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American Apparel Integrated Marketing Strategy

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American Apparel Integrated Marketing Strategy

  1. 1. Integrated Marketing Strategy Jieli He Sona Martirosian Christina L Oresajo Oguzhan Iskenderoglu Channon Chiu NYU MS Integrated Marketing
  2. 2. American Apparel is a vertically integrated manufacturer, distributor, and retailer of branded fashion and basic apparel. 1998 Founded as Wholesale Distributor in Los Angeles 2003 Opened First Retail Store in Los Angeles 2004 Launched E- Commerce website 2004 Opened first stores in Canada and Europe 2005 Opened stores in Asia, Latin America, Australia 2008 Sales started declining 2010 Reported highest Net Loss in company history 2011 Listed as one of “10 Brands that Won’t Be Around in 2012” Company Overview
  3. 3. • Vertically Integrated – All operations done in Downtown Los Angeles factory • “Made in the USA” • Use high quality fabrics • Sawing facility ranked #1 in size and value in western hemisphere • 53,000,000 garments produced in a year •Fare wages and benefits for employees • “Sweatshop Free” • Average factory worker earns $12 an hour •Environmentally friendly production • Use all residues of fabrics • Solar panels used in factory Production
  4. 4. • Wide range of products • For men, women, children, babies, pets • Clothing, hosiery, shoes, bags, accessories • Wide range of colors • Produce 499 styles in 614 colors • Style - simple basics mixed with retro inspired pieces • California Selects •Vintage clothing • Multibrand – products by other brands that fit the culture and look of the company • Watches by Swatch or Casio, nail polish by Nail Lacquer, water bottles by Bobble… • Varies based on culture of store location Product
  5. 5. • Retail • 285 stores worldwide • Locations in 20 countries • In metropolitan city centers •E-Commerce • AmericanApparel.net • Operating since 2004 • 10 localized store fronts • Wholesale • Operates from Los Angeles Headquarters • Sold to 10,000+ screen printers & specialty shops. Distribution
  6. 6. • “Young Achievers “ lifestage group on the Neilson Prizm •Young, metropolitan adults • Aged 20 to 32 • Culturally sophisticated • Creative • Independent-minded •Well educated -a bachelor’s degree or higher • Income between $50-90K per year •Tech savvy • Interested in world events •Fashion conscious •Shop online • Looking for well-designed, high-quality fashion essentials • Prefer companies with good corporate cultures Target Market
  7. 7. Political/Legal •The National Minimum Wage Act •The Working Time Regulations •The Employment Rights Act “The average sewer with experience at American Apparel is making about $25,000/yr, or $12 an hour, almost twice the federal minimum” Economical •Recession in 2008 •Another factor of declining share prices (from $15.80/a share to $1.55/a share in the same year. • Influencing shopping behavior towards apparel industry downwards by 36%. PESTEL Analysis Macro Environment
  8. 8. Social • Increased importance for consumers of the role of corporate social responsibility •Ability to easily access and spread information about a company through social media Macro Environment
  9. 9. Technological •E-commerce has been gradually replacing retail shopping. the apparel and accessories industry will eventually lead e-commerce sales with the predicted sales gain of 20.2%. •By 2016, it will reach $73 billion of US online retail e-commerce sales. Environmental As if 2011, American Apparel’s cost per pound of cotton went up to $2.34, from $.40- $.50 per pound in 2010. This was due primarily to the weather conditions that affected cotton producing companies and restrictions by governmental policies. Macro Environment
  10. 10. US Apparel Industry • 100, 000 stores in total • Combined annual revenue of $150 billion • Rapid shifts in fashion trends • Consumer demand volatility • High competitive pressure • Imports account for over 80% of domestic demand
  11. 11. • Competition is based on brand image, marketing, fashion design, quality, price, customer service and store location • Apparel products differ in function, and each product segment contributes to a certain portion of the industry revenue US Apparel Market
  12. 12. Market Growth • Industry revenue of women’s clothing stores • Annual growth of 3.4% over five years • Will reach $47.9 billion in 2017 • Industry revenue of men’s clothing stores • Increase at an annualized rate of 1% • Will reach $8.3 billion in 2017 • Store growth • 2% over the next five years • 56,879 locations.
