HULT International Business School22860004000500International MarketingProduct Launch Victoria’s Secret UK45720045720052578003072130Presented by: Gaurav Agarwal, Guillermo Anaya, Marieta Bencheva, Olga Lukanina, Mathias Rieger & Maria StenquistLecturer: DR. Agnes Nairn14 January 2011<br />Table of contents<br /> TOC o "1-3" h z u Executive Summary PAGEREF _Toc156485055 h 3Introduction PAGEREF _Toc156485056 h 3Primary market research PAGEREF _Toc156485057 h 4Secondary market research PAGEREF _Toc156485058 h 4Marketing Strategy PAGEREF _Toc156485059 h 4UK Launch PAGEREF _Toc156485060 h 8Launch at Bond Street Flagship Store PAGEREF _Toc156485061 h 11Contingency plan PAGEREF _Toc156485062 h 11Recommendations PAGEREF _Toc156485063 h 11Conclusion PAGEREF _Toc156485064 h 12Appendix PAGEREF _Toc156485065 h 12<br />Executive Summary<br />Victoria's Secret is a globally recognized brand with its stunning Victoria’s Secret Angels models and signature pink color of choice for everything from logo to store décor. Founded in 1977 in San Francisco, Victoria's Secret has become a leader in the intimate apparel industry where a dazzling assortment of lingerie, beauty products, and loungewear can be purchased. The fashion shows, models, stores, and products are the favorites of men and women alike. Nonetheless, Victoria’s Secret stores could only be found throughout the U.S. until very recently with new introductions in Canada, Kuwait and the United Arab Emirates. Despite the on-going global economic recession, Victoria’s Secret is continuing with its growth strategy. Looking at the UK as the next destination in Victoria’s Secret global expansion strategy, London is posed to be a key market. As a shopping destination with name-brands dominating the high-street, London is a prime location. <br />In our research we have chosen to take this highly successful American company and analyze the viability of introducing the brand into the UK market. In the process there is emphasis on focusing on the customer, and our primary research seeks to identify customer needs, and how Victoria’s Secret can offer a differentiated brand to the UK intimate apparel industry. After taking a look at the UK market and competitors in the intimate apparel industry, the short and long term objectives of a proposed marketing strategy will be addressed. The strategy aims to take a US-based company and transfer it to a different market and create brand awareness and build brand equity in the UK market. Victoria’s Secret has built a loyal customer base in the US, and accomplishing this in the UK is discussed in the advertising strategy and SWOT Analysis. In the final part of the paper, a UK launch is proposed, and a Bond Street flagship store introduced in London. In conclusion recommendations are given to justify whether the UK is a suitable market to introduce Victoria’s Secret. <br />Introduction<br />Background<br />Victoria's Secret is the largest subsidiary of Limited Brands, which is one of the largest specialty retailers in the United States. The Victoria’s Secret brand is North America's #1 specialty retailer of women's intimate apparel, operating approximately 1,040 largely mall-based independent stores throughout the U.S. and Canada. Limited Brands acquired Canada’s top intimate apparel brand, La Senza, in 2009. La Senza branded products are sold both at Victoria’s Secret stores, as well as 250 stand-alone stores in Canada. Under the parent company of Limited Brands include other well-known beauty and home-accessories brands such as Bath and Body Works, White Barn Candle Company, and C.O. Bigelow. Product offerings including bras, panties, hosiery, swimwear, loungewear, and more are sold under the Victoria's Secret brand and grouped in collections such as Dream Angels and Very Sexy. Many of Victoria's Secret stores also sell beauty products under Victoria’s Secret Beauty. Its sister company, Victoria's Secret Direct, mails about 400 million of its glossy catalogs per year, with a broad offering of intimate apparel, women's clothing, and footwear.<br />Limited Brand's chairman Leslie Wexner has said that he wants to see Victoria's Secret blossom into a $10 billion megabrand, and has global aspirations for the business. The recent global financial crisis and decline in consumer confidence have softened the intended aggressive growth strategy of stores to capture higher global market share in the intimate apparel industry. Total net sales at Victoria's Secret, which includes Victoria's Secret Direct and La Senza, were $5.3 billion in 2009, a 5% decline from 2008. To appeal to younger women and the collegiate market, Victoria’s Secret launched Pink in 2004. Robust sales of the Pink brand led Victoria's Secret Stores to establish freestanding Pink stores in the U.S. and Canada. Also, in partnership with Collegiate Licensing Co., Pink in June 2008 launched a line of collegiate co-branded merchandise (featuring the name of 33 universities on a selection of signature products). <br />Primary