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Strategic Marketing Plan - Michael Kors

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Strategic Marketing Plan - Michael Kors

  1. 1. Marketing Management (MK2002S) Assignment 2 FT UCD BBS 23 (B) – TEE SZE MIN, LEE XIAO PING,RENICE WOO WAN LIN,NG XIAO HUI Executive Summary Michael Kors (MK), a luxury fashion brand of worldwide acknowledgement, is seeking growth to its success track record. Upon research and situational analysis of the brand, we hereby propose a strategic marketing plan with the following objectives to achieve:  Increase annual total revenue by 175% of FY2015 by FY2018  Increase social media following by 5% every month  To take over Ralph Lauren as the top online luxury leader by increasing online market share to 23.1%  Protecting brand value Various strategies need be in place. Number of product offerings need be increased, to further enhance global geographical presence and explore e-commerce development. Product innovation and differentiation need be highlighted frequently and to capture stray online traffic to generate conversion to sales. Brand value has to be protected to maintain exclusivity; therefore price control and supply-demand control will assist MK to achieve success. The proposed plan seeks to further elevate MK’s status not only as a luxury brand, but as a global enterprise achieving growth sustainability. MK will need to assess circumstances and adjust approaches in order to fully maximize profitability.
  2. 2. Marketing Management (MK2002S) Assignment 2 FT UCD BBS 23 (B) – TEE SZE MIN, LEE XIAO PING,RENICE WOO WAN LIN,NG XIAO HUI 1. Background information Michael Kors is a prestigious brand named after its establishing fashioner. Displaying its design style to be “luxuriously casual and simply elegant”, the brand has gotten worldwide acknowledgment pertaining to American sportswear, for which it exemplifies native yet stylish elegance. Michael Kors Holdings Limited (KORS) is managed by a top-notch executive team as well as conspicuous, award-winning designer; who is none other than Mr. Michael Kors himself. 2. Situational analysis 2.1 PESTE Analysis Political and Legal Factors Singapore is known for its stable political environment and commerce infrastructure, attracting Foreign Direct Investments and tourists. With a government tax of 7%, it acts as a barrier for the flow of imported goods into Singapore. However, the tourist gets a tax refund if they spend a minimum of $100. In order to facilitate the movement of goods and services between countries, Singapore has signed the Free Trade Agreement and has expanded to cover 31 countries. (FTA, n.d.) Actions are also taken to protect companies. Singapore was one of the eight countries who signed the Anti-Counterfeiting Trade Agreement (ACTA) in 2011, to fight against infringement of intellectual property rights. (Ministry of Law Singapore, 2011) The likes of Singapore’s political and legal environment allows Michael Kors to not only tap on local but also tourism spending to maximise profitability. Just in Singapore alone MK has 4 flagship stores (Kors, 2015). Comparatively, other countries may encounter political instability. For example, Russia and the United States are engaged in geopolitical tensions due to the Ukraine crisis, damaging bilateral and regional ties. Organisations will be discouraged from doing businesses with the affected countries. In this way, MK will be restricted in its corporate developments. Economic Factors
  3. 3. Marketing Management (MK2002S) Assignment 2 FT UCD BBS 23 (B) – TEE SZE MIN, LEE XIAO PING,RENICE WOO WAN LIN,NG XIAO HUI The global luxury market was valued at 224 billion Euros in 2014 (Bain & Company, 2015). Despite the market being traditionally resilient to economic fluctuations, Serret (2011) notes that most industry players had lost approximately 40% of their stock value in the 2008 Financial Crisis. MK will need to protect their company from devaluation. Markets behave differently. Even though the BRICS (Brazil, Russia, Indian, China and South Africa) countries present strong potential for lucrative businesses, the