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Michael Kors Marketing Plan

Accessories
Currently Michael Kors branding is receiving recognition for its stability
and accomplishments within the entire American apparel industry. Michael
Kors is a global luxury lifestyle brand with a jet-set aesthetic that combines
elements of style, elegance, and sport. Established in 1981, Michael Kors
himself is now known as a prominent fashion designer based in New York
City. The product lines include accessories, footwear, watches, jewelry,
means and womens ready-to-wear, eyewear and a full line of fragrance
products. The business operates in three different segments: retail,
wholesale, and licensing. Their goods are sold in company operated retail
stores, leading department stores, specialty stores and through carefully
selected licensing partners. Michael Kors stores are operated, either directly
or through licensing partners, in some of the most prestigious cities in the
world, including New York, Beverly Hills, Chicago, London, Milan, Paris,
Munich, Istanbul, Dubai, Seoul, Tokyo, Hong Kong, Shanghai and Rio de
Janeiro.
Michael Kors is the founder, designer and Honorary Chairman and Chief
Creative Officer for Michael Kors Holdings Limited (KORS). A fashion icon who
not only designs clothing and accessories, but also known for his
appearances as a judge on the Emmy-nominated Project Runway. Behind this

burgeoning empire stands a singular designer with an innate sense of


glamour and an unfailing eye for timeless chic. Michael kors has won
numerous accolades within the fashion industry, been honored for his
philanthropy, and earned the respect and affection of millions.

Product
The product line I will be focusing on is called, MICHAEL Michael Kors
composing of small leather goods, such as: accessories, clutches, wallets,
wristlets and cosmetic cases. Specifically handbag/purses that are the most
popular and profitable for the company. The marketing plan will consist of
segmentation/targeting, New Product Development, Marketing
channels/distribution framework, Marketing Synchronicity, and types of
fixed/variable costs connected in the scope of this product. Simplicity, luxury,
and comfort are Michaels foundation principles to this product line. His
influences may vary from season to season, like this falls upscale but
unabashedly western-inspired looks. On the contrary Kors Clothes reflect a
feeling of timelessness that is the essential component of investment in
clothing. If anything, his emphasis on luxury is evident in fabrics that range
from cashmere to leather to fur and have grown stronger over the years. As
of right now, luxury sportswear is as much about practicality as it is about
indulgence, says the ever-pragmatic Kors.

Segmentation/Targeting
Michael Kors succeeded because it was the first retailer to hit the
markets sweet spot, people with money to spend but who arent rich, quoted
by Ashley Lutz in Business Insider. This explains Michael Kors target market
to the core. Between $100,000 and $250,000 income levels roughly. Michael
and his team went through these seven criteria before selecting the target
segment; Measuring the market size through buying/consumption capacity,
adequate to generate revenues, logistically reachable so as to serve,
competitive position, expected growth, cost of reaching segment, and
compatibility with organizations objectives and resources. The product line is
differentiated with multiple products targeted at one market segment. Some
variables for segmenting the market to meet the middle class income level
were: Demographics, Psychographics, and Geographic/Regional.
Kors customers include working women, society ladies (and in many
cases their daughters), as well as celebrities ranging from Sharon Stone to
Gwyneth Paltrow, Elizabeth Hurley to Barbara Streisand. Theres also no
secret that his clients love him as much as they do his clothes and there is
little doubt that his legendary charm has contributed enormously to his
success. His signature looks are as easy to sew as they are to wear, which is
why it may be hard to believe that Kors himself does not sew.
Michael Kors is the most searched for fashion brand online, beating out
its competitors by a long run. The lifestyle brand overcame heavyweights like

Calvin Klein, Marc Jacobs, and Ralph Lauren, according to a report by Digital
Luxury Group. Kors became the most searched for brand on the internet
because they offer a lower priced diffusion line that appealed to an even
wider range of consumers.