market research<br />During the initial discussion of choosing a foreign product/brand to introduce to the U.K. a group member raised the issue of “well, isn’t talking about underwear, well, a bit uncomfortable?” We set out to gather insight and to uncover just how uncomfortable/comfortable the ‘underwear market’ is in the UK, is and discover how current needs are being met. <br />Our primary market research is divided into two main sections: an online survey component (please see appendix), and a visit to the high-street to interview individuals (please see link in appendix). We were slightly concerned it might be hard to flag down individuals to spend a few moments discussing personal preferences on a somewhat sensitive subject—intimate apparel. Luckily we found several takers (although many declined) to speak to us regarding the current intimate apparel industry offerings in the UK, and personal needs. A dual online survey and in-person approach was taken to see if there would be any alignment/disconnect between the two <br />methods in responses. Furthermore, we wanted to see if we could gather whether or not there would be difference with people giving their opinion on an online survey versus while consumers are on the high-street making purchase decisions. Our group did this while keeping the buying decision process in mind. Many questions on the survey were designed to see if we could extract any insight into the consumer buying process, and identify behavior drivers and any patterns. <br />After receiving results of our online survey and reviewing the responses captured on the busy shopping street, we were pleased to discover interesting parallels from the feedback by participants to the other areas of research for the project including the secondary market research and marketing strategy. A summary of our findings with our survey/prospective customer interviews is below.<br />Key Needs of Customers<br />The majority of respondents were female, and in the age bracket of 18-25. Regarding the ‘problem recognition’ stage, the respondents were split between deciding to buy intimate apparel “only when I need it” and “whenever I feel like shopping” (Q5). Comfort ranked the highest in primary decision driver among customers on the street, but on the survey both comfort and style ranked equally in importance (Q3). Although brand ranked lower for primary decision driver, and customers say they are fairly price sensitive, when given a selection of ‘brands’ to choose from, a higher-end brand (Calvin Klein) ranked the highest. Among products most shopped for, bras ranked the highest (Q7). The majority prefers to shop in individual stores, and customers currently meet their needs by frequenting department and individual lingerie brand stores. <br />Advantages of Victoria’s Secret<br />Currently in the market there are department stores and a selection of small individual high-street brands to choose from. The department stores are not male-friendly environments to shop for a significant others, and the experience of shopping for intimate apparel is unexciting. In developing Victoria’s Secret store layouts, providing a comfortable atmosphere for male (and female) shoppers to browse in an unpretentious environment was a key component. Since UK shoppers prefer to shop in a store, a well-placed flagship store would do well to meet customer needs. Additionally, Victoria’s Secret best selling products are bras, and the company is known for developing new technology and innovation in materials, shape, fit, and style among bra offerings. In the survey results, the brand awareness for Victoria’s Secret was very high (Q8), and many participants owned products from Victoria’s Secret, the majority obtained while shopping abroad (Q9). Favorable reception for a Victoria’s Secret UK launch, with 40% of respondents selecting ‘very likely’ to shop at a Victoria’s Secret store in the UK. According to our secondary research (below) women no longer are satisfied with meeting basic underwear needs, and department stores are struggling to meet these changing needs. Our primary research supports this as well, where style and brand are important decision factors. Women want to be comfortable, but want feel sexy and stylish on an everyday basis as well. Victoria’s Secret fills the gap of consumers wishing to escape the homogenous department store environment, and find intimate apparel in a fresh environment that marries functionality and style. <br />Victoria’s Secret offers products that are comfortable, stylish, and reasonably priced in a bright and friendly environment. It’s about time UK women became a bit more comfortable in their own skin. <br />Secondary market research<br />UK Intimate Apparel Market:<br />The economy in the UK is the world’s sixth largest national economy measured by both the nominal GDP and purchasing power parity. The UK is one of the world’s globalized countries and London is one of the world’s top shopping destinations that attract discerning shoppers and large numbers of tourists to the shopping districts. British women are the second biggest consumers of lingerie and intimate apparel in Europe, after French women. For expanding Victoria’s Secret stores outside North America, the U.K., especially London, is a prime location based on many attractive aspects. Firstly, the Gross Value Added is the highest in the U.K. in the area of Greater London with nearly £35,000/capita. Recent data showed that the average weekly pay for a full-time worker has grown by 3.7% from last year.