impending Chinese economy crisis and Russia’s economic policies being unfavourable to foreign businesses may impact MK’s market penetration rather seriously (Laudicina & Peterson, 2015). Singapore, however, presents a potential for a thriving luxury market with the above factors contributing to the following conditions: tax-free shopping, business-friendly policies, and strong customer buying power. The big number of international agreements further expresses Singapore’s economic influence in the Asia-Pacific region (British Chamber of Commerce Singapore, n.d.). The Singapore luxury market size as of the year 2013 was S$4.3 billion (Acunzo, 2014). The above economic factors influence MK’s planning to be strategically geographic, looking out for the best channels and tailor marketing efforts accordingly as there is no ‘one size fits all’. Social Factors People see luxury goods as mediums to express their social standing and economic success. The more customer perceives the brand to fit their ideals, the more accepting they are towards the brand, in turn forming brand loyalty. The exorbitant prices and high quality of these goods further build an emotional attachment to the brand for customers. For example, middle-income earners purchase luxury accessories for ‘self-indulgence’, hinting their achievements (perhaps a lucrative bonus or a promotion). This leads to building a ritual, whereby they will continue purchasing luxury goods to celebrate, but no longer limited to accessories and eventually moving to the ‘absolute luxury’ range (Cebreros, 2012). Today, almost everyone owns an electronic communication device such as mobile phones, tablets and laptops. Due to technological advancements, people are virtually connected through social media platforms. Social media plays a big part in today’s society, social media platforms the likes of Tumblr and Youtube are popular among the younger and tech-savvy people. Most of the time, people get first hand news from the internet. On top of that, these younger and tech-savvy seek
  4. 4. Marketing Management (MK2002S) Assignment 2 FT UCD BBS 23 (B) – TEE SZE MIN, LEE XIAO PING,RENICE WOO WAN LIN,NG XIAO HUI inspiration from celebrities’ fashion choices and live-streamed fashion shows on the Internet (Zegheanu, 2014). With such advantages, MK engages celebrities such as Angelina Jolie and Jennifer Lopez for product endorsement, the campaign has successfully earned lots of followers (Kross, 2014). Customers today not only spend on brands. They also seek the ‘software’ factor of compassion that organisations and businesses reciprocate their profits to the less privileged. This will be detailed further in Environmental Factors. Technological Factors While not many luxury brands have progressed towards modern technology, Kors has come out with products for technological devices for instances, smartphone case, wristlet, USB keychain, battery wallet, and iPad sleeve. As technology advances, Michael Kors begins to engage with his audiences via digital marketing platforms like Facebook, Twitter, Youtube and Pinterest. Kors likewise has an online store which can be accessed from their official website. However, not having a phone application for easy accessibility of customers will be one of their setbacks (Kross, 2014). Environmental Factors Customers today seek ethical consumerism to define how meaningful a brand can be (Dodes & Schechner, 2010). MK faces several issues regarding ethical consumerism pertaining to environment conservation. People for the Ethical Treatment of Animal (PETA) had singled out MK for animal cruelty, as MK is still selling leather products till today and conducting testing on animals (PETA, 2010) (Meredith, 2013). While other brands have moved to adopt fur-free initiatives, MK’s insistence, however, constitutes its product differentiation of using real leather. MK is also marked for its insufficient revelations on environmental sustainability (Konietzko et. al., 2014). MK currently counters these unfavourable issues with charitable endeavours e.g. #WatchHungerStop campaign feeding 100 children a meal for every watch sold (Kors, 2015).
