\fMarketing Fashion: A Global Perspective 00_INT_Rath_FM_FNL.indd 1 4/16/12 6:54 PM 00_INT_Rath_FM_FNL.indd 2 4/16/12 6:54 PM Marketing Fashion: A Global Perspective Patricia Mink Rath Marketing Education Consultant Richard Petrizzi Illinois Institute of Art Penny Gill PWG Communications Inc. Fairc hil d Bo o ks N e w Yo r k 00_INT_Rath_FM_FNL.indd 3 4/16/12 6:54 PM Executive Director & General Manager: Michael Schluter Copyright Bloomsbury Publishing Inc. 2012 Executive Editor: Olga T. Kontzias Assistant Acquisitions Editor: Amanda Breccia All rights reserved. No part of this book covered by the copyright Development Editor: Rob Phelps hereon may be reproduced or used in any form or by any means Assistant Art Director: Sarah Silberg graphic, electronic, or mechanical, including photocopying, Production Director: Ginger Hillman recording, taping, or information storage and retrieval systems Associate Production Editor: Jessica Katz without written permission of the publisher. Ancillaries Editor: Amy Butler Associate Director of Sales: Melanie Sankel Library of Congress Catalog Card Number: 2011940997 Copyeditor: Joanne Slike Cover Design: Erin Fitzsimmons 978-1-60901-078-2 Text Design: Alicia Freile, Tango Media GST R 133004424 Page Layout: Alicia Freile, Tango Media Printed in The United States of America 00_INT_Rath_FM_FNL.indd 4 4/16/12 6:54 PM Dedication For Phil, Eric, Kiyomi, Dana, Stefani, and Justin 00_INT_Rath_FM_FNL.indd 5 4/16/12 6:54 PM 00_INT_Rath_FM_FNL.indd 6 4/16/12 6:54 PM Contents Preface and Acknowledgments Part I: Defining Fashion Marketing and How It Works Chapter 1: Developing and Maintaining Profitable Customer Relationships xvii xxii 1 Chapter 2: Participating in the Global Fashion Marketplace 33 Chapter 3: Understanding Fashion Consumer and Business Buyer Behavior 65 Part II: Building a Fashion Marketing Strategy 97 Chapter 4: Creating a Company Marketing Strategy 101 Chapter 5: Obtaining and Using Fashion Marketing Information 131 Chapter 6: Creating the Right Relationships with Fashion Customers 163 Part III: Focusing Marketing Mix Elements on the Fashion Consumer 195 Chapter 7: Branding Strategies for Fashion Goods and Services 197 Chapter 8: Developing New Fashion Products and Monitoring Their Life Cycles 233 Chapter 9: Pricing: Identifying and Promoting Customer Value 263 Chapter 10: Fashion Marketing Channels and Supply Chain Management 303 Chapter 11: Fashion Wholesaling and Retailing 341 Part IV: Communicating Fashion's Value through Promotion 372 Chapter 12: Promoting Fashion Goods and Services 375 Chapter 13: Promoting Fashion through Personal Selling and Direct Marketing 399 Chapter 14: Fashion Advertising, Sales Promotion, and Public Relations 427 Appendix A: Sample Marketing Plan 459 Glossary 462 Bibliography 480 Index 482 vii 00_INT_Rath_FM_FNL.indd 7 4/16/12 6:54 PM Extended Contents Part I: Chapter 1: Developing and Maintaining Profitable Customer Relationships 1 Communications Marketer's Insight: Turning Social Networking into Customer Loyalty 23 xxii Social Media and Mobile Defining Fashion Marketing and How It Works Ethics and Social Responsibility 24 Summary What Do I Need to Know about Strategy Makes Customers the Focus 27 Case Study 1.1: Macy's New Marketing Developing and Maintaining 21 Profitable Customer Relationships? A World of Fashion and Marketing What Are Marketing and Fashion Marketing? 3 Marketing Defined Fashion Marketing Defined 5 29 Discussion Activities and Projects 29 30 References 31 3 29 Your Marketing Plan 2 Key Terms Review Questions 1 Fashion Marketing in Focus: 28 the Global Fashion Marketplace Fashion Marketers' Long-term Goal: Customer Loyalty Chapter 2: Participating in 7 What Do I Need to Know about 8 the Global Fashion Marketplace? 33 Identifying Customers Marketer's Insight: Marketing Beauty Products to Chinese Women Creating Fashion Products 10 The Fashion Marketing Environment 36 Building Customer Relationships 12 The Microenvironment 37 Marketer's Insight: Zappos The Company 37 Makes Customer Service an Obsession 14 Suppliers and Intermediaries 38 15 Customers 39 40 Developing a Fashion Marketing Strategy 9 Fashion Marketing in Focus: The Global Nature of Today's Marketplace 33 34 Choosing a Marketing Point of View 16 Competitors Creating a Marketing Mix 18 Marketer's Insight: Max AzriaGlobal Fashion Marketer 41 Publics 42 Fashion Marketing in the Twenty-First Century Globalization 21 21 The Macroenviroment 43 viii 00_INT_Rath_FM_FNL.indd 8 4/16/12 6:54 PM Focusing the Marketing Mix on the Customer 47 How Much Does the Customer Care? 49 The Buyer's Level of Involvement 72 Implications for Fashion Marketers 74 51 The Buyer's Decision-Making Process 75 Economic Forces 52 Marketer's Insight: What Do Purchases Political and Legal Forces 53 Say about Usand Who Cares? Natural Forces 56 The Buying Situation 78 Ethics and Social Responsibility 56 Cultural Influences 78 Global Fashion Marketing 58 Social Forces Marketer's Insight: L'Oral Speaks to Hispanics Technological Forces Marketer's Insight: Adidas Connects with World of Consumers Deciding to Market Globally Summary with Its Environment 59 61 77 Subcultures 79 Social Class 81 Social Influences 83 62 Family 83 Case Study 2.1: Nike Shifts 68 Marketer's Insight: Steps in 43 Friends and Reference Groups 84 Personal Influences 85 Key Terms 62 Perception 85 Review Questions 62 Learning 85 Discussion Activities and Projects 62 Motivation 86 Developing Your Marketing Plan 63 Attitude 86 References 63 Personality and Self-Concept 87 Business Fashion Buyer Behavior 88 Chapter 3: Understanding Fashion Kinds of Business Markets Consumer and Business Buyer Behavior 65 Marketer's Insight: What Do Foreign Consumers Like to Buy When Visiting the United States? 