<br />Despite the global recession causing a marked dent in global retail sales, the lingerie and intimate apparel industry has benefited from the perspective of women viewing intimate apparel as a relatively inexpensive pick-me-up, as well as a necessary everyday product. “The total underwear market was worth £2.57bn in 2009 and is expected to increase slightly to reach £2.59bn by the end of this year,” according to Mintel. The women's sector performed much better than the men's, with sales rising 9% between 2004 and 2009, compared with a 1% decline in men's underwear over the same period.” <br />Due to continual development of the fashion and market trends, consumer behavior and preferences have shapes as well. Women are no longer solely interested in the basic function of underwear--which is providing comfort and utilizing necessity. Nowadays, ladies are looking at style, design, shape, material, as well as functionality that make them look pretty for everyday and for specific occasions. As the industry began focusing on consumer insight and tailoring products to meet the needs of women, the intimate apparel industry became increasingly crowded with players. Previously, stuffy department store retailers traditionally dominated the industry, and now both the high street and online arena are flooded with lingerie specialists ranging from very high-end to bargain providers. Supermarkets as well are looking to expanding and stealing market share by offering designer style products at a discount to high street prices. According to U.K. statistics “Marks &Spencer is the leading player in the lingerie industry and has confirmed its status through increasing its market share.” Marks & Spencer has succeeded in building on its formidable position as the retailer of choice for many shoppers' underwear needs. It has the biggest share of own-label, commanding 26% of the lingerie market and 25% of men's underwear.” <br />The main competitors Victoria’s Secret will face on the high street include La Senza, Marks & Spencer (among other department stores), BHS, and designer brands in the UK. The average price across all lingerie products varies from £18 starting with BHS up to £35 at John Lewis. Two more premium brand competitors are Calvin Klein and La Perla which price their lingerie products at a higher average price starting from £50 at Calvin Klein up to £110 at La Perla.<br />Based on the research and constant market trends we can see that lingerie products are definitely in demand, across high-low price offerings. The Successes of online selling does make the market quite price sensitive. <br />Marketing Strategy<br />Long and short term objectives<br />Our marketing strategy will consist of short terms goals, which will concentrate on life span from one to five years and our long term goals, will concentrate on our mission looking at the future life span from five to ten years. Short term goals will mainly be to create brand awareness in the UK market. By the help of varies marketing communication campaigns such as fashions shows, Victoria Secret’s angels (models), PR campaigns and press conferences, master classes will create a Buzz in the market. In addition to the shows and events we will use traditional below the line and above the line marketing campaigns, which will help us to facilitate successful launch and enhance brand awareness. Marketing activities will provides us a bridge between online selling and actual presence in the UK Market. Large amount from our sales is coming from online selling; therefore, our potential clients already know about the brand, our role would be to create awareness of the actual launch of the first shop in the UK market. Second short term objective would be to create a stable demand for our products and to achieve a breakeven point of our initial investment. In addition, we would like further to analyze another potential market, which is man segment. We see a great opportunity to look closer at a men’s segment for the products. A lot of women are interested when members of the opposite sex are able to buy the lingerie for them for the special occasions such as Christmas, Valentine’s Day, Birthdays, seasonal occasions and Wedding presents, anniversaries. Since we are going to follow the standards and of the main Victoria’s Secrets shops in USA, it’s going to be nice the red sofas and the wooden-paneled walls as well as frames for hanging pairs of the various styles and shapes with