.T.Analysis Strengths Weaknesses Opportunities Threats Ecommerce business Product lines expansion Increase retail expansion in the U.S. and internationally High Competition Rising costs of raw materials (coton) Economical crisis Cyclical trends CEO bad reputation (Dov Charney) Controversial marketing stra- tegy Controversial hiring methods High cost strategy Limited design Vertically integrated (full control) Unique image High brand recognition «Made in downtown LA» High quality Commited stockholders Effective marketing strategies > > > > > > > > > > > > > > > > > > > 16
  17. 17. S.W.O.T.Analysis The main strengths of American Apparel such as their responsiveness to new market trends and the strong control above all the operations along with a unique and distinctive image represent a strong advantage over most of the threats such as high competitions and the shift in consumers’ preferences. The vertical integrated strategy is giving American Apparel a huge advantages over their competition, because they keep the control of everything. On the other hand, this strategy is costly and risky.Still cyclical economic changes and rising cost of raw materials represent a constant menaces that require the company to be alert and flexible. While “US made” policy enhances brand image and ensure more control, this increase structural costs and create financial problems. Besides financial problems the main weaknesses for American Apparel comprise limited product design, controversial marketing strategy/ad campaigns and brand image and limited customer base. Besides, their brand image was tar- nished by the lawsuits for sexual harassment against the CEO, Dov. When it comes to opportunities, there is room for success if the brand takes advantage of its biggest opportunities developing a consistent ecommerce strategy, exports the brand into emerging markets and increase retail expansion. Moreover a constant monitoring of their market and trends ensure the company the possibility to understand new needs and expand product line consequentially. Nevertheless, American Apparel has to deal with an incredibly competitive market, an increase of the cost of raw mate- rial and consider the cyclical aspect of trends, which can turn the situation around. 17
  18. 18. Porter’s Five Forces Rivals Threats of new entrants Threats of substitutes Bargaining power of suppliers Bargaining power of buyersUrban Outfitters Mango Gap Zara Abercrombie and Fitch Forever 21 H&M Really low due to the vertical integrated strategy used by American Apparel (But rising cost of raw mate- rial such as coton). No substitute. Clothing and apparel are necessities for every consumers. High power from buyers (consumers) due to the multiple offer (for the price, quality, style, distribution pro- cess) in the retail industry. Low barriers at the entry but new entrants are struggling to compete with big brands and to create brand loyalty. Intensity of rivalry High level of rivalry due to the incredible amount of fashion brand in the retail industry > >
  19. 19. Competition Analysis 19
  20. 20. Competition AnalysisAmerican Apparel does business in an exceptionally competitive landscape. The company has many competitors; among them the main ones are Abercrombie and Fitch, Zara, Forever 21, Gap, H&M, Urban Outfitters, Mango. The main reasons for such intense competition is the non-existent cost for consumers to switch companies. Customers are constantly looking for the best products at the lowest prices, so American Apparel and its competitors are forced to be highly innovative in obtai- ning and retaining customers. Because of their constantly evolving fashion tastes this target demographic is a difficult group to appeal to. With regards to its main competitors, American Apparel own 1% of the market share of the clothing and apparel industry. Its main rivals in terms of market share are H&M and GAP, followed by Urban Outfitters and Abercrombie & Fitch. The competition is based on the following key points: · Timeliness of fashions trendiness · Breadth of merchandise · Brand recognition · Pricing · Quality · Overall shopping experience and environment. 20
