1. 0
COMM 468
Marketing Applications
Boardroom Eco Apparel
Marketing
Plan
Strategic recommendations for the new
online business casual product line
Bell Lotongmongkol 60442084
Mei Ying Ng 10876126
Thao Nguyen 10602126
Luisa Wen 52182102
Saqib Yaqoob 41380098
2. 1
EXECUTIVE SUMMARY
Boardroom Eco Apparel is an apparel design and manufacturing company located in Vancouver, British
Columbia, Canada. Currently, Boardroom manufactures custom made, fashionable and low-impact
clothing primarily for the promotional products industry, which includes clients such as Google, Maserati,
Audi, etc. The company is now looking to expand into the business casual clothing industry through an
e-commerce platform particularly targeted to men. Although Boardroom can leverage its expertise in
clothing manufacturing and design onto the new product line, it neither has a clear understanding of its
potential target market nor experience in the e-commerce industry.
After conducting primary research and gaining insights on the target market’s preferences,
recommendations have been outlined. The marketing plan focuses on implementing strategies that
support the divisional goal, which is to reach $1 million in sales revenue one year after launch within
Canada. The four core objectives are: (1) to launch Boardroom’s new product line in January 2015, (2)
achieve a minimum of 64,000 website visits per quarter in the year 2015, (3) convert 3% of total website
visits into sales within one year after launch, and (4) achieve an average customer satisfaction score of 4.5
out of 5 within one year after launch.
In order to address Objective One, three strategies on product, price, and place will be implemented upon
launch. To fulfill Objective Two, online and offline marketing channels as well as word-of-mouth
stimulation are recommended to promote the website and raise brand awareness. The strategies for
Objective Three involve overcoming the main barriers of online purchasing, as well as facilitating and
enhancing consumer purchasing process to convert website visits into sales. For Objective Four,
maintaining close customer relationships and establishing an effective order processing and an on-time
delivery system are integral factors to ensure customer satisfaction. Considering all strategies on the
launch of the new brand, driving website visits, converting those visits into sales, and maintaining close
relationships with customers, Boardroom’s new product line is ensured success in the long run.
In terms of expected performance, the “launch” strategies will construct a strong fundamental for the new
product line to stand out from the competitors. The recommended marketing channels are well-tailored
to the target market (High Spending Online Shoppers). Combined with the brand credibility fostered
through the word-of-mouth tactic, they are expected to effectively generate brand awareness and attract
traffic to the website. Removing the barriers of online purchases followed by facilitating the shopping
process will effectively convert visitors into buyers. Creating a positive shopping experience through
exceptional customer service and efficient delivery system will ensure repeating sales and accumulate
loyal customers, which will lead to the long-term success of the new product line.
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SITUATION ANALYSIS
INDUSTRY DEFINITION
Boardroom Eco Apparel operates in the apparel industry, which is primarily concerned with the
manufacture, design, and distribution of clothing. The industries Boardroom Eco Apparel will be
operating in are defined below:
MEN’S APPAREL
The men’s apparel industry comprises of menswear and wearable accessories. The industry
encompasses different categories and styles of clothing including essentials, outerwear, formal wear,
casual wear, and activewear.
E-COMMERCE
An industry where trade between buyers and sellers takes place on electronic systems, mainly on the
Internet. Over the years, trade through e-commerce has grown significantly.
BUSINESS CASUAL CLOTHING
A style of clothing in professional and white-collar workplaces that is part formal and part casual.
While there is no specific definition for business casuals, as it is a sense of style, fashion experts have
described it as “a pair of chinos, a blazer and a good shirt, no tie” (Shrimsley, 2011). Business casuals
allow one to be trendy, fashionable, creative, and more comfortable with his or her attire.
MARKET ANALYSIS
AGGREGATE MARKET FACTORS
Men’s outerwear market in Canada is estimated to be $9 billion dollars in revenue with a constant
annual growth rate of 1.7% until 2017 (Euromonitor, 2012). The matured men’s clothing market
enjoys low revenue volatility with $227.6 million in profits. However, fashion trends change every
season, which constantly drive new product designs in the industry. Regardless of the constant
emerging fashion trends, product segments can be clearly identified within the market. There is a
diversity in distribution channels, which varies from mass merchandisers to specialty stores.
Particularly, apparel sales in online stores are expected to grow as there is a growing amount of men
that have caught up with online sales and are becoming more self-conscious about their appearance
(IBISWorld Canada, 2013).
PORTER’S FIVE FORCES
Industry Rivalry: High
There are many small players within the industry, making it a fragmented industry. A major player is
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Harry Rosen, with 10.5% market share operating in the luxury segment. The second largest player is
Moores Clothing for Men, with 5.4% market share operating in the mid-level segment. Because the
industry is fragmented, competition in the market is intense. Additionally, the absence of an
oligopolistic environment enables niche and smaller players to arise (IBISWorld Canada, 2013).
Threat of New Entrants: Medium
The capital required for start ups in the clothing industry is low relative to other industries, resulting
in low barriers to entry. However, the high level of competition in the industry leads to difficulty in
sustaining a competitive advantage and attracting new customers. Established companies’ customer
loyalty is a major threat to new entrants. Moreover, new entrants may also encounter high economies
of scale from experienced competitors. Although this industry is highly competitive, the fragmented
nature of the industry enables prospective entrants to penetrate the market by targeting niche
segments.
Bargaining Power of Buyers
Wholesaler: Medium to High
The large number of suppliers in the industry gives wholesale consumers many choices.
Buyers have a certain degree of bargaining power as they could substitute products with alternatives
that offer more affordable products. A supplier that has low company awareness and offers typical
products would face high bargaining power of buyers as there are many substitutable suppliers that
could offer the same thing.
End consumer: Medium
Although end consumers have very little switching costs and can easily compare competitor’s pricing
and products, many consumers tend to be loyal to specific brands and are less responsive to price
changes. These behaviours make the bargaining power of end consumers to be medium.
Bargaining Power of Suppliers: Low
There are many undifferentiated suppliers in the textile and apparel industries. The standardized
commodity inputs give the suppliers little or no power to influence price. Moreover, switching costs
are low for retailers resulting in the ease to switch between suppliers. This concludes the bargaining
power of suppliers to be low.
Pressure from Substitutes: High
There are constant threats from substitutes that do not only exist online. For instance, department
stores and discount stores do not specialize in men’s apparel but pose a constant threat on specialty
stores. Consumers also have the option of visiting individual retail stores or a tailor shop depending
on their personal preferences.
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ENVIRONMENTAL FACTORS
Demographics
A 2010 study reports that clothing expenditures were significantly driven by gender and fashion
fanship in the short term. In contrast, gender and impulse buying influence long-term purchase
decisions. Women in particularly, spend more relative to men. Moreover, Generation Y (those born
from early 1980s to early 2000s) showed higher purchase frequency, fashion fanship, and impulse
buying relative to other age cohorts (Pentecost et al, 2010)
Marketing Intermediaries
For Boardroom’s new product line to reach other online retailers, there are marketing intermediaries
such as promotional agents. This intermediary provides a platform such as online retailers for
communication and enables the new line’s products to reach consumers. Promotional agents will
attend trade shows and visit showrooms in order to arrange deals by presenting sample products
from the company they represent.
Economic Climate
The economic climate highly influences market conditions as consumers have different levels of
disposable income due to various factors including unemployment rates and economic crises. As
disposable household income decreases, the willingness to purchase apparel decreases. Thus,
economic conditions influence the overall demand for men’s clothing (IBISWorld Canada,
2013).
Technological Factors
Technology has served to enhance customers’ shopping experience and overall service levels.
However, technological advancements and the increase of integration of advanced equipments often
pose a threat to employees as less human labour is required (IBISWorld Canada, 2013).
Natural Forces
Environmental protection is a worldwide problem and has been a growing concern due to the
increased level of pollution. This condition affects the availability of raw materials. Thus, there is
pressure for organizations to improve their practices and move towards an environmentally
sustainable strategy.
Cultural and Social Trends
According to Statistics Canada, there has been a significant increase in online purchases as online
expenditures for Canadians has increased by 24% from 2010 to 2012. (Statistics Canada, 2013).
Moreover, a study by the digital marketing agency iProspect shows men prefer to do their shopping
research and purchases online rather than purchasing at physical stores. This switching behaviour
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takes place due to the ease of sharing information with friends online, the display of different ways to
wear a specific product, and the increasing number of electronic devices available to access websites
(Tansley, 2013). Additionally, there is evidence of a growing trend towards business casual clothing
as 95% of U.S. companies have casual day policies implemented in the workplace (Anderson, 2000)
Political and Regulatory Trends
Retailers are subject to regulations such as the Textile Labelling Act, which mandates that labels
must include information regarding the content of the fibre used, care instructions, dealer identity
and country of origin (IBISWorld Canada, 2013). There has also been constant political pressure
regarding the violation of workers’ rights and child labour laws.
Publics and Stakeholders
Groups advocating for fair worker conditions have high influence on the market. Similarly, other
topics such as offshore manufacturing and outsourcing are of great importance. For instance,
Wal-Mart was involved in claims regarding sweatshop conditions in Bangladesh, which received a lot
of negative feedback from the public (Gogoi, 2008).
Suppliers
Raw material prices have a high influence on products’ final prices for end consumers and determine
the availability of products.
COMPANY ANALYSIS
COMPANY INTRODUCTION
Boardroom Eco Apparel is an apparel design and manufacturing company located in Vancouver,
British Columbia, Canada. Co-founded by the company CEO - Mark Trotzuk - in 1996, Boardroom
specializes in custom manufacturing and technical, fashionable and low-impact clothing solutions.
Since 2001, Boardroom has focused innovation and research on eco-friendly materials and processes.
With the launch of the bluesign® safety collection, Boardroom is at the leading edge of eco-friendly
fabrics, processes, audits, and knowledge within the clothing and textile fields. The company mainly
produces through its Vancouver-based factory but also has contracts with offshore manufacturers,
three of which are located in Vietnam and one in China. Trotzuk plans to open a factory in California,
U.S. in 2016.