sizes for the customer to browse through. Therefore, not only ladies will feel comfortable like experience of shopping in our shop, but men as well will like the whole experience enjoyable and special, different from a simple shopping. Skilled professional staff with be available to help men any enquires and questions<br />Long-term goal is mainly to be a dominant player in the UK lingerie market and capture significant market share. In addition, we would definitely like to expand our operations in the UK market by opening more retail shops/ flagship stores starting first from strategic planning of several different regions in London. If we would have a stable growth and our market share goes up, we would continue to expand in major UK cities such as Manchester, Liverpool, Birmingham, Leeds. Having said this, expansion can be even further into closed regions such as Scotland and Ireland in the next 10 years.<br />Customer Value/Proposition<br />In order to be successful in the competitive market we understand that having a right product is not enough. Nowadays you need to focus more on the voice of the customer approach, listening what customer needs and wants are. Therefore, we are creation competitive customer value with our product offering. Having said that lets analyze Victoria’s Secret value proposition:<br />Victoria’s Secret products:<br />Bras, panties, Sleep & Lounge, Clothing, Shoes, Swim, Beauty, Gifts, PINK<br />Target customers:<br />Normal women that seek fashion, glamour, as well as comfort. Meeting the needs of aspiration and lifestyle seekers alike.<br />Benefits: <br />Provides sexy, sophisticated and young products that spice up everyday life<br />Price:<br />20 % premium<br />Value Proposition:<br />Fashionable & glamorous lingerie and apparel every lady wants to have provided at a moderately premium-branded price.<br />Segmentation<br />From our primary and secondary research, as well as looking at the current strategy in the US, we have decided to focus efforts on targeting one main segment.<br /><ul><li>Main segment- women 18-35 years, who are into fashion and latest trends. Women who
follow the latest fashion trends and who want to look gorgeous and sexy everyday.
Teenage/college girls 18-24 years would be targeted with the brand PINK. Mostly it is a cheaper brand, with more colors and cheaper yet comfortable cotton materials. A lot of teenage girls can afford it and be stylish and the same time can feel that they are a part of big brand Victoria’s Secret and associate themselves with aspirations such as Victoria’s Secrets Angels.</li></ul>Positioning vis a vis competitors<br />In order to differentia our company and products from our main competitors we will position ourselves in the UK market in alliance with global position and mission of the Victoria’s Secret brand. According to the Victoria’s Secret mission statement it is “focused on lingerie, beauty and personal care that make customers feel sexy, sophisticated and forever young”. (http://www.limitedbrands.com/our_company/about_us/default.aspx). We are trying to make the brand of Forever Young generation; therefore, a teenage image girl can shop in our store, a single working lady and well as a mother. Each one of them wants to look special, wants to look gorgeous and stylish wearing latest trends. Nevertheless, there would be some extra point each one are looking in additional, some of them would be more or less price sensitive, some of them would look for more comfort rather then sexy style. Therefore, we have different product lines/brands in order to satisfy each and every need and want. <br /> One of the main differentiation points of Victoria’ Secret is using the concept of Angels (Models) as ambassadors of the brand, which represents fashion, beauty and sexy style and latest trends in the market. Company tries to use celebrity endorsement strategy, therefore, every time a woman wears Victoria’ Secret’s lingerie she associates herself with the image of sexy and gorgeous Angels who are always the first in the market with the latest trends and designs. It is the whole experience and every time you wear the underwear, you feel special, you feel a Lady. <br />In addition not all of our competitors are have such a developed history of online selling as Victoria’s Secret.<br />Moreover, our online and hard copy catalogues also differentiate ourselves from the competitors. <br />Last but not least, we have more products in our stores in comparison to our competitors. In addition to lingerie products our brand carries the following products: dazzling assortment of intimate apparel, beauty products, sleepwear, hosiery, clothing, beauty, gifts and PINK brand. <br /><ul><li>Cannibalization effect:
