Competitive Advantage of Victoria's Secret - Case Study Example

? Victoria’s Secret Table of Contents Current target segment: The new brand for men 3 2. Do men consider underwear purchases discretionary? 3 3. Potential target market 4 4. Rationale behind buying from Victoria’s Secret 8 5. Current competitive market 9 6. Competitive Advantage of Victoria’s Secret 10 7. Pricing of men’s undergarment products 11 8. Product range for initial entry 11 9. Components for promotion mix 12 10. Leveraging the existing social network links 14 11. Six principal advertising formats 15 12. Metrics 16 Outcome metric 16 Performance Metric 16 13. Leveraging its brick and mortar store 17 14. Changes expected after the 24 months launch period 17 Works Cited 19 1. Current target segment: The new brand for men The management of Victoria’s secret has come up with the strategy to expand their line of products into the men’s segment. They expect to be equally successful in this segment as they had been in the women’s segment. The underlying idea behind this expansion is to introduce color and style to men’s underwear thereby exploring a market which is tremendously underserved. The new line brand of products targeted towards men will add a new dimension to Victoria’s Secret range of products. Expanding into the new line of men’s undergarment will fetch consumer loyalty to Victoria’s from this segment of customers as well alongside the loyalty of their existing customers. The underlying strategy behind the company’s expansion into the men’s underwear line is to attract new customers. This strategy will help the business to diversify into a segment that is yet to be explored in the US and henceforth in the world. In addition to that, the expansion program will help Victoria’s secret to achieve a wider customer base thereby creating new sources of revenue stream. 2. Do men consider underwear purchases discretionary? According to a logic outlined by Alan Greenspan, men’s practice of buying underwear is thought to be a good indicator of discretionary spending (“What Is the Men's Underwear Index?”). The logic that Alan Greenspan stated is both elegant and simple. According to him, more often than not most of the guys have their drawer filled with fairly ratty underwear which they choose to wear until and unless the elastic has ruptured or the boxers are riddled with holes. Because of the fact that co workers and friends generally do not notice a guy’s undergarments, hence this frayed underwear often looks like a purchase made on discretionary basis. Men’s pattern of buying underwear is a crucial indicator of how the economy is performing. Whenever, men starts to apprehend that the economy is about to dip, they simply stop refilling their drawers with fresh undergarments. A perfect example to support this theory was when the economy started dipping the year 2008, annual sales of men’s underwear dropped by 12% (Trex “Boxers, Briefs or Loincloth? A Brief History of Men's Underwear”). In accordance with these recent theories, expanding into the men’s segment will prove to be a prospective decision for Victoria’s secret. The primary reason that can be attributed to this fact is that currently the United States economy is recovering at a steady pace. Moreover, not many undergarment brands exist in the country which produces men’s underwear suggesting that, this segment is highly unexplored. So, it is expected that the changing pattern in the performance of the United States economy will bring about a profound change in the way men buy their undergarments. Thus, an expansion in this division will prove to be a value maximizing decision for the company. If the products are well appreciated by customers and society, Victoria’s Secret has a possibility for extended growth. 3. Potential target market The potential target market is young and trendy men between the age group 15 and 45. As of now, in terms of geography, the chosen target market is USA. The reason for this is because of a slow growth (10%) witnessed in the annual sales of men under garments between 2004 and 2010 (“Global Underwear Market Report 2012”). This slow growth suggests the discretionary pattern of undergarment shopping done by men. In such a context, the need for high quality and affordable men’s undergarments is of utmost importance. Victoria’s secret’s primary objective is to achieve a wider customer base (male) by launching superior quality and affordable undergarments which will attract men between the age group 15 and 45 it is supposed that they have a higher tendency to replenish their drawer with new undergarments compared to older people. In addition to that, the management of Victoria’s Secret believes that most men prefer comfort over style, thus comparatively it would be less of a challenge for Victoria’s Secret to produce products that will satisfy men because the products need not to be excessively trendy. However, they need to make the products appealing. Young men with female partners are also being targeted, because of the fact that women more often than not buy their undergarments from Victoria’s Secret will keep their male partners apprised of any new product launch specifically for men. The common consumption behaviors and