Value Creation and Delivery Sequence



Juicy Couture-Made in the Glamorous USA

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Projected Marketing Plan

June 9, 2006

Prepared by,

Natalie McKinley and Justin Black

Part 1

Executive Summary

Recent news shows that high end fashion designers have the potential for success in new markets, but a recall on Juicy jewelry may stall Juicy’s growth. Juicy has many strengths, weaknesses, opportunities, and threats within their business and industry. Constant review of theses attributes will enable Juicy to continually improve there business operations. Value is delivered to the Juicy customer in many different ways. Value is needed to keep the customers coming back and wanting more. A Juicy shopper is buying pleasure, comfort, beauty, and status, not just a pair of quality sweats. Juicy is considered a durable and specialty good. Juicy delivers medium to high customer value and a low to medium costs to customers. The brand resonance pyramid displays psychological bonds customers have with Juicy, and the level of activity produced by this loyalty. Juicy’s labeling provides authenticity and describes the pants because a package provides no benefit to the product. The Juicy customer could be segmented in a variety of different ways. Juicy has clearly defined the appropriate points-of-difference and points-of-parity associations based on positioning, target customers, and competition. At $85 each, the Terri Pants will bring in a 30% profit totaling $51,000 from the sales of 2,000 units. The place strategy flows from the manufacturer to the retailer to the end user. Juicy communicates to their customers in a number of ways through promotion. Juicy bases their Customer Relationship Management on 3 determinants: identify your prospects and customers, increasing the longevities of the customer relationships, and focusing disproportionate effort on high value customers. Through charitable donations and the concern for safety of all Juicy stakeholders, Juicy Couture has a strong social responsibility program.

Part 2

Situation Analysis

• “Advantage, Mr. Lauren.” Rachel Dodes and Christina Passariello. The Wall Street Journal. Thursday, May 25 2006.

The Polo Ralph Lauren Corp. has designed new uniforms for the umpires and ball boys and girls for the Wimbledon tennis tournament in England, one of tennis’ biggest events. For 30 years, the officials have been required to wear solid green uniforms, and there have certainly never been sponsors on the uniforms. Wimbledon has relaxed the strict rules this year and signed a five year contract with Polo. Polo’s new uniforms will be navy blue and have the Ralph Lauren logo on them. Sponsorships have increased in tennis as of late, so Ralph Lauren is joining the new marketing opportunity. More people with salaries over $185,000 a year attend Wimbledon than any other British sporting event. This information is important because Polo is a mid to high level fashion designer and may have the same target customers as Juicy Couture.

• “Credit-Card Issuers’ Problem: People Are Paying Their Bills.” Robin Sidel. The Wall Street Journal. Thursday, May 25 2006.

The percentage of people paying off outstanding credit card debts per month is up to almost 21%. Consumers are managing their debt better, and some are paying off their debts by borrowing against their houses with the low home equity rates. Even though consumers have more debt than ever and use credit cards for more purchases, creditor’s revenues are dropping. This could be good news for Juicy Couture because if people are getting out of debt, then they can afford to spend money on Juicy products. This news could also be bad for Juicy because people are spending their money on getting out of debt rather than purchasing Juicy apparel.

• “Global Business Briefs” section of The Wall Street Journal. Friday, May 26 2006.

Polo Ralph Lauren Corporation’s fourth quarter earnings were more than double the previous year’s results. Their net income was up to $62.5 million for the quarter ended April 1. Their retail sales were up 15%. Also, retailer Eddie Bauer is considering selling itself. While Polo has done well, Eddie Bauer has not. Juicy Couture should learn from the success of Polo and not follow what Eddie Bauer has done.

• Google search “Juicy Couture”

A search of recent news regarding Juicy Couture revealed that on May 17 of this year, Juicy voluntarily recalled some children’s jewelry. The jewelry was found to have a high content of lead. This news could damage Juicy’s reputation and could cause parents to question whether Juicy products are safe for their child. This negative publicity could create a bad image for Juicy Couture. Juicy should proceed with caution and show that their other products are indeed safe. Since this news was released, Juicy has added a link on their website explaining what products are being recalled. This shows good measures are being taken to help their image by keeping their customers safe.