Since La Senza and Victoria’s Secret are the part of one company Limited Brands introducing Victoria’s to the UK market might cannibalize La Senza. Even though Victoria’s Secret considered as a premium brand and has different positioning strategy in the market it can significantly decrease La Senza’s market share.</li></ul>Marketing Mix Details<br />In order to launch the product in the new market and be successful we need to analyze essential part of the marketing strategy, which is 4P or Marketing Mix. Since Victoria’s Secret is one of the brands of the parent company Limited Brands Inc., we are going to launch it in the UK market as a franchise and follow the corporate guidelines with slide modification to the local UK market. These four elements are self-reinforcing and, when coordinated, increase the sales appeal of services. All four Ps must reinforce the image of Victoria’s Secret to the potential customer.<br />Product<br />As far the product concerned our main focus in the UK market will be lingerie products. Various Victoria’s Secret collections will be offered, such as:<br /><ul><li>Angels By Victoria's Secret® Collection, Body By Victoria®, Signature Cotton, Very Sexy, Victoria's Secret PINK, The Miracle Bra, Second Skin Satin, Glamour By Victoria's Secret Such A Flirt</li></ul>In order to adapt the product to the UK market, we will modify our offering. For example, we will offer panties and bras with UK flag or logos such as “With love from UK” the same can be done when with rapping papers for the gifts with the Victoria’s Secret logos and UK flag. The bags with also carry Victoria’s Secret branding creative visuals as well as the different styles such as: “With love from UK”, “Victoria’s Secret UK” signed my Angels (models).<br />Apart from lingerie products, Victoria’s Secret Store will carry other products such as:<br /><ul><li>Sleep & Lounge, Clothing, Shoes, Swim, Beauty, Sale &Specials, Gifts, PINK</li></ul>However, in order to see the purchase behaviors of the UK customer, we have decided to focus on lingerie market and sell only best selling products from the other above products offering. Having said that, consumers still would be able to have the access to complete line of all the products from our online catalogue as well as hard copies available in the store itself. After a few months, we will gather enough consumer’s inside information with the loyalty cards and sales analysis, therefore, we will be able to add extra products if necessary to our store. <br />Place <br />Since Victoria’s Secret position its products globally as the premium class products, which represent an aspiration life style — a way of life, we have decided to launch our products in the flagship store. The flagship store will be located in the central London’s location for shopping Bond Street. We have decided to choose this central location for the several reasons: great brand explosion and higher potential of sales from local people as well as from tourists. Lingerie garments would also be offered through the catalog and online store.<br />The concept of the store will be base on corporate structure of the main headquarter store in the USA. The design of the store will have red sofas and the wooden-paneled walls in addition to frames for hanging pairs of the lingerie of the various styles and shapes with sizes for the customer to browse through. As most of the retail stores our store will have inventory room that would carry the stock of the lingerie products for all ages and sizes. In terms of the distribution channels, our products will be sources from the primary manufacturing plans for the US market, which is China.<br />Price <br />The price Victoria’s Secret will charge for its lingerie products depends on the different product lines and series. Compared to our main competitors we will charge a higher price than La Senza, BHS, Marks & Spencer, but lower than La Perla and Calvin Klein. Victoria’s Secret offers high quality branded products and commands a higher price than standard run-of-the-mill products. The brand awareness and recognition is very high. The average price across all products will be £40 which is less than Calvin Klein’s and La Perla’s average price given the fact that these two companies offer designer products at very high prices. <br />To break-even Victoria Secret needs to sell at least 25,000 items per month. The total costs amount to £1,000,000 per month consisting of the fixed cost, the rent, and the variable cost the salaries, insurances and administrative costs. Concluding, Victoria Secret needs to sell 300,000 items per year to break even which is expected to be reached in the first couple of month.<br /><ul><li>Promotion </li></ul>As a part a of our launch program we will continue with the strategy later on. We will advertise our product in the Internet (Social media: Face book and you tube), busses on Fashion channel, Magazines, Bill Boards, Internet. The cost of the advertising in described in details in the launch part as well as the financial statement graph. <br />http://www.limitedbrands.com/our_brands/BrandOverview.aspx<br />http://vsallaccess.victoriassecret.com<br />Oxford St. Customer insides findings:<br />As a part of our primary research we have decided to compare results of actual survey facilitated online and several questions asked to the customers right at the point of sale in one of the busiest shopping streets in London-Oxford Street. Since we have not been allowed to ask the questions and take the videos inside the shops of our competitors (La Senza & Intimisimi), we have conducted the interview right after the purchase, outside the stores.