MISSION AND VISION
While the clothes produced by Boardroom are comfortable, affordable and of good quality, the
company aims to sell clothing that has low impact on the environment. Boardroom’s culture focuses
strongly on preserving the environment and preventing climate change by bringing green clothing to
corporations, government organizations and to the general consumers.
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ORGANIZATIONAL CULTURE
The work environment at Boardroom’s factory in Vancouver is quite relaxed and contains a friendly
yet professional atmosphere (Boardroom, 2014).
HUMAN RESOURCES
With 40 employees, the company is self-motivated and has the ability to adapt quickly to change and
be flexible with its production. It has a lean structure where there are fewer employees with fewer
layers of management. Employees working in such an environment have better relationships with
company and its customers.
FINANCIAL RESOURCES
Profits generated from Boardroom’s existing revenue model will act as a primary source of funding
for the new business casual clothing line. Besides this, with the help of social enterprises such as
Climate Smart, Boardroom has found ways to run its factory. Trotzuk is also seeking potential
investors that share Boardroom’s vision in preserving and protecting the environment through
sustainable and environmentally friendly production techniques.
CURRENT TARGET MARKET AND POSITIONING
Currently, Boardroom primarily conducts B2B trade and its main target market is in the promotional
products industry. Boardroom is positioned as an entity that produces high-quality products that are
made through sustainable production techniques.
EVALUATION OF 4P’S
Product: Currently, Boardroom manufactures custom made, fashionable and low-impact clothing
primarily for the promotional products industry. All of the items in the current catalogue are made
from environmentally friendly fabrics: rayon from bamboo, organically grown cotton, recycled
polyester, recycled cotton, Tencel (made from wood pulp) and eco-charcoal (made from ground-up
coconut shells) (Boardroom, 2014). A collection of items that Boardroom offers, for both men and
women, includes T-shirts, crewnecks, polos, jackets, pants, and short, etc.
Price: In general, Boardroom products are in the medium to high price range because of the unique
quality and reliability of its products. Boardroom ships its orders in bulk and the price of an item
depends on the quantity ordered. For example, a full sleeve button-down shirt is priced at $69 per
piece if the order placed ranges between 48 to 143 shirts. If the order is placed within the range of
144 to 710 shirts, then each shirt would cost $63 and so forth.
Place: The company’s point of sale is its factory located at 1201 Franklin St., Vancouver, British
Columbia. Boardroom uses UPS and FedEx to ship products to its current B2B customers.
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Promotion: Boardroom promotes its products through personalized magazines and catalogues
along with the company’s personal website that contains product and price information. Trotzuk
also uses various environmental summits as a platform to promote the company’s products.
KEY SUCCESS FACTORS
Boardroom has been successful given its ability to differentiate. Boardroom’s current customer base
values the quality of the textiles as well as the ability to customize the end product. Moreover,
Boardroom is able to deliver an order within 30 days for an order below 50 items. Similarly, the
organization has done an outstanding job by reaching its target market through promotional
agencies, trade shows, and mass catalogue mailing.
In the men’s clothing industry, the establishment of a strong brand name and a clear market position
is a key success factor. Customers will then have clear associations with the brand that will affect the
purchase decision process. Clothing design plays a significant role in the industry as organizations
that have the ability to understand and meet the preferences of the market will succeed. It is crucial
to have good inventory management as the industry is highly driven by seasonality and fashion
trends.
CURRENT OBJECTIVES
So far, Boardroom has manufactured and designed apparel primarily for the promotional products
industry. However, Trotzuk would like Boardroom to expand its customer base and reach out to the
end consumer directly. He plans to launch a clothing line of fashionable and low-impact business
casuals targeted at 20 to 55 year-old working men. The exchange between consumers and
Boardroom will take place solely online, where consumers will place their orders on Boardroom’s
website and the orders will be mailed out from the factory. Trotzuk plans to launch this product line
in January 2015. In the first year of launch, Trotzuk aims to generate $1 million worth of sales.
EXPECTED FUTURE STRATEGIES
Product: In 2015, Trotzuk plans to launch a new line of business casuals to men. The clothing will be
of high quality, manufactured with sustainable and eco-friendly production methods similar to its
current production model.
Price: For the new line of business casuals, Boardroom plans on pricing its apparels at the medium
to high price range for its quality, unique style, and eco-friendliness of the fabrics used. Trotzuk plans
to charge a margin of 60% in order to have a substantial working capital and cover various costs that
the business would incur such as shipping. For instance, Trotzuk estimates a full sleeve button-down
shirt to be priced approximately $65 to $70.
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Place: For the new product line, Boardroom plans to reach its consumers through the company’s
website, making it a Boardroom Eco Apparel online point of sale.
Promotion: In the future, Trotzuk plans to focus heavily on promoting his new product line online
and the use of Search Engine Optimization (SEO) could be effective in making Boardroom become
more visible on the Internet.
People: Boardroom’s workforce includes dedicated employees who have the experience and
knowledge to be able to venture into manufacturing and selling business casuals to the end
consumers. Boardroom’s staff have been working in the apparel industry and are well equipped to
foray into manufacturing other types of clothing.
CUSTOMER ANALYSIS
FUTURE CUSTOMERS
As Boardroom’s new B2C product line is still in the planning stage, it has neither current customers
nor core customers. Boardroom’s future customers are end consumers who purchase business
casual clothing online and reside in North America.
Growing Demand for Business Casual Clothing
Business casual clothing has been gaining ground over traditional business attire since the 90’s.
The Society for Human Resource Management reported that 95% of U.S. companies had different
extent of casual day policy in place. The casual clothing manufacturer - Levi Strauss - claimed that
75% of American workers dressed in casual business attire everyday (Inc, 2014). The trend first
emerged in high-tech companies and then spread to various types of businesses. Many businesses
found they had to allow casual dress codes in order to compete for talented employees. Nowadays,
most former white-collar workers have business casual wardrobes, and they often use it not only for
work but also for leisure activities such as shopping and dining out (Anderson, 2000). These
consumers favour such clothing and are willing to spend on business casuals. Thus, making them
Boardroom’s potential customers.
However, many large companies and professional industries, including banking and legal fields,
recently reinstated more formal dress codes. Such professionals deal extensively with clients on a
regular basis; therefore, they need a formal attire to project a more professional image (Temple,
2002). Workers in these companies are unlikely to become Boardroom’s future customers.
Trend towards Online Shopping
Canadians’ use of the Internet for online purchases has been growing significantly over the recent
years. According to Statistics Canada, Canadians spent $18.9 billion online for goods and services in
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2012, which was a 24% increase from 2010. Internet users aged 25 to 34 years were most likely to
make a purchase online, as 69% did so in 2012 (Statistics Canada, 2013). Among the online shoppers,
42% purchased clothing, jewellery or accessories. These online shoppers are potential future
customers of Boardroom. The growing trend towards online shopping in North America guarantees a
significant customer base for Boardroom’s new product line.
SEGMENTATION
Segmentation Variables
When segmenting the online retail market for clothing, it is important to focus on consumers’
likelihood to purchase clothing online. Moreover, as Boardroom intends to position its new product
line in the medium to high price range, it is essential to look at the consumers’ propensity to pay
medium to high price for clothing. These two key variables will be used to segment the consumers in
the online men’s clothing industry.
Key Segments
(1) High Spending Online Shopper
Men who shop online and have the propensity to pay medium to high price for clothing
17.5% of male consumers belong to this segment (Appendix 1). The primary research shows that
this segment’s total spending on business casuals purchased online is $269 to $484 million per
annum (Appendix 2 & 3).
This segment consists of men who have high disposable income, regularly shop online, and prioritize
the quality of clothing. They value quality over quantity and they tend to buy high-quality clothing at
a high value but make a relatively low volume of purchase. They are not interested in having a wide
range of clothes to wear and are not necessarily looking for individuality — they would rather stand
out in terms of quality than in terms of fashion trends. They do however, have an awareness of
brands and are loyal to labels that they consider to be of high quality. They do not usually shop
around to compare prices. Shopping is done efficiently and quickly — they know which brands cater
to their style and quality requirements and remain loyal to such brands for a long period of time.
Their pursuance of shopping efficiency explains their preference to shop online so as to save time
and effort. They are more likely to buy from the websites of stores they have tried before and trust.
(2) High Spending Offline Shopper
Men who do not shop online and have the propensity to pay medium to high price for clothing
10.8% of male consumers are in this segment (Appendix 1). As they do not shop online, this
segment’s total spending on online business casuals is $0 (Appendix 2 &3). This segment consists of
either young men with high disposable income as they live with their parents, or mature working
men earning high income with children in their teen years. The younger group is very fashion
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conscious and they want their clothes to be functional and practical. They are willing to spend a
significant amount of time browsing and looking for the right clothing items. They value individuality
in clothing and prefer trying them on before purchasing. The older group values quality and is
willing to pay premium price. They prefer the classic look and usually shop in exclusive independent
retailers and high-end department stores. They like when their clothing reflect current trends. They
also prefer natural over synthetic materials. Both groups prefer in-store shopping over online
shopping.
(3) Low Spending Online Shopper
Men who shop online and may NOT have the propensity to pay medium to high price for clothing
33.8% of male consumers are in this segment (Appendix 1). This segment spends $45 to $120
million on business casuals online per annum (Appendix 2 & 3). It includes men who have low
disposable income and are less willing to spend unnecessarily on clothing. This segment comprises
of two groups of men. The first group includes young men who do not have much income to spend on
clothing items but are conscious of the way they look. They will often buy something new each
season and are willing to experiment new styling and trends within their limited budget. They are
also likely to browse in different shops or utilize the online platform to quickly compare prices and
styles. The second group includes fathers and mature men that mostly purchase for their children.
They are not highly keen on expressing individuality through fashion, and are unwilling to spend
much on clothing as quality is not a high priority to them. They are mostly quick shoppers; therefore,
favouring online shopping to reduce the effort of shopping in a physical store.
(4) Low Spending Offline Shopper
Men who do not shop online and may NOT have the propensity to pay medium to high price for clothing.
This segment occupies 38% of male consumers (Appendix 1). They do not shop online at all,
resulting in the $0 spending on online business casuals. This segment mainly consists of: (1) mature
men who do not spend much on clothing due to their limited budget or their lack of interest in
clothing and (2) elderly men who only buy clothes to replace worn out ones. The first group tends to
buy a larger quantity of items with lower quality and they do not mind what they wear as long as it is
acceptable. They consider buying clothes as a necessary task that needs to be done as quickly as
possible. Therefore, they avoid any inconvenience associated with online shopping such as shipping
hassles and extra waiting time. The latter group is price conscious and gives little or no concern to
styling or fashion. They care about comfort, fit and durability of the clothing, and tend to purchase
new clothes only to replace worn out items. They do not spend much time shopping — they tend to
purchase nearly identical clothes from familiar stores, and are very unlikely to experiment new styles.
Brand name is almost of no value to them. They are also reluctant to shop online, as they are
generally not proficient with the Internet.
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ESTIMATED MARKET SIZE
Men’s outerwear market in Canada is estimated to be $9 billion in revenue in 2015 with a constant
annual growth rate of 1.7% until 2017 (Euromonitor, 2012). The market size of business casual
clothing (“BCC”) and online BCC will be calculated based on primary research findings. The following
estimations are based on a 95% confidence interval.
According to Statistics Canada, there are 14,521,600 males aged 20 to 79 years old in Canada. The
primary research indicates that 77.7% to 88.1% of them are likely to purchase BCC next year. Also,
29.8% to 41.8% are likely to purchase BCC online. The overall average spending on BCC per person is
$579 (Appendix 2). Within this amount, 9% to 16% of the spending is done online. According to the
calculations in Appendix 4, the total spending per annum on business casuals in total is $5.7 billion
to $6.5 billion and the total spending per annum on BCC online is $199 million to $498 million.
PRIMARY CUSTOMER RESEARCH
Research Purpose
While secondary research provided the foundation to segment the market and explores the
psychographics of different groups of consumers, primary research was carried out to confirm and
estimate the profitability of selling business casuals online. In addition, primary research was also
designed to give a better understanding of the factors that influence customers’ purchase decisions,
as well as their clothing preferences and current shopping habits.
Methodology
Exploratory Questioning
The first stage of this primary research involves asking a sample of 10 white-collar male workers
some open-ended questions in order to generate all possible hypotheses. The questions are the
following:
1) If you buy clothing online, what factors affect your purchase decisions? If you do not buy clothing
online, what are the reasons for not buying online?
2) What promotional channels affect your purchase decisions?
3) What business casual clothing items do you have in your wardrobe?
Large-scale Survey
Following the exploratory stage, the second stage of primary research involves conducting a
large-scale survey online and in-person. The goal of this survey is to provide concrete and
quantifiable characteristics of different segments, as well as to draw valid inferences on the larger
market. The survey was posted on popular Facebook groups, forwarded to several LinkedIn contacts,
and administered in-person at Pacific Centre and Metrotown Mall. After filtering out women and
incomplete responses, the sample size includes 187 people who are male and completed the survey.
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This sample may not be as representative as a census, but it gives a good indication of the population
of interest. These respondents were categorized into the four pre-determined segments to provide
more insights about each segment (Appendix 5).
Refer to Appendix 25 for the primary research survey.
Customer Behaviour
When and how often do they buy?
In terms of purchase frequency pattern, the survey results show that most men purchase clothing at
least once a year, with the majority of them shopping for clothing from two to six times per year.
There is, however, a slight difference between men who have the propensity to pay medium to high
price and men who may not. Men who have the propensity to pay medium to high price tend to shop
for clothing more frequently than those who may not have the propensity to pay medium to high
price. This is indicated by the significant difference in the proportion of men who buy clothing at
least once a month within those two groups (Appendix 6).
Where do they buy?
The primary research findings show that 54% of the respondents do shop online, supporting the
aforementioned evidence on the increasing trend for online shopping. Although there is a high
percentage of men who shop online, most of the purchases are still done at physical stores.
According to the primary research, on average, only 17% of the total amount spent on men’s clothing
was done online. Despite the high percentage of men who bought men’s clothing online, when it
comes to business casuals, online shopping is still relatively new and not popular. With a 95%
confidence level, primary research findings suggest that, of all men in the market, the proportion of
men who shop online for business casuals only ranges from 31% to 44% (Appendix 7). Out of the
total amount spent on business casuals, on average, 9% to 16% was done online.
Different segments demonstrate different characteristics in terms of their online spending for
business casuals and the likelihood to purchase business casuals online. Findings suggest that the
High Spending Online Shoppers spent $203 to $365 for online business casuals per year, while the
Low Spending Online Shoppers only spent $25 to $66 on online business casuals per year (Appendix
8). Nevertheless, according to the survey, both the High Spending Online Shoppers and the Low
Spending Online Shoppers indicated higher likelihood to buy business casuals online compared to
the other two segments. When asked about the likelihood to buy business casuals from an online
company in the future, 59% of the High Spending Online Shoppers and 42% of the Low Spending
Online Shoppers stated that they were likely to buy. Only 25% of the High Spending Offline Shoppers
and 14% of the Low Spending Offline Shoppers stated the same thing. This is understandable as
people who have had experience purchasing clothing online are expected to have a higher
willingness to buy business casuals online.
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How do they use the product?
While the main purpose of business casuals is to be worn at work, it is not the only occasion they are
used. A reason that business casuals have become so popular is because the style of such clothing
allows people to wear them to work, social gatherings and while engaging in other leisure activities
without feeling too formal or uncomfortable.
What factors do they consider in choosing between options?
When it comes to factors that affect purchase decisions, clothing design consistently proves to be the
leading factor across all segments, followed by the quality of clothing. On the other hand, brand name
of the clothing, online assistance, and corporate social responsibility are considered the least
important factors to all segments. However, to the High Spending Online Shoppers, the
user-friendliness of the retailer’s website is ranked as the third most important factor, followed by
the retail price of the clothing. The cost of shipping, the ease of returns, and the cost of returns have
limited impact on the decision making process of the High Spending Online Shoppers. In contrast, the
other three segments perceive the retail price of the clothing as the third most important factor, and
they see the user-friendliness of the retailer’s website even less important than all the costs involved
with shipping and returning products. (Appendix 9)
The primary research findings also indicate that men are more likely to buy online business casuals
from a company if it offers styling suggestions and is transparent with its operations. The fact that
clothing are manufactured in Canada has the least appeal to all segments. Likewise, the
eco-friendliness of the clothing also has little appeal to all segments, except the Low Spending Online
Shoppers.
The findings also identify the main barriers that prevent men from buying clothing online. Most men
do not want to buy clothing online mainly because they want to try on the clothing to test the
clothing’s material, quality, and fit before purchasing. In addition, they also want to avoid shipping
hassles (returns, refunds, exchange) and shipping costs. Some less popular reasons that men do not
purchase clothing online include them preferring to shop with a companion at physical locations or
not wanting to wait for the ordered items to arrive.
How do they respond to various marketing programs?
In comparison to other promotional media, the primary research findings suggest that promoting
through company websites is more likely to influence consumers’ purchase decisions in all segments.
However, the people who have previously purchased clothing online seem to respond to email
marketing more favourably than those who have not. Both the High Spending Online Shoppers and
Low Spending Online Shoppers stated that promotional materials in email are more likely to have an
impact on their purchase decisions than that in ads and articles in men’s magazines. On the contrary,
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the two offline segments responded that they were more affected by ads and articles in men’s
magazines. Nevertheless, all four segments indicate that other promotional media such as
newspaper ads, Facebook and Twitter posts, and video clips on YouTube, do not have much of an
impact on their purchase decisions.
Will they buy a product again?
According to a report provided by Mainspring eStrategy Consulting firm, there are four key factors in
building online customer loyalty (Bain & Company, 2014).
The first important factor is the company’s ability to fulfill order accurately and in a timely manner.
This is a vital issue because customers’ satisfaction is formed not when customers place an order, but
when they receive the order. In the apparel industry, improving customer satisfaction scores on
order fulfillment can increase implied customer retention rate by over 2%.
Another important factor is the retailer’s ability to offer a fair price. In the apparel industry, as long
as an online retailer can meet or beat the offline price, or can provide a “good deal”, that company
does not need to compete on price with competitors. In fact, an online retailer can make up for the
higher prices by providing exceptional customer service, reliability, and a variety of selections.
Customer service also plays an important role in retaining online customers. Good customer service
means answering questions and solving problems quickly, whether person-to-person or via
self-service. In the apparel industry, this usually translates into “money back guarantee” policy for
customers who are not satisfied with the products.
Last but not least, website functionality is another major factor in generating repeat sales. According
to the report, the majority of people who would like to buy online are prevented from doing so
because they either cannot find the product they want, or they find the transaction process too
complex. A website needs to make its products easily searched, provide a simple order process, and
give access to real-time inventory information in order draw customers back to that website.
Long-term value of the average customer
The estimated customer lifetime value for the two online segments are:
Lower Bound Upper Bound
High Spending Online Shopper $511 $918
Low Spending Online Shopper $64 $165
Please refer to Appendix 10 for detailed calculations.
17. 14
COMPETITIVE ANALYSIS
COMPETITION OVERVIEW
In this growing market, companies have become extremely competitive to keep their piece of the
market share but at the same time, the size of the industry also attracts several new entrants adding
to the competitiveness of the market (IBISWorld Canada, 2013). To enter and survive in the market,
Boardroom has to carefully analyze its competitors, both direct and indirect. Direct competitors in
this case, are those brands that offer business casuals to men while indirect competitors offer all
other apparel that cater to men. This report focuses on 3 to 4 major competitors within the industry
that are potential rivals to Boardroom. Refer to Appendix 11 for a detailed competitor analysis.
COMPETITION MATRIX
The competition matrix compares Boardroom’s direct competitors (J. Crew, Banana Republic and
Frank & Oak) with indirect competitors (Trunk Club, Harry Rosen, and Le Chateau). Clothing design
and quality are the most important attributes shown in the primary research. On a scale from 1 to 5,
5 being the best clothing design and quality among the six competitors, Harry Rosen is placed at the
top as the company claims to use the world’s finest designer labels. On the other extreme, Frank &
Oak is placed at the bottom as it is not a strong point of differentiation for the brand.
Harry Rosen has the highest price range, as it competes in the high-end segment. As for other
competitors, Frank & Oak has the lowest pricing range. Regarding shipping experience, Frank & Oak
delivers poor services as it takes too long to process and ship an order. In contrast, Trunk Club has
the highest shipping experience as it enables customers to receive products and return them with no
delivery cost.
In terms of styling suggestions, all companies provide it to some extent. However, Trunk Club does an
outstanding job as the stylist handpicks the clothing for every customer. Looking at transparent
operations, there was no company that publicly provided information on its business and operations.
For instance, J. Crew and Harry Rosen are committed to giving back to the community but not to
business transparency
18. 15
BENCHMARKING
Based on the competition matrix, Boardroom’s new product line does not have a strong clothing
design as products may not be designed by premium-brand designers. In contrast, Boardroom’s new
product line will aim to provide outstanding shipping experience to enhance the overall customer
satisfaction. Styling suggestions will also be provided to enhance personalized services. Information
on the business and its financial activities will be available to the public, as well as contributions to
the community and overall whereabouts of the organization’s profits.
PLANNING ASSUMPTION
TOTAL MARKET POTENTIAL
Although there are numerous secondary reports analyzing the fashion market in Canada, there is
none specifically written for the men’s business casual market; therefore, its market potential was
estimated with a heavy reliance on primary research findings. All of these estimations are under the
assumption that the primary research reasonably reflects the purchase likelihood and average
spending of consumers.
NEW PRODUCT LINE SALES FORECASTS
Before the creation of this report, Boardroom’s CEO already set a divisional goal to reach $1 million
in sales revenue one year after the launch of the new product line. It is assumed that this overall goal
is realistic and attainable. All of the following SMART objectives will be calculated to reach the $1
million sales goal. For example, with the average conversion rate of 3%, the minimum number of
website visits needed to achieve the sales goal is calculated. The marketing budget required to reach
the given goal is also calculated, and if the amount exceeds the company’s financial ability, it may
need to lower its sales target to a more realistic and affordable level.
SEGMENTATION
In order to represent the whole male population more accurately, data from TNS Worldpanel Fashion
(TNS) were used to draw a conclusion for segmentation. TNS monitors the fashion purchasing trends
of 15,000 demographically representative British individuals, and provides detailed insight into their
fashion purchasing behaviour and attitudes. This report is a strong complement to the primary
research as it covers all demographics and includes in-depth analysis of consumers’ characteristics.
An assumption is made that men in the UK and North America have similar attitudes and behaviour
towards fashion.
OTHER ASSUMPTIONS
First, it is assumed that the primary research findings are reasonable representation of the
behaviour of male consumers in Canada. The sample may be slightly biased considering the
respondents were mostly from mall intercepts in Vancouver, the team’s personal connections, and
19. 16
Boardroom’s CEO’s LinkedIn contacts. Therefore, the sample may have missed consumers in certain
demographics and provinces. The comprehensive TNS report mentioned above will therefore help
fill in this loophole, generating a more representative customer analysis.
Second, it is assumed that consumers in the U.S. have similar behaviour with those in Canada. The
Society for Human Resource Management reported that there is a growing trend towards business
casuals in the U.S. Findings were also implied on Canada to prove the growing opportunity for
Boardroom’s new product line.
Third, the competition matrix is based on the assumption that the team’s judgement on the
positioning of competitors based on attributes such as clothing design, quality, retail price, shipping
experience, styling suggestion, and transparent operations, is objective and reasonable. The
positioning of competitor’s design, quality, and price is based on similar items. The shipping
experience, styling suggestion, and transparent operations are conclusions based on information
available through the companies’ websites and public domains.
Fourth, it is Boardroom’s original plan to launch the new product line in January 2015 and serve only
the Canadian market in the first year. It is assumed that this marketing plan is strictly bounded by the
given timeframe and is designed to maximize impact under the time constraint.
SWOT ANALYSIS
Refer to Appendix 12 for a detailed SWOT analysis.
20. 17
GOAL AND OBJECTIVES
GOALS
BOARDROOM’S CORPORATE GOAL
To maximize growth under the principle of sustainable development.
DIVISIONAL GOAL
To achieve $1 million in sales revenue one year after launch of the new product line within Canada.
MARKETING PLAN GOAL
To create awareness and develop a strong customer base for the new product line that is going to be
launched in January 2015.
CORE STRATEGY
TARGET MARKET RECOMMENDATION
Based on the analyses, Boardroom’s recommended target market is the High Spending Online
Shoppers. Although the proportion of male in this segment is comparatively smaller (17.5%), its
market size in terms of total spending on business casual clothing online is the largest ($269 to $484
million). Their attitudes and behaviour towards fashion and shopping also match ideally to the
characteristics of Boardroom’s new product line.
First, Boardroom intends to sell its business casuals featuring quality in the medium to high price
range. High Spending Online Shoppers place quality in the highest priority and have high propensity
to pay premium price for business casual clothing. Second, Boardroom will sell its business casual
clothing solely online. As High Spending Online Shoppers favour shopping online, it will be easy for
Boardroom to encourage them to use the online platform without much effort and cost needed to
overcome the barriers of online shopping. It is unlikely for Boardroom to stick to the latest trend by
frequently renewing its product offerings. The fact that High Spending Online Shoppers are not
interested in the individuality and latest fashion trends makes them an ideal target segment for
Boardroom.
Although High Spending Offline Shoppers have high propensity to pay medium to high price, they
prefer to try the clothing on before purchasing them and want to avoid any shipping hassles. These
barriers are costly for a small company like Boardroom to overcome. The extra profit earned by
converting a small portion of this segment into online shoppers may be overwhelmed by the cost
spent to weaken these barriers. For the other two segments who may not have the propensity to pay
mid-high price (Low Spending Online Shoppers and Low Spending Offline Shoppers), their
21. 18
preference for low price clothing and lack of interest in clothing quality render them unsuitable and
unprofitable for Boardroom to target.
POSITIONING RECOMMENDATION
With this target market in mind, Boardroom should position its new clothing brand with the
following positioning statement: For male consumers who are familiar with online shopping and
have the propensity to pay medium to high price for clothing, Boardroom’s new clothing brand
provides high-quality business casuals with a contemporary and smart look, accompanied by
exceptional styling suggestions and delivery services while being transparent in its sustainable
practices. Unlike Frank & Oak that has a low reputation in customer service and provides men’s
clothing with relatively lower quality and basic design. Boardroom will be able to differentiate itself
by building on its core competencies and surpassing the competition on the attributes that
customers highly value. As indicated in the primary research, those attributes include clothing
quality and design, customer service, and the company’s operational transparency.
SMART OBJECTIVES, STRATEGIES AND TACTICS
SMART OBJECTIVE 1: TO LAUNCH BOARDROOM’S NEW PRODUCT LINE IN JANUARY 2015
Strategy A: Product
Tactic 1: Launch 10 items supported by the most selected items in the primary research
To start off the new product line, it is recommended that Boardroom includes the following ten items
in its men’s business casual clothing catalogue.
(1) Button-down shirt, (2) Dress pants, (3) Blazer, (4) V-neck sweater,
(5) Khakis, (6) Peacoat, (7) Polo shirt, (8) Overcoat, (9) Basic jacket, (10) Crew-neck sweater
The respondents were asked to select the top ten business casual items they believe are the most
important to them. The above ten items are recommended because they are the most selected ones
in the primary research (Appendix 13).
Tactic 2: Create a new brand that is appealing to the target market
Since the current brand image of Boardroom may not be easily associated to business casual clothing,
it is strongly recommended that Boardroom introduces a new brand that is appealing to the target
market in order to spark interests among consumers and differentiate itself from competitors.
This marketing plan suggests Boardroom’s new product line to be called ZUK’s - a new appealing
brand that will resonate with the target market’s core values. ZUK’s key brand attributes and
character will include high quality, contemporary, smart, sustainable, and transparent. The main
marketing communications will focus on the high quality products and contemporary designs, as
they are the most important factors in the target market’s evaluation of current or potential online
22. 19
business casual purchases. Smart, sustainable, and transparent will be the underlying message that
accompanies the main attributes in all communications; although they are not explicitly emphasized
like quality and design, they should help connect the five key brand elements together.
Ideally, consumers should perceive ZUK’s as a smart brand that provides contemporary and high
quality business casuals, and values high operational transparency as well as sustainable practices.
The table below briefly summarizes ZUK’s communication elements:
Tone of Voice Colour Palette Typography
Explicit:
High quality,
Contemporary
Implicit:
Smart,
Sustainable,
Transparent
Dark blue & Grey:
High quality, professional, smart
White:
Clean, simple, transparent
Utilize consistent font styles and
layout. Font styles should create a
unique impression. Avoid “cute”
fonts such as Comic Sans MS or a
typical font style such as Times
New Roman
Refer to Appendix 14 for a detailed explanation of each brand character
Refer to Appendix 15 for a sample style guide of ZUK’s that all future marketing communications of
ZUK’s must refer to in order to maintain a consistent brand image.
For the simplicity of this report, the term “new product line” will be used interchangeably with the
new brand name - ZUK’s.
Strategy B: Price
Tactic 1: Charge all ZUK’s products in the medium to high price range
The new product line is suggested to be priced at the medium to high range. Given the direct
competitors’ pricing outlined in the competitive analysis, it is recommended that ZUK’s prices its
products higher than Frank & Oak but lower than Banana Republic. For instance, Frank & Oak offers
men’s shirt at a price range of $45 to $65 per piece while Banana Republic offers the same thing at a
$50 to $150 range, the price range of ZUK’s men’s shirt should be set at $50 to $120 per garment.
Pricing higher than Frank & Oak can be attributable to a brand image that carries high-quality
clothing in addition to providing excellent customer service relative to Frank & Oak. It is not
recommended that ZUK’s implements premium pricing. This is because ZUK’s clothing is neither a
designer nor a luxury brand like Hugo Boss or Dolce & Gabbana. If consumers compare ZUK’s with
these indirect competitors, premium pricing may not portray the intended brand image of ZUK’s,
reducing the overall brand competitiveness. This pricing strategy will apply to all other items in
ZUK’s product offerings. Refer to Appendix 16 for a pricing scale relative to competitors
23. 20
Strategy C: Place
Tactic 1: Facilitate sales and distribute solely through the company’s online channel
For the purpose of this report, the “place” branch of the 4P’s will be solely online because the
distribution channel had already been selected by the CEO prior to the creation of this report. All
sales will be facilitated via the new product line’s website - for example: www.zuks.ca. All products
will be manufactured at and distributed from Boardroom’s factory in Vancouver, BC.
Strategy D: Promotion
The promotion strategies for the new product line will be discussed in more detail under the
remaining SMART objectives that are specifically tailored to post-launch periods.
SMART OBJECTIVE 2: ACHIEVE A MINIMUM OF 64,000 WEBSITE VISITS PER QUARTER IN 2015
Refer to Appendix 17 for the calculation of the website traffic target.
Strategy A: Raise Brand Awareness and Promote the Website through Online Marketing
Channels
Since ZUK’s has no existing brand awareness, in order to achieve the desired website traffic, it is
necessary to bring the brand to the attention of as many potential customers as possible. Considering
that the target market of ZUK’s is people who are familiar with online shopping, online marketing is a
plausible marketing method. By utilizing the online platform, and with the right strategy, ZUK’s will
be able to reach its targeted customers on a cost-effective basis. Online marketing also allows for
real-time tracking and measuring, which makes it preferable than traditional advertising channels.
Tactic 1: Search advertising
Search advertising is the method of placing text-based advertisements on web pages that display
results from search engine queries. With search advertising, ZUK’s can target men who have some
purchase intention for online business casuals. For example, ZUK’s can bid on keywords such as
“business casuals for men” or “styling suggestion for men’s business casuals”, so that when potential
customers search for these phrases on search engine, ZUK’s ads would show up. Since search
advertising only displays an ad if the ad’s content and keywords match what Internet users search for,
the people who are exposed to such ad are more likely to visit the website.
There are many search advertising services. However, to be most cost-effective, it is recommended
that ZUK’s only focus on Google AdWords since advertising on Google alone can give access to 48% of
all Internet users. Also, by allowing advertisers to target specific geographical areas, topics or
websites, AdWords helps companies save money from attracting unwanted audience. Advertising
costs can be further minimized since advertisers only need to pay when people click on their ads.
Thus, for a new online clothing brand like ZUK’s, Google AdWords is the best method to raise brand
24. 21
exposure and drive website traffic within a limited budget. However, an AdWords campaign will not
achieve the desired effect without the right keywords, content, and bidding amount. ZUK’s will need
to spend time monitoring the website traffic generated through this method on a regular basis to
make necessary adjustments.
Tactic 2: Display advertising
To complement search advertising, which includes only text-based ads and is more geared towards
people who have already formed some purchase intention, display advertising is mainly used to raise
general brand awareness through other types of ads, such as banner or video ads. By utilizing
engaging visuals and occupying a bigger space, display advertising allows a brand to better capture
the target audience’s attention, which leads to the desired search for the brand’s website.
Since target customers highly value clothing design, using display advertising to showcase the
designs that ZUK’s offers will allow the company to raise customers’ interest in its new apparel
brand. Also, since these customers are likely to be influenced by ads in men’s magazines, it is
recommended that ZUK’s place banner ads on online magazines that align with ZUK’s brand image
and match the target market’s psycho-demographics profile. This is a cheaper and more flexible
alternative to advertising in print magazines. Considering the target market’s characteristics, the
three following online magazines are the best candidates for this tactic: askmen.ca, gq.com, and
sharpformen.com.
Tactic 3: Search engine optimization
Search engine optimization (SEO) is the practice of improving a website’s visibility in a search
engine’s unpaid results list. The higher the position of a website on search engine result pages, the
more impressions and clicks that website would receive. Unlike search advertising, SEO takes a
longer time to see effects and is initially more costly. However, effective SEO will result in consistent
website traffic in the long run without making the site’s owner pay for each website click, making it a
more cost-effective method for the website’s long-term success.
It is recommended that ZUK’s adopts SEO practices early, preferably when the company starts
constructing the e-commerce site. Without paying early attention to SEO, it would be costlier for
the company to adopt this tactic later since there is a lot of technical work involved in terms of the
website’s infrastructure and content. Even when the website has the sleekest design on its surface, if
it is not optimized properly, it will lose opportunities to appear on search engine results list. Due to
the complexity of SEO, ZUK’s may consider outsourcing this activity to a third-party company which
specializes in offering SEO services.
25. 22
Tactic 4: Blogging
According to a report by Hubspot, companies that publish 15 or more blog articles per month
generate five times more website traffic than companies that do not blog at all, and those
that blog 9 to 15 times per month generate three times more traffic than companies that do not blog.
Thus, in order to achieve the targeted website traffic, ZUK’s should blog frequently on its website
about subjects that are relevant and appealing to its target audience. This activity not only helps
ZUK’s attract qualified prospective customers and bring repeat visits, but also allows the company to
build up ZUK’s intended brand image. On top of that, blogging helps improve the ranking of the
website on search engine’s results list, which further increase the website’s exposure and drive more
traffic.
Considering the target market’s characteristics and the brand’s positioning, ZUK’s can blog about
topics such as men’s business casual styles, the brand’s clothing quality, its manufacturing process, as
well as its sustainable practices. While blogging may sound like an easy task, in order to truly engage
the audience, ZUK’s needs to put serious effort in content planning and scheduling so that all of its
blog posts would have high quality that will ultimately form a coherent story about the brand and/or
the company.
Tactic 5: Social media
When it comes to clothing purchases, the primary research suggests that ZUK’s target market is
heavily influenced by online reviews, followed by Facebook and Twitter posts. Thus, ZUK’s should
establish its presence on social media sites so that it can leverage customer interactions to increase
brand awareness. ZUK’s should focus its effort on Facebook, Twitter, and Yelp. Being on Twitter and
Facebook will allow ZUK’s to maximize its reach as these two channels have the highest number of
male users among all social media sites. Being on Yelp will further enhance the brand’s reliability and
exposure because Yelp has a strong base of frequent users and is the most trusted source for small
business reviews and ratings. It is essential that ZUK’s connects each of its social media page to its
website, and vice-versa.
While ZUK’s needs to maintain consistent tone of voice and brand image across all platforms, the way
ZUK’s interacts with users of different social media sites may vary depending on the site. To engage
Facebook users, ZUK’s should post at a maximum of four times per week, with content revolving
around the company’s updates (e.g. new blog post, new clothing collection, current promotional
campaigns, tips to dress smartly in the workplace, clothing suggestions, or its sustainable practices).
As visuals are important in the fashion industry and are strong communication tools, it is
recommended that ZUK’s includes visual elements in each of its posts on Facebook to convey the
smart and professional image of ZUK’s. Unlike on Facebook, ZUK’s should post more frequently on
Twitter, ideally four to five times a day, in a more conversational tone. The content on Twitter should
26. 23
follow the same theme with that on Facebook. However, with Twitter, ZUK’s can post more real-time
updates to generate hype for its events, and it can reach out to make conversations with influential
bloggers and stylists to build up credibility. Meanwhile, the way ZUK’s interacts with Yelp users is
limited to responding to their reviews and maintaining accurate information about the company.
Since word-of-mouth is an extremely influential source of information, ZUK’s needs to constantly
monitor customers’ reviews on these channels to maintain the brand’s reputation.
Strategy B: Raise Brand Awareness and Promote the Website through Offline Marketing
Channels
With the online market becoming more and more cluttered, ZUK’s should also consider promoting its
website through offline channels to cut through the noise and further increase exposure. Although
offline marketing usually costs more than online marketing, this strategy can still be cost-effective if
ZUK’s chooses the right promotional media and approaches the right target audience.
Tactic 1: Direct mail
According to a US’s research, direct mail recipients are more likely to make an online purchase and
buy more items than shoppers who do not receive direct mail. Also, based on a UK’s research, direct
mail marketing is more likely than online marketing to encourage consumers to go to a website and
seriously consider a purchase from a company for the first time. Also, according to Canada Post, 95%
of Canadians read their mail the same day it arrives. Thus, among all traditional advertising methods,
direct mail seems to be most optimal tactic to drive website traffic due to its relatively low cost,
targeted reach, longer attention span, and high response rate.
In order to maximize the impact of this tactic, it is recommended that ZUK’s utilizes direct mail as a
component of an integrated marketing campaign rather than as a stand-alone activity. In that sense,
ZUK’s may launch a direct mail campaign before any big promotional event to raise customers’
awareness and interest. ZUK’s might want to include a promotional code in each direct mail in order
to track the website traffic generated through this tactic, as well as to give consumers more
incentives to visit the website. To minimize advertising expenses, it is suggested that ZUK’s has a
clear definition of the target market and selects target lists accordingly. Initially, ZUK’s may focus
only on the Vancouver region for its direct mail campaign. As the company grows bigger, it can send
direct mail to other cities as well.
Tactic 2: Public relations
Public relations (PR) are the practice of managing a business’s image and relationships with the
press in order to receive virtually free publicity in the way it wants. Although the process can be
time-consuming and need a lot of care to get it right, this is still a very cost-effective method for small
businesses to gain exposure due to the following reasons: publicity usually reaches a wider audience
27. 24
than does advertising, and people are more likely to trust third-party sources of information.
Although it is not easy to grab the press’ attention, if a company has insightful materials and
maintains strong relationships with journalists, it can still earn good media coverage.
While there are many ways to gain publicity, the easiest and least expensive way is to send out ZUK’s
-related information to journalists in the hope that they will write about the company. The more
detailed and exciting the materials ZUK’s prepares, the more likely ZUK’s business will be featured in
the news. To maximize the impact of PR, it is suggested that ZUK’s builds connections with
journalists who write for magazines that are catered to ZUK’s target market. Being on those
magazines would not only help increase exposure but also help build ZUK’s brand image.
Strategy C: Stimulate Word-Of-Mouth for the New Brand
According to Nielsen’s Global Trust in Advertising Survey 2012, 92% of consumers trust
word-of-mouth above all other forms of advertising and 70% of consumers consider online reviews
as their second most trusted source (Zhang, 2014).
Tactic 1: Influencers
With these statistics in mind, we hope to rope in some influencers such as fashion bloggers to try out
ZUK’s products and express their honest opinions about the product and service on their personal
blogs or on social media platforms. In order to grab their attention, ZUK’s would have to convey its
products’ uniqueness and competitive advantage to such influencers in order for them to get to try
the products and stimulate word-of-mouth advertising. ZUK’s can connect with the appropriate
influencers through websites such as LinkedIn and Twitter. Once they agree, they will be asked to go
through the entire process of signing up for membership on ZUK’s website like a new customer and
order the items that interest them, and their order will be mailed out. The entire process will be free
of charge for the bloggers but we will encourage them to provide detailed and honest information.
Tactic 2: Referral program
Once ZUK’s begins operations, customers will be encouraged to refer the brand to their friends. In
order to incentivize the customers, ZUK’s will offer a Referral Program on its website in order to
promote the tactic. Under the Referral Program a customer can import “friends” or “followers” from
his preferred social media website and if the referred customer decides to make a purchase, the
referrer will gain a 20% discount off on their next purchase. ZUK’s will offer incremental discounts to
its customers under the referral program, where a customer will receive more discounts and rewards
as more of his friends make purchases from ZUK’s.
28. 25
Tactic 3: Manage review program
People trust what their friends say more than what the brand says about itself. This is why people
are more likely to try something new based on what their friends say on social media. Whether good
or bad, people are easily influenced by what their friends say, especially in today’s online world
(PUB802, 2014). Customers will be given the incentive to collect reward points upon providing ZUK’s
feedback for their service. ZUK’s website will offer a section where customers can offer their
feedback and reviews on all matters related to their sales experience with ZUK’s. A complete
feedback will award customers with reward points. The more feedback a customer provides, the
more points they earn, and the accumulation of which will result in rewarding discounts to
customers on their future orders.
SMART OBJECTIVE 3: CONVERT 3% OF TOTAL WEBSITE VISITS INTO SALES WITHIN ONE YEAR
AFTER LAUNCH
Strategy A: Overcome the Main Barriers of Online Purchasing
Tactic 1: Organize pop-up stores
The primary research shows the main barrier preventing consumers to purchase online is that they
“want to try on clothing”. Therefore, pop-up stores will help address this issue and will create a new
environment for customers by enabling them to experience ZUK’s in a three-dimensional way.
Pop-up stores will be small and temporary. An example of a pop-up store is a transparent tent
(Appendix 18). It must be big enough to gather at least a group of ten individuals, have a minimum of
two changing rooms, and allow products to be displayed. The pop-up store should also be resistant
to weather conditions (e.g. waterproof) and enable the use of electronic devices to allow customers
to make online purchases. Similarly, customers will be able to record their measurements and sizes
and save them into their accounts right away. Once this is done, future purchases will be fairly easy
as their measurements have already been recorded into the system.
Locations of pop-up stores include fashion shows, trade shows, and areas close to the target markets’
workplace and area of recreation within BC. We recommend bringing the pop-up store to life at least
three times a year and launch it based on customers’ shopping habits (e.g. every 1st or 16th day of
the month, fashion show weekend, summer). The pop-up store could also feature a special guest (e.g.
stylist) in order to attract customers. Announcements of appearance should be done through the
Facebook page and website as it is a cost-effective and real-time promotion. Facebook events could
be created in order to reach a larger audience and spread awareness of the event.
By engaging the customer in a new experience, associations such as transparent and smart will
resonate. Customers will be curious and eventually decide to enter the pop-up store. The one-on-one
interaction starts as soon as the customer steps in. Customers will be educated about the brand and
will have the opportunity to interact with a stylist.
29. 26
Tactic 2: Establish a sustainable shipping policy
Having an effective shipping policy that ensures on-time delivery for the customers is essential to
overcome the main barriers to online shopping, which are ‘try on clothing’ and ‘shipping hassles’
from our primary research.
Shipping and Handling | Zuks.ca
Provide free shipping on all domestic orders placed on website, with no minimum order size. Orders
will be processed and shipped within 2 business days. All orders are standard (allow about 5 to 7
business days for delivery). Optional 2-day air shipping at cost. Orders must be submitted before
12:00 noon PST Monday-Friday.
Returns and Exchanges | Zuks.ca
Returns are allowed for up to 90 days from the purchase date. Products must be in the same
condition and in the original tags and packaging. Return shipping has no additional cost. You will be
provided with a pre-paid carrier domestic label for returns.
Returns will be processed within 2 business days after receiving the items. Refunds will be processed
and a credit will be applied to your original method of payment within 7 days. Please note that
depending on the method of payment, it could take additional 2-10 business days after the credit is
applied to your account.
Strategy B: Facilitate and Enhance Consumer Purchasing Process
Tactic 1: Create a user-friendly website that exhibits transparency and credibility
The fact that the website will most likely be the first point of contact with consumers,
user-friendliness of the website is crucial to the brand’s future success as it could convert a visit into
sales. It would be ineffective to ignore this tactic because the customer analysis stated that men
consider the user-friendliness of a website an important factor in online shopping.
To further facilitate the consumer purchasing process, ZUK’s is recommended to invest heavily in
accessibility to ensure all website features are compatible with all browsers (mainly Chrome, Firefox,
Safari, and Internet Explorer). ZUK’s can also demonstrate ZUK’s high transparency and credibility
by displaying the company’s contact information, outlining clear policies for shipping, returns, and
privacy, and disclosing information regarding manufacturing locations and processes.
Another important aspect of the user-friendliness of ZUK’s website is to design a clear shopping
system and interface. The search button should always be clear and visible in all web pages. Zooming
options and other exploration tabs such as selecting different colours and angles of the clothing
should be clear and easy to navigate. It is also useful to install a sidebar showing clear a cost
breakdown as an item summary as well as providing descriptions of how and where materials were
30. 27
made. Other customers’ online reviews on the products are recommended to be shared as the
primary research shows that the factor “online review” is the second most influential in consumers’
decision making process. An “ADD TO CART” or “BUY NOW” buttons should be located
unobstructedly. The checkout process should be easy and informative regarding payments and
delivery options. Sufficient payment methods, mainly Visa, Mastercard, PayPal, and Interac, should
be available to customers. Finally, it is recommended that the website has online assistance to
support customers with technical difficulties.
ZUK’s can also incorporate a blog for customers to keep up to date with upcoming events and
promotions. Pop-up store dates and locations will be announced on the blog to generate more
awareness and attraction to the event. The blog will also help connect website visitors to ZUK’s
Facebook page and Twitter account. Additionally, it can also be a source of ZUK’s updates such as
journal entries from the CEO or a stylist, about fashion or ZUK’s corporate social responsibility
initiatives.
Tactic 2: Offer free styling services
The primary research findings indicate that men are most likely to purchase business casuals online
if the company offers styling suggestions. Therefore, it is recommended that ZUK’s offers free styling
services to further differentiate itself from its competitors.
When a potential customer arrives www.zuks.ca, he has three options. The details of each option are
explained below:
1) Self-guide shopping:
This option is for the customers that do not need or want styling suggestions. This means that the
customer is free to browse ZUK’s online catalogue and shop at his own convenience.
2) Self-help styling:
The self-help styling option is for customers who would like some styling suggestions but do not
want to interact with an actual stylist at the time of selection. Once the customer selects “self-help
styling”, he will be directed to a group of photos that filter certain styles into each category such as
casual, smart of serious.
3) Live chat with a stylist:
This option provides the full service of styling suggestion. The customer will get connected with a
stylist and a chat box will appear to start a live consultation. Before the chat begins, the customer will
need to fill in a brief online form with his name, email, current city (for time zone reasons), and
answer the question - “How did you hear about ZUK’s?”. If the stylist is currently occupied, the
31. 28
customer will be directed to self-help styling for the time being with a window displaying that his
personal stylist will call or email him within 24 hours. Meanwhile, the customer has the option to
answer other relevant styling questions via a link sent to his email, so that when he gets connected
with his stylist, he will already have some recommendations lined up.
Refer to Appendix 19 for a list of suggested topics a stylist could discuss with a client.
SMART OBJECTIVE 4: ACHIEVE AN AVERAGE CUSTOMER SATISFACTION SCORE OF 4.5 OUT OF
5 WITHIN ONE YEAR AFTER LAUNCH
Strategy A: Maintain Close Customer Relationships and Facilitate Feedback
Tactic 1: Pre-set FAQ
A page consisting of answered FAQs will be put up on ZUK’s website for customers to be able to refer
to in case they have any doubts, questions or concerns. This tactic would allow customers to be able
to have their questions answered quickly while they are still active on ZUK’s page. Once their
questions are answered they can proceed with their shopping or website visit on the page.
Tactic 2: Staff optimization
In order to improve customers’ shopping experience with ZUK’s, the company will have to optimize
its staff. By having the right number of staff, customers would not have to wait on hold for long, on
phone or for online chat service, before they get in touch with a sale representative. The customers
will be attended to sooner and it will result in less frustrated and more satisfied customers. ZUK’s
will also employ a highly responsive online chat service through which the company will be able to
respond to customers in a more personalized manner and be available to serve them promptly.
Tactic 3: Emails
ZUK’s will be emailing promotional offers bi-weekly. Apart from that, to build a more personal
relationship with its customers, ZUK’s will also send out personalized emails to its customers on
their birthdays and on festivals such as Christmas, Thanksgiving and New Years.
ZUK’s will also send out emails confirming customers’ orders and also provide tracking information
and expected delivery date in order to keep the customers up to date. Once the customers have
received their order, they’ll be asked to provide ZUK’s with feedback, through e-mail, regarding their
shopping experience with ZUK’s including the order processing and delivery service for the company
to have a better understanding of what their customers feel about the service and find out ways to
improve it. ZUK’s will also offer rewards, such as discounts, to customers that offer unique
suggestions to the company.
32. 29
Strategy B: Establish an Effective Order Processing and an On-Time Delivery System
Tactic 1: Implement effective schedules for the logistics team
For ZUK’s and its employees to stay on track and prioritize customer demands, the company will
have to establish an effective schedule for the logistics team at ZUK’s to follow. This way, the
company can give customers more accurate information on order delivery and customers’
expectations could be met better.
ZUK’s will also need to perform regular inspections and tests to make sure that its operations are
working effectively and efficiently. ZUK’s could also try and acquire certifications for their operations
and display them to customers. This would offer assurance to purchasers and win their trust.
IMPLEMENTATION TIMELINE
Please refer to Appendix 20 for a full schedule of planning and activation of all strategies and tactics.
Tactics that require further clarification are marked with numbers corresponding to the explanations
below.
Further Explanation for Certain Tactics:
1. Direct mail will be sent out one month prior to the launch of each pop-up store. This is to create
awareness and word-of-mouth for the event along with the promotion of the website. Due to the
high cost of direct mail relative to other marketing tactics, its issuance will be limited to three
times a year. In the first year of launch, it will only be sent out twice with the first one being
issued in June as ZUK’s first pop-up store event will be organized in July, 2015.
2. PR (Magazine) will be organized three times a year. The planning time is expected to reduce in
the long run after ZUK’s has established its tone of voice and relationships with PR agencies.
3. Influencers’ reach tactic will be initiated after ZUK’s has gained experience operating the
online sales platform smoothly and is ready to generate a satisfying shopping experience for
influencers This period is assumed to be four months after launch. If ZUK’s still faces
unfavourable comments from consumers by that time, it should postpone this tactic until it is
ready to impress the influencers.
4. Pop-up stores will be organized around every four months, ideally in March when spring
approaches, in July when people enjoy to be outdoor, and during Christmas when people are
actively shopping and trying out new things. The very first implementation of ZUK’s pop-up store
will be in July 2015, after the brand has gained reasonable ground of awareness from online and
offline marketing.
33. 30
BUDGETS
The tables in Appendix 21 & 22 outline the ranges of marketing expenditures used to execute the
recommendations in this marketing plan. While these costs seem high, it is a worthwhile investment
that could contribute to the long-term success of ZUK’s new product line. Note that certain costs are
a combination of several expenditures while some are the expenditures that incurred from
outsourcing. Nevertheless, these are useful estimates for ZUK’s to assess each project’s affordability
and feasibility.
MONITORS & CONTROLS
THE LAUNCH
To ensure the product line is successfully launched with the suggested 4P’s, a tool as simple as a
checklist can be used. For Product, the company can check and ensure the top ten items suggested
are offered. For Price, the company should maintain a regularly updated database containing major
competitors’ pricing on key items to sustain its pricing strategy and positioning. For Place, the
company can run a customer-perspective simulation to confirm that the online purchase platform is
successfully launched and is fully operational. The monitoring metrics for Promotion will be covered
in the following sections.
BRANDING
To ensure that the new branding strategy is properly implemented and that the brand identity
communicated, a brand audit survey is recommended to be carried out one year after the launch, i.e.
January 2016. The survey should be emailed to customers in the company’s database, potentially
accompanied by discounts for the next purchase to encourage participation. If less than half of the
customers are aware of the brand’s key attributes, the company needs to investigate the customer
feedback to explore the reasons behind the ineffective brand leverage, then analyze the branding
strategy and make improvements accordingly. Refer to Appendix 23 for questions that should be
included in the brand audit survey.
ONLINE MARKETING
As online marketing allows for real-time tracking and measuring, ZUK’s needs to keep track of the
website traffic coming from each online marketing channel (search advertising, display advertising,
organic search, social media), as well as the cost per conversion and returns on investment (ROI) for
each channel. Depending on ROI of each tactic, ZUK’s may decide to allocate its budgets accordingly.
34. 31
SEARCH ADVERTISING
Besides the metrics mentioned above, ZUK’s needs to keep track of the click-through-rate of
AdWords campaigns, quality score of each keyword, cost per click, and conversion rate, on a daily
basis. Analyzing these metrics carefully will allow ZUK’s to identify issues and make necessary
improvements in terms of budget allocation, keyword selection, and landing page optimization. For
example, a low conversion rate might signal that the landing page is not relevant to what Internet
users search for, making them leave the site without buying anything. If ZUK’s realizes this issue and
optimizes its landing page, the conversion rate might go up, leading to lower cost per conversion and
higher ROI.
DISPLAY ADVERTISING
Although click-through-rate, cost per visitor, and cost per conversion are also important metrics to
assess display advertising, they are not enough to reflect the real impact of this advertising channel.
Since display advertising is mainly utilized to raise brand awareness, some consumers might not
click on the banner ad immediately when they see it, but they might visit the site later. Thus, ZUK’s
should track if there is any lift in the number of searches for the brand on search engines, or increase
in direct website traffic during the time when ZUK’s display advertising is running.
SEARCH ENGINE OPTIMIZATION
Monitoring SEOs is very important because search engines are constantly updating their algorithms.
Hence, it is difficult to determine which metrics to track. The following three metrics are the ones
ZUK’s should focus on monitoring:
1. Bounce Rate
Bounce rate is the percentage of visitors who leave the website after only viewing one page. Having a
high bounce rate suggests that ZUK’s should make adjustments to keywords and subjects in the
content to ensure that the website shows on top of the list in search engines.
2. New Visitor Growth
This metric is important because simply tracking visitors does not separate new and recurring ones.
ZUK’s will be able to tell whether its SEO is effective by the number of growing new visitors.
3. Conversion Rate
Conversion rate is the number of website visitors performing a desired action, in this case is
purchasing clothing. Although bounce rate and number of new visitors could be growing, conversion
rate may still be stagnant. This means that the ranking of the keywords and contents are not correct.
If ZUK’s conversion rate is low, this metric would be able to mitigate the problem by suggesting that
it needs to revise its keywords to achieve a higher conversion rate.
35. 32
BLOGGING
To monitor the effectiveness of blogging in engaging customers and driving website traffic, ZUK’s can
track the number of comments, likes and shares for each blog post, as well as the time customers
spend on each post. Through that, ZUK’s can identify content that attracts more customers so that
the company can keep delivering on that. ZUK’s should also track the source of blog traffic and the
keywords that led to its blog. Doing so will allow ZUK’s to optimize its blog content based on
customers’ interest and identify channels that it should spend more effort on to promote the blog.
SOCIAL MEDIA
The purpose of monitoring social media is to track how many website visitors were lead from a
social media site. ZUK’s can either use a system to track the visitor’s origin whether they came from a
social media site or not. Another option is to include a question in the post-purchase customer
feedback - “How did you hear about ZUK’s?” Once ZUK’s has the percentage of visitors who came
from social media sites, the company can assess the conversion rate whether these visitors from
social media channels make purchases or not. In addition to this, ZUK’s should track the number of
followers, likes, comments, shares, and reviews, to determine each content’s engagingness. Achieving
many “busy” contents (e.g. contents with many positive comments) is what ZUK’s should aim for
because they could foster more favourable word-of-mouth about the brand. With these monitors,
ZUK’s will be able to evaluate whether social media is a good investment for its online marketing.
OFFLINE MARKETING
DIRECT MAIL
To monitor the effectiveness of direct mail campaign, ZUK’s can assess the change in unique website
visits before and after the launch of the campaign, as well as the sales associated with those visits.
When doing so, ZUK’s should exclude website visits that can be attributed directly to online
advertising (search advertising, display advertising). If ZUK’s includes promotional codes in direct
mails, it can also track the exact amount of sales generated through direct mail campaign. After
calculating the cost per order and ROI associated with its direct mail campaign and benchmarking
them against industry average, ZUK’s can determine if this tactic is cost-effective and worth pursuing,
or if there is something ZUK’s can do improve future ROI.
PUBLIC RELATIONS
Monitoring public relations starts with making sure the information about ZUK’s on press releases is
accurate and engaging. Following that, ZUK’s needs to calculate the number of free media
impressions it receives from these publicities and the amount of costs it was able to save. To assess
the effectiveness of public relations efforts, Boardroom may also want to track the change in unique
website visits, brand mentions on social media, and organic search phrases, before and after the
press releases.
36. 33
WORD OF MOUTH STIMULATION
INFLUENCERS
To monitor Influencers such as bloggers, ZUK’s will have to explore their experience with the
shopping process. ZUK’s can have its own “hashtags” associated with the brand, which would allow
the company to track of who is talking about the brand and the effect it is having on social media. The
influencers shopping experience can also be measured through a survey that would ask them for
their feedback and suggestions. Refer to Appendix 24 for sample questions.
REFERRAL PROGRAM
ZUK’s will have to monitor each customer and the discounts they earn through the referral program.
ZUK’s can also ask each customer, through a survey, after they have been served about how did they
discover or find out about the company.
REVIEW PROGRAM
In order to monitor reviews online, ZUK’s will have to remain active on all social media websites,
primarily because its target market is expected to be most active on such platforms. Reviews posted
on websites such as Yelp, Facebook and Twitter should be closely monitored in order to keep track of
the reviews. ZUK’s should employ suggestion management systems for their website where
customers can post suggestions for the company in a quick and effortless manner.
POP-UP STORES
To monitor the pop-up store’s performance, the number of visitors should be measured during the
period of launch. Similarly, the average number of sales before and after the pop-up store event need
to be recorded to understand the extent of the pop-up store’s impact on total sales.
SHIPPING POLICY
Some factors that will help monitor ZUK’s shipping performance include tracking the average return
rate per month in order to gain insights on the frequency of returns. This will help control costs and
modify ZUK’s shipping policy, if needed. Additionally, recording the number of lost items per month
will help control quality and service assurance to customers. Moreover, monitoring the number of
two-day air shipping per month will provide an insight on customers’ shipping preferences. If the
number of two-day air shipping is high, the number would suggest that time is a valuable factor for
customers.
LOGISTICS SYSTEM
ZUK’s will have to monitor its logistics team very closely and perform regular inspections to ensure
the delivery schedules are being followed. One of the methods to keep close and accurate progress of
the Logistics would be through the employment of logistics software such as NetSuite. Through the
37. 34
surveys filled out in follow-up emails by customers, ZUK’s should pay close attention to customer’s
feedback on their shipping experience with the company.
38. 35
APPENDICES
APPENDIX 1: CALCULATIONS FOR SEGMENT SIZE
To represent the whole male population more accurately, the data from TNS Worldpanel Fashion is
used to draw conclusions for segmentation. TNS monitors the fashion purchasing trends of 15,000
demographically representative British individuals and provides insights into their fashion
purchasing behaviour and attitudes. This report is a strong complement to the primary research as it
covers all demographics and includes in-depth analysis of their characteristics. As stated earlier, the
report assumes that men in the UK and North America have similar attitudes and behaviour towards
fashion.
The size of the four segments is estimated by grouping the 16 segments in the TNS report according
to their habits of online purchases for fashion, as well as their spending preferences.
(1) High Spending Online Shoppers
Profession Look 4.25%
Quality not quantity 7.66%
Dressed in the best 5.55%
Total 17.46%
(2) High Spending Offline Shoppers
Functional fashion seekers $6.77
Distinguished classics $4.02
Total $10.79
(3) Low Spending Online Shoppers
Sporty Basics 6.26%
Budget Image 6.81%
Mainstream fathers 6.10%
Mid-range Suitability 7.20%
Brand boy 7.46%
Total 33.83%
(4) Low Spending Offline Shoppers
Youthful aspiration 4.99%
Any shirt will do 4.84%
Low cost and long lasting 10.70%
Conventional appearance 8.62%
Selective habit 8.77%
Total 37.92%
39. 36
APPENDIX 2: CALCULATIONS FOR SEGMENT AVERAGE SPENDING
With respect to each segment, a customer’s average spending on business casuals per year = Average
of each price range * Percentage of respondents in each price range
APPENDIX 3: CALCULATIONS FOR SEGMENT TOTAL SPENDING
High Spending Online
Shopper
Price Range Average Price Weight
Average Price x
Weight
500 - 999 $749.50 56.86% $426.00
1000 - 1499 $1,249.50 23.53% $294.00
>1500 $1,500.00 19.61% $294.00
Total Spending On Business
Casuals
$1,014.00
Low Spending Online
Shopper
Price Range Average Price Weight
Average Price x
Weight
$0.00 $0.00 2.00% $0.00
1-199 $100.00 36.00% $36.00
200-499 $349.50 62.00% $217.00
Total Spending On Business
Casuals
$253.00
Average Shopper Price Range Average Price Weight
Average Price x
Weight
$0.00 $0.00 20.86% $0.00
1-199 $100.00 37.97% $21.00
200-499 $349.50 22.99% $112.00
500 - 999 $749.50 14.97% $216.00
1000 - 1499 $1,249.50 3.21% $109.00
>1500 $1,500.00 20.86% $122.00
Total Spending On Business
Casuals
$579.00
(1) High spending online shoppers
Male aged 20-79 12,859,000
Segment percentage 17.50%
Segment size $2,250,325.00
Likely to buy business casual online 59%
Number of male likely to buy BCC online $1,327,691.75
Average spending on business casual online per person $203 - $365
Total spending on BCC online per annum $269 -$484 million
40. 37
APPENDIX 4: CALCULATIONS FOR MARKET SIZE
(2) High spending offline shoppers
Male aged 20-79 12,859,000
Segment percentage 10.80%
Segment size $1,388,772.00
Likely to buy business casual online 25%
Number of male likely to buy BCC online $347,193.00
Average spending on business casual online per person $0.00
Total spending on BCC online per annum $0.00
(3) Low spending online shoppers
Male aged 20-79 12,859,000
Segment percentage 33.80%
Segment size $4,346,342.00
Likely to buy business casual online 42%
Number of male likely to buy BCC online $1,825,463.64
Average spending on business casual online per person $25 - $66
Total spending on BCC online per annum $45 -$120 million
(4) Low spend offline shoppers
Male aged 20-79 12,859,000
Segment percentage 38.00%
Segment size $4,886,420.00
Likely to buy business casual online 14%
Number of male likely to buy BCC online $684,098.80
Average spending on business casual online per person $0.00
Total spending on BCC online per annum $0.00
Market size of business casuals
Lower Bound Upper Bound
Male aged 20-79 12,859,000 12,859,000
Likely to buy BCC next year 77.70% 88.10%
Number of male likely to buy business casuals next year 9,991,443.00 11,328,779.00
Average spending on business casuals per person $579.00 $579.00
Total spending on business casuals next year $5,785,045,497.00 $6,559,363,041.00
Market size of business casuals online
Lower Bound Upper Bound
Male aged 20-79 12,859,000 12,859,000
Likely to buy business casuals online 29.80% 41.80%
Number of male likely to buy business casuals online $3,831,982.00 $5,375,062.00
Spending on BCC per person $579.00 $579.00
Online purchase 9% 16%
Total spending on business casuals online $199,684,582.02 $497,945,743.68
41. 38
APPENDIX 5: CATEGORIZATION OF RESPONDENTS
The grouping of survey respondents into four pre-determined segments was based on respondents’
answers to the following two questions:
1) Of the amount that you spent on all men’s clothing, what percentage of your purchase was
done online?
2) On average, how much do you spend per year on business casual clothing?
If a respondent has shopped online (percentage of the purchase done online > 0%) and spends at
least $500 per year on business casual clothing, that respondent is in the High Spending Online
Shopper segment.
If a respondent has shopped online (percentage of the purchase done online > 0%) and spends less
than $500 per year on business casual clothing, that respondent is in the Low Spending Online
Shopper segment.
If a respondent never shopped online (percentage of the purchase done online = 0%) and spends at
least $500 per year on business casual clothing, that respondent is in the High Spending Offline
Shopper segment.
If a respondent never shopped online (percentage of the purchase done online = 0%) and spends less
than $500 per year on business casual clothing, that respondent is in the Low Spending Offline
Shopper segment.
APPENDIX 6: SHOPPING FREQEUNCY
22%
41%
23%
15%
3%
At least once
per month
4 to 6 times per
year
2 to 3 times per
year
Once per year Less than 1 per
year
Shopping Frequency of All Respondents
42. 39
Statement: There is a significant difference in the proportion of men who buy clothing at least once
per month within the High Spending Shopper and the Low Spending Shopper groups.
Hypothesis Tests
Sample proportions = 0.29 and 0.13
Sample sizes = 89 and 100
Approximate lower bound of 95% confidence level for difference between proportions: [0.0634638]
Null Hypothesis: difference between proportions = 0.0
Alternative: greater than
Computed z statistic = 2.71803
P-Value = 0.00328368
Reject the null hypothesis for alpha = 0.05.
30%
40%
23%
6%
1%
At least once
per month
4 to 6 times per
year
2 to 3 times per
year
Once per year Less than 1 per
year
Shopping Frequency of High Spending Shoppers
13%
36%
23% 23%
5%
At least once
per month
4 to 6 times per
year
2 to 3 times per
year
Once per year Less than 1 per
year
Shopping Frequency of Low Spending Shoppers
43. 40
APPENDIX 7: PROPORTION OF MEN WHO SHOP ONLINE FOR BUSINESS
CASUALS
Statement: Of all men in the market, the proportion of men who shop online for business casuals
only ranges from 31% to 44% (with 95% confidence level)
Hypothesis Tests
Sample proportion = 0.3729
Sample size = 177
Approximate lower bound of 95% confidence level for p: [0.312237]
Approximate upper bound of 95% confidence level for p: [0.436792]
APPENDIX 8: AVERAGE SPENDING ON ONLINE BUSINESS CASUALS
With respect to each segment, the average spending of a customer on online business casuals
per year = The online proportion of annual spending on business casuals x Annual spending on
business casuals
The online proportion of annual spending on business casuals is inferred from the sample
mean with 95% confidence level.
High Spending Online
Shopper
Lower Bound Upper Bound Note
Spending on BCC per year $1,014.00 $1,014.00 Sample Size: 47
% spent online 20.00% 36.00% Mean: 28%
Online spending on BCC
per year
$1014 x 20% =
$203
$1014 x 36% =
$365
Low Spending Online
Shopper
Lower Bound Upper Bound Note
Spending on BCC per year $253.00 $253.00 Sample Size: 50
% spent online 10.00% 26.00% Mean: 18%
Online spending on BCC
per year
$253 x 10% =
$25
$253 x 26% =
$66
Average Shopper Lower Bound Upper Bound Note
Spending on BCC per year $579.00 $579.00 Sample Size: 184
% spent online 9.00% 16.00% Mean: 12%
Online spending on BCC
per year
$579 x 9% =
$52
$579 x 16% =
$93