89 The Nature of Business Buying 90 Buying Methods 91 Types of Buying 91 What Do I Need to Know about Fashion Consumer and Business Buyer Behavior? Fashion Marketing in Focus: Why Customers Buy 65 66 What Is Consumer Behavior and What Do Marketers Do about It? 67 Ethics and Social Responsibility Extended Contents 00_INT_Rath_FM_FNL.indd 9 88 92 ix 4/16/12 6:54 PM Summary 93 Marketer's Insight: L'Oral Plans 'Big Growth' Strategy 118 94 Creating Value-Added Solutions 119 Key Terms 95 Identifying SMART Objectives 120 Review Questions 95 Positioning the Product 121 Discussion Activities and Projects 95 Capturing and Measuring Results 124 Developing Your Marketing Plan 96 References 00 Case Study 3.1: Zeroing in on Consumer Needs at IKEA Summary Case Study 4.1: World Imports 126 127 Key Terms Review Questions 97 128 Developing Your Marketing Plan 129 References Building a Fashion Marketing Strategy 128 Discussion Activities and Projects Part II: 128 129 Chapter 4: Creating a Company Marketing Strategy 101 Fashion Marketing Information What Do I Need to Know about Creating a Company Marketing Strategy? Knowing Your Customer 101 Planning for Success 102 102 Where Does Fashion Come From? 132 Where Marketers Obtain Information 134 Marketer's Insight: Web Coupons: 'We Know Who You Are' 106 Marketer's Insight: Trend Forecasting 107 at Your Fingertips 139 107 How Marketers Manage Information 140 104 The Planning Process 104 Specifying the Company's Mission 105 Marketer's Insight: LG Markets with Lifestyle Approach Types of Analysis Developing a Marketing Strategy 132 Fashion Marketers' Need for Information Types of Marketing Plans 131 Fashion Marketing in Focus: Marketing Analyses 131 What Do I Need to Know about Fashion Marketing Information? Fashion Marketing in Focus: Chapter 5: Obtaining and Using 110 The Marketing Research Process 136 140 Marketer's Insight: Defining Research Objectives 142 Technology Takes Analysis to Creating a Research Plan 144 Whole New Levels Choosing the Research Approach 149 What a Marketing Strategy Marketer's Insight: The Limited Gains Accomplishes 112 Insight from Traffic-Counting System Types of Strategies 113 Applying Research Results to 117 the Marketing Plan Strategy for Growth x 00_INT_Rath_FM_FNL.indd 10 Segmenting and Targeting Markets 111 117 Analyzing Research Data 154 154 154 Extended Contents 4/16/12 6:54 PM Applying the Results Summary to Consumers Completing the Positioning Process 157 Marketer's Insight: How to Create a Perceptual Map Research Lets Marketers Listen Case Study 5.1: Web-Tracking 156 Managing Relationships 177 178 180 158 Marketer's Insight: Martha Stewart Key Terms 159 Repositions Her Brand Review Questions 159 Customer Relationship Management Discussion Activities and Projects 159 (CRM) Developing Your Marketing Plan 160 Customer Experience Management References 160 (CEM) Marketer's Insight: Never Underestimate Chapter 6: Creating the Right the Value of a Good CRM System 184 Relationships with Fashion Customers 163 Measurement Tools 185 Partner Relationship Management 187 What Do I Need to Know about Selecting the Right Customers 163 164 Why Selecting Customers Is Vital 164 What Is Market Segmentation? 166 Creating Market Segmentation Categories 183 Relationships 188 Fashion Marketing in Focus: 181 Ethics and Globalization in Customer Creating the Right Relationships with Fashion Customers? 181 Social Responsibility 189 Globalizing Ideas 190 Summary 191 Case Study 6.1: Stefani B 192 Key Terms 166 193 Review Questions 193 Marketer's Insight: Customer Diversity 166 Discussion Activities and Projects 193 Consumer Markets 167 Developing Your Marketing Plan 194 Business Markets 168 References 194 Global Markets 169 Targeting Market Segments 171 Essential Segmentation Factors 171 Segmentation Profile 171 Identifying a Targeting Strategy 173 Part III: Focusing Marketing Mix Elements on the Fashion Consumer Concentrated 173 Customized 173 Chapter 7: Branding Strategies Differentiated 173 for Fashion Goods and Services Undifferentiated 174 What Do I Need to Know about Branding 175 for Fashion Goods and Services? 195 Positioning the Product Arranging Information 176 199 Fashion Marketing in Focus: Extended Contents 00_INT_Rath_FM_FNL.indd 11 199 xi 4/16/12 6:54 PM Speaking of Brands Why Marketers Brand Products 200 Key Terms 230 200 Review Questions 230 What Makes Up a Product? 