Part 3

Check List for Performing Strength and Weakness Analysis

| | |Performance |Importance |

| | | | |

| | |Major Strength|Minor Strength|Neutral |Minor Weakness |Major Weakness |Hi |Med |Low |

|MARKETING | | | | | | | | | |

|Company Reputation | |√ | | | | |√ | | |

|Market Share | |√ | | | | |√ | | |

|Customer Satisfaction | |√ | | | | |√ | | |

|Customer Retention | |√ | | | | |√ | | |

|Product Quality | |√ | | | | |√ | | |

|Service Quality | | |√ | | | |√ | | |

|Pricing Effectiveness | |√ | | | | | |√ | |

|Distribution Effectiveness | | | | |√ | | |√ | |

|Promotion Effectiveness | | | | |√ | |√ | | |

|Sales Force Effectiveness | | |√ | | | | |√ | |

|Innovation Effectiveness | |√ | | | | | |√ | |

|Geographical Coverage | | | |√ | | |√ | | |

|FINANCE | | | | | | | | | |

|Cost or Availability of Capital | | |√ | | | | |√ | |

|Cash Flow | |√ | | | | |√ | | |

|Financial Stability | | |√ | | | |√ | | |

|MANUFACTURING | | | | | | | | | |

|Ability to produce on Time | | | | |√ | |√ | | |

|ORGANIZATION | | | | | | | | | |

|Flexible and Responsive | | | |√ | | |√ | | |

|Visionary Leadership | |√ | | | | |√ | | |

S W O T Analysis

Strengths

• Company Reputation: extremely high when focusing on quality, brand attractiveness, and fashion

• Market Share: extremely high, most sought after sweat line, very profitable

• Customer Satisfaction: always pleasing customers with new product lines, new styles and colors, and return and repair policies

• Customer Retention: juicy is always in the minds of its customers, constant reminder from celebrities and media

• Product Quality: extremely high, does not fade or shrink after washings, always looks new, comfortable fabrics and materials, mostly made in the US

• Pricing Effectiveness: consumers are will to pay for quality and style, normal mark up 2.2 or 120% (Received at $50 → Priced at $110) as fine department stores and competing brands

• Innovation Effectiveness: always one step ahead of customer wants, after a new style is introduced customers feel as if they need the new style, talented product and style personnel

• Market Saturation: not available to every store, exclusive territorial rights, makes brand more appealing, the need for a LA specialty store (similar to Las Vegas)

• Cash Flow: big money maker, high mark up, little to no storing costs, minimum wage labor

Weaknesses

• Distribution Effectiveness: only 1 store world wide specializing only in juicy, research needed to find best locations based on demographic, geographic, and psychographic segmentation, possibly 10 world wide locations

• Promotion Effectiveness: little to no promotion directly associated with Juicy, promotion consists of positive publicity

• Ability to Produce on Time: often runs behind on deliveries, ships in a 15 to 30 day window period, often 30 days behind, zippers and materials come from overseas and are not allotted proper shipping and assembly time, gives juicy a bad image

• Purchasing: a luxury good, sweat line unaffordable to many people (however accessory line makes accommodations)

Opportunities

• Expansion: customers can shop the whole collection, greater variety of sweats, the need for additional juicy locations

• Brand Domination: everyone wants juicy, few to no other brands compete, exclusive rights

• Special Orders: customers can make special orders if styles or sizes are unavailable

• Specialization: 1 brand to focus on, great product knowledge, new items are released early

• Internet: shop largest selection available, pre-order before released, shipped to your door, gift wrapping, free returns

Threats

• Media Influential: highly susceptible to critique of celebrities and the media, could cause a shift in demand

• Existing Locations: available at Neiman Marcus, Nordstrom’s, Bloomingdales, Saks Fifth Avenue, Specialty Boutiques

• Internet Shopping: customers can purchase and ship Juicy in a matter of clicks

• One Brand: little variety, little price differences, juicy may not fit all customers, too specific

• Target Customers: customer base is narrow, middle to upper mid

Value Creation and Delivery Sequence

|Choose the Value |Provide the Value |Communicate the Value |

|Customer Segmentation |Market Selection/ Focus |

Choose the Value

• Customer segmentation: Juicy customers could be segmented by clusters, geographically, demographically, and psychograph. However, the best way to segment is based on psychographic. Personality traits, lifestyles, and values are easier to segment the customer than geographic and demographic. People within the same demographic group may possess many different psychographic qualities. Although a customer may be in middle to lower class and have low income levels, some customers still feel the want and need to purchase Juicy. Some customers try to portray a certain life style they do not have.

• Market Selection / Focus: Our customer is not only a resident of LA, but also any fashion conscientious girl. The Juicy customer is usually woman between the ages of 16-50. A person looking for Juicy enjoys comfort, fashion, and looking good. Juicy is for woman on the go with little time. Juicy is for women of all sizes and shapes. Most Juicy customers prefer simplicity in a wide range of styles and colors. Juicy customers are students, businesswomen, moms on the go, and travelers.

• Value Positioning: Juicy delivers high image, personnel, service, and product value.