<br />Findings: <br />All the three interviews generated similar results if not identical. Ladies of the age group 18-30 have pointed that their primary purchase decision have been based on price dimension rather than style/comfort/trends, two out of three answered that they would chooses Mark & Spenser if they consider shopping for lingerie products in London. All of them have heard about Victoria Secret, one of the asked ladies have been even wearing the product and purchased it in the USA. At the end of the interview all ladies showed the enthusiasm of buying Victoria’s Secret if the brand would come to the UK market, which indicated that with the brand awareness and wiliness to buy the product price would not be the issue. Since Victoria’s Secret is only 10% higher than Mark & Spenser, we assuming that those ladies can easily switch their purchasing habit from our competitor and try our product.<br />The Launch<br />The launch of the Victoria Secret London will include a range of different elements and activities that will allow us to reach our targeted audience. Before the actual launch we will do a traditional marketing campaign consisting of a TV advertisement on Fashion Channel and Magazine ad placement. For the launch, the focus for spreading awareness will be through the use of social media and guerrilla marketing. The launch will focus on opening up a contest to UK girls between the ages of 18-28 years old with the chance to be a part of the ‘Runway Angels’ experience. The judge will be Marisa Lee Bertetta, a fashion industry expert. This will be an opportunity for the UK audience to get personally involved with the brand. The launch will primarily make use of viral marketing with Twitter, Facebook, and a specialized section of the Victoria’s Secret website. To generate excitement, people can go online and see the video’s that model applicants post up on Youtube. These videos will be used in evaluating applicants. <br />Out of tall the participants, 15 top fashion models will be selected for magazines, a chance to be part of a special “UK launch” Victoria’s Secret 2012 calendar (after the Christmas 2011 launch). The focal point of the launch is a fashion show hosted at the Bond Street store which will be broadcasted live on Fashion Channel. Guerilla marketing of posting up stickers all over London with the question “Become an Angel?” and “Where is Victoria?” with teams going out and interviewing potential girl applicants to create buzz. This will give popularity and awareness among the audience in the UK and it will generate interest in young girls for Victoria’s Secret. By attracting younger females, this will build brand loyalty. <br />These elements are:<br />Fashion show program announcement on Fashion Channel and fashion show broadcast.<br />Website and fashion show announced in brochures and ads to be found on taxis <br />Social media: Facebook profile and Youtube.<br />Guerilla Marketing: flood streets of London to create buzz.<br />Promotion On Fashion magazine by Victoria Secret. <br />Victoria Secret application for I-phone and I-pad to keep up-to-date with launch, fashion show, and <br /><ul><li>Budget for the Marketing Launch</li></ul>The total of the elements included in the launch program will be held for a period of 2 months from the before the launch so this budget shows the total amount for that period of time:<br />FASHION SHOW COMPLETE EXPERIENCE<br />TypeTotal25 Models show with 1000 guestsModels- £10 mShow- £ 313,000,000Fashion channel broadcast2,000,000Billboards£400/week per board100 billboards for 8 weeks320,000Bus stops ads£150/week per bus stop100 bus stops for 8 weeks120,000TAXI ads£300/ week per taxi150 taxis for 8 weeks360,000I-phone application£200/ month400Radio£2000/channel3 channels for 8 weeks48,000Web site design£10,00010,000Magazine cost- London magazine£60,000/per edition2 months120,000TOTAL15,978,400<br />The Total Marketing Launch budget will be £15,978,400.<br /><ul><li>Internal marketing details.</li></ul>Motivation among Company employee by involveing them for suggestion or new strategies is important part of Marketing plan.<br />And they are, meeting between managers every week or 2 weeks<br />Training and team buliding activies.<br />Vouchers of 50%-60% for friends and family.<br />Newsletters.<br />Motivation among Company employee by involving them for suggestion or new strategies is important part of marketing plan.<br />TotalAverage Per storeAverage Per FtSq.ExpensesCompany-wide£1,038,122,870.40£223,258.95£60.44Sq. Ft. projected15000Sq. Mts.1394Average rentcost Bond Street (per sq. mts)£6,500.00Rent Per Month£2,265,250.00Total Administrative expenses£906,629.19<br />And they are, meeting between managers every week or 2 weeks<br />Training and team building activities.