New Product Development


Research and development is the key in new product innovation. The
brand has become very popular based on its unique looks that make women
feel beautiful. Michael Kors new product development has flourished through
its sibling brand, adding value to its parent brand identity. Not only did Kors
create a new product, but an entire new brand. The sister brand expansion is
comprised of cheaper accessories that attract a new target market. When
the sister company MICHAEL Michael Kors came into play, there was a
possibility that the downscaled brand could hurt the prestige of the premium
brand. Although, marketers ensured that the communication design of
MICHAEL Michael Kors took its inspiration from the jet set theme of Michael
Kors. This not only did justice to both brands, but also helped develop the
new labels own identity. The MICHAEL Michael Kors collection was first
introduced in 2004 when they identified the opportunity to capitalize on the
brand strength of the Michael Kors collection to meet the significant demand
for accessible luxury goods. The MICHAEL Michael Kors collection has a
strong focus on accessories, in addition to offering footwear and apparel, and
is positioned to appeal to a younger demographic. Our MICHAEL Michael Kors

collection is carried in all of our lifestyle stores as well as leading department


stores throughout the world.
Usually when brands come up with a downscaling strategy,
maintaining quality becomes a major concern and failing to address it can
eventually destroy the brand image. Kors tackles this goal by using exotic
leather to make products, assuring his customers that there will never be
divergence in this realm. While still managing his existing prestigious product
line, Kors has done a great job at developing this whole new product line and
creating a different brand for it. Let alone the fashion industry itself is one of
the hardest to keep up with new trends. With constant demand of new
trends, the sisterhood brand MICHAEL Michael Kors has kept up with its
parents brand and competitors as well. While extending its product range,
Kors has also played a smart card by licensing with luxury giants like Estee
Lauder, and Fossil Group, which has helped it maintain premium quality.
Not to many luxury brands are ready to move away from tradition.
After a company has made their mark and are known for their high quality
products and brand recognition, they want to continue that cycle. Afraid of
change and innovation, these luxury brands are limiting themselves of what
further products they can develop. However, iPhone clutches, wristlets and a
wide range of other contemporary products from Michael Kors show that the
brand loves to adapt to the needs of the modern consumer. Constantly
technology is changing and the way that we go about our lives. Every
industry sees these changes and are adapting to them. In this evolution

stage, the fashion industry needs to become more tech savvy as well. Not
only through their products but their marketing strategies as well. Moreover,
Kors digital marketing strategy reflects the brands dynamism with respect
to changing trends. Understanding the importance of the internet in
engaging its customers, and the brand is aggressively active of various social
media platforms. Being active on many different apps as well for promotions
will help your image. The company also ensures that the brand is stamped
on all tweets, thus ensuring that its brand identity remains consistent in all
communications. The new sisterhood brand is patented by Michael Kors on
all social media platforms.

Marketing Channels and Distribution Framework


Michael Kors contracts for the purchase of finished goods are with
independent third-party manufacturing contractors, whereby the
manufacturing contractor is typically responsible for the entire
manufacturing process, including the purchase of piece goods and trim.
Although they do not have written agreements with any of their
manufacturing contractors, they believe to have mutually satisfactory
relationships with them. Allocating product manufacturing among third-party
agents based on their capabilities, the availability of production capacity,

pricing, and delivery. They have relationships with various agents who source
their finished goods with numerous manufacturing contractors on their
behalf. Although their relationships with their agents are generally
terminable at any time, they believe to have a mutually satisfactory
relationship again with them. Kors primarily uses foreign manufacturing
contractors and independent third-party agents to source their finished
goods, which poses legal, regulatory, political and economic risks to their
own business operations.
Michael Kors operates its business in three segments: retail, wholesale,
and licensing. They have strategically controlled global distribution network
focused on company-operated retail stores, leading department stores,
specialty stores and select licensing partners. In the fiscal year 2013, their
retail segment accounted for approximately 48.7% of their total revenue. As
of March 30, 2013, the retail segment included; 231 North American retail
stores, including concessions, and 73 international retail stores, including
concessions, in Europe and Japan. In the Fiscal 2013, our wholesale segment
accounted for approximately 47.3% of the total revenue. AS of March 30,
2013, their wholesale segment included; Wholesale sales through
approximately 2,215 department store and specialty store doors in North
America and Wholesale sales through approximately 1,034 department store
and specialty store doors internationally.
A small number of the wholesale customers account for a significant
portion of net sales. Net sales to the five largest wholesale customers