Provide the Value

• Product Development: Juicy started as a casual sweat line and has greatly expanded their product line over the past five years. Juicy is always competitive with customer demands. When a trend becomes popular, Juicy is constantly ahead of the game. Juicy has expanded their line to shoes and accessories.

• Service Development: Juicy provides great customer service. If a product is defective in anyway, the product can be returned and a replacement or store credit is issued. After a purchase, Juicy wraps each product in tissue, secures the tissue with a sticker logo, and places the purchase into a specialty marked bag.

• Pricing: Juicy is marked up a standard rate. Each item arrives to the store priced and ready to sell. Juicy has an advantage selling directly to their customers by eliminating the middle man. Juicy can then afford to offer their customers product at a discounted rate. Juicy can save on shipping and carrying costs.

• Distributing: The Juicy store is shipped directly from Juicy. All other department stores and specialty stores are shipped Juicy from a close by warehouse. It is much easier for the Juicy store to reorder merchandise directly.

Communicate the Value

• Sales Force: The staff at Juicy would be between the ages of 15-50 similar to the customer. Juicy would employ full and part time employees. Juicy employees would need to possess the following qualities: outgoing, friendly, previous retail experience, easy to train, great personalities, good listeners, and creative thinkers.

• Sales Promotion / Advertising: Juicy does not do very much promotion or advertising. Their main promotion and advertising is done though television, movies, singers, and other types of celebrities. Juicy could definitely improve in this category.

Value Creation

Juicy customers receive high personnel value, image value, services value, and product value. All these values combined leads high total customer value. The product is expensive so customers expect great personnel to help them with their selections. Customers expect more amenities while they shop. Juicy customers expect finer things. Shopping for Juicy is an experience.

Part 4

5-Levels of Product

For Juicy’s brand to be successful, they must plan a customer value hierarchy that satisfies their customers. The first level is the core benefit. For Juicy, customers are buying pleasure, happiness, comfort, fashion, style, and beauty. A Juicy girl loves to shop and finds pleasure in shopping. She is happy when she wears Juicy Couture, and wants to be comfortable and stylish at the same time. A Juicy girl always wants to look gorgeous.

The basic product is sweats. It is astounding to see that customers of Juicy are buying all those core benefits from a pair of casual pants. But these pants are not just sweats. They are actually called Terry Pants and together with a Hoodie make up a tracksuit, a signature Juicy Couture item.

The expected product is a set of attributes normally expected of buyers. Juicy sweats are expected to be manufactured with good quality and not shrink or fall apart, be highly fashionable, make the wearer look fabulous, and be comfortable. These expected conditions help make Juicy Couture one of the hottest fashion companies for women.

The fourth customer value hierarchy level is the augmented product that exceeds customer expectations. This is where differentiation occurs. The augmented elements are prestige, exclusivity, and popularity. Prestige comes with the Juicy name because celebrities love to wear Juicy. Juicy Couture is relatively expensive, so exclusivity comes for those that choose Juicy. The augmented elements add cost, and Juicy certainly costs more than their competitors. Juicy pants cost roughly $82, while their competitor, Adidas, sells a similar product for $40-50. These augmentations soon become expected benefits of Juicy customers. Competitors then have to search for other benefits to attract buyers. “Stripped down” versions of track pants are available for those that simply want a comfortable pair of pants but are unwilling or unable to pay the high price for Juicy Couture. Target offers this product for around $20.

The final level is the potential product. This level is never actually reached. Since fashion is so volatile, the best Juicy Couture can do is try to predict what the next hot fashion look will be. Their products change depending on what fashion demands. It is possible that Juicy could change their designs every season. This constant design modification is necessary to stay competitive in the fashion market. An advantage Juicy has is they are considered a benchmark for casual fashion, so customers will trust the clothes Juicy offers are fashionable and they will buy them. Juicy creates the demand for a certain design or style.

Product Classifications

• Juicy is considered a durable good because they last after many uses. Juicy looks fantastic washing after washing. The seams do not move, the fabrics used are of highest quality and do not shrink after each washing. On the basis of shopping habits, Juicy is considered a specialty good because buyers are willing to travel to make the purchase. Juicy is a sought after clothing line. Customers recognize the brand and never make substitutes. Juicy customers are loyal. Juicy can also be classified as medium to high customer worth. Juicy is not convenient to all consumers. However with additional specialty locations Juicy can reach a greater portion of the market. Shopping for Juicy requires some effort, but not too much. Juicy has found the median between waste and worth.