202 Discussion Activities and Projects 230 Types of Consumer Products 203 Developing Your Marketing Plan 231 206 References 231 Product Decisions Decisions about Individual Products 206 Decisions Concerning Product Lines 207 Chapter 8: Developing New Fashion Products Decisions Concerning Product Mix 207 and Monitoring Their Life Cycles The Importance and Value of Branding 208 What Do I Need to Know about 208 Developing New Fashion Products What Is a Brand? Fashion Brands and the Marketing Mix 208 Marketer's Insight: Brand Fashion Marketing in Focus: Personalities: Lancme and Julia Fashion Products RobertsTwo Stars Shine More Light The Advantages of Branding for the Consumer and Marketer 233 Creating Strong Brands Brand Positioning 210 and Monitoring Their Life Cycles? What the Customer Gets 233 234 236 Marketer's Insight: Product Essence 212 and an Engagement Ring 236 213 Product Essence 236 213 Real Product 237 Expanded Benefits 238 Product Fundamentals 239 Marketer's Insight The Rise and Rebirth of Liz Claiborne, Inc. 214 Selecting a Brand Name 215 Types of Products 239 Types of Brand Choices 216 Usage Time 240 Global Fashion Brands 219 Marketer's Insight: Personal vs. Marketer's Insight: Licensing Takes Business Pricing 240 Lacroix Brand Global Product Categories 241 Packaging and Labeling 220 221 New Product Ideas 242 Brand Packaging 221 New Product Variations The Meaning of Labels 222 Marketer's Insight: New Products 223 Aim for Market Appeal 243 Fashion Services 242 Characteristics of Services 224 Segmenting Fashion Products 244 Strategies for Marketing Services 225 Influences 244 New Product Development 245 Marketer's Insight: \"Couture Frenzy\" 246 Fashion Brands, Ethics, and Social Responsibility 226 Summary 228 Case Study 7.1: Football Players Build Their Personal Brand xii 00_INT_Rath_FM_FNL.indd 12 Major Stages of Product Development 248 229 Product Life Cycle 251 Rate of Adoption 253 Extended Contents 4/16/12 6:54 PM Ethics and Social Responsibility 254 Cost-Plus Pricing 279 Globalizing Ideas 256 Markup Pricing 279 Summary 258 for a New Business 280 Other Factors Determining Price Case Study 8.1: New Products Competition-Based Pricing 280 259 Effect of the Marketing Mix on Pricing 281 Key Terms 260 Effect of External Factors on Pricing Review Questions 260 Marketer's Insight: Price Views of Discussion Activities and Projects 260 the Millennial Generation Z Developing Your Marketing Plan 261 References 261 286 289 Pricing Decisions 290 Demand-Based Pricing Decisions Marketer's Insight: Price at the High Fashion Level 293 Cost-Based Pricing Decisions 295 What Do I Need to Know about Marketer's Insight: Steps in the Pricing to Identify and Pricing Process 296 Steps in Setting Prices 296 Chapter 9: Pricing: Identifying and Promoting Customer Value Promote Customer Value? Getting What You Pay For 263 Law, Ethics, and Social Responsibility Fashion Marketing in Focus: 263 What Is Price? Why Price Is Important to Fashion Markets Marketer's Insight: Comparison of Price Levels for Women's Apparel 265 Compete on Price or Some Other Way? Pricing Objectives 266 in Pricing 297 Global Pricing 264 What Is Price and Why Is It Important to Fashion? 290 298 Summary 299 Case Study 9.1: Forever 21Really Fast Fashion 300 Key Terms 301 Review Questions 301 268 Discussion Activities and Projects 301 269 Developing Your Marketing Plan 302 271 References 302 267 Profit-Oriented Pricing Objectives 271 Sales-Oriented Pricing Objectives 272 Chapter 10: Fashion Marketing Channels Status Quo Pricing 273 and Supply Chain Management How Demand and Supply Determine Price 273 What Is Demand? Supply and Its Effect on Fashion Pricing Cost-Based Pricing Break-Even Pricing 273 What Do I Need to Know about Fashion Marketing Channels and Supply Chain Management? 275 276 Sean John Rethinks Its 276 Marketing Channels 303 Fashion Marketing in Focus: Extended Contents 00_INT_Rath_FM_FNL.indd 13 303 304 xiii 4/16/12 6:54 PM What Are Marketing Channels and What Do They Do? Ethics and Law in 305 Channel Management 306 Marketer's Insight: Where Are the Customers for Unsold Goods? 333 Social Responsibility 334 332 The Purpose of Marketing Channels Marketing Channels Influence the Marketing Mix 306 How Channels Serve the Market 308 Types of Marketing Channels 308 Case Study 10.1: Coach Expands Its 311 Marketing Channels How Marketing Channels Are Organized Summary 335 336 Key Terms 337 Review Questions 337 314 Discussion Activities and Projects 337 Conventional Marketing Channels 314 Developing Your Marketing Plan 338 Vertical Marketing Channel Systems 315 References 338 Multi-Channel Marketing 317 Marketing Consumer Goods Marketing Channels for Business Goods and Services Channel Decisions 311 319 Chapter 11: Fashion Wholesaling and Retailing (from a Marketing Viewpoint) 341 Analyzing Customer Demand 319 Establishing Channel Goals 320 What Do I Need to Know about Fashion Determining Distribution Intensity 321 Wholesaling and Retailing? Dealing with Competition 322 Fashion Marketing in Focus: Getting 323 Fashion to Fashion Consumers Channel Management What Is Wholesaling? 