represented 29.3% of total revenue for Fiscal 2013 and 27.9% of total
revenue for Fiscal 2012. The largest wholesale customer, a large, nationally
recognized U.S. department store, accounted for 14.0% of total revenue for
Fiscal 2013 and 13.3% of total revenue for Fiscal 2012. Remaining revenue is
generated through the licensing segment, through which they license to third
parties certain production, sales and/or distribution rights through
geographic licensing arrangements. In Fiscal 2013, the licensing segment
accounted for approximately 4.0% of total revenue and consisted primarily of
royalties earned on licensed products and their geographic licenses.
Michael Kors partners with leading wholesale customers, such as
Bergdorf Goodman, Saks Fifth Avenue, Neiman Marcus, Holt Renfrew,
Bloomingdales, Nordstrom and Macys in North American and Harrods,
Harvey Nichols, Selfridges and Galeries Lafayette in Europe. These strong
relationships enable them to access large numbers of their key consumers in
a targeted manner. In addition, they are engaged in wholesale growth
initiatives that are designed to transform the Michael Kors displays at select
department stores into branded shop-in-shops. By installing customized
freestanding fixtures, wall casings and components, decorative items and
flooring, as well as deploying specially trained staff, they believe that their
shop-in-shop provides department store consumers with a more personalized
shopping experience than traditional retail department store configurations.
These initiatives, among many others, have helped increase total revenue for

their wholesale segment from $610.2 million in Fiscal 2012 to $1,032.1


million in Fiscal 2013, representing a 69.2% year-over-year increase.
The strength of their global brand has been instrumental in helping
them build their licensing business. Collaborating with a select number of
product licensees who produce and sell what Kors believes are products
requiring specialized expertise that are enhanced by the brand strength.
Their relationships with their product licensees have helped them leverage
success across demographics and categories by taking advantage of their
unique expertise, resulting in total revenue for licensed products increasing
from $65.2 million in Fiscal 2012 to $87.0 million in Fiscal 2013. Additionally,
they have entered into agreements with non-manufacturing licenses who
they believe have particular expertise in the distribution of fashion
accessories, footwear and apparel in specific geographic territories, such as
Korea, the Philippines, Singapore, Malaysia, greater China, the Middle East,
Turkey, Russia, the Caribbean, and Latin America.

Marketing Synchronicity Media and Promotions


Michael Kors is nationally known for its wide expansion over just a few
years. Whereas many other companies struggle just to get their brand name
out there. During the first few years that Michael Kors has launched, it has
gained tremendous brand awareness through all of its marketing and
advertising as well as the suited appeal to many demographics. Not only can

the rich can buy this luxury brand, but a wide range of medium income levels
as well. The brand has gone from being known from 0%-71% in just the first
year and 71%-89% the following years. With this significant milestone, Kors
is also expanding its network of retail stores rapidly in Europe and Japan.
Through its classy branding and impeccable marketing strategies, Kors has
gained recognition as a global lifestyle brand that promises unique designs
backed by high standards of quality.
Michael Kors marketing strategy is to deliver a consistent message
every time the consumer comes in contact with the brand through all of their
communications and visual merchandising. Their image is created and
executed internally by their creative marketing, visual merchandising and
public relations teams, which helps ensure the consistency of their message.
In Fiscal 2013, they recognized approximately $41.9 million in advertising
expense in North America and internationally. In conjunction with promoting
a consistent global image, they use their extensive customer database and
consumer knowledge to best target their consumers in an effort to foster
marketing efficiency. Engaging in a wide range of direct marketing programs,
including, among others, emails, print advertising, catalogs and brochures, in
order to stimulate sales in a consumer-preferred shopping venue. As part of
their direct marketing strategy, their catalogs are sent to selected
households to encourage consumer purchases and to build brand awareness.
With their growing number of visitors to their michaelkors.com online store
provides an opportunity to increase the size of their database and to