Brand Value

|Determinates of Customers Delivered |Rated Value |Juicy Specialty Store in Los Angeles |

|Value | | |

|Image Value |Medium |Celebrities like Paris Hilton and Jessica Simpson are wearing juicy. Most people want |

| | |to look and feel like a celebrity. Juicy is in the press, magazines, television, and |

| | |movies. If you are seen in Juicy people think you are high class, have money because |

| | |you have nice sweats (because Juicy is costly). It is far different owning Juicy sweats|

| | |compared to Adidas sweats. |

|Personnel Value |Medium |Between the ages of 16-30. Fewer older customers in LA would be wearing Juicy. Younger|

| | |workers are needed because there is more traffic flow in LA. Positive exciting people |

| | |with the ability to sell. More stores offer Juicy in LA than any other city so the |

| | |employees need to be fantastic and extremely qualified. Possibly business, |

| | |communication, or fashion majors with great communication skills. Full and part time |

| | |workers. The employees need to be outgoing and friendly with previous retail experience|

| | |(or extremely easy to train). Great personalities, good listeners, and creative |

| | |thinkers. |

|Services Value |High |Prices are high and competition is close, therefore the services end must also be high. |

| | |Onsite alterations would be available (10 minutes or less or your alterations are FREE).|

| | |Complimentary bottled water and fruit available to all customers. Large fitting rooms |

| | |with good lighting and full 360 degree mirrors. |

|Product Value |High |Made in the USA! Easy to wash. Looks brand new each wearing. Very durable. Color |

| | |doesn’t fad. Seams stay in tack. Product made extremely well! |

|Total Customer Value |Med-High |Total customer value is Medium-High. The product value is expensive so customers expect|

| |2-2 |great personnel to help them with their selections. Customers expect more amenities |

| | |while they shop. They expect the finer things. Shopping for Juicy is more of an |

| | |experience! |

|Psychic Cost |Low |Customers are willing to spend lots of time to find the perfect color and the perfect |

| | |styles that flatter their body. Customers are shopping to achieve an image in their |

| | |head. An image of beauty. It is not too stressful. Everything is on a simplistic |

| | |level. |

|Energy Cost |Low / Medium |With sweats as the focus, there will be folding and hanging for the customer (if they |

| | |are nice). Customers will have to carry their merchandise to the counter. Very little |

| | |energy is involved. Sizes and styles will be clearly labeled. The store is located |

| | |centrally in LA where there is high traffic flow. |

|Time Cost |Low |Alterations are done on-site. Little wait time is involved. All transactions will be |

| | |done in a fast manner. Multiple registers will be used so customers do not have to |

| | |wait. Credit cards will be process quickly, so you don’t have to wait long for |

| | |approvals. The store will be staffed heavily to answer questions, find sizes, and |

| | |assist customers. Sizes and styles will be labeled to help the customers have a seedy |

| | |visit. If a customer wanted to they could run in and out in little time. |

|Monetary Costs |High |The costs are high. They same type of sweat could be found at target for 4x less the |

| | |cost. However, you are paying for the name, quality, and image. Sweats tops run from |

| | |85-225 dollars. And the sweat bottoms run from 75-210 dollars. |

|Total Customer Costs |Low-Medium |Total customer costs are low-medium, which is a good for this type of store. Total |

| |3-1-1 |customer value is high and monetary costs are high, but the time, energy, psychic cost |

| | |even out the highs. |

Brand Resonance Pyramid

|Relationships |Resonance |

|Buyer and seller as one |Customers are very aware of the brand |

|Call customer about new merchandise |They know the current colors and styles available |

|Call customers when their favorite styles come in |They know and trust the same basic fit |

|Send out discount offers to top customers |Little assistance is needed because customers are very knowledgeable about the brand Juicy |

|Help pick out special occasion outfit | |

|An actual relationship...not just selling to make | |

|the sell | |

|Honesty and Friendship | |

|Response |Judgments |Feelings |

|Not concerned about spending money |Not impulse purchases because Juicy is costly |You feel happy and comfortable wearing Juicy. |

|Shop to fulfill happiness |and represents an image. People want to get | |

|Shop because stressed |the image right and it takes time to pick out |When you are in Juicy you look very nice and |

|To build relationships with others |an exact outfit. For 1 Juicy outfit the |put together. |

|Shop because life is boring |average cost is $200. This is an expensive |The perfect travel solution |

| |purchase that is usually not an impulse |The perfect solution on those days “you have |

| |decision. |nothing to wear” |

| | |Safe-never a risky outfit |

|Meaning |Performance |Imagery |

|Fashion Followers |Fit: hugs in the right places |Great style, celebrities wear them, full |

|Businesswomen |Durable |length, cropped, ¾ length, short sleeves, |

|Mothers |Washes well, easy to wash, comes out looking |drawstring, rushed, pocket pant ect... |

|Students |great each time |Awesome fit, makes your body look good, not |

| |Keeps you warm or cool depending on the style |too round, and not straight up and down |