341 342 343 Selecting Channel Members 323 Motivating Channel Members 323 Wholesalers' Role in Evaluating Channel Members 323 Fashion Marketing 344 Types of Wholesalers 346 Markets 349 Marketer's Insight: Marketing Logistics and Supply Chain Management 324 The Role of Marketing Logistics in the Supply Chain 325 Doba Clicks with Online Marketing Logistics Activities 326 Wholesaling Business 350 Marketer's Insight: Transportation: Market Weeks and Trade Shows 351 Defeating the Deadhead Downer Global Marketing Channels Some Examples of Global Channels and Supply Chains Serve Consumers xiv 00_INT_Rath_FM_FNL.indd 14 351 Classifying Retail Stores 330 Marketer's Insight: Mandee Stores Get Bold Makeover 353 Multi-Channel Retailing 359 Marketer's Insight: Nordstrom Links Real and Virtual Stores 331 Ethics, Law, and Social Responsibility in Marketing Channels Fashion Retailing Today 330 How Global Fashion Channels 327 332 352 360 Extended Contents 4/16/12 6:54 PM Retailers to Optimize Marketing through Digital Channels Elements of the Promotional Mix Marketer's Insight: Some Ways for Global Fashion Retailing 382 Advertising 383 365 Public Relations 383 365 Sales Promotion 384 Marketer's Insight: Some Ways Personal Selling 384 for Retailers to Optimise Marketing Direct Marketing 384 through Digital Channels Creating a Promotion Mix 385 365 Social Responsibility in Factors That Affect the Fashion Retailing 366 Promotion Mix Summary 367 Marketer's Insight: Jimmy Choo Urges Fans to ChatchaChoo Case Study 11.1: Retailers Reap Rewards with Exclusive Lines 385 389 368 Integrated Marketing Communications 390 Key Terms 369 Ethical Issues in Fashion Promotion 391 Review Questions 369 Promoting Fashion on a Global Scale 392 Discussion Activities and Projects 369 Summary 394 Developing Your Marketing Plan 370 Case Study 12.1: Fango Pushes the References 370 Envelope in Promotional Campaign 395 Key Terms Review Questions 372 396 Developing Your Marketing Plan 397 References Communicating Fashion's Value through Promotion 396 Discussion Activities and Projects Part IV: 396 397 Chapter 12: Promoting Fashion Goods and Services 375 Personal Selling and Direct Marketing What Do I Need to Know about Promoting Fashion Goods and Services? Promotion Is Everywhere 375 The Role of Promotion Goals of Promotion Key Uses of Promotion Uses of Promotion Selling and Direct Marketing? 376 377 Personalizing the Sale 399 Fashion Marketing in Focus: Marketer's Insight: 399 What Do I Need to Know about Personal Fashion Marketing in Focus: Chapter 13: Promoting Fashion through 379 The Personal Selling Process 400 401 The Nature of Selling 403 380 Types of Selling 403 381 The Role of Personal Selling 404 Marketer's Insight: Key Steps in the Selling Process 405 \"Prom Reps\" Program Promotes Marketer's Insight: Personal Selling Men's Wearhouse in the Age of E-Tailing 382 Extended Contents 00_INT_Rath_FM_FNL.indd 15 410 xv 4/16/12 6:54 PM Reading Customer Signals Direct Marketing 411 Marketer's Insight: Edun Focuses 411 Ad Message on Men 435 Determining the Advertising Budget 435 Planning the Campaign Strategy 437 Marketer's Insight: Celebrity Power: Benefits to Fashion Consumers and Marketers Marketer's Insight: Targeting Catalog Customers by Zip Code 414 Not What It Used To Be Types of Direct Marketing 415 Implementing the Advertising Direct Marketing to Global Campaign Fashion Consumers Evaluating the Campaign's Marketer's Insight: Direct Marketing Effectiveness Takes Future Twist 413 418 438 442 443 Ethical Issues in Personal Selling Sales Promotion 444 Public Relations 419 445 and Direct Marketing 420 Media Contact Summary 422 Marketer's Insight: Uniqlo's \"Tweet\" Sales Promotion 447 423 Annual Reports 448 Key Terms 424 Events and Product Placement 448 Review Questions 424 Blurring the Lines between Discussion Activities and Projects 424 Promotional Mix Elements Developing Your Marketing Plan 425 Ethical Issues in Fashion Advertising, References 425 Sales Promotion, and Public Relations Case Study 13.1: Bon-Ton Finds Key to Selling Beauty Sales Promotion, and Public Relations Summary 427 Fashion and Marketing in the World The Nature of Advertising 453 Case Study 14.1: Old Spice Campaign Makes a Viral Splash 451 454 455 Review Questions 455 Discussion Activities and Projects 455 428 Developing Your Marketing Plan 456 431 References 456 427 Fashion Marketing in Focus: 450 Key Terms Advertising, Sales Promotion, What Do I Need to Know about Fashion and Public Relations? a Growing Role for Public Relations 450 Marketer's Insight: Social Media Sparks Chapter 14: Fashion Advertising, 446 Advertising Objectives 431 Types of Advertising 432 Appendix A: Sample Marketing Plan 459 434 Glossary 462 Creating an Advertising Campaign Identifying the Target Market 434 Bibliography 480 Defining Campaign Objectives 434 Index 482 xvi 00_INT_Rath_FM_FNL.indd 16 Extended Contents 4/16/12 6:54 PM Preface T he vibrant field of fashion marketing contrib- find their customers and determine their fashion utes frequently and heavily to society's swiftly needs, and how they then center their strategies on changing moods. Marketers of fashion navi- reaching their twin goals of maintaining consumer gate customer whims and continually develop satisfaction and corporate profitability. The over- new offerings as they strive to persuade cus- arching themes of globalization and ethics as they tomers to take part in their latest innovations. In apply to all aspects of fashion marketing are dis- accomplishing its objective, fashion marketing pro- cussed in every chapter. vides a range of opportunities and challenges for Marketing Fashion: A Global Perspective is orga- dedicated students. Careers in product design and nized in four parts to guide the reader in a logical way development, research and trend forecasting, retail through the processes and