A Marketing Research Proposal for Michael Kors (March 2016)

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Rebuilding Customer Loyalty | Marketing Research Proposal for Michael Kors
Rebuilding Customer Loyalty:
A Marketing Research Proposal to
Uncover Core Customer Preferences
Prepared For: Michael Kors
Prepared By: Ashley N. Peterson
Course: West Virginia University | IMC 611
Date: March 2, 2016

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Table of Contents
I. Introduction 3
II. Background 3
III. Statement of the Problem & Research Objectives 4
IV. Research Method #1: Mall Intercept 4
a. Research Design & Data Collection Method
b. Sample Plan
c. Analytical Plan
V. Research Method #2: Focus Group 6
a. Research Design & Data Collection Method
b. Sample Plan
c. Analytical Plan
VI. Deliverables 7
VII. References 9
VIII. Appendix
a. Vendor Overview - Added Value 11
b. Questionnaire for Mall Intercepts 12
c. Focus Group Discussion Guide 16

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Introduction
For many years, designer handbag brands such as Michael Kors, Coach, and Tory Burch
marketed products to the "It Girl" population - females 13-29 - and served as a status symbol for
this group of young consumers. These consumers were willing to pay a premium for the
exclusivity that these brands embodied. In the past few years, though, new brand strategies
watered down this symbolism as the products became more widely available to the masses and
lost their "cool factor" amongst their biggest customers, contributing to a drop in sales for some
of these well-known brands (Schlossberg, 2015). The proposed research, leveraging the
expertise of our research company in partnership with Added Value research consultancy, will
bring Michael Kors a greater understanding of its core customer’s way of thinking to drive future
brand strategies focused on rebuilding loyalty and, in turn, driving sales to back to where they
used to be.
Background
Michael Kors (2016), established in 1981 by its founder of the same name, describes itself as "a
world-renowned, award-winning designer of luxury accessories and ready-to-wear". Offering
products for both women and men under its Michael Kors Collection and MICHAEL Michael
Kors labels, consumers look to this brand for accessories, footwear, watches, clothing, jewelry,
eyewear, and fragrance products (Michael Kors, 2016).
In recent years, Michael Kors made their products available in outlet stores, non-luxury
department stores, in addition to their own flagship stores, offering a wide variety of prices
depending on the retail location. These varying prices quickly made the brand more accessible
to the middle-market customer, and, unfortunately, the exclusive, luxury feel of the brand
enjoyed by its high-end customer was quickly lost (Schlossberg, 2015).
That loss of desired exclusivity quickly reflected in the success of the brand. In the beginning of
2015, shares were at an all-time high of $97.60 but, within a few months, were down to 50% of
that. The brand unexpectedly experienced a 5.8% decline in stores open greater than a year,
6.7% in its greatest market - North America. This decline comes after back-to-back 20%+
growth in comp sales since the company went public in 2011 (Wahba, 2015). As Wahba (2015)
shared, Michael Kors' temptation to act on aggressive expansion to become a "lifestyle" brand
inevitably led to brand fatigue, which leads to the need to conduct market research to
reinvigorate the brand in the eyes of its original, core customer.

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Statement of the Problem & Research Objectives
With recent business strategies to expand the availability of Michael Kors products through
store expansion and price point variations, the brand has become one that everyone owns, and
no longer reflects the aspirational nature that the brand once held. In this case, the main
question for Michael Kors management becomes, “How do we restore the Michael Kors brands'
luxurious exclusivity and aspirational symbolism with our most loyal customers?” In order to
come to an answer for that question, market research must determine what makes a brand in
today's world seem aspirational, specifically among the select target market of 13-29-year-old
females. This includes determining how this consumer group selects one luxury brand over the
other as well as gaining a greater understanding of what they look for in the brands they
choose.
The proposed research will work to accomplish the following objectives to allow for an informed
management decision:
 Explore consumer perceptions of the Michael Kors family of brands vs. competitors;
 Identify opportunities for the brand based on what drove consumers to competitors;
 Determine what changes in brand strategy will re-engage the selected consumer group
and restore loyalty; and
 Identify preferences for designer/luxury/aspirational brands amongst the selected
consumer group, and segments within that group.
Research Method #1: Mall Intercept
The key to getting insight about Michael Kors’ customers will be to reach them where they are:
shopping centers. Mall intercepts will be used first to help Michael Kors understand what high-
end consumers look for in the designer brands that they buy versus mid-market consumers.
This approach will uncover themes around the thoughts and experiences that may be similar or
different between the two segments to fully understand the shift that is needed in the brand’s
future branding strategies to regain the lost aspect of exclusivity and, ultimately, loyalty.
Research Design & Data Collection Methods
Leveraging experienced interviewers from research consultancy Added Value, the mall
intercepts will be designed to occur as close as possible outside of the higher-end anchor stores
in the identified mall to catch the shoppers that not only fit into the population identified, but are