  5. 5. Marketing Management (MK2002S) Assignment 2 FT UCD BBS 23 (B) – TEE SZE MIN, LEE XIAO PING,RENICE WOO WAN LIN,NG XIAO HUI 2.2 SWOT Analysis Figure 2.1: SWOT Analysis of Michael Kors MK enjoys strong and resilient branding through executing brand segmentation. The brand officially has two segments – catwalk range Michael Kors Collection, and the MICHAEL Michael Kors collection offering affordable luxury. Compiled with the high-quality products from suppliers providing the highest quality materials, MK produces products spearheading the fashion trend. The Michael Kors’ unique ‘jet-set chic’ design styles a working woman dressed in MK products traveling around fashionably, seen consistently through its promotion materials. Celebrity endorsements e.g. Heidi Klum, Miranda Kerr, and even Mrs. Michelle Obama further motivated MK’s success. However, MK being a luxury brand heavily relies on discretionary spending, subjected to economic and political conditions of the respective countries. MK being a home grown brand in the United States still has more work to do in terms of global geographical presence. •Expansion into men's and children's markets •More retail stores outside of United States •Luxury good, relies on discretionary spending subject to economy, political conditions etc. •Lack of global geographical presence •Myriad of competitors; challenge to retain customers •To correctly guage fashion trend and customer demands and needs •Unethical or undesirable behaviour by founder •Strong and resilient branding •High quality products from suppliers •'Jet-set chic' unique design Strength Threat OpportunityWeakness
  6. 6. Marketing Management (MK2002S) Assignment 2 FT UCD BBS 23 (B) – TEE SZE MIN, LEE XIAO PING,RENICE WOO WAN LIN,NG XIAO HUI Nevertheless, opportunities lay ahead for MK in expanding its business. Further developing its existing men’s line and starting a children’s line will aid in increasing revenue. MK may also seek to resolve its lack of global geographical presence by opening more stores outside of United States. MK sees for itself a myriad of competitors offering substitutes or alternatives. Customers are therefore allowed to switch between brands of similar price ranges. Therefore, customer retention is crucial for business sustainability. MK has renowned for fashionable designs; its design team must continue ensuring designs be leading market trend while catering to customer demands and needs as well. Since MK is a self-titled business by its founder Mr. Michael Kors, any unethical or undesirable behaviour by Mr. Kors will certainly deal a huge negative impact on its reputation. 2.3 Porter’s Five Forces Bargaining power of Supplier: High Michael Kors bags are manufactured by Sitoy Group Holdings Ltd in China. Competitive brands such as Coach, Fossil and Prada are also Sitoy’s clients. (Ask, 2015) There are a few factors that determine the supplier power. When a company has multiple suppliers, it will make its decision mainly based on price, on the other hand, when there is only a single supplier, the company has little power to negotiate on the price. Since Michael Kors handbags are manufactured by a single supplier, the Supplier has more power to increase the price for the handbags. Bargaining power of Buyers: Low There will always be buyers for the luxury market, but their buyers will be lesser than convenience product. Usually, customers will purchase one product at a time unless there are sales. When a company has many small buyers, the customers are usually unable to bargain. Whereas when a company has few large buyers, the buyers hold more power in negotiating for a better price. However, since Michael Kors is a luxury brand, their prices are fixed in the stores. Intensity of competitor rivalry: High Michael Kors faces competition from other major players such as Coach, Kate Spade and Ralph Lauren, offering similar designs at similar prices. The intensity of industry rivalry depends on the numbers of replica, the base cost for product and uniqueness of the product. If the base cost of a
  7. 7. Marketing Management (MK2002S) Assignment 2 FT UCD BBS 23 (B) – TEE SZE MIN, LEE XIAO PING,RENICE WOO WAN LIN,NG XIAO HUI good is expensive, MK has to sell it at a higher price which causes price sensitive customers to go for the cheaper choice if the product from the competitor is similar to MK’s. The number of replicas is also an important factor as it will affect the brand image, the more the replicas, the less unique a brand is. Consequently, Kors has to enhance its product differentiation to sustain customer loyalty. Threat of Substitution: High As there are a lot of competitors in the market who are also selling quality products, the determining factors are usually based on individual preferences. Since Michael Kors is considered a mid-range luxury brand, their products are cheaper than Hermès and Chanel who are high-end luxury brands. For price sensitive customers, they will switch between brands of the same price range. However, there is a rising trend for imitation goods that threatens the brand image. Threat of New Entrant: Medium The chance of new entrant is determined by the barrier for entry. It is harder for a new company to enter the market if existing companies have patented their technology and the cost of starting up is higher for some countries. However, in the fashion industry it is not easy for new brands to emerge as one of the main players as the brand needs to gain some fame. As the Internet has low barriers to for entry, new players begin from the online sector. 3. Target Market Marketing Segmentation is the process of dividing the market into segments or groups by identifying similar needs and wants, based on the idea that there are differences in the needs of individuals (Kotler et al., 2012). Hence, it is important to segment the market so that the company can select one or more segments it can serve efficiently and effectively with products or services to meet the distinct needs of the target market (Kotler et al., 2012). Throughout the years, Michael Kors has expanded from North America to other geographical markets worldwide, such as Europe and Asia. The brand has a strong presence in North America due to it being the company’s largest geographical market (Turano, 2012). Michael Kors is still