  21. 21. Marketing StrategyHow will we grow ? The main aim of this event is to increase the brand image and its value, as well as reinforce the interactivity of the brand with the customer. The majority of the growth would operate during the event, but also after the event depending of the impact of the festival on social media. In other word, extolling the brand image will increase sale. In fact, this ephemeral event would be perceive as specific event from AA, but will be in the line with the brand promotion. Indeed, this music festival will bring new prospect, new people that could be interested by music and curious about the event. As a result, it would create awareness and attract new customer, as well as reinforce the feeling of already existing and loyal customers to the brand and allow growth in a long term. If the event is a success, American Apparel will have a new opportunity to export the event in other main cities in the world, such as Paris, London, New York, ... Moreover, a new catalog and collection will be created specially for the event. Indeed, creating new product lines to purchase. Before the AA Musical Festival we will launch and official site for the event. This site will provide information and guidance for the fans; customers will be able to buy tickets and merchandise associated with the festival. These options will be available online same as in stores, and the employees will be trained to address the custo- mers in order to increase popularity of the brand. In order to further increase awareness of the brand and AA Music Festival as well, we will buy SEO keywords associated with the event and the American Apparel brand to make it easier for our customers to find us and get to know our ideas. 21
  22. 22. Marketing Strategy (2) The American Apparel Music Festival is to take place at Echo Park Los Angeles, mid September each year. The event is expected to reach 10,000 visitors. Due to the capacity of the location this number will be final. The tickets will be sold before the event and on the day of the event. During the event itself, we will work on brand image and interaction with our fans. The location of Echo Park will visually stimulate the customers and help them connect with the brand. This location is hip, urban, natural and trendy, same as American Apparel wants their customers to see and experience them. The visual will be emphasized in order to stimulate the audience so they not only see but also feel the brand reaching out to them. The main strategy will be based on a new social media concept, allowing participant to interact during the festival live through the social media twitter. This strategy will lead to a growth of the sale because it will spread the word about the brand on social media and relay the information to a larger audience, even to people no present on the event. So it will finally become International thanks to the live broadcast and the social media use. We will have special desk that will help our fans connect their social platforms with the event itself. Mentions and hashtags such as @AAfestival and #AAfestival will be trademarked and used for next year event. We want people to come back to the event and bring more of their friends. After the event we will continue to monitor fan activities by following and commenting their photos and videos, which they took with our VYCLONE app, and answer any of their questions and inform them more about the brand. What will we change ? The main change is the integration of the brand into a social event. The creation of a new concept will bring a new as- sociation of ideas in customers mind. The AA festival could be seen in a long term as other important music festival that is part of our generation culture. It will be the place of new collection launch, but also artist performance and will make history in the music industry. Another change In AA marketing strategy is that, this festival will bring a new ‘Place’ in the 4P of the brand strategic plan. Indeed, aside from stores and online store, the event offers a new way to consider buying AA product. 22
  23. 23. Positioning & Value proposition ‘‘American Apparel, the provocative high quality brand made in LA.’’ Vertically integrated, American Apparel prides on its provocative designs, innovative technology, and its fairly responsible environment. Created and manufactured in Los Angeles, American Apparel adopts local culture and styles and makes them into fashionable, high quality garments desired by the young and hip trendsetters. Positioning Value Proposition 23
  24. 24. Pricing Strategy Our pricing strategy will be based on the competitive method. We looked at different festivals, in LA or in the world that are similar to the event we want to create for AA. They are similar either in the type of music, type of customers and the style. Here are our findings: - Coachella - in California (3 days): $300 - Rock En Seine - in France (3 days): $150 - H&M Music Festival - in Paris (1 night): Only VIP invitation - Glastonbury Festival - in England (3 days): $300 - Outside Lands - in California (3 days): $250 - Main Square Festival - in France (3 days): $150 - Tomorrowland - in Belgium (3 days): $450 - Igloofest - in Canada (1 night): $30 Based on this competitive analysis, here is our pricing strategy: Basic price: 70$ VIP Pass: 120$ (Included: a backstage pass and access to a VIP corner) 24
  25. 25. Customer Lifetime value 25