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also shopping at the stores where they would purchase designer brands. With this placement,
there is a greater chance to get input from the desired shoppers who fit the target market and
may agree to move forward and take the survey.
In order to capture the full essence of shoppers’ thoughts, the recommended data collection
method is an interview-style questionnaire that will be conducted in a separate research facility
inside the mall, as illustrated in the Questionnaire in Appendix B. While looking into the reasons
why the shoppers buy designer brands, it is not just important to capture the quantitative
answers, it is also helpful to get the emotion behind a few open-ended questions asked by the
interviewer. Given the connections that consumers tend to have with designer brands, the
interviewer can capture the greater emotional ties to the shopping behaviors while the
respondent is actually in the act of shopping, instead of when shoppers may have to think back
to shopping experiences, as would be the case in focus groups. Consequently, with the
following sample and analytical plans, researchers will have a good foundation to take their
insights to the next level with focus groups, to be explained further in the next section.
Sample Plan
The non-probability sampling methodology to be used is convenience sampling as the mall
intercept approach catches respondents when they are easily accessible. Interviewers will be
required to complete 30 surveys with female shoppers ages 18-29 across three (3) local malls
each in the following five (5) metropolitan areas: New York, Miami, Chicago, Dallas, and Los
Angeles – resulting in a total sample size of 450 shoppers. Because the convenience sampling
will not provide a representative sample, the variety of malls and locations will give a provide a
diverse set of shopper insights based on their locality in the metro area and/or region in the
nation.
Analytical Plan
To drive further analysis of the data collected, each of the analytical methods below will serve to
determine the following conclusions about the questionnaire responses:
1. Descriptive Analysis – To develop a general foundation around how different
respondents answered the questions through descriptive statistics and one-way
frequency tables

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2. Associate Analysis – To provide insight into how specific groups of respondents (i.e.
age groups or income levels) responded to certain questions compared to other groups
through the use of cross-tabulation
3. Differences Analysis – To identify the contrast between the various consumer
segments, specifically the high-end vs. mid-market groups, in terms of shopping
preferences, purchase motivations, and non-Michael Kors product options
4. Factor Analysis – To leverage previous analysis to create concrete customer segments
in order to simplify the data collected through the questionnaire
Research Method #2: Focus Group
Based on the themes and customer segments uncovered in the mall intercept questionnaire
data, a set of focus groups will be leveraged to dig deeper into consumers’ perceptions of
designer brands, including Michael Kors’. Overall, the goal of the focus groups will be to better
understand the current viewpoints of Michael Kors’ customers, past and present, to achieve the
overarching research objectives.
Research Design & Data Collection Methods
Under the direction of Added Value research consultancy, two focus groups will be conducted
per metro area, one comprised of the high-end customer and the second of the mid-market
customer. The focus group participants will be recruited through the following criteria:
High-End Customer
Focus Group
Mid-Market Customer
Focus Group
# Participants 10 10
Age 18-29 18-29
Last Michael Kors Purchase ≤ 2 years ≤ 2 years
Economic Class/Income
Upper Middle Class;
$100,000 - $149,000
Lower Middle Class;
$32,500 - $60,000
Ethnicity
Representative of breakdown of
ethnicities within the class
Representative of breakdown of
ethnicities within the class
Other – Michael Kors product
ownership
Owns 5 or more products Owns 1 or more products