  8. 8. Marketing Management (MK2002S) Assignment 2 FT UCD BBS 23 (B) – TEE SZE MIN, LEE XIAO PING,RENICE WOO WAN LIN,NG XIAO HUI slowly expanding to other markets, China as their priority for its growth potential, in an effort to increase sales revenue and international brand awareness (Turano, 2012; Plopan, 2014). Michael Kors appeals to a variety of demographic market segments. From startup until present, the company primarily targets women, as women make up a majority of 82% of its audiences, for the reason that women in all age groups seem to spend more than men on apparels (Plopan, 2014; McGowan, 2014). Michael Kors targets consumers from the age range of 25 years old to 54 years old (Business Wire, 2013). The two collections of the company, Michael Kors and MICHAEL Michael Kors, differs in the pricing, therefore, it targets a considerably wide income range. However, Jones (2014) stated that age influences an individual’s willingness to spend, rather than income. Jones (2014) claimed that “Consumers under the age of 45 spend enough to be one of the top two highest-spending customer demographics, along with those earning $250,000 or more a year.” Which explains the growth potential of younger demographics. Michael Kors Collection Michael Kors luxury collection, targets middle to upper class income as it offers high-quality leather and exotic skins accessories, footwear and apparels, for men and women, ranging from US$40 to US$10,000 (Michael Kors, 2015). Women’s line The pricing of Michael Kors luxury women line products ranges from US$300 to US$6,000 (Michael Kor, 2015). It targets Achievers mainly from Gen X and early Gen Y, assumingly to be of age 30 to 54 years old, from a segment group under the VALS framework. Female Achievers that Michael Kors are targeting for this product line, are PMET (Professionals, Managers, Executives, and Technicians) from the upper class income of above US$100K annually, who are primarily motivated by achievements (Plopan, 2014). The interests of affluent consumers from 45 to 54 years old are global and pleasure travelling, and high-end retail or catalogue shopping (Harland Clarke, 2015). Achievers are also high resource consumers who value success, status, work, and family (Marketing91, n.d). They are image- and peer-conscious, which are the bases of their preference over products that portray their achievements, thus, they are attracted by established and prestige products (Lynch, n.d).
  9. 9. Marketing Management (MK2002S) Assignment 2 FT UCD BBS 23 (B) – TEE SZE MIN, LEE XIAO PING,RENICE WOO WAN LIN,NG XIAO HUI Michael Kors luxury collection appeals to Achievers who are especially in North America, for the brand is well-established in the continent. Michael Kors aims to increase their international brand presence, particularly in China, to target Achievers in that market, as the Chinese prefer brands that are well-known internationally (Plopan, 2014). Men’s line Males in the 21st century, are more image-conscious and more fashionable, hence, they put effort into their appearances and they are more willing to spend on aesthetics. Although the men’s line is under Michael Kors collection, the price of products can be considered as “affordable” luxury. Michael Kors menswear ranges from US$50 to US$1,300. The target segments of this product line are Gen Y (25 to 34 years old) white-collar male Experiencers and Strivers, largely earning a middle income of US$30K to US$100K annually. Strivers are similar to Experiencers, they are trendy, novelty-seeking, and they are motivated to purchase goods that are able to show that they are successful and wealthy. However, the difference between Strivers and Experiencers is that Strivers have low resources, and Experiencers have high resources. Strivers are usually young working professionals from Gen Y (25 to 29 years old), who have just stepped into the working society, hence, their earning power is middle to low (annual income of approximately US$40K and below), hence they do not have the ability to purchase their desired high-end brands like Louis Vuitton, Gucci, etc. Thus, Michael Kors men’s line is able to cater to the needs and wants of Strivers due to the affordable pricing, and allowing them to carry the internationally well-known luxury brand, Michael Kors. MICHAEL Michael Kors Collection MICHAEL Michael Kors accessible luxury collection targets middle class income, as it offers women’s wear, footwear, and accessories exclusively in women’s styles with prices ranging from US$45 to US$600 (Michael Kors, 2015). The brand is currently highly sought by younger generations, a high growth potential target market, which can significantly increase the sales revenue gradually (Plopan, 2014; Jones, 2014). In addition, the offered products appeal to women who prefer to be associated with younger age groups as they want to feel youthful (Plopan, 2014).