lifestyle of the chosen market segments are designed for young and trendy men. Men could sometimes feel negative about themselves owing to any negative impact which might result from a bad day at home, school, college or work. In that case, they might have the inclination to buy trendy undergarment products offered by Victoria’s Secret which will make them look trendy and stylish, thereby making him feel good. In addition to that, men can choose to buy underwear products online via the company’s website www.victoriassexymen.com thus avoiding any embarrassment that they might face while visiting the store. Selling the products online will give the customers an added flexibility through which they can compare the product in terms of its quality, variety, and price with other similar vendors. The undergarments for men will be affordably priced so as to attain a wider customer base. The products will be priced in such a way that they attract men having annual income of $30,000 and above. The product will have to be strategically placed in order to ensure that the customer’s decision is a positive one. The products need to be clearly defined in terms of its quality via proper promotional campaign that would include advertising, PR, and sales promotions. This will be done in order to ensure that customers are making an informed decision. The product placement and promotion also needs to be kept simple yet appealing to attract young men. In order to make the men undergarment line appealing, colors and a simple monogram of Victoria’s secret will be put as a design. The targeted segments need to feel that the articles are tasteful and realistic for them to wear. The placement of this product is a crucial factor responsible for having a successful line and a positive target market. Another way to target the segment market is celebrity endorsement. This would occur through commercials with good looking and famous celebrities either buying the product, or already donning it. It has been witnessed that celebrities more often than not tend to communicate in a much better way to their fans thereby inclining them to buy the product that they are endorsing. In addition to that, successful good-looking models with a perfect physique can also be hired as brand ambassadors. Models of the stature of Matthew Terry, the one from the Calvin Klein Super Bowl commercial, can be hired as brand ambassadors for Victoria’s Secret men’s undergarments as models like him are believed to move products out of the shelves in absolutely no time. The ad would be positive for the segment market because models like Mathew Terry are known to be fashion icons who have the potential to influence young men to buy products that they endorse (Wilson “Less Ab, More Flab”). There can be other celebrities that can endorse Victoria’s Secret men’s undergarment brand by being in commercials and ads, or being a brand advocate. The company could send out samples of the new line to well-known celebrities to use and experience the quality. This thereby will expose the public to the new line of products being offered by the company. This will be an effective marketing strategy. The men’s undergarment has been witnessing tremendous competition over the last few years. On top of that, when the product is being sold by a company of the stature of Victoria’s Secret, it is sure to increase the demands for their products to an all time high. That is why the purchase cycle is critical as it will determine whether the marketing strategies of the company are being able to attract the target market or not. This part is crucial in order to ensure that gain and retain achieved from this target segment remains consistent in future purchases as well. The post-purchase review involves the evaluation of customers as to how they feel about using products manufactured by Victoria’s Secret. If the product is well appreciated by customers and society, this will ensure a rapid growth of Victoria’s Secret in this segment of the industry. In addition, if the customers feel that they are not comfortable using the product manufactured by the company, or the brand conveys a negative image, and then they will have a negative evaluation of the brand, which may cause cognitive dissonance and negative word of mouth by the customer. All in all, Victoria’s Secret using their brand name to expand in the men’s undergarment section is a positive option for men in the market segment. They have to uncover what they want in the chosen product, which is trendy, fashionable, classy and comfortable clothing for themselves. Once they have formed this opinion that this is the product for them to use, they are to evaluate the alternative options available at other stores and make an informed and conscious decision on what they want to wear. The purchase point is the key step to completing the sale with the consumer and selling the undergarment brand. Once the purchase has been made it is the retention and loyalty that the company will be trying to establish with its consumer. Thereafter, the customers will consider opinions from their peers and society regarding whether it was a good decision to buy the product or not. This will be the point that will determine whether the brand receives repeat buyers, or the brand name is hampered. The primary goal of the company is to get the society to accept and appreciate their brand for undergarment clothing in order to produce a positive line, and help the store grow gradually. Customer loyalty is a crucial factor that will determine the success of Victoria’s secret. It depicts the willingness of a customer to buy products from Victoria’s secret as well as the willingness of his child (male) to become the next generation of potential customers. The Victoria’s Secret brand is expected to grow as a whole with this undergarment line for men, and convert the one time buyer to a lifelong customer. 