<br />Vouchers of 50%-60% for friends and family.<br />Newsletters.<br />LAUNCH AT BOND STREET FLAGSHIP STORE<br />Based on the last financial reports, the rents and administrative expenses are approximate in dollars and have been converted in pounds ($1.6/£1).<br />Considering the numbers above, the working capital need to consider at least two month so for coverage. The sales per month at least has to reach the amount £3,171,879.19 in order to cover the initial expenses not taking.<br />In a pessimist scenario that the sales are not reached the coverage of two months at least should be enough to run the contingency plan that will give enough time to the market to react. The first step to take will be to reduce the costs of the retail store, by firing staff, since the sales are not less employees are required so that will significantly impact in the administrative cost per month. At the same time with the launch go f the brand the loyalty program will target potential and recurrent clients, that will make easier to target them in future sales and offers.<br />Part of the first contingency plan will be to recall the loyalty members by massive media, with special offers, since they already show interest for the brand will incentives the sales, in the UK the potential markets so we will expect at least the 2.5% of response for the launching period being optimistic that will cover and exceed the operating cost of the first months. Since in the US 27% of the sales are made online, that is a resource that we should take in consideration for the first contingency plan as well by promoting the usage of the webpage to increase the sales.<br />Contingency plan<br />Part of the first contingency plan will be re call all the loyalty member by massive media, with special offers, since they already show interest for the brand will incentives the sales, in the UK the potential market is £2.8 bn, so we will expect at least the 2.5%-3% of response for the launching period being optimistic that will cover and exceed the operating cost for the first months. That means that we can target £84m sales. For the period of 9 years in our budgeting plan we are assuming on Year 7- Year 9 sales between £70- £160m, as for the previous years the sales represent less than 2%. <br />ince in the USA 27% of the sales are made online, that is a resource that we should take in consideration for the first contingency plan as well by promoting the usage of the web page to increase the sales.<br />Recommendations<br />We made a thorough budgeting for the next 9 years. As detailed in the appendix (exhibit 3) it can be seen that Victoria’s Secret UK will achieve losses for the next 4 years, followed by rapid growth in the latter 5 years. The Net Present Value is negative for the first 4 years, followed by positive NPV in the latter 5 years. The result is that, as the company has borrowed £30,000,000 at 6% per year. The principal and the interest will be repaid for the first 5 years. In addition to that more than £15,000,000 will be spent on Initial Marketing Launch Campaign, which results in our losses for the first years.<br />We recommend that after the 5th year of Victoria’s Secret in UK, we can focus on opening more shops around UK and Europe. The reason for that is Victoria’s Secret is a popular and widespread brand and as we will have the funding for the developing more shops – we should work on that direction.<br />Conclusion<br />Works Cited<br />Appendix<br />Exhibit 1<br />Basic Store Facts* Net sales (millions) $5,307Comparable store sales (6%)Number of stores 1,040Selling square feet 6,063,000Sales per average selling square foot $581Average store size (selling square feet) 5,830<br />*As of January 30, 2010<br />**The above information is based on U.S. Victoria's Secret Stores figures, and was used to calculate the budget for the U.K. launch as well as our initial budget projections (and breakeven analysis) for Victoria's Secret operations in the United Kingdom.<br />Primary Market Research: U.K. Consumer Survey<br />NOTE: The participants that completed this survey did so anonymously through the survey our group created on Qualtrics. This survey was generated and distributed before our knowledge of a ‘consent survey’ being posted on Moodle (HULT Online). This survey was sent out to known friends, family, and work colleagues throughout the U.K. The personal details of whom took each particular survey are unknown, as our group chose to use the ‘anonymous’ settings provided as an option in creating the survey using Qualtrics software.