  10. 10. Marketing Management (MK2002S) Assignment 2 FT UCD BBS 23 (B) – TEE SZE MIN, LEE XIAO PING,RENICE WOO WAN LIN,NG XIAO HUI Experiencers from the targeted age market segment of MICHAEL Michael Kors, are generally young white-collar trendy females from Gen Y (25 to 35 years old) who have either just started their career or have years of work experience, earning middle income but in the higher range of US$50K to US$100K. This group of consumers have high resources (i.e. income, education, intellectualism, etc.) and they are motivated by self-expression (Strategic Business Insights, n.d). They are enthusiastic, seek novelty and social acceptance, and they keep themselves updated on the latest trends and fashions (Kotler et al. 2012). Experiencers spend a high portion of their income on entertainment, fashion, and social activities (Marketing91, n.d). According to statistics, the majority of these consumers are still living at home, hence, they possess more discretionary income because they do not have to pay for housing (Plopan, 2014). 4. Product Level Figure 4.1 An image of Michael Kors Riley Tote. (Mulkerrins, 2015) According to Mulkerrins, Michael Kors Riley Tote is one of the two bags that helped MK earn a profit of £2.2 billion in 2014. (Mulkerrins, 2015) Figure 4.1 Shows the product level of a MK Riley Tote.
  11. 11. Marketing Management (MK2002S) Assignment 2 FT UCD BBS 23 (B) – TEE SZE MIN, LEE XIAO PING,RENICE WOO WAN LIN,NG XIAO HUI Figure 4.2 Three product levels of Michael Kors 5. Marketing Objectives and Strategies Objective 4P classification Strategy specification Increase annual total revenue by 175% of FY2015 by FY2018 Product Increase product offerings Place ● Increase global geographical presence ● E-commerce strategy Core • Social Status • Satisfaction from owning a fashionable item • Carrier for all the items Actual • Available in more than 10 colours. • Made with 100% Cow leather, rhodium hardware and 100% polyester for internal lining. • Comes with 1 internal, 1 external top zip and 1 key fob • Removable and adjustable shoulder strap 18” – 20” • Center Zip compartment • 1 interior zip pocket • Dust-bag • Available in 3 sizes : • Small: • Top Handle: 4" • 13.5” X 9” X 5” • 2 open pockets(Kors, 2015) • Medium: • Top Handle: 4" • 15" X 10" X 5.5" • 3 open pockets(Kors, 2015) • Large: • Top Handle: 5" • 16.5" X 11" X 6" • 3 open pockets(Kors, 2015) Augmented • 1 year product warranty from date of purchase (Kors, 2015) • Free shipping and returns for online purchases within United States, Puerto Rico and Guam. (Kors, 2015) • Gift-wrapping service in store • Exquisite packaging with every purchase.
  12. 12. Marketing Management (MK2002S) Assignment 2 FT UCD BBS 23 (B) – TEE SZE MIN, LEE XIAO PING,RENICE WOO WAN LIN,NG XIAO HUI Digital marketing efforts: ● Increase social media following by 5% every month ● To take over Ralph Lauren as the top online luxury leader by increasing online market share to 23.1% Promotion ● To increase awareness ● To highlight brand differentiation Protecting brand value Price ● Maintaining ‘luxury’ status ● Control supply-demand for product exclusivity Table 5.1: Marketing objectives, 4P classification and strategy specifications Objective 1: Increase annual total revenue We propose four strategies to increase annual total revenue. The addition of a children’s line will motivate spending not only from MK’s existing customers but create a new market segment for MK to penetrate. MK also stands to achieve market penetration from an increase in global geographical presence, opening more channels to generate revenue. However, MK needs to extensively research on customer needs and demands that vary according to geography. Location of the stores also need be strategically planned in order to reap the most benefits. To further tailor marketing efforts to the respective regions, MK may consider appointing celebrities to represent the brand e.g. MK may appoint Bingbing Fan, a renowned Asian actress to represent the brand in Asia. Asian audience will find Bingbing Fan familiar and more relevant to their lifestyles, therefore improving acceptance of MK’s brand in Asian markets. E-commerce is particularly lacking in MK; MK only offers e-commerce in the United States and Canada (Michael Kors Holdings, 2015). We propose that MK develops e-commerce on respective regions to fully maximise profitability on their existing distribution channels. The support from digital marketing campaigns (to be detailed in Objective 2) seeks to convert online traffic into real statistics of sales and profits. Objective 2: Digital marketing efforts