practices of marketing. buying and merchandising, sales, advertising, and up the field of fashion marketinga field replete Part I: Defining Fashion Marketing and How It Works with many creative and rewarding occupations. The first chapter opens with an overview of mar- promotion, among other areas of expertise, all make The fashion marketing process, while following keting and fashion marketing, explains the traditional marketing in theory, has many unique marketer's long-term goals and the basic elements applications. Up until now, no textbook firmly of the marketing process, and outlines the direction anchored in marketing theory and practice has fashion marketing is moving in the global economy. existed to specifically cover the fashion universe. Chapter 2 examines the various internal and Marketing Fashion: A Global Perspective accurately external elements that impact fashion marketers and engagingly presents theories and best prac- today, and describes how those entities and forces tices current among fashion marketing businesses influence the way fashion businesses operate in the today. global marketplace. The third chapter explores the topic of consumer behavior from the fashion mar- Organization of the Text keter's point of view. It explains how a customer's The premise of this book is based on a definition of level of involvement with a product or buying situ- fashion goods that includes all currently popular ation influences the purchase process, and looks designed products from apparel to automobiles and at the internal and external influences that have from cosmetics to kitchen equipment. Further uni- an effect on both consumer and business buyer fying elements include a focus on how marketers behavior. xvii 00_INT_Rath_FM_FNL.indd 17 4/16/12 6:54 PM Part II: Building a Fashion Marketing Strategy goods. Channel organization, distribution inten- The fourth chapter describes the purpose of the mar- explored. Fashion wholesaling and retailing are the keting planning process and the mission statement. topics of Chapter 11. Included is description of the It then explains how to formulate a competitive anal- marketing practices of fashion wholesalers, organi- ysis, develop a marketing strategy and a marketing zational characteristics of global fashion retailers, mix, and measure the results. Chapter 5 explores and activities of Internet fashion businesses. sity, and international marketing strategies are all fashion organizations' need for marketing informa- research process, and the uses of research findings. Part IV: Communicating Fashion's Value through Promotion Creating the right relationship with fashion cus- Fashion promotion objectives, making customers tomers is the topic of Chapter 6, which describes aware and persuading them to buy, are the topics market segmentation, targeting, and positioning, of Part IV. The promotion mix is defined in Chapter and the resulting application of the marketing mix. 12, with an overview of how the five major promo- tion in order to create their strategies. This chapter details the available research sources, the marketing tional elements work separately and together in an Part III: Focusing Marketing Mix Elements on the Fashion Consumer integrated marketing communications strategy to Chapter 7 describes the importance of branding elements of direct marketing and personal selling, and building brand loyalty with consumers. It describing their use and effectiveness in marketing differentiates among various types of brands fashion products. How fashion marketers create including designer, private label, and generic, awareness and stimulate customer demand through and discusses how fashion marketers make deci- advertising, sales promotion, and public relations sions about product lines and mixes and branding is the subject of the final chapter, which details the strategies. Fashion marketers continually need to goals and activities involved in developing adver- develop new goods and services, and the product tising campaigns, sales promotions, and public development process is the topic of Chapter 8. The relations plans. convey a marketing message to target customers. Chapter 13 delves more deeply into the promotional many factors that fashion marketers must consider ject of Chapter 9. This chapter looks at aspects of Keeping an Eye on Globalization and Ethics pricing including the customer's estimate of the Increasingly today, consumers demand fashions product's value, production and marketing costs, from throughout the world, while fashion busi- and various pricing strategy options. Chapter 10 nesses seek out products and expanded customer covers marketing channel activities and supply markets across the globe. The importance and chain management practices in marketing fashion application of global marketing, therefore, is woven in establishing prices for their products is the sub- xviii 00_INT_Rath_FM_FNL.indd 18 Preface 4/16/12 6:54 PM into each chapter throughout the text. In addition, ffMarketer's Insight. Boxed sidebar features in each because consumers prefer to patronize businesses chapter bring the chapter's content to life and they recognize as ethical and socially responsible, offer further enrichment, often through real- examples of the way fashion