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Sample Plan
Two focus groups will be conducted in the same five (5) metropolitan areas as the mall
intercepts, allowing the deeper dive to occur within the same geographic areas and provide
greater insights to relate to the broader population. In order to ensure the proper representation
of ethnicities in the focus groups, a two-stage cluster sampling will be used. The total
metropolitan population will first be divided into groups based on ethnicity and then persons
within each cluster will be randomly chosen based on the percentage of that ethnicity compared
to the total population. As shared above, 10 consumers will be chosen out of the respective
high-end and mid-market income brackets to complete the participant group for each of the two
focus groups, resulting in a total sample size of 100.
Analytical Plan
Because the two focus groups are representative of two different income groups, discriminant
analysis will serve as the key type of analysis of the focus group results. As shown in Appendix
C, the groups will be asked questions around their designer brand buying behaviors,
perceptions of Michael Kors paired with a personification exercise to illustrate those
perceptions, and, just for the higher-income participants, questions about what drives their
loyalty. Responses to these questions will allow researchers to assign various brand
preferences, as the dependent variables, to the income level of the respondent group.
Inferential analysis, as a follow up, will serve to help researchers understand if the differences
found between consumer segments are dependable when extended to a view of the broader
consumer population. Given a positive result, showing that the focus groups helped to define
the broader population, Michael Kors is then provided with the preferences of their original high-
end customer to compare to their current brand strategy and, with the gaps, determine how to
move forward to regain their loyalty.
Deliverables
 Top Line Report: A two- to three-page top line report will be provided to Michael Kors’
executive leadership team summarizing the research that was undertaken, as proposed
above, as well as highlight the key findings and recommendations determined by the
researchers. This top line report can be used to provide the company a quick overview
of the research leading into the oral presentation and used later as a summary of the
research completed for the company.

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 Oral Presentation: Following the top line report, our organization will provide additional
detail and the opportunity to have broader discussion around the research through an
oral presentation to Michael Kors’ marketing research team and any other functional
representatives that the company desires to have in attendance.
 Research Report: Finally, a detailed research report will be provided to Michael Kors
delivering all details of the research undertaken, including any additional feedback or
needs as addressed following review of the top line report and discussions during the
oral presentation.

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References
Added Value. (2016). Home. Retrieved from http://added-value.com/
Francis, D. (2012, Sept. 13). Where do you fall in the American economic class system?
Retrieved from http://money.usnews.com/money/personal-
finance/articles/2012/09/13/where-do-you-fall-in-the-american-economic-class-system
Greenbook. (2016). Added Value. Retrieved from http://www.greenbook.org/company/Added-
Value
Michael Kors. (2016). About us. Retrieved from
http://www.michaelkors.com/browse/common/staticContent.jsp?slotId=400005
Schlossberg, M. (2015, Nov. 16). American women are abandoning a longtime status
symbol that put Michael Kors, Coach, and Kate Spade on the map. Retrieved from
http://www.businessinsider.com/handbag-sales-are-falling-flat-according-to-goldman-
sachs-2015-11
Wahba, P. (2015, May 27). Michael Kors' weak sales suggest it's falling out of fashion.
Retrieved from http://fortune.com/2015/05/27/michael-kors-sales/

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APPENDIX

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Appendix A: Vendor Overview
Added Value, a consultancy providing research services across 17 offices in 11 countries
across North America, Europe, and Asia-Pacific, reflects the global nature of the Michael Kors
brand and has the experience needed for such a brand (Greenbook, 2016). With clients like
Diageo, Kellogg’s, PepsiCo, Godiva, plus many more global and/or luxury brands, Added Value
brings the expertise to deliver insights for brands that target the higher end customer but also
brings an understanding of diverse customer bases, which are two components of what Michael
Kors is dealing with currently. In addition, Added Value, due to its experience with global
brands and audiences, leverages online focus groups, which is an appealing option to the
identified age demographic (Added Value, 2016).
Added Value
3400 Cahuenga Blvd., W.
2nd Floor
Los Angeles, California, 90068
www.added-value.com