  13. 13. Marketing Management (MK2002S) Assignment 2 FT UCD BBS 23 (B) – TEE SZE MIN, LEE XIAO PING,RENICE WOO WAN LIN,NG XIAO HUI Digital marketing is the main driver of MK’s digital campaigns. MK is on social media’s biggest platforms: Facebook, Instagram, Twitter, Pinterest and Youtube (Michael Kors Holdings, 2015). MK is already leading its competitors in terms of digital marketing. Therefore, MK needs to continue its practice of precise and carefully curated social media postings and execute search engine optimisation campaigns to capture stray online traffic. These social media postings highlight brand differentiation, engaging followers in accepting the brand, looking to convert them into customers and ultimately loyal fanatics. For example, even though MK’s Twitter (Michael Kors, 2015) notes lesser frequency (8,085 tweets) compared to those of Marc Jacobs (18,000 tweets, there is only a marginal difference of followers (3.12 million versus 3.76 million). The statistics prove the importance and impact of carefully curated content on digital marketing. The search engine optimisation campaigns capture online traffic previously not captured, featuring MK’s site in the top search results and in turn increase overall awareness. The objective to be achieved by this strategy is for MK to absorb market shares, becoming the top online luxury retailer by beating Ralph Lauren’s current market share of 23.1% (Experian Marketing Services, 2014) Objective 3: Protect brand value MK’s clear segregation of its two sub-brands – the catwalk range Michael Kors collection and ‘affordable luxury’ MICHAEL Michael Kors collection determines not only its price range but also specifically defining the target market the products are intended for. MK needs to preserve its premium ‘luxury’ status through price control. All MK products must be sold at fixed prices. Prices should be adjusted accordingly to inflation rates, and should either remain unchanged or higher, never lower. MK retail spaces in departmental stores should also be excluded from any special discount activity. ‘Marking down’ prices is absolutely disadvantageous to MK; such actions will jeopardise MK’s brand value of being an aspirational brand. Customers are willing to pay for its high price but if prices are unstable or not being marked up for prolonged periods, many consumers are able to get it and once everyone has the product, it would no longer be a product of a premium status (Lutz.A, 2015). MK’s brand value can be further protected by ensuring exclusivity of its products. Product quantity must be carefully planned in the prediction of supply-demand. The more exclusive the item is, the higher it creates for MK’s brand value. For example, the jacket worn by Mrs Michelle Obama at a national event was sold out overnight (Nessif, 2015). The item was already out in the market for
  14. 14. Marketing Management (MK2002S) Assignment 2 FT UCD BBS 23 (B) – TEE SZE MIN, LEE XIAO PING,RENICE WOO WAN LIN,NG XIAO HUI quite some time prior to Mrs Obama’s appearance. MK did not further mass produce the item to maintain exclusivity; various e-commerce platforms carrying MK products state that the jacket is ‘unavailable’ (Nordstrom, 2015), or ‘sold out (Polyvore, 2015)’. Customers who bought the jacket, therefore, enjoy the exclusivity of owning the exact piece from Mrs Obama’s wardrobe, feeling for themselves to be special and honoured. The likes of this exclusivity work not only to protect, but also to further heighten MK’s brand value. 6. Action plan timeline Action 2015 2016 2017 2018 Precise and carefully curated social media postings Search Engine Optimisation campaign New products, items Open new stores in and out of United States Regional e-commerce No sales or discounts in retail stores Product quantity planned in prediction of supply- demand Table 6.1: Action Plan timeline
  15. 15. Marketing Management (MK2002S) Assignment 2 FT UCD BBS 23 (B) – TEE SZE MIN, LEE XIAO PING,RENICE WOO WAN LIN,NG XIAO HUI 7. Projected Financial Forecast Figure Michael Kors Financial Trend from Year 2013 to 2015 interim statistics (Michael Kors Holdings, 2015) MK’s total revenue has been increasing steadily over the years; net sales, gross profit and total revenue had increased two-fold from 2013 to 2015. However experts (Loeb, 2014) (Lewis, 2014) (Kierulf, 2014) are pessimistic on MK’s future, predicting it to become the next Coach due to brand overselling. Based on the assumptions of (Dey, 2015) (Bryan, 2015) (Conerly, 2015)- ● Euro will continue to be weak, but may in turn motivate tourism spending, ● United States will be recovering slowly in their economy, which may increase sales in their home ground, ● China however may experience slowdown on growth, affecting the global economy to a certain extent, nevertheless luxury spending will still go strong; We therefore predict (McGrath, 2014):