| |Comfortable |Tons of colors!!! |

|Identify |Salience |

|Middle to Upper Class |What makes it pop? |

|Female |Colors, bright and vibrant displays |

|Teens to Adults |Windows have real mannequins moving (motion!) |

| |Music, not too load, up beat, popular songs |

| |Candles, appeal to the senses when they walk by and in the store |

| |Draw the eye to different variations in heights |

| |Bright colorful stacks of sweats |

| |These draw in the customers |

Packaging/Labeling/Warranty Considerations

Packaging for apparel is different from most products because Juicy clothing is displayed or folded on a rack free from all packaging. The same is true for Juicy Couture sweats. When the sweats are ordered they come to the retail store directly from Juicy. Juicy pants do not have a primary or secondary package, but they do have a shipping package. They are shipped via UPS. The sweats are folded up and individually wrapped in plastic bags and placed in a cardboard box. The sweats are bagged to keep them clean during shipping. Once the order reaches the retail store, employees open the box and remove the sweats from the plastic bags and place them on the shelf. Since the end consumer of Juicy Couture does not see this process, the shipping package does not have to be flashy or attractive.

Essentially, the product, Juicy sweats, itself is the package. Shopping is self-service activity when you are looking for the perfect outfit. Clerks do help out when you cannot find a size or style you are looking for, but Juicy Couture is for people who love to shop for the perfect outfit. If the pants were in a package, shoppers would be unable to try them on or see the unique features, like the “J” zipper. A primary or secondary package would hinder the shopping experience. Consumer affluence and brand image are inherently a part of Juicy Couture. Consumers are willing to pay more for the appearance and prestige of Juicy fashions. A package would not enhance that image.

Labeling is key for Juicy Couture to prove authenticity and describe their product. Juicy uses elaborate gold tags attached to their pants to identify their brand. Their tags describe what material the product is made of, tell the style number, size, price, and say it was, “Made in the glamorous U.S.A.” One of the tags describes how to care for the product when laundering it to protect the “J” zipper. The labels are gold because gold usually means expensive and classy. There is a large crown on a couple of the tags, and they say, “Choose Juicy.” Some of the tags have the Juicy crest, which include two small dogs. Juicy Couture wants to ensure the end user that they purchased a genuine Juicy product. Here are some pictures of the tags and labels used.

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Juicy Couture offers a 100% satisfaction guarantee on all their products. If one was to purchase Juicy pants, take them home, try them on and suddenly realize they are not what they wanted, they can easily return the pants for a full refund or replacement with their receipt. If they do not have their receipt, and we know they purchased the product from our retail store, the customer will receive store credit in the amount of the returned item. If an item breaks from normal use, Juicy will gladly repair or replace the item free of charge. Depending on the nature of the product failure, the retail store will either repair the item in store, or ship the item to Juicy for repair. If a product is beyond repair, the item will be replaced at the store, and the store will receive credit from Juicy. Juicy knows its competitors can not match the quality of Juicy Couture because Juicy is a superior product.

Part 5

The Juicy customer could be segmented in a variety of different ways. One has to keep in mind the type of customers shopping at your store, the geographic, demographics, and psychographics variations.

• Clustered Segments are most similar to the market preference patterns that Juicy needs to be successful. Juicy will be located in the new center of Los Angeles. Few people would have a problem traveling to Los Angeles to purchase Juicy because Juicy is a specialty good. After all they will be supporting a local store, the trip is far less time consuming than traveling to a mall, finding parking, searching the store, and waiting to pay.

• It is important to look at the Geographic Segmentations to customize the inventory for customers located in different segments. The climate in LA in the summer is very hot. A smart buyer would look at past weather and climate trends and order accordingly. In the summer, very few full length pants and long sleeve hoodies would be stocked. A limited amount would need to available for customers traveling to colder climates.

• Demographics play a major role for the target customer profile. Age would be important to know because most women over the age of 50 are not likely to shop at a Juicy store. The store needs to be located predominately around a highly populated area of women or where women are willing to travel to. Income is a very important factor because Juicy is an expensive purchase and some people cannot afford to spend over $200 on sweats. Occupation is another important factor. People with high levels of stress at work can’t wait to get home and put on comfy clothes to lounge in. This would be a great market to target. Also, social class. Juicy targets the middle to upper social class levels because women in theses levels have more money to spend on fashion trends. Before deciding on a location or which customers to target, collect information on age, gender, income, occupation, and social class.

• Behavior segmentation could be effective for Juicy, but not practical. Behavior segmentation is based on knowledge and attitude about the product. I would not locate a Juicy store in a population where everyone already knew about the product. New customers can not evolve if attitudes and knowledge about the product is already developed.