<br />-Below are the survey questions along with the distribution results of the survey. These results, along with feedback of those individuals interviewed on the street are used in our primary market research section outlined above. <br />Link to primary research video:<br />http://www.youtube.com/watch?v=1xIDh_cqHTk<br />Consent to videotape for the sole purpose of this HULT International Business School project was asked of individuals. Several individuals declined being video taped, but were still asked questions verbally on the street, and their input is reflected in our primary market analysis section.<br />Exhibit 2<br />VS Marketing Survey<br />1. What is your Gender?<br />#AnswerResponse%1Male415%2Female2385%Total27100%<br />StatisticValueMin Value1Max Value2Mean1.85Variance0.13Standard Deviation0.36Total Responses27<br />2. When shopping for intimate apparel products, who do you mainly shop for?<br />#AnswerResponse%1Yourself2593%2A significant other (e.g. wife/girlfriend)27%3relative00%4friend(s)00%Total27100%<br />StatisticValueMin Value1Max Value2Mean1.07Variance0.07Standard Deviation0.27Total Responses27<br />3. When you shop for your intimate apparel products what is your primary decision driver?<br />#AnswerResponse%1Brand519%2Price415%3Style/Fashion Trends933%4Comfort933%Total27100%<br />StatisticValueMin Value1Max Value4Mean2.81Variance1.23Standard Deviation1.11Total Responses27<br />4. Where is the most convenient purchase method when shopping for intimate apparel?<br />#AnswerResponse%1Flagship/Individual Brand Stores1454%2Department Stores831%3Discount Retail Stores28%4Online28%5Catalog/Mailings00%Total26100%<br />StatisticValueMin Value1Max Value4Mean1.69Variance0.86Standard Deviation0.93Total Responses26<br />5. When do you buy intimate apparel products?<br />#AnswerResponse%1For Holiday/Special Occasions28%2Everyday wear312%3Only when I need it1144%4Whenever I feel like shopping936%5Seasonal/Trends00%Total25100%<br />StatisticValueMin Value1Max Value4Mean3.08Variance0.83Standard Deviation0.91Total Responses25<br />6. If you are considering buying intimate apparel in the UK, what would be your first choice?<br />#AnswerResponse%1Calvin Klein744%2La Senza425%3Marks & Spencer319%4La Perla213%Total16100%<br />StatisticValueMin Value1Max Value4Mean2.00Variance1.20Standard Deviation1.10Total Responses16<br />7. Among intimate apparel products, what do you mostly shop for?<br />#AnswerResponse%1Bras1350%2Panties623%3Sleep & Lounge519%4Beauty and Accessories28%Total26100%<br />StatisticValueMin Value1Max Value4Mean1.85Variance1.02Standard Deviation1.01Total Responses26<br />8. Have you ever heard about Victoria's Secret?<br />#AnswerResponse%1Yes, many times before2181%2Yes, a few times before28%3Yes, vaguely14%4No28%Total26100%<br />StatisticValueMin Value1Max Value4Mean1.38Variance0.81Standard Deviation0.90Total Responses26<br />9. Do you posses any products from Victoria's Secret? if Yes where have you purchased it?<br />#AnswerResponse%1Abroad, while traveling/living1478%2Online16%3Received as a gift/present317%Total18100%<br />StatisticValueMin Value1Max Value3Mean1.39Variance0.60Standard Deviation0.78Total Responses18<br />10. If Victoria's Secret came to the UK, how likely would you shop at Victoria's Secret?<br />#QuestionVery UnlikelyUnlikelySomewhat UnlikelyUndecidedSomewhat LikelyLikelyVery LikelyResponsesMean1Choose 111044511265.62<br />StatisticChoose 1Min Value1Max Value7Mean5.62Variance2.73Standard Deviation1.65Total Responses26<br />11. If Victoria's Secret came to the UK, which product(s) would you most likely purchase?<br />#AnswerResponse%1Bras1352%2panties520%3Sleep/Lounge-wear520%4Beauty and Accessories28%Total25100%<br />StatisticValueMin Value1Max Value4Mean1.84Variance1.06Standard Deviation1.03Total Responses25<br />12. If Victoria's Secret came to the UK, among the factors below, how important are they to your purchasing decision?<br />#QuestionNot at all ImportantVery UnimportantSomewhat UnimportantNeither Important nor UnimportantSomewhat ImportantVery ImportantExtremely ImportantResponsesMean1Brand1014856255.282Price0304747255.203Style/Fashion00115126255.844Comfort00023911256.16<br />StatisticBrandPriceStyle/FashionComfortMin Value1234Max Value7777Mean5.285.205.846.16Variance2.132.580.970.89Standard Deviation1.461.610.990.94Total Responses25252525<br />13. What age group do you fall under?<br />#AnswerResponse%1Under 1800%218-251765%326-35831%436-4514%546-5500%6Over 5600%Total26100%<br />StatisticValueMin Value2Max Value4Mean2.38Variance0.33Standard Deviation0.57Total Responses26<br />14. How much on average do you spend monthly on intimate apparel products?<br />#AnswerResponse%1Under £20831%2£20-501454%3£50-10028%4over £10028%Total26100%<br />StatisticValueMin Value1Max Value4Mean1.92Variance0.71Standard Deviation0.84Total Responses26<br />15. What is your monthly income?<br />#AnswerResponse%1£1000 or less935%2£1000-2000831%3£2000-300028%4£3000-500028%5£5000-10,00000%6£10,000 or more00%7Prefer not to answer519%Total26100%<br />StatisticValueMin Value1Max Value7Mean2.85Variance5.02Standard Deviation2.24Total Responses26<br />Exhibit 3<br />Victoria’s Secret Projected Budget (2011-2020)<br />**Attached at the back of document as an Excel spreadsheet, for ease of reading/formatting.<br />