4. Rationale behind buying from Victoria’s Secret The main reason that would attract the target market to buy men’s underwear is the brand name and value of Victoria’s secret. The name itself speaks for the quality of the product that they have been producing for the existing target market. Despite the fact that the company is famous for its feminine products, similar quality of products is expected from them for the new target market which is for men. In addition to that, another facility that would attract the new target market is the flexibility, which is being offered by the company to its new target market, to buy products from the online store of Victoria’s Secret. In this way, men can choose to avoid being embarrassed by visiting the Victoria’s Secret store which is filled with female clothing and most of all lingerie. Another factor that is sure to attract the new target market is the company’s effective marketing strategy. Victoria’s secret puts in extra effort to attract its current customer base thereby formulating effective marketing strategies. In order to keep a smooth business operation, the company needs to have strong marketing strategies. If they do not achieve a wider customer base, they would not be doing much business. The company is well aware of this fact and that is why they constantly offered facilities to its customers by sending coupons, special offers, discounts and sometimes free stuff. As an example, it can be proposed that the company can choose to incorporate online-only deals which will give $15 discount for every $100 spent, $30 discount for every $150 spent and $75 off on shopping of $250 or more (Smith “4 Victoria’s Secret Marketing Tricks That Get People Through the Doors”). The primary reason for following this strategy is to achieve a higher customer satisfaction and customer loyalty. Till today, this strategy has worked well for the company which is evident from the growing customer base of the company. Victoria’s secret will follow the same strategy for attracting its new customer base. The company wants to make sure that it continues to bring high quality products and services to its customers and that too, on a consistent basis. In order to keep this continuum of maintaining superior quality products, they will have to continue manufacturing and distributing the men’s undergarment products in the same way they do manufacture and produce female clothing and lingerie. Their continuous effort to make the consumers feel comfortable and create a modern and trendy environment will help them to achieve a high customer retention rate time and time again. The primary qualities that they want their products to endorse are: Diversity: Victoria’s Secret wants to create a wide variety of patterns and trendy designs to suit the needs of their customers. Superiority: Victoria’s secret already has a huge brand name and value. It enjoys a very stable and superior position in the fashion industry. So it is important that they maintain this position and remain held at high regards by their customers. 5. Current competitive market Victoria’s secret will face a steep competition while expanding into the men’s undergarment market segment. This is because of the significant presence of large and reputed companies (both private and public) within the US and also all over the world. The companies that can be considered as potential competitors of Victoria’s secret in the USA are Hanes, Fruit of the Loom, Jockey International, Calvin Klein, 2(x)ist, Ralph Lauren Corporation, Tommy Hilfiger, Abercrombie and Fitch and BVD. While expanding globally, the companies that will give steep competition to Victoria’s secret are Joe Boxer, Diesel, Armani, Dolce and Gabanna, Selfridges, Versace and Gap (Cook “20 bestselling men’s underwear brands”). All these companies have proved their mettle in this line of the fashion industry. However, the fact that the men’s undergarment segment hasn’t been explored much in US and a slow growth in the annual sales of the men’s undergarment product will help Victoria’s secret to understand the market in a better way and do effective marketing in order to gain competitive advantage over its competitors. Victoria’s Secret which is the leading retailer in US as far as women clothing and lingerie is concerned can use its brand name and value to influence its target customer base to buy the products manufactured by their company. This can be achieved by following an effective marketing strategy on the basis of the potential target market that is chosen. 