communicate with consumers to increase online and physical stores sales


and build an even stronger brand awareness.
One of the first promotions Kors implements is celebrity endorsements.
In the way the designer uses his personal relationships with celebrities helps
the promotion of his brand. Endorsements for his brand have come from
Angeline Jolie, Cameron Diaz, Uma Thurman, and Jennifer Lopez. These
endorsements have helped the brand get more known and prove that huge
celebrities love the brand as well. When consumers celebrities they like or
not wearing a brand, they automatically witness brand awareness. Although
the sister brand, MICHAEL Michael Kors does not incorporate celebrity
endorsements in its advertising strategy, it happily enjoys their trickle-down
effect through its associations with its co-brand.
Michaels mission is to deliver a jet-setting, luxurious lifestyle to both
women and men around the globe. In every communication medium used by
the brand, this idea is reflected. The advertising strategy translated the bran
architecture of Kors beautifully, with ads portraying the jet-set style with
celebrities on cruises and planes. Through commercial awareness in
magazines, T.V, google ad words, and social media like Facebook, Twitter,
and Instagram. After the launch of MICHAEL Michael Kors, advertisements
have moved on from the jet-set theme, but still showcase young, trendy and
tastefully glitzy models who love to flaunt their watches and bags. This
successful strategy shows how a brand can communicate well when dealing
with upscale and downscale brands simultaneously. Through Kors digital

marketing, its engagement with audiences is reflected in the fact that it


ranked second, behind Versace, as the top searched high fashion brand on
Google Search in 2013.
Michael has also incorporated a promotional tool through the popular
Emmy-nominated reality television series, Project Runway. He enjoys the
massive popularity from many successful appearances on the show. Not only
is this profit for himself but the company is being recognized on T.V besides
an advertisement. His fame has helped develop brand integrity for Michael
Kors as well. Kors keeps his public relations activities going all year long for
constant brand awareness. While vying for and winning several major awards
like the Womens Fashion Designer of the Year (1999), Lifetime Achievement
Award (2010) and the Mens Fashion Designer of the Year (2013). The
pureness that Michael Kors himself leads the design team of his brand
assures the authenticity of craftsmanship to loyal customers.
The bottom line is to constantly be seeking better ways to increase
brand awareness. In order to increase awareness of the brand, the use of
social media must be optimized. Currently, Kors is the clear leader when
compared to his competitors, but in order to keep up with Marc Jacobs, who
is inching up on him slowly, he needs to remain transparent and unique. The
number of tweets/posts is not the key when it comes to social media; the
quality of each one is still of the utmost importance. Marc Jacobs tweets
almost twice as often as Kors, but still does not have as many followers.
Carefully crafted tweets and posts engage the audience without overdoing it.

Increasing awareness is easy when a brand is clear and authentic. Kors


himself has one Twitter account for himself/his brand, that way the
customers do not become confused and forced to follow two different
accounts. Marc Jacobs, for example, has one account for himself and another
for his brand. This segmented approach creates uncertainty in followers who
may decide that following more than one account is not beneficial to them.
People want all of their information clearly laid out and easily accessible.
One point of differentiation is that Kors is taking the time to become a
strong presence on Tumblr, which is where the young audience currently
spends their time. Instead of relying on the traditional avenues such as
Facebook and Twitter, he takes his campaign to a different level. This may be
a reason that he resonates so well with the younger generation. Kors should
also incorporate this account to post contests/giveaways as well. Another
point of differentiation is Kors use of hashtags. His current hashtag is
#WhasinYourKors, where followers are encouraged to share what they keep
in their Michael Kors handbags. They are invited to post words and images
that can easily be searched by other follower. This provides style inspiration
from the community rather than Kors dictating what his customers should be
wearing/carrying. Marketing expenses projected out to be are to be $60
million in 2014, $70 million in 2015 and $80 million in 2016.