  26. 26. Distribution & Sales strategy AA is vertically integrated and is using the direct channel system. They sell their products directly from their factories to the consumer, through their retail stores, 100% AA branded. For the event, we will have to sell tickets, and we imagine 2 different ways for it, directly inspired from their current strategy. Tickets will be available online, through the AA e-shop, and in store. A new menu category will be set up on the website, in order to make it accessible for everybody, and improve visibility for the event. This new category on the menu will include all the information about the event, the partners, the non-profit, the volunteering info and the line-up. Besides, tickets will be available in store. AA will provide P.O.P. ads, such as posters and flyers for each store, to showcase the event. The sales team will be trained to sell and promote the event. Each employee will receive a note and the manager of each store will organize a preparation meeting, to train the employees. 26
  27. 27. Tactics Strategy Why creating a “social festival”? By mixing the real and virtual world, we will create a completely new experience. This experience will appeal the target audience as it will bring fun, new friendships, experiences, surprise, excitement and ‘buzz’” that will encou- rages the guests to “flirt”, compete in contests, share photos, etc. This experience embrace American Apparel Related brand image because as a precursor as trying new things, it will bring a new dimension to the brand and alternative music culture. The tactics will be organized in 3 parts, before, during and after the event. A) Tactics before the event: 1. PR: - Press release: The main goal is to inform and have publication about the festival in the press, especially in L.A newspaper, California tourism center magazine and brochures as well as specialized press. Here is a comprehensive list of targeted press: • L.A times • L.A weekly • Elle • Cosmopolitan • Glamour • Rolling Stones • Billboards magazine These press releases will also mention and get the attention on the non-profit organization that sponsor of the event. - Blog PR: Not to forget into our PR initiatives, the blog PR have the same role as traditional PR but online. Famous blog would be used such as PRnewser or PRSquared. 27
  28. 28. Tactics Strategy (2) 2. Online content: - Ephemeral website: The goal is to open of a special website to sell the tickets and start attracting online customers. It would give access to the collectible store and find all the details about the event as well. - App: In parallel, an exclusive app would be launched for the event and linked to the website to order collectible items and tickets. - SEO: The foal is to keep the website on the first page of research engines (Google, Bing, Yahoo, etc.) from august to the event with the use of key words like: • Music festival • L.A event • What to do in L.A. • Party • Concert • August/September in L.A. 3. Social media: - Start the social media strategy on AA social media platforms (Creation of a Facebook event for people to RSVP and start an ‘online word of mouth’. Gaining fans on different platform (Facebook, Twitter, Pinterest, Instagram etc.) and consequently potential costumer. Plus encourage shares to spread contents.) - YouTube channel: Opening of a special YouTube channel with video posted regularly before the event with special appearance and message from the bands and music groups attending the show. 28
  29. 29. Tactics Strategy (3) 4. Media - YouTube pre-roll: Buy 15 seconds advertisement spots on YouTube to be aired before YouTube music videos. - Website Banners: Buy advertisement banner to be posted on music specialized websites. - Media buying: Buy a set of traditional media to advertise. Here is a comprehensive list of targeted support: • Print magazine, quarter page on rolling stone, L.A. weekly, L.A times, campus magazine (USC, SMC, Peperdine, UCLA, Marymound) • Billboards • Local radio spot (KiisFm, Alternative L.A) • Web radio spot (Pandora and iHeart Radio) 5. Traditional Marketing -Direct mail and email by using the data base of loyal customers to send out a flyer and online call to action to purchase.