6. Competitive Advantage of Victoria’s Secret The competitive advantage that Victoria’s Secret will have while expanding into the new market can be best explained by its core competencies. The company is known for using product differentiation as their primary business-level strategy. They emphasize heavily on adding brand loyalty to their products thereby developing unique products which is hard to be duplicated (“What is Victoria's Secret?”). This is one competitive advantage that company already has attained, that is uniqueness. The expertise that they have in the fashion industry will help them to formulate an effective strategy whereby they can focus their efforts into attaining a wider customer base and thus generating value for the company. In addition to that the resources that the company possesses are a crucial factor which gives a competitive advantage to the company over its competitors. The existing customer base is a huge resource for the company through which they can approach their potential target market. Moreover, being a leading retailer in women’s clothing and lingerie market, the company can use its brand name and value in order to attract its target market and propel them into buying the new products manufactured by the company. 7. Pricing of men’s undergarment products Price is the next element in the marketing mix. Price is also a very important attribute to find out how to sell to the new market segment. The price of the products in the men’s undergarment clothing line must not be too expensive, and at the same time must also not be too cheap. The pricing of the products must be carefully balanced in order to make them accessible and affordable to a wider customer base. However, the company has to make sure that alongside maintaining affordability in the product pricing strategy, they should also not compromise on the integrity of the brand. Victoria’s Secret is known for producing expensive line of fashion products. That is why they have to make sure that this characteristic does not trigger wrong information to its potential target market. They have to come up with an effective pricing strategy to attract a bulk of customers almost immediately after its launch so that the customers can reiterate the information to other customers making them the next potential buyers. Although the current products that Victoria’s Secret sells are priced relative to its competitors but since it is expanding to a completely new segment they cannot do the same here as it will discourage customers who do not want to spend much on their undergarments. The company’s objective is to ensure the fact that the new target market is able to afford the undergarment consistently and at the same time they want to stay true to the company’s exclusivity. 8. Product range for initial entry To expand into the men’s undergarment segment, Victoria’s Secret will need to pay close attention to quality of the product that they are manufacturing and selling and at the same time they have to understand that, but these products are the means of conveying their ideas and messages to the customers. In order to launch the new product line successfully and that too with a positive message, Victoria’s Secret needs to change the image of their brand slightly in order to maintain a trendy appeal to the men’s undergarment segment. They have to understand the fact that the potential target market deserves a fashionable and trendy and at the same time refined and classic. The company has to initially market two proposed products and incorporate them into their product line in order to check customer behavior and the level of customer appreciation towards those products. The first year will see a bulk production of trendy and fashionable yet comforting line of products that will include premium briefs and vests. The company will be able to come to a conclusion regarding the target market’s level of appreciation for the production not before five months from the launch. Depending upon the customer’s pattern of buying, the company will gradually expand its line of products to short pants and then undershirts. Following that, another product that will be added to the company’s already existing product line will be thermal vests and pants that will offer comfort against cold to their users. 9. Components for promotion mix The company’s short term goals mostly include advertising. The main strategy of Victoria’s secret is to make sure that the details, the photography, setting, printing, and the production values are finely tuned. These characteristics have now become the benchmark that has been set in the fashion industry. In order to reach the benchmark, the main media source that would be adopted by the company in order to do effective advertising are internet, catalogs, magazines, commercials and word of mouth. Strategy, creativity, and execution are the three broad dimensions upon which BMW’s advertisements are based. To design, implement and execute an advertisement campaign strategy is going to be comparatively easier because of the fact that the Victoria’s Secret already is renowned company in this particular industry and they know how to design and execute a sound promotion strategy and what would be the right components