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Appendix B: Questionnaire for Mall Intercepts
Interviewer Instructions
Purpose To identify the motivation behind female shoppers' consumption of
designer brands such as Michael Kors in comparison to off-brand or
cheaper options.
Staff 5 experienced interviewers per shift; 2 at the mall post to gather potential
respondents, 3 in the research facility to facilitate questionnaires; Rotate
as needed
Location One busy shopping mall in a middle to upper-middle socioeconomic area.
The two interviewers assigned to the mall post should be in the area of
one of the anchor stores, specifically similar to a Macy’s, Dillard’s, Belk,
or Nordstrom. In the center, three private interviewing stations are to be
set up. Other interviewers will be set up in other busy shopping malls to
ensure ample demographic representation is covered.
Quota 30 completed questionnaires
Project Materials You will be supplied with 75 screening questionnaires and 30 study
questionnaires
The Questionnaire: Designer Brand Purchasing Behavior
Hello, I am [insert name] from global research firm Added Value representing Michael Kors. We
are currently recruiting female shoppers to take part in a survey. The following survey is being
used to understand motivations of female consumers to purchase luxury brands like Michael
Kors and their perceptions of these brands. The survey is 26 questions and will take about 15-
20 minutes to complete with an interviewer. The interview may be recorded or monitored for
quality purposes, but no selling will result from your participation in this survey. You will receive
a $25 VISA gift card as a thank you for your time spent with us. We would greatly appreciate
your time in taking this survey. May we include your opinions?
Screening Questions
I have a couple of screening questions to ask before we begin:
1. Are you between the ages 18 and 29?
2. Are you an owner of any designer or high-end handbags or accessories such as
jewelry, wallets, belts, etc. by Michael Kors, Coach, Tory Burch, Kate Spade and the
like?
Thank you, those are the two screening questions that I have.
Questionnaire
1. When is the last time that you have purchased a designer brand handbag or accessory for
yourself?
a. In the last 30 days
b. In the last 6 months
c. In the last year

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d. Over one year ago
2. What was your reason for this last purchase?
a. Replacing an old handbag/accessory
b. Gift for self/Celebration
c. Routine Purchase
d. Other
3. When shopping for handbags and accessories, what type of shopper would you consider
yourself?
a. Designer Brands Only
b. Best Quality
c. Bargain/Lowest Price
d. Any of these/Depends On The Product
4. If you selected "Any of these/Depends On The Product", which products would fall into each
of these three categories?
5. What is your biggest motivator in purchasing designer brand handbags and accessories
instead of other brands?
___ Social Identity/Status
___ Quality
___ Product Style
___ Other
6. If you selected "Other", please elaborate.
7. If you did not select "Other", what other reasons, in your opinion, may motivate consumers to
purchase designer brands? (Probe: Why don’t these things motivate you?)
8. Rank the following motivations to purchase designer products in order of importance to you (1
being the most important and 5 being the least important)
____ Status/Social Identity
____ Quality
____ Product Style
____ Other
9. Which of the following would be the top reason that would prevent you from purchasing
designer brands?
a. Availability of replicas/knock-offs
b. Budget
c. Everybody has them
d. N/A - I always buy designer bags
10. If you were shopping for a designer handbag or accessory, what is your preferred retailer
type?
a. The brand's brick and mortar location or website
b. Department Store (i.e. Macy's)
c. Bargain price retailer (i.e. TJ Maxx)
d. Online retailer (i.e. Amazon)
e. Other