  30. 30. Tactics Strategy (4) B) Tactics during the event: 1. Online during the event: - YouTube broadcast: Air and online and live broadcast on YouTube to attract worldwide viewers and create awareness of the brand all over the globe. A secondary goal would be to encourage them to interact and create discussions on social media platforms. 2. Live during the event: - The primary use of Twitter as part of the social festival with special features for exclusive content and services, Indeed Twitter will: • Allow everyone to connect to their own social community for meeting, interacting, having fun, experiencing, flirting, tweeting as well as much more. • Be accessible only through the Festival’s WiFi • Encourage the guests to communicate with the Information desk via #AASocialFestival hashtag. • Allow services to be requested by making use of the hashtag (#). Such as #Valet, #snack etc. • Allow the guests to register by making use of their Twitter accounts. • Allow order of #food directly to #foodtrucks of the festival by using twitter. • Allow order of #collectible to pick it up at the store later. • Facilitate guests to #flirt and find each others. • Give access to live information that will be send to the guests through mention on twitter. • Allow guests to book #VIPspace - Several photo booths will be set on the area of the festival, each photo would be send on Instagram and Twitter via this special access to the festival network. 30
  31. 31. Tactics Strategy (5) C) Tactics after the event: 1. PR -Press release: The goal will be to create newsworthy content such as article about the success of the festival as well as the amount of donation raised for the association. 2. Online content: - Video montage: The goal is to upload exclusive footage such as backstage videos, Best of live moment of the festival on Youtube channel and on the website of the event. - Photo album with the logo American Apparel: The goal is to create and album to be shared on facebook for the participants to tag themselves and share it to other people. - Positive Sentiment: the idea is to research via different social media tools such as ‘socialmention’, platform observation and analytics to give to the audience the percentage of positive impact the festival had on the partici- pants. 31
  32. 32. Budget Strategy A) Before: 1. PR: 3 persons working full time on PR and blog PR (writing and sending press releases and media kit, call journalists, reach out blog- gers...): $4,000 2. Ephemeral website: (Web designer, developer, graphic designer + domain name) $8,000 3. Social Media: (Community Manager) $6,000 4. App: (Development on IOS and Android) $10,000 5. SEO: (Using Adwords) $10,000 6. Media: a) ONLINE -Youtube pre-roll: ($30 per CPC) $60,000 -Website banners: ($15 per CPC) $30,000 - Web radio: (iHeart and Pandora) $25,000 b) TRADITONNAL MEDIA - Print Magazine: (Rolling Stones $70,000, LA Times $100,000, LA Weekly $80,000, Daily Bruin $500, Daily Trojan $500, Daily SMC $500, Daily Pepperdine $500, Daily Loyola $500.) - Billboards $150,000 - Radio: (Kiis FM $30,000, LA Alt $30,000, local campus radios $40,000) Total: $655,500 32
  33. 33. Budget Strategy (2) B) DURING: 1. Production of the entire event: (staff, security, stage, lighting, insurance) $200,000 2. Social Media (10 persons working on the social media manage- ment) $1,200 3. Wifi $5,000 Total: $206,200 C) AFTER: 1. PR: (1 person working full time for a month) $2,000 2. Social Media (Community Manager) $2,000 Total: $4,000 TOTAL: $865,700 33
  34. 34. Metrics Strategy How will we know if we are successful? In order to know if we were successful, we will measure the results of each of our tactics, using specific tools. First, the amount of tickets sold will tell American Apparel if the event itself was successful, and also from the revenue we will get from the ephemere stores during the event (selling our limited edition line). For the PR and blog PR, we can calculate the number of articles we’ve got from all the press releases and media kit we sent out. For Direct Mail, we will check the number of inquiries For the app, we will know from IOS and Android how many people download the app, how many people deleted it and also all the comments on it are accessible online. Same for the website, we will check the traffic. For all the social media tactics, we can measure the quantity and the quality of the results. Quantity: number of fans, number of comments, number of likes, number of sharing on each post related to the event Quality: By reading all the comments, we will figure it out if they are positive or not (using the tool Social Mention). For the media buying (radio, billboards, print magazine, pre-roll on Youtube, banners), the only way to know if we are successful is to reach out to a survey company and ask them to do a report. They will ask a panel and do some tests (brand recognition and event recognition). The results will help us if we will conduct the event for the year after, or in another city. 34
  35. 35. Calendar 35