• The best way to segment the Juicy customer is based on Psychographic. Personality traits, lifestyles, and values are easier to segment the customer by than geographic and demographic. People within the same demographic group may possess many different psychographic qualities. Although a customer may be in middle to lower class and have low income levels, some customers still feel the want and need to purchase Juicy. Some customers try to portray a certain life style they do not have.

|Yes |No |No |

|No |No |Yes |

|No |No |Yes |

• The best target market segment for Juicy would be Selective Specialization. Selective specialization targets many different and equally important segments. In areas were income is high, cashmere tracksuits could be sold because they retail for over $400 a suit. Expensive and moderately priced suits could be sold at this location. Customers in the Psychographic segmentation would want to shop at a Juicy store that carried the trendiest tracksuits. The suits with large logos and symbols would be shipped to that location. People shopping at that location would want others to know what sweats they were wearing. Each of the segments would make money because they are appropriate for their customer base.

POD

• Attributes or benefits consumers associate with a brand

• Strong, favorable

• Juicy has created many points of difference. However, the point of difference that stands out over all others is attractiveness. Not only does Juicy look pleasing to the eye, but it also makes the customers wearing Juicy feel attractive. I am not sure how Juicy does it, but they have it down. When you wear Juicy, you feel great. You feel good about yourself and your appearance.

POP

• Not unique to the brand and shared by other brands

o Category

▪ Necessary conditions for brand choice

• Attractiveness

• Functionality

• Comfort

• Exclusiveness

• Variety

• High Fashion

• Price

• Image

• Credibility

• Reliability

o Competitive

▪ When compared to other brands Juicy was very similar in the fields of credibility, reliability, and comfort. Juicy was superior to the competition in the following fields, Attractiveness, Exclusiveness, and High Fashion.

• Choosing POPs and PODs

o Customer desirability criteria for PODs

▪ Distinctiveness: Regular Juicy customers and even customers who are not as familiar with Juicy are able to find Juicy’s PODs distinctive and superior. Juicy differentiates itself from the competition by fashion appeal and exclusive rights. Most women between the ages of 16-50 are familiar with Juicy and what it has to offer.

▪ Communicability: Reason why the brand deliverers benefits

• Most fashion conscientious consumers rely on magazines and celebrities for there “Proof Points”. People look to the magazines for choosing what and what not to wear, how to accessorize, and put together clothing. Celebrities are always in the eyes of the media. If the celebrities are wearing certain items, then everyday consumers know that the items they are wearing are “hot”. Juicy is always featured in magazines. I have never picked up a magazine that did not talk about Juicy. The compelling reason why Juicy delivers benefits is because the magazines and celebrities say so...

•

Positioning Mapping

Based on 1 to 10(10 being the Best)

| |Juicy |Adidas |Target Brand |

|Attractiveness |9 |6 |7 |

|Functionality |8 |10 |6 |

|Comfort |9 |9 |9 |

|Exclusiveness |10 |3 |4 |

|Variety |6 |9 |3 |

|High Fashion |10 |7 |6 |

|Price |3 |6 |10 |

|Image |9 |9 |5 |

|Credibility |9 |9 |9 |

|Reliability |9 |9 |8 |

|Totals |82 |77 |67 |

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After looking at all the Differentiation Strategies and carefully critiquing each concept I came to the conclusion that Image Differentiation is most important to the Los Angeles stylish shopper. If a shopper does not care about their image than shopping at Juicy would not be beneficial. A customer could spend much less on a sweat suit if they were not concerned with image. Customers who are not concerned about image and status would rather shop at Target or sporting good stores for sweat suits. The reason why people purchase Juicy is mostly because of the image Juicy portrays. Wear “our” sweats SO you will look good and have fun like all the celebrities. Juicy is fun and happy! You can be happy too if you wear Juicy!

• Product Differentiation

o High product quality makes customers want to keep repurchasing. Juicy makes their clothing line very well. They use only the finest fabrics and materials to produce their sweat line.

▪ Quality by product performance using physical signs and cues

• The zipper makes a loud noise when zipped

o Customer perceive the zipper as strong and less likely to break

• Personnel Differentiation

o Competence: employees should be highly trained and knowledgeable about their product. Customers are more inclined to purchase if they are aware Juicy is made in the USA. This signifies proper payment of wages. Employees need to also be knowledgeable about the sweat suits. Each style fits differently. Employees should be able to recommend the right style for each body type.

o Credibility: Employees at Juicy will need to be friendly and trustworthy. No one wants to be around unhappy people, in order to make sales the employees need to put on a smile. Trust is also an issue. The Juicy personnel are there to help you find the proper fit....not to sell, sell, sell. If you tell a customer your product looks great when in fact it does not, the customer will get home and realize (What was I thinking listening to her. Her job is just to sell. I am not shopping there again.) Honesty is the best policy.

o Reliability: Reliability comes in many forms

• Customers rely of retailers to carrying what they are looking for. (styles, sizes, and colors)

• They rely on the store being open when they are ready to shop

o Communication

▪ Between the customer and the employee is very important

• Being able to help customers with their questions, requests, and problems

• Channel Differentiation: Juicy cannot use this differentiation to their advantage. Juicy is known for exclusiveness. Juicy is no longer opening new accounts because the do not want the market to become saturated. On of the nice things about Juicy is that you can not purchase their products everywhere. One specialty stores carry the Juicy Product.

• Image Differentiation: Juicy created a very distinctive image for their brand. They showcase the brand in ways that make consumers want to buy. The image is youthful and full of energy. Juicy has all the right people giving there line publicity. Celebrities like Paris Hilton, Jessica Simpson, and Reece Witherspoon are always photographed in magazines wearing Juicy. The image created by Juicy is far different from the image other brands communicate. Juicy communicates fashion forward, easy comfort.

Part 6

Price

|A. Marketing Assumptions | |Industry Std. |Labor Wage | |

| | |20% of Sales |@ $12.75 | |

| “S” | $ 85.00 | X 2,000 Units | Sales Revenue | $ 170,000 |

|Less “C” | $ 38.25 | X 2,000 Units | Cost of Goods Sold | $ 76,500 |

| Equals “M” | $ 46.75 | X 2,000 Units | Gross Margin | $ 93,500 |

| Less “OP” | $ 21.25 | X 2,000 Units | Operating Expenses | $ 42,500 |

| Equals “P” | $ 25.50 | X 2,000 Units | Net Profit | $ 51,000 |

A. Finally, “Analytical Ratios” can be Computed to Evaluate to Operation “Vital Health Signs”:

1) Cost of Goods Sold Ratio = COGS / Sales Revenue …… (same % as “C” / “S” ) ----- THIS IS BAD & WE WANT TO BE LOW

$38.25/$85= 45%

2) Gross Margin Ratio = GM / Sales Revenue …………….. (same % as “M” / “S” ) ----- THIS IS GOOD & WE WANT TO BE HIGH

$46.75/$85= 55%

3) Operating Expense Ratio = OE / Sales Revenue ……….. (same % as “Per-Unit” ) ----- THIS IS BAD & WE WANT TO BE LOW

$21.25/$85= 25%

4) Net Profit Ratio = NP / Sales Revenue ………………… (same % as “Per-Unit” ) ----- THIS IS GOOD & WE WANT TO BE HIGH

$25.50/$85= 30%

Using the three Cs of pricing, Juicy Couture can effectively set a price for their product. The costs of material and labor add up to $38.25 for one pair of Terri Pants. This sets the price floor. Juicy cannot accept a price lower than $38.25 or else they will lose money; this is the breakeven point. Competitors lower prices of $50 for Adidas and $20 at Target for similar pants enables Juicy to orient their price above their competitors to give the association that Juicy pants are better and of a higher quality in the minds of Juicy’s target shopper. Once Juicy’s consumers see that Juicy Couture is a far superior product than the competition, Juicy can establish the price ceiling at $85. The unique features of Juicy sweats and products like their high grade material and “J” shaped zippers convince the end user to pay the premium price for Juicy Couture. The net profit of $51,000, or 30%, is enough to satisfy Juicy’s investors, especially since that is just off of one line of product.

Juicy Couture’s pricing method is markup pricing. Even though this is a simple way to price, Juicy still uses all three Cs of pricing to establish the final price. Juicy adds a markup to the cost of the sweats. For one pair of Terri Pants, the markup is 30%. This percentage works because the marked up price actually brings in the expected level of sales. Juicy uses this method because it is easy to determine costs and estimate demand. The interbrand competition between other retailers of Juicy Couture is low because these retailers use roughly the same markup. The price for a pair of sweats will be very similar from an authorized retailer of Juicy Couture. Buyers are not being taken advantage of and sellers are entitled to a decent profit with markup pricing.

Place

The place element strategy Juicy uses is a one-level consumer marketing channel. To get Terri Pants to the end user, Juicy sells through a retailer. This is the best strategy because Juicy is not a large fashion company. A wholesaler is not necessary, and a direct-marketing channel creates inefficiencies of fewer outlets for the customers to obtain Juicy Couture. By not using a wholesaler, Juicy keeps its distribution channel efficient and saves money at the same time. By using select retailers, Juicy can monitor each store more closely than if Juicy was sold everywhere. There is some friction in the channel, but not much because the sweats move from the manufacturer to the retailer to the customer. The friction would occur at the retail level from misplaced orders or dissonance between the retail store and manufacturer. This selective distribution gives the authorized retailers of Juicy greater exclusivity by allowing a deep selection of Juicy products.

The physical flow of the product follows a forward flow pattern from the company to the customer. First, Juicy obtains the necessary material and equipment directly from suppliers. Juicy then manufactures the sweats and ships them via UPS to the retail store, the sales channel. Shoppers then purchase their sweats, concluding the physical flow.

Promotions

Juicy could communicate to the customers in a number of ways; the list could go on forever. The following are some of the most important ways Juicy could communicate. However, the style of the stores layout, merchandise, location, the stores décor, staff, the packaging, and logos all contribute something to the customers.

Common Communication Platforms

|Advertising |Sales Promotion |Events / Experiences |

|Motion Pictures |Truck Shows (Vendors come and place special customer |Wine, cheeses, and cookies |

|Celebrities |orders) |Musicians to play while customers are shopping |

|Billboards |Contest Winner Receive Store Gift Certificates |Candles and lighting to relax customers |

|Point of Purchase Displays |Coupons | |

|Symbols and Logos |Free Gift with Purchase | |

|Customers are walking Advertisers | | |

|Public Relations |Personal Selling |Direct Marketing |

|Donations |Profit Sharing |Telephone and Email |

|Internet Web Site |Sales meetings |Mailers |

|Seminars |Bonus Programs |Catalogs |

| | |Internet Shopping |

| | |Express Shopping |

Customer Relationships

Don Peppers and Martha Rogers wrote a series of books that targeted Customer Relationship Management determinants. The following determinants are in closest relation to the Los Angeles Juicy store, identify your prospects and customers, increasing the longevities of the customer relationships, and focusing disproportionate effort on high value customers.

• Identify your prospects and customers: All shoppers in LA cannot be targeted. Juicy is made for a specific person with specific qualities and attributes. Juicy could initially contact customers by purchasing a mailing and phone number list from a similar type of store in LA. This customer list would help Juicy identify prospective customers. Every time a customer makes a purchase they should be added to the computer system database. The data base keeps track of each customers purchases, money spent, address, phone number, and wants.

• Increasing the longevities of the customer relationships: Customer relationships would be one of the top priorities at Juicy. From the customer database, Juicy could say in close contact will all their customers. Mailers would be sent out with special discount offers and sales promotions. The Juicy staff could also contact individual customers and let them know when new shipments of their favorite brands have arrived. Strong customer relationships enable the customers to have voices within the company. Anyone who feels like they have a say within a company will continue to patronage the business.

• Focusing disproportionate effort on high value customers: The most valuable customers need to know they are important to the businesses success. The top customers will receive birthday gift certificates towards any item in the store. Top customers will also be able to take advantage of Juicy Express. Juicy Express allows top customers to make quick purchases without ever leaving their vehicles. The Expresses service is a drive through at the back of the store where customers can call ahead, make their purchases, and have their items delivered to their vehicles.

Part 7

Holistic, Ethical, and Social Responsibility Plans

Juicy Couture has an aggressive social responsibility program to protect their customers from defective products. From the recent recall of children’s jewelry, Juicy has inserted a link on their website explaining in detail what products are being recalled due to the danger they pose. This is a big step for Juicy because their website does not have much on it. Adding one link to a website that has normally five links is a significant addition. Juicy is aggressively dealing with the problem jewelry to keep their customers safe and keep their reputation high.

The employees at Juicy must remain within the law. The sales staff must make sure they are not making false claims about the sweats when they are helping a customer. Juicy staff is there to help one find the perfect outfit, not sell as many pants as possible by lying about the workmanship or material. They must also be careful not to disparage their competitors by making false claims about Juicy’s competitor’s products. Belittling other retailers is not the Juicy way of doing business. Juicy wants to comply with the law, and they certainly do not want to confuse or mislead their customers.

Juicy’s ethical behavior is built on traditions of safety for the environment and its people. All Juicy products are made in the glamorous U.S.A., therefore they are avoiding possible child labor from an overseas supplier. Juicy cares for the environment. All materials are secured in a safe manner free from all endangered lands and animals. Ethics are important to Juicy because good ethics translate into positive affective behavior from consumers.

Since Juicy is a small company, they may never make a top ten list for ethics or social responsibility. That does not matter. What matters is they continue to focus on safety and equality for all stakeholders. Donations will be made to charities or non-profit organizations that our customers support. At the retail store, there will be a box for people to suggest charities that Juicy should support. This gives the customer a more active role in social responsibility. Juicy customers support charities through purchases made of fabulous Juicy Couture.

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Juicy Tube Dress

Juicy Sweat Suit

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