for promotion mix. The promotional activity that is going to be relatively costly for the company is to add pictures and fonts for the men’s undergarment magazine alongside developing a completely new website. A heavy initial investment is required as it is a completely segment being developed with a new idea. The long terms goals of the company are pretty simple i.e. to increase the revenue and create longer term loyalty with the new target market. The components for promotional mix include: Advertisement: This mode of promotion will be an important approach which will cater to attract a wider customer base. It will involve the use of media in order to re-invent the definition of fashionable and trendy undergarments for men. Various media such as TV advertisements, newspaper advertisements, online advertisements as well as publishing fashion magazines will be considered as probable approaches under this promotional component (Chang, Lin and Mak “The Silky Strategy of Victoria’s Secret”). TV advertising will be a huge medium for the company to reach a wider audience and moreover this form of promotion is associated with three crucial advantages. Firstly, it covers a large audience base and that too in a cost efficient manner. Lastly, it has a strong influence on the taste and perception of its target audience. As far as Victoria’s Secret’s online advertisement campaign strategy is concerned, the company will design its website in such a way that customers will be attracted by the variety of things offered in the portal such as brochures, newsletters and online magazines. Sales promotions: Sale promotions will involve sending coupons, special offers, discounts and sometimes free stuff to their customers. Occasion oriented sales will be done where products will be sold at a much cheaper rate than its market price in order to attract more customers to their stores once they are satisfied with the quality of the products. Victoria’s secret will be using techniques such as celebrity endorsements, banner ads and most importantly word of mouth to spread information regarding their expansion into the new segment. The company will have to place commercials and ads in places frequently visited by a larger cross section of the public in order to make the audience aware of the new segment. PR: The Company will organize events in order to market its product to its customer base. Fashion shows is a key method by means of which the newly launched products can be displayed to its potential customers. Victoria’s Secret’s advertisement campaign strategy will always include attributes such as novelty and catchy caption that will instigate the view of their customers to purchase their product. The company’s advertisements are associated with high level of acceptability among their existing customer base. This factor will create a bridge for them to target their next potential customer base. 10. Leveraging the existing social network links The company can leverage its existing social network links by creating discussion forums to interact with target customers directly. They can also integrate products into virtual worlds which will help them to understand customer expectations. The use of existing social networking sites will help the company to promote services through those sites and at the same time the company will be able to foster loyalty with target audience (Marketing Leadership Council “Leveraging Social Networking Sites in Marketing Communications”). Victoria’s Secret’s e-marketing strategy will include social networks such as Twitter, YouTube and Facebook. That is particularly because these websites have tremendous potential of reaching a greater customer base at a relatively low cost. In addition to that, social networks allow interactive communication with a large number of customers enabling the company to conduct communal, viral and influenced marketing campaigns (Mbewette “BMW e-marketing analysis”). 11. Six principal advertising formats Banners: Since the Victoria’s secret undergarments product will be sold online via their website, this format will be an excellent mode of advertising the company’s products. Rich media: This is another display related advertising format which will help the customers to assess the product in terms of its looks and designs. Digital Video: This advertising format will help the potential customers to download and stream commercials of the product that they want to purchase. Email: This ad will include the products specific offers, coupons and discounts that can be intimated to the target market. Search: This advertisement format will help the company to advertise its products all over the internet where the customers can get easy access to information regarding the product just by typing the keywords. Interstitials: In this age of internet where people switch from one website to another website almost every second, this advertising format will be of great help to the company as this will display the advertisements during those transitions (Evans “The Online Advertising Industry: Economics, Evolution, and Privacy”). All these advertising formats are vital strategies that should be adopted by the company as these formats are strictly internet centric which is the primary and only selling point of the company initially. 