  36. 36. Summary American Apparel, first born in 1997, started selling online and then opened a store in Los Angeles. They have integrated manufac- turing, distribution and retail in their fabric in downtown Los Angeles, which allows them more control, flexibility and faster turnout of their merchandise. They began by selling high quality T-shirts as a wholesaler, but now sell through their retail stores and wholesale operations. They own all American Apparel retail stores, which also include online stores, that sell garments throughout the U.S. and worldwide. Their workers are paid up to 50 times more that their competitors pay theirs, and they are conscious about the environment their carbon footprint. That is why they are implementing programs to improve and enrich the lives of their employees and protect the environment. American Apparel CEO, Dov Charney, is a controversial figure, whose actions sometimes reflect on the brand. However, even though American Apparel might be influenced by his actions, the brand does not seem to be declining in the success of sales. Our main goal for American Apparel is to create an event that will increase the brand image and its value, as well as reinforce the interactivity of the brand with the customer. Our SMART objectives for this brand are: 1. Create a successful event for AA fans with 10,000 attendees and generate more than 1million in revenue by the end of 2014 2. Increase AA online community by 20% by the end of 2014 3. Develop AA positive brand image by 80% by the end of 2014 The event would be specific for AA, since they have never done anything like this, but will be in the line with the brand promotion and will help increase the awareness and improve the image. The event itself would be of musical nature and will bring new prospects interested in the bands that will perform. In order to further improve American Apparel image we will connect the Music Festival with non-profit organization and donate all earnings to its cause, this will reinforce the feeling of already existing and loyal customers to the brand, and attract new ones who share similar interests. 36
  37. 37. Appendix Results from our survey hosted on Survey Monkey 37
  38. 38. Appendix Results from our survey hosted on Survey Monkey 38
  39. 39. Appendix Results from our survey hosted on Survey Monkey 39
  40. 40. Appendix Results from our survey hosted on Survey Monkey 40
  41. 41. Appendix Marketing Persona 41 Please meet Jenny, 24, the Social Girl Jenny was born and raised in Los Angeles, and just graduates from U.C.L.A with sociology major. Now, she dreams about discovering Europe and follows her favorite mantra, Carpe Diem. She is completely addicted to her iPhone 4 and admits to use the Facebook app more than 2 hours per day. She regularly texts her best friends to find out if they’ve heard of the popular party tonight, to show her dancing talent, or share the latest hot gos- sips. She is fun, attractive and adventurous. She is concerned about her health and love to go to yoga classes once a week and surf on week end. Her favorite drink is the green tea from Starbucks, and she loves discovering new restaurants on Yelp to make some reviews on her personal blog. When it comes to fashion, Jenny knows all the new trends from her bible, Cosmo. She likes to explore vintage clothes at Urban Outfitters but also like classy brands that she can find on Robertson Ave. Her favorite American Apparel’s clothes? Her red hoody to work out and her black body to go dance in the Hollywood Clubs. Please meet Tina, 26, the Rebel Tina was born in Connecticut, but had gone to high school and college in New York. She had adopted that city as her home and has no plans to leave it ever. She is the youngest of three children, and is known as a rebel because she constantly challenges her family decisions. Her parents wanted her to be a lawyer, but she realized she could never fit into that corporate world. She studies at School of Visual Arts and works part time at New Museum of Contemporary Art. She loves to travel and visit new cities, especial if they have abundant artistic content to offer. She can’t afford all those travels by herself so she uses her status of a student. She applies to exchanges and seminars that are sponsored by the college. Tina likes to express herself through her paintings, clothes and colorful hairstyles. She likes to spend her weekends in the parks sketching landscapes and people. Still her favorite pastime is spending hours in thrift shops searching for hidden fashion treasures. She is not a technology junky but she liked to keep up with the newest trends. She does have various social platform profiles such as Facebook, Instagram and Pinterest, and she uses them to promote her art, follow and support other artists. When she goes out she likes to look unique and trendy. Even though she doesn’t have a lot of money she can afford do buy at American Apparel. She mixes her fashion style with her art in order to provoke a reaction from people. Some one always stops her to tell her they like her flamboyant leggings or green and purple hair.