marketers demonstrate world examples that help illustrate key concepts. social responsibility and ethical business practices Some may be a basis for additional research and are also an integral part of every chapter. individual and group reports to the class. ffWhat's Your Point of View? Select boxed features Learning Resources and Activities include questions that ask readers to consider Marketing Fashion: A Global Perspective contains a experience. the sidebar content as it applies to their own wealth of color illustrations, case studies, and other ffWhat Do You Think? Questions for classroom dis- current examples of fashion marketing practices cussion or individual consideration are scattered that create for students a vivid portrayal of fashion throughout each chapter to offer readers the marketing theories, concepts, and real-life applica- opportunity to pause and reflect on key concepts tions. The text contains a number of engaging special fresh in their minds. features designed to actively involve students in the ffSummary and Review. Each chapter contains a learning process. Many of these features may be brief summary of the chapter contents, giving used for class discussion, research, and individual students an opportunity to synthesize and inter- and group projects. They include: nalize what they have studied and reflect back on ffOpening Statement. Each chapter begins with a the questions posed at the chapter's introduc- brief statement regarding its contents. It is suit- tion. A list of the chapter's Key Terms provides able for quick reading as an overview and also as a an opportunity for increasing fashion marketing class topic for preliminary discussion. vocabulary. Review Questions reflect the chapter ffWhat Do I Need to Know about ...? A list at the objectives, while Discussion Activities and start of each chapter presents the major concepts Projects encourage students to explore the chap- that students will find covered therein, laying a ter's topics more broadly, offering opportunity for roadmap for their study and an easy reference to hands-on projects or further research related to ensure they have met the objectives upon com- what they have just learned. pleting the chapter. ffFashion Marketing Case Study. Each chapter con- ffFashion Marketing in Focus. Each chapter begins tains a fashion marketing case study related with a fashion marketing observation or scenario to the content of the chapter. Students may that pertains to the chapter's content and leads respond to the questions posed about the case into its introductory topics. As a basis for opening and do further research as the instructor deems class discussion, students may be asked to intro- suitable. duce similar examples they've encountered from their own experiences. ffReferences. The references cited apply directly to the chapter content and may serve as sources Preface 00_INT_Rath_FM_FNL.indd 19 xix 4/16/12 6:54 PM for additional student research on particular related topics. Instructor's Guide and PowerPoint The instructor's manual contains an assortment Developing Your Marketing Plan of useful resources. These include general teaching Each chapter contains instructions for a course- chapter. Outlines for each of the chapters are pro- long project in which students develop their own vided, as are answers to the Review Questions, marketing plan for a business they have selected, Discussion Activities and Projects, and tips on how using what they have learned in the chapter to to help students develop their Marketing Plans. A build each segment of their overall plan. Included test bank and answers are also provided, along with as an appendix is an example of a marketing plan, additional activities and resources. In addition, which the students will be encouraged to use as a PowerPoint lectures have been developed for each reference but not as a model, since it is emphasized chapter. suggestions as well as suggestions specific to each throughout the book that every marketing plan must be created to target its own set of goals. xx 00_INT_Rath_FM_FNL.indd 20 Preface 4/16/12 6:54 PM Acknowledgments T he authors wish to express deep apprecia- some of the subtleties of marketing with patience tion to our many colleagues in academia and and enthusiasm. His focus and attention to detail business whose interest and enthusiasm significantly enrich the outcome. We also express helped move this text toward its goal. In par- appreciation to Fairchild's peer reviewers: Emily ticular, we thank Fairchild's Executive Editor, Davis, Woodbury University; Beth Hinckley, FIDM; Olga Kontzias, who imagined this text and pro- and Kate Schaefer, Columbia College Chicago. pelled it along to production, plus the entire group Among the business and academic commu- who helped convert our manuscript to final text, nities, we are grateful to Wilma Kozar for her including Executive Director and General Manager original suggestion for the text, and to Sandra Michael Schluter, Development Editor Rob Phelps, Henderson-Williams for her contributions to the Production Director Ginger Hillman, Production development of its early outline and chapters. Editor Jessica Katz, Assistant Art Director Sarah We also appreciate the interest and contributions