  13. 13. Market Trends • Demographic shifts • 10% increase in US population • 8% increase in population of adults between the age of 25 and 44 • Baby-boomer generation will retire and be replaced by younger workforce • Retail prices for clothing will continue to decrease • More consumers will shop in specialty clothing stores • Clothing store sales increased nearly 10 percent between 2005 and 2010 • Sales at conventional department stores decreased 14 percent • Competition with international brands will increase in the upcoming years
  14. 14. Wholesale Net Profit 2011 Wholesale Sales 2011 •Large customer base in mass merchandisers such as Target, Wal-Mart, and Kohl’s •Hanes, Champion and L’eggs. •Active wear and wholesale T-shirt : Russell and Russell Athletic • Production takes place in overseas in Latin America. •Marketer and globally low-cost vertically- integrated manufacturer of quality branded basic apparel •Gold Toe and exclusive rights with Under Armor Wholesale Competitors
  15. 15. • 2,500 stores in 44 Markets that offer “Fashion and Quality at the Best Price • Celebrity clothing lines from Marni, David Beckham, and Madonna to name a few. • Over 400 stores • Considerably lower price, point makes Forever 21 a popular retail location for teens and young adults. • Urban Outfitters, Anthropologie, Free People, BHLDN and Terrain • “On some days, 20% of the company’s sales came from social media Retail Competitors 2011 Annual Sales 2011 Net Profit Margin
  16. 16. Strengths Weaknesses ● Vertical Integration ● “Made in the USA” ● Sweatshop free ● Strong supplier relationships ● Product quality ● Company owned manufacturing facilities in California ● Speed to market ● High fixed costs ● Negative brand perception ● Provocative advertising ● Financial restrictions ● Rapid store expansion ● Breath of line ● Leadership Opportunities Threats ● E-commerce ● Return to “basic” apparel (prune line offerings) ● International expansion ● Change brand perception through advertising ● Improve inventory management ● Improve financial margins ● Market Nicher ● High level of global competition ● Costs of raw materials increasing (cotton) ● Celebrity endorsements of competitive brands ● Economic market trends ● Government regulations SWOT
  17. 17. Marketing Mix Product Shirts, dresses, basics, denim, sweaters, jackets, shoes, bags, accessories, and cosmetic goods. For men, women, children, infants, and even pets. General product design: Iconic retro and vintage imagery. Place •Retail •285 stores in 20 countries, positioned accordingly to the target market. Exp: metropolitan areas and university sites. •Wholesale •A dozen wholesalers and 10,000 screen printers sold by call center in L.A •Online •Americanapparel.net since 2004 Price A competitive pricing strategy Promotion •Increasing awareness as well as supporting acquisition, retention and growth strategies. •Utilizes digital (online), print and outdoor advertisement to support retail and online sales. (Wholesale benefits too) •Approximately, 25% of advertisement spend was cut last year. Keeping reasonable prices despite cost of supplies and exchange rates.
  18. 18. ATTRIBUTES BENEFITS VALUES POSITIONING STATEMENT To the trend setting, young adult, American Apparel is the sweatshop free provider of high quality fashion basics and accessories that puts pride and value back in “Made in the USA” fashions. • Fashion Basics produced in the USA • Fast product turnover (vertical integration) • Corporate social responsibility-sweatshop free • Brand Recognition • One Stop shop • Multiple locations • I like to layer my outfit with a bright colored T- shirt • I do not mind paying more for sweatshop free clothing • I am against Forever 21 they are as bad as NIKE • I love my gadgets and must be the first to try the latest technology • Strong Brand Loyalty • Fashion Basics (T-shirts, jeans, dresses) • Multiple Brand Extension • International Brand • American Clothing company • Company owned Warehouse and Factory • Wholesaler • Retailer • Vertically Integrated • I support American Business • I shop in specialty stores like H&M, J Crew and Urban Outfitters • Having the latest fashionable apparel is important • I shop online and in store • I value quality apparel over low prices Brand Ladder and Positioning
  19. 19. Keys to Success and Key Issues Keys to Success •Quick to Market •Relationships with Suppliers •Company Owned Warehouse •Sweatshop free clothes “Made in the USA” •High Quality products Key Issues •Extensive product line •Provocative advertising /Negative brand perception •Difficulty repaying past debt •Declining profits •Lack of Cash flow
  20. 20. Marketing Objectives •Increase positive brand awareness and recognition by 25% over two years. •Expand E-commerce to increase online sales by 5% percent •Increase Market share by 1% within 2 years •Position American Apparel as a Market Nicher
  21. 21. Market Research • Focus groups • Current and perspective customers • Behavior towards marketing trends • Advertising concepts • Heart share
  22. 22. • Surveys • Facebook, receipts, email blasts • Brand association • Campaign effectiveness • Mind Share • Market share Market Research
  23. 23. Objective • Reposition American Apparel as the premier fashion basic retail brand – generating a 25% increase in positive awareness increase net sales by 5-10% Recommendation • Year long “Back to Basics” Campaign • Highlight the basic fashion pieces not the models • Highest quality basics that make fashion trendy, unique and versatile. • Focusing on heart share – increase in mind share will ultimately increase the current market share of American apparel in the next year. Media • Print • Out of Home • Store Fronts • Digital Revamp Brand Image
  24. 24. Current Advertising
  25. 25. In The Media
  26. 26. Sample Executions
  27. 27. Market Testing 6/1/2012 9/1/2012 Marketing Team Creative Executions 9/1/2012 11/1/2012 Creative Team Back to Basics Phase 1 11/1/2012 3/1/2013 Marketing Team Back to Basics Phase 2 3/1/2013 8/1/2013 Marketing Team Back to Basics Phase 3 9/1/2013 12/1/2013 Marketing Team Creative Schedule
  28. 28. Objective: Increase Sales from E-Commerce Recommendation: •Increase overall presence on the Internet •Increase digital advertising • Facebook Advertising •Grow social media presence ●Increase following on social networks ●Establish positive brand image in the blogosphere ●Implement online only sales •Optimize website & Facebook page for positive user experience Increase E-Commerce
  29. 29. • Consumers are more likely to visit company’s social profile than website for information •American Apparel has smallest social following and site traffic of all its competitors Social Media
  30. 30. Social Media Posts
  31. 31. Facebook Page Improvements
  32. 32. Accessing American Apparel E-Commerce site: Landing Page: Corporate Website Select Region Online Store Recommendation: Landing page: Online store featuring current offers. Website Improvements
  33. 33. • Contact 100 Fashion bloggers with high readership • Offer American Apparel merchandise to use in posts • Include link-backs to AmericanApparel.net Blogger Outreach
  34. 34. Prune Lines/ Inventory Controls Objective: Increase cash flow in order to minimize financial obligations and allocate more marketing dollars to raise net sales by 10%. Recommendation •Prune lines which house underperforming products •Based on Net sales and production cost •Multibrand Brand Extension •Improve Inventory Control System •Analyze current system •Sync sales forecasts with inventory re-order •Utilize technologies such as RFID •Market Nicher Strategy •Focus on basics
  35. 35. • Break Even within 2 year on implementation • Increase Net Sales by 17 % in two years • Increase and maintain Advertising spend by 20% for 2 years Financial Objectives
  36. 36. • The sales after campaigns would be higher than previous campaigns. • The sales of Q4 and Q3 will be higher than Q2 and Q1, because of the holiday season, which prompts sales. • The sales would be higher when compared to the same quarter in the last year. • The highest profits will show in 2012 Q4 and 2013 Q1, which follow the marketing action plans, and the sales will remain the same in the following quarters because of the after effect of action plans. Sales Projections
  37. 37. Because our marketing actions mainly focus on social media and advertising, we estimate that online sales will have the most rapid growth and followed by retail sales. Sales Projections
  38. 38. Profit & Loss Statement
  39. 39. Task Start By Complete By Department Marketing Plan Completion 2/7/2012 5/7/2012 Marketing Team Recommendation 1 Line Pruning Research 6/1/2012 1/1/2013 Marketing/Accounting Department Begin Line 1/1/2013 6/1/2013 Marketing Department/Sales Recommendation 2 Increase Digital Advertising 6/1/2012 12/1/2013 Marketing Team Facebook Advertising 6/1/2012 12/1/2013 Marketing Team Increase Social Media Presence 6/1/2012 ongoing Marketing Team/ Web Design Team Blogger Outreach 6/1/2012 9/1/2012 Marketing Team Improvements to Website 6/1/2012 ongoing Marketing/Web Design Team Recommendation 3 Market Testing 6/1/2012 9/1/2012 Marketing Team Creative Executions 9/1/2012 11/1/2012 Creative Team Back to Basics Phase 1 11/1/2012 3/1/2013 Marketing Team Back to Basics Phase 2 3/1/2013 8/1/2013 Marketing Team Back to Basics Phase 3 9/1/2013 12/1/2013 Marketing Team Budget Allocation (Dollars in thousands) Line Pruning $1,630 Digital Advertising $4,500 Facebook Advertising $3,000 Other Social Media Advertising $1,500 Blogger Outreaching $1,000 Improvement to Website $250 Market Testing for Back to Basics $500 Execution of Back to Basics $5,500 Total $17,880 Implementation Schedule
  40. 40. Monitoring & Controls • Net Sales • Expenses • Heart Share • Mind Share • Market Share • Conversions Contingency Planning Difficulties and Risks • Our recommendation to prune underperforming lines, runs the risk of not recouping profit or added to cash • A substantial increase in market share amongst the niche brands will be difficult as the threat of competition is high Monitoring and Control
  41. 41. Questions

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