  42. 42. Appendix Marketing Persona 42 Please meet Lydia, 29, on Two Continents artist Lydia is a former drama student at Mountview Academy of Theater Arts. She resides between London and Los Angeles where she frequently performs in musicals and plays. Acting has enabled her to visit many cities in Europe and Asia. Her favorite country is Japan, that’s where she discovered her love for sushi. After her visit to Tokyo, she took a cooking course just so she could learn to make her favorite dish herself. She loves her hometown, London, but she prefers to spend winters in Los Angeles. Even thought she is proud English woman she can’t defend English weather.Los Angeles offers her a mixture of cultures, experiences and warmth she can’t find in England. Lydia works as an assistant at Theatre of Arts in Los Angeles. She is happy she can pass her passion to other people. She has a lot of friends on both continents and tries to stay in touch with them all the time. She is happy to be born in the age of advanced techno- logy that allows her to peruse her dream but still stay connected to her loved ones. She kept her keen sense of fashion which works well both in London and Los Angeles. She does not follow the mainstream trend; that’s why she likes to dress at American Apparel, but she happily combines it with her London style. Same as she expresses herself through her acting, she expresses herself through the clothes se wears. She is not the one to go party all the night, but prefers have dinner and lounge with her closest friends. Her dream is to have a drama school of her own! Please meet Raph, 25, The Foreign Student Raph is a 26 year old swiss guy, fun and dynamic. He moved to San Francisco to broad new horizons. He hopes to switch gears and give a little something extra to his starting career in business. He is a reader, hooked on the last best sellers, magazines and newspaper, yet he also enjoy new technologies and is hooked on Samsung devices. Twitter and Facebook rhythm his days, allowing him to stay in touch with his European peers. He is also found of wide-open spaces, he needs it to revitalize himself. He crossed the U.S backpacked several times and seeks new thrill and place to escape. Aside from its will of solitude, he enjoys meeting new people. His penchant for communication has helped him to build strong relationships with his classmate. He’d rather go to some jazzy, lounge bar than clubs, but he enjoys party with his close friends. He dress business casual to stay cool but to be always prepare in case of an unexpected and interesting encounter. His iTunes is full of classics, as well as new electro music and urban hits. To summarize, Raph has a double personality, jumping between the modern aspirant entrepreneur and the fleeing adventurer.
  43. 43. Appendix Marketing Persona 43 Please meet Michael, 26, The Tech Addict Michael is from New York. He is a graphic designer in a small advertising agency and dreams about having his own company in the big apple. He is constantly checking his emails on his iPhone 5S and like look for trends and inspirations on Twitter, Tumblr and art blogs. Since his childhood, Michael has always been considered as an « understood artist ». He enjoys strolling around exhibits at the MoMa to increase and develop his art knowledge. Michael is a film-lover and is particularly hooked by Woody Allen movies, because of its style and crazy scripts. When it comes to fashion, Michael would be consider as a « hipster ». Always aware of the new trends, Michael is not scared about being obser- ved in the street, and is always proud of his preppy look. With his Wayfarer RayBan glasses, skin tight squared shirt and his pair of skinny nicely cut jeans, Michael is always ready to meet new friends.
  44. 44. Appendix Non-Profit eligible for AA festival 44 Green Cross International Green Cross International is an environmental organization founded in 1993 by Mikhail Gorbachev. He was the first to address and link concepts of environmental protection, nuclear disarmament, border security concerns and development. GCI Mission “The mission of Green Cross International is to respond to the combined challenges of security, poverty and environmental degradation to ensure a sustainable and secure future. We seek solutions through dialo- gue, mediation and co-operation. To achieve this we: Promote legal, ethical and behavioral norms that ensure basic changes in the values, actions and attitudes of government, the private sector and civil society, necessary to develop a sustainable global community; Contribute to the prevention and resolution of conflicts arising from environmental degradation; Provide assistance to people affected by the environmental consequences of wars, conflicts and man made calamities.” 1 AA could get involved with GCI because they have similar attitudes toward nature. AA is also trying to be sustainable and decrees the pollution and waist during their production. GCI is worldwide known non-profit organization and many bands could be interested to support their cause. Due to their popularity they could attract more people to the festival and help spread the message. 1
  45. 45. Appendix Non-Profit eligible 45 Sierra Club The Sierra Club is one of the oldest, largest, and most influential grassroots environmen- tal organizations in the United States. It was founded on May 28, 1892, in San Fran- cisco, California, by the Scottish conservationist and preservationist John Muir, who became its first president. Sierra Club mission To explore, enjoy, and protect the wild places of the earth; To practice and promote the responsible use of the earth’s ecosystems and resources; To educate and enlist humanity to protect and restore the quality of the natural and human environment; and to use all lawful means to carry out these objectives.”2 Both Sierra Club and AA are Californian brands. Both brands are trying to create healthy society by applying education, organization and communication. AA is doing it for their employees and customers and Sierra Club for all the people and nature. Many Band s could support this organization due to the fact that it is all American brand trying to protect California’s nature, and the people who attend AA Music Festival would get the feeling that they contributed to preserving the surroundings in which they live.