  16. 16. Marketing Management (MK2002S) Assignment 2 FT UCD BBS 23 (B) – TEE SZE MIN, LEE XIAO PING,RENICE WOO WAN LIN,NG XIAO HUI Financial Year / Aspects FY 2016 FY 2017 FY 2018 Total Revenue USD 5.1 billion USD 6.5 billion USD 9 billion Net Sales USD 4.7 billion USD 6.9 billion USD 8.5 billion Gross Profit USD 3.1 billion USD 3.9 billion USD 5.2 billion Table: Financial Forecast for Michael Kors MK’s performance for Financial Year (FY) 2016 will be a dismal one, we will see revenue growth becoming stagnant due to brand overselling in reference to reports of Kierulf (2014) and Lewis (2014). However there is little possibility of MK being the next Coach as FY 2017 will see improved earnings from whatever marketing efforts MK will undertake in FY 2016 to ‘save’ its brand. Our estimate for FY 2018 is bold as we see increased global geographical presence and new sub-brands from MK generating revenue therefore, FY 2018 will achieve a 175% increase of FY 2016’s total revenue amount as above mentioned. 8. Contingency Planning Our financial forecast predicts global economy on a slow rebound which MK will observe opportunities for revenue growth. However certain factors will affect MK’s strategies (Laudicina & Peterson, 2015): Euro still remains comparatively weak; external influences may further weaken the Euro, therefore affecting Euro’s regional spending on MK, delaying MK’s Europe geographical expansion. Economic powerhouses facing a crisis e.g. the Chinese economy transition is putting China at risk of economic crisis should the transition fail. Asian countries of close geographical proximity and share strong economic ties, global markets where China has a pivotal role in will be impacted adversely. Political conditions e.g. MK’s expansion into Russia is highly difficult due to high tensions between Russia and the United States over the Ukraine crisis. As such, Russia’s foreign policies had been extremely unfavourable for foreign businesses to enter their local markets. Should Russia exert its influence over neighbouring countries, the overall outlook for MK to expand businesses in this particular region is negative.
  17. 17. Marketing Management (MK2002S) Assignment 2 FT UCD BBS 23 (B) – TEE SZE MIN, LEE XIAO PING,RENICE WOO WAN LIN,NG XIAO HUI In this case whereby MK’s global geographical presence and international sales is threatened, we propose e-commerce strategy to counter the threat. The key is to avoid highly possible losses in entering new markets, and to focus on existing channels to maximise profitability. As mentioned earlier, MK only offers e-commerce in the United States and Canada, launching of regional e- commerce sites seeks to increase international awareness, convert online traffic to sales, and also to impress MK’s local presence to residents of the region. A regional e-commerce centre to be appointed in each region, and customers can either opt for delivery or self-collection at any of their physical stores. During this ‘lie-low’ period, MK should undertake intensive preparations for new channels, working to enter these markets. If conditions should be ideal for MK, MK can enter these markets with a lower cost compared to entry during a high economy; and immediately benefit once the regional/global economy turns for the better. 9. Conclusion MK‘s excellent marketing planning elevated itself as the luxury brand powerhouse today, surpassing competitors like Coach. While MK’s products have a competitive advantage, more needs to be done to ensure long-term sustainability of its business. Our marketing plan proposes objectives such as increasing revenue, digital marketing efforts and protecting brand value, through various strategies. These strategies include increasing product offerings and global geographical presence, increase awareness on brand and product differentiation, maintaining luxury status and controlling supply-demand for product exclusivity. Our marketing plan encourages not only business sustainability, but also looks to build resilience against economic uncertainties.

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  • TKeykhosravi

    Nov. 16, 2016
  • JKamalov

    Dec. 3, 2016

Co-authored essay for undergraduate studies


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