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11. If you selected "Other", please identify your preferred shopping location.
(Interviewer Direction - “In questions 12-20, I will be getting your opinion around various types of
handbags. For the purpose of these questions, we will define the types as follows: Designer
Brand = Manufactured by the actual brand and sold by the brand, i.e. Michael Kors; Replica =
Legally manufactured by a different non-designer brand to look similar to the Designer Brand
item; Designer Brand at a Bargain Price = Manufactured by the actual brand but sold at a
bargain retailer, i.e. TJ Maxx or the like; Quality/Low Price = Manufactured by a non-designer
bag, i.e. Liz Claiborne or Steve Madden; Counterfeit/knockoff = Illegally manufactured and sold
as if it came direct from the brand, deceiving consumers”.)
12. If you were purchasing a new handbag for yourself for everyday use, which would you buy?
a. A designer brand
b. A replica of a designer brand
c. A designer brand at a bargain price
d. A quality, low price handbag
e. A counterfeit/knockoff of a designer brand
13. If you were purchasing a new handbag for yourself for occasional use, which would you
buy?
a. A designer brand
14. If you were purchasing a new handbag for use by a younger female (age 13-17), which
would you buy?
a. A designer brand
15. What is the likelihood that you will buy the following?
1 = Definitely Not Buy | 2 = Probably Not Buy | 3 = Probably Buy | 4 = Definitely Buy
Designer Product (Full Price) 1 2 3 4
Designer Product (Bargain Price) 1 2 3 4
Replica of a Designer Brand 1 2 3 4
Quality/Low Price Brand 1 2 3 4
Knockoff of a Designer Product 1 2 3 4
16. If you answered "probably not buy" or "definitely not buy" for any of the above, please
explain why.
17. Do you agree or disagree with the following statement: The sale of counterfeits/knock-offs
affects the true brand's image.
a. Strongly Disagree
b. Disagree
c. Undecided

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d. Agree
e. Strongly Agree
18. Do you agree or disagree with the following statement: The sale of replicas affects the true
brand's image.
a. Strongly Disagree
b. Disagree
c. Undecided
d. Agree
e. Strongly Agree
19. Explain your reaction if you spot a knock-off or replica of your favorite bag or accessory. Is it
positive, negative, or neutral and why?
20. Do you believe that luxury brands should fight against the replica or knockoff market? Why
or why not?
21. Please select your age group.
a. 18-21
b. 22-25
c. 26-29
22. Please select the social-economic group that you most identify with.
a. $7000 or less
b. $32,000 or less
c. $72,000 or less
d. $100,000 or less
e. Over $100,000
f. I do not wish to provide this information
23. Please identify your current work status.
a. Student
b. Full-Time, Salaried
c. Full-Time, Hourly
d. Part-Time, Hourly
e. I do not wish to provide this information
Closing
Thank you for your time and cooperation today. I hope this experience was a pleasant one.
Please remember that your opinion counts! Have a good day/evening.

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Appendix C: Focus Group Discussion Guide
Though two focus groups will be used, most of the topics will be the same to understand what
the consumers think about the brand and, if they buy or don’t buy, why. The main difference
between the two focus group discussions will be the specific use of a topic that will help
researchers understand what will drive the high-end customer become loyal again. The topics
of discussion will include the following:
 Luxury Brand Buying Behaviors: This topic will focus on questions for both groups
such as “What luxury brands do you own?”, “What types of products within those brands
do you purchase?”, “Why do you buy those brands?”, and “If you saw a similar product
at a cheaper price, what would make you choose the luxury versus the off-brand?”.
These questions will not only give researchers a sense of what brands these consumers
may be buying along with or instead of Michael Kors, but also what makes them select
luxury over other less expensive brands with the same products.
 Perception of Michael Kors: To uncover how each of the participants view Michael
Kors as a brand, questions such as “What does the Michael Kors brand mean to you?”,
“How would you describe your feelings when you are wearing a Michael Kors product?”,
and “What do your closest friends think about your Michael Kors purchases?”, will help
researchers get to the bottom of how each group’s perception of the brand differs and
what drives that perception.
 Personification Exercise: As a follow up to the questions around the participants’
perceptions, this exercise will serve as about ¼ or more of the time that is spent with
researchers. The groups will have 15 minutes to illustrate, through words and/or
drawings, their perception of what the Michael Kors stood for when they first started
buying the brand and what it stands for in the current day. They will present their
illustration to the group to help drive further discussion around the group’s perceptions.
 Drivers of Loyalty: This topic will only be used with Focus Group #1 with the intent of
getting additional insight of what a luxury brand needs to do to gain and maintain the
loyalty of the high-end customer. Such questions as “What is your favorite luxury brand
and why?”, “What makes you buy a second, third, etc. product from a specific luxury
brand?”, and “What did Michael Kors do/not do to make you buy again/not buy again?”
will help researchers to dig deeper into the mind of luxury consumers.

A Marketing Research Proposal for Michael Kors (March 2016)

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