Pricing Fixed and Variable Costs

For most luxury brands, the diminishing capacity of consumers to


spend extravagantly has been viewed as a threat. The richest 1% of the
worlds population are getting wealthier, owning more than 48% of global
wealth. This growing inequality could be a trigger for recession and downfall
of luxury brands but it is left uncertain. Michael Kors, however, views it as a
window of opportunity. Kors hit the right chord by targeting the High
Earnings Not Reach Yet (HENRY) market with its favorably-priced MICHEAL
Michael Kors label in 2004. The brands extension offered similar aesthetics
at cheaper rates, enabling it to connect with the emerging middle-class and
budget-constrained fashion customers, and boosting brand recognition with
finesse. Offerings products priced in a range of $40 to $10,000, MICHEAL
Michael Kors ensures that customers do not have to break their banks to
fulfill their luxury appetite. Revenue at Kors increased 59 percent during last
years holiday quarter, topping $1 billion for the first time in the fashion icons
history. This amazing revenue was fueled by nearly 100 new stores opening
over the last year, a 27.9 percent increase in comparable-store sales, and
even healthier gains at the wholesale level. Net income skyrocketed 77
percent, leading to a profit of $1.11 a share. Analysts had expected earnings
of $0.86 per share on $859.5 million revenue.
They recognize retail store revenue upon sale of their products to retail
consumers, net of estimated returns. Wholesale revenue is recognized net of
estimated for sales returns, discounts, markdowns and allowances, after
merchandise is shipped and title and risk of loss are transferred to their

wholesale customers. The amounts reserved for retail sales returns were
$3.1 million, $1.7 million, and $2.3 million at March 30, 2013, March 31,
2012, and April 2, 2011, respectively. To arrive at net sales for wholesale,
gross sales are reduced by provisions for estimated future returns, based on
current expectations, trade discounts, markdowns, allowances, operational
chargebacks, as well as for certain cooperative selling expenses. Selling,
general, and administrative expenses consist of warehousing and distribution
costs, rent for our distribution centers, store payroll, store occupancy costs,
(such as rent, common area maintenance, real estate taxes and utilities),
information technology and systems costs, corporate payroll and related
benefits, advertising and promotion expense and other general expenses.
Depreciation and amortization includes fixed and definite-lived intangible
assets. Income from operations consists of gross profit minus total operating
expenses. Interest expense, net represents interest and fees on their
revolving credit facilities and amortization of deferred financing costs. Offset
by interest earned on highly liquid investments (investments purchased with
an original maturity of three months or less, classified as cash equivalents),
the amounts of which are not material for all periods presented.

Conclusion
Based on the information that was provided to me on my findings on
Michael Kors Marketing, I have found that their marketing research
developers such as Michael himself have done a great job in segmenting

their target market of customers. That step was combined while Michael was
designing his luxury line of just clothing. He then continued the marketing
research with his company to appeal to a wider group of consumers, by not
limiting himself to only the richest people. Developing a wide range of
products at reasonable designer prices was the key to success in Michaels
later work in the product line called, MICHAEL Michael Kors. His new
product line has flourished with all of the marketing campaigns and
advertising that has been applied. This clearly communicates how innovation
and implementing new products into your product line can make your
revenue boost drastically when done correctly. From targeting consumers
demographics to designing affordable items and pricing them where they
make a great profit.

Global breakdown of searches by some of Michael Kors


competitors

Kors revenue and net income rising significantly in


previous years

Works Cited
"Michael Kors Strategic Marketing Plan." Michael Kors Strategic Marketing Plan. N.p.,
n.d. Web. 29 Nov. 2014.

"About Us | Michael Kors." Michael Kors. N.p., n.d. Web. 30 Nov. 2014.

"The 85 Richest People In The World Have As Much Wealth As The 3.5 Billion
Poorest." Forbes. Forbes Magazine, n.d. Web. 02 Dec. 2014.

United States. Securites and Exchange Commssion. Washington, DC. Michael Kors
Holdings Limited. N.p.: n.p., n.d. FORM 10-k. Web. 30 Mar. 2013.
<http://www.sec.gov/Archives/edgar/data/1530721/000119312513239625/d494652
d10k.htm>.