Silberg, Graphic Designer Vanessa Han, and of the following: Dr. Alexxis Avalon, Dr. Karen Ancillaries Editor Amy Butler. Janko, Judy Aronson, Lee Collingwood, Philip Our special appreciation goes to Dr. Stewart Husted, who, as expert reviewer, guided us through R. Nielsen, Margot A. Wallace, Inese Apale, and Nicholas Braggo. xxi 00_INT_Rath_FM_FNL.indd 21 4/16/12 6:54 PM Part I Defining Fashion Marketing and How It Works 01_INT_Rath_P1_FNL.indd 22 4/16/12 6:54 PM Before you can understand the process and practices of marketing fashion, you need to understand the fashion marketer's long-term goals, the basic elements of the fashion marketing process, and the direction fashion marketing is moving in the global economy. This includes the various internal and external elements that impact fashion marketers today, and involves how those entities and forces influence the way fashion businesses operate in the global marketplace. Fashion marketers must be alert to the many ways potential customers may behave in the marketplace. They must also develop a keen sense of the level of involvement the customer has with a product or buying situation that influences the purchase process; then they can begin to explore the internal and external influences that have an effect on both consumer and business buyer behavior. 01_INT_Rath_P1_FNL.indd 23 4/16/12 6:54 PM Chapter 1 Developing and Maintaining Profitable Customer Relationships This chapter offers an overview of marketing and fashion marketing, explains marketers' long-term goals and the basic elements of the marketing process, and outlines the directions fashion marketing is moving in our global economy. What Do I Need to Know about Developing and Maintaining Profitable Customer Relationships? How to define marketing and fashion marketing \u0007 hat the long-term goal of marketing is, and some of the ways fashion marketers W build customer loyalty What the basic fashion marketing process encompasses The components of the marketing mix and their function Major trends that impact fashion marketing in the twenty-first century The importance of ethics and social responsibility in fashion marketing 1 02_INT_Rath_CH_01_FNL.indd 1 4/16/12 6:55 PM Fashion Marketing in Focus: A World of Fashion and Marketing Whoever you are and wherever you live, if you are like the vast majority of people inhabiting our planet, there are two things that have an influence on you virtually every single day fashion and marketing. Fashion surrounds you constantly in the things you see, use, wear, watch, and do. There is fashion not only in the clothes you put on this morning, but in everything from the sheets on your bed, to the iPhone you may be carrying, to the new film all your friends are buzzing about or the trendy caf where you like to meet after class to relax over the latest flavor of cappuccino. Marketing is equally pervasive. It's what catches your eye as you walk past a department store window. It pops up on the screen when you surf to a favorite Web site. It's an integral part of why your best friend just bought those stylish boots and how your parents decided on the particular flat-panel TV they mounted on the family room wall. It's what persuades you to go shopping when you receive a 15 percent discount offer in the mail or by e-mail, and what gets you to purchase the same well-fitting brand of jeans over and over again ... or maybe tempts you to try on a new brand that promises to fit even better and whose maker donates a portion of profits to fight world hunger. T here is no question that both fashion and conceived and designed, how they are presented marketing influence many facets of our daily and sold to us, and at what point they make way life, even when we're not directly aware of for even newer versions. that influence. Fashion adds newness and Put the concepts of fashion and marketing freshness to the clothes we wear, the prod- together, and you've got one of the most dynamic, ucts we use, the cars we drive, and the activities exciting segments of businessand the subject we we enjoy. Marketing not only informs us about will explore in depth in this text. Let's begin with the existence of those fresh new offerings, but it is some definitions. also a driving force behind how new products are 2 02_INT_Rath_CH_01_FNL.indd 2 Part I: Defining Fashion Marketing and How It Works 4/16/12 6:55 PM Figure 1.1 Fashion and marketing surround and influence us virtually every day and everywhere. What Are Marketing and Fashion Marketing? and to the marketer. Like fashion, marketing is constantly evolving ... as customers change their minds about what they want, as technology advances, as The term \"marketing\" brings to mind different global markets emerge, and as concepts of ethics things to different people. Some may think of and social responsibility mature. Each of these con- marketing as a dirty word: businesses foisting ditions contributes challenges and compensations things off on people who don't really want or need to the vibrant field of fashion marketing today. them. Others think of marketing as simply television commercials and ads in magazines or on Web siteswhich is indeed an aspect of marketing, but hardly the whole picture. Marketing Defined According to the American Marketing Association In reality, marketing is a complex system that, (AMA), an international association of professionals when well planned and effectively executed, makes and organizations involved in the practice, teaching, customers the central focus and builds long-term and development of marketing, \"Marketing is an relationships that are rewarding both to customers organizational function and a set of processes for Chapter 1: Developing and Maintaining Profitable Customer Relationships 02_INT_Rath_CH_01_FNL.indd 3 3 4/16/12 6:55 PM creating, communicating, and delivering value to that the product has value for customers. Once a customers and for managing customer relation- product is developed, it requires a coordinated plan ships in ways that benefit the organization and its of advertising and other forms of marketing com- stakeholders.\" Another way of stating it is that munication to get the word out to customers about marketing is \"the process by which companies its features and benefits so they will understand its create value for customers and build strong cus- value. Determining the best retail stores or other tomer relationships in order to capture value from channels for delivering the product into customers' customers in return.\" hands is also an important function of marketing 1 2 Let's look more closely at elements within those definitions. Both mention value. The value that because it helps to reinforce the marketer's value message. marketers provide to customers is derived from the The other key concept in both definitions cited product they are offering, whether it's something above is that of building and managing customer to fill a need (like food or shelter) or something to relationships so that both customer and mar- satisfy a want (like a videogame or a motorcycle). keter benefit. This final component involves an In the AMA's definition, there are three specific exchangeor in marketing terms, any activity, components relating to that value: creating, com- such as buying and selling, in which one party municating, and delivering. Creating a product receives something by voluntarily giving something involves inventiveness and design skills, but mar- in return. The exchange activities in marketing are keting is what directs the creative process to ensure what provide value back to the marketer, allowing the company to earn profits, and sometimes foster goodwill, as well. To illustrate how those aspects might manifest themselves within a total marketing plan, consider the Tommy Hilfiger brand. ffCreating. For nearly three decades, Tommy Hilfiger has designed high-quality fashions that have been proven to appeal to customers the designer wants to reach. ffDelivering. In 2008, the Hilfiger company made a strategic decision to partner with Macy's as the exclusive U.S. department store to sell its men's and women's sportswear lines. ffCommunicating. The retailer and designer began Figure 1.2 In marketing, exchange activities are what provide value to consumers as well as returning value to the marketer. 4 02_INT_Rath_CH_01_FNL.indd 4 working together to promote the availability of the sportswear at Macy's to consumers, not only through advertising and other communications Part I: Defining Fashion Marketing and How It Works 4/16/12 6:55 PM but also via special events, such as an appearance by Hilfiger himself at Macy's Union Square Fashion Marketing Defined store in San Francisco to celebrate his company's Adding a focus on fashion does not change the basic twenty-fifth year in business. marketing concept, but it may introduce new ele- ffExchanging. As part of the event, customers who ments in how a marketing plan is executed, since purchased $75 worth of Hilfiger apparel received fashion goods require a somewhat different mar- priority seating at a free concert by alternative keting approach from that of many non-fashion rock band Third Eye Blind, held in Union Square products and services. First, let's define what the same day as Hilfiger's appearancepro- is meant by fashion: A fashion is any designed viding value to customers (desired apparel plus product that is currently popular, that is of the better concert seats) and value back to Hilfiger moment and subject to change, and that people (profits from the apparel sale plus goodwill from consider desirable and appropriate at a given time.4 attendees at the free concert). Clearly, our definition of fashion encompasses apparel and accessories, including footwear, jew- Later chapters will discuss in more detail how elry, cosmetics, and fragrances, which tend to be activities and processes such as these are developed the first categories most people think of when they and incorporated into a company's comprehensive think \"fashion.\" But the concept of fashion extends marketing plan. But whatever specific plan a mar- much further than that. Fashion plays an impor- keter establishes, the marketing process generally tant role in home furnishings, including textiles begins with the company looking at itself from the (microplush throws, animal print bolster pillows), consumer's point of view and determining its capa- furniture (clean-lined minimalist tables, Mission- bilities to supply something the customer needs style futons), and appