Alloy.com conducted an analysis of their marketing strategies and competitors to provide recommendations. They analyzed direct competitors dELiAs and mXg who have larger databases and more touchpoints. Alloy's differentiation strategy focuses on catalogs, newsletters, events, contests and brand awareness through advertising. The recommendations include using catalogs, online ads, emails, events and contests for customer acquisition, retention and reactivation. The analysis shows the marketing investment and average cost for each strategy. It also provides a customer lifetime value analysis showing a cumulative net present value profit over three years.

1. December 3, 2013
By Adrianna Ryles, Hongqian Su, Chanjuan
Zhang, Xiaoshi Zhang
Alloy.com:
After IPO Marketing Analysis

2. Outline
• Competitive analysis
• Company differentiation strategy
• Recommendations
1. Acquisition, Retention, Reactivation
2. CLTV
• P & L statement
• Summary of recommendations

3. Competitive Analysis
• Direct competitors dELiAs, mXg
bluefly.com
• Indirect competitors The mall-based stores
Bolt.com, Seventeen, Twist and Jump

4. dELiAs Inc.
• The largest online
and catalog
merchant
• 20 conventional
retail stores
• Company website
Features
Threats
• Larger database
• Extended product lines
(ex: home furnishings)
• Online to Offline (O2O)
• Many touchpoints (online
magazine, other brands,
websites, Brick and
Mortar)

5. mXg Media Inc.
• A hybrid of catalog
and magazine
• Sponsor concerts
• Company website
• Sensitive to teen girls’
tastes
• Many touchpoints
(fashion shows,
concerts, website etc)
• Multiple distribution
channels (newstands
and bookstores)
Features Threats

6. Company Differentiation Strategy
• Catalogs
• Newsletters
• Events
• Contest
• Online ads
• Brand
recognition/awareness
(advertising creates the
most revenue)
• Customer engagement
• Constant
communication
• Extended database
Features
Strengths

7. Recommendation
• Catalogs/Email
• Online Ads: Banners, SEMAcquisition
• Email
• Event
• Contest
Retention
• Letters/EmailReactivation

8. $2,600,000
$1,400,000
$1,500,000
$2,000,000
$1,000,000
$1,000,000
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
Acquisition Retention Reactivation
Catalogs Online Ads Email Events Contest Letters/Email

9. Launch Time

10. Acquisition
Sources Catalog (print)
Online Ads
(SEM,
Banner Ads)
New Customers 35,455 179,226
Response Rate 9% 3%
Prospects 393,939 6,288,640
# of efforts 12 9
VC/ effort $0.55 $0.02
Total Marketing Inv. $2,600,000 $1,400,000
Avg. Acquisition Cost $73 $8

11. Retention
Sources Email (E-Zine) Event-1 Event-2 Contest
# Renewed
Customers 501,958 486,099 446,477 395,340
Retention Rate 78% 68% 68% 60%
# Existing Customers 264,681 714,851 656,584 658,900
# of efforts 52 1 1 1
VC/ effort $0.15 $1.40 $1.52 $1.52
Total Marketing Inv. $2,000,000 $1,000,000 $1,000,000 $1,000,000
Avg. Retention Cost $3.98 $2.06 $2.24 $2.53

12. Reactivation
Source Letter/Email
# Reactivated Customers 660,000
Reactivation Rate 40%
# Lost Customers 1,650,000
# of efforts 1
VC/ effort $0.606
Total Marketing Inv. $1,000,000
Avg. Retention Cost $1.52

13. CLTV
Year Acquisition Year Second Year Third Year
2000 2001 2002
Customers 214,681 175,292 145,493
Retention Rate 82% 83% 85%
Orders per Year 3.8 4.4 4.6
Avg. Order Size 75 88 92
Total Revenue $60,379,031 $67,873,224 $61,572,513
Costs 48% 43% 41%
Cost of Good Sold $28,981,935 $29,185,486 $25,244,730
Acquisition/ Mkt.
Cost $19 $16 $12
Marketing Costs $4,000,000 $2,804,679 $1,745,912
Total Costs $32,981,935 $31,990,165 $26,990,643
Gross Profit $27,397,096 $35,883,059 $34,581,870
Discount Rate 1.14 1.30 1.48
New Present Value $24,032,541 $27,610,849 $23,341,777
Cumulative NPV
Profit $24,032,541 $51,643,389 $74,985,167
Customer LTV $111.95 $240.56 $349.29

14. P & L Statement

15. Thank You