12. Metrics Outcome metric End-to-End Conversion Metric: This will help the company to measure the conversion ratio for the full revenue cycle and at the same time for individual stages that includes sales close and customer lifetime value. Revenue Diversity Metric: This will help the company to measure the productivity of lead generation. Through this the company can evaluate how effectively the marketing reached the target prospects (Crandell “Three Metrics to Measure Sales and Marketing Alignment”). Performance Metric Outcome Profitability Metric: This metric will help the company to measure the extent to which sales and marketing had recognized the expectation of the buyers. Return on Investment (ROI): This metric will serve as a good indicator to the company by which they can measure company sales and profits. Return on marketing investment (ROMI): As a relatively new metric, this will help the company to determine the marketing effectiveness thereby enabling them to transfer investments from less productive to more productive segments (“Marketing Performance Metrics”). Customer retention rate: This is a robust performance measurement metric as it gives an idea about the marketing capabilities of the company. It helps the company to assess the efforts which are being made to engage and nurture existing customers. Revenue Growth: This is a key performance indicator depicting whether the revenue shows growth or has become static. Based upon this, the company can formulate effective marketing strategy (Donlon “18 Marketing Performance Metrics that Matter”). 13. Leveraging its brick and mortar store Since, the company’s expansion to the new market segment is completely based online, the only way to leverage the brick and mortar store is to display ads regarding the company’s expansion into the men’s undergarment segment. In addition to that, pamphlets can be distributed to male visitors accompanying their female partners, which will inform them about the availability of men’s undergarments produced by Victoria’s Secret and the purchase website. 14. Changes expected after the 24 months launch period Having done a thorough research of Victoria’s secret campaign strategies till date, it has been observed that the company has a well structured integration of offline and online marketing communication which has contributed significantly towards its marketing strategies’ success as of now. This main reason for this success is that their campaign strategy is directed towards identifying, acquiring, anticipating, satisfying and retaining their customers. The company’s campaign examples have shown marketing strategies to be relatively efficient and cheap. The same result will be expected while they implement the same or somewhat modified strategies in order to expand to the new target segment. It is expected that the Victoria’s Secret will be able to appeal to a greater target segment. With their brand name and value they will be able to achieve a wider customer base which will boost its revenue significantly within and after the 24 months initial launch period. In addition to that, the company will gradually increase its products mix that will include new and unique products such as thermal undershirts and pants and later will also add swim suits for men into their line of products. After the 24 month launch period, the company will incorporate the men’s section in to their existing brick and mortar stores whereby men can come and buy products from their stores directly. However, as a recommendation it can be suggested that the company must consider the macro and micro environment factors while designing and implementing its marketing strategies. Works Cited “Global Underwear Market Report 2012.” yStats. GmbH & Co. 2013. Web. 24 October 2013. “Marketing Performance Metrics.” Boundless. n.p. n.d. web. 24 October 2013. “What Is the Men's Underwear Index?” Wise Geek. Conjecture Corporation. 2013. Web. 24 October. 2013. “What is Victoria's Secret?” Oocities. n.p. 2009. Web. 24 October 2013. Chang, Chelsea Chi, Alice Lin and Charlene Mak. “The Silky Strategy of Victoria’s Secret.” Mcafee (2004). PDF file. Cook, Steve. “20 bestselling men’s underwear brands.” Microsoft. 2013. Web. 24 October 2013. Crandell, Christine. “Three Metrics to Measure Sales and Marketing Alignment.” Forbes (2013). PDF file. Donlon, Jessica. “18 Marketing Performance Metrics that Matter”. PR 20/20 LLC. 2013. Web. 24 October 2013. Evans, David S. The Online Advertising Industry: Economics, Evolution, and Privacy. Journal of Economic Perspectives 23.3 (2009): 37-60. Print. Marketing leadership council. “Leveraging social networking sites in marketing communications.” Corporate Executive Board (2008). PDF file. Mbwette, Kennedy. “BMW e-marketing analysis.” Slide share. 2013. Web. 24 October 2013. Smith, Jaimie. “4 Victoria’s Secret marketing tricks that get people through the doors.” Quality Logo Products Inc. 2013. Web. 24 October 2013. Trex, Barry. “Boxers, Briefs or Loincloth? A Brief History.” Mental Floss. 2012. Web. 24 October 2013. Wilson, Eric. “Less Ab, More Flab.” The New York Times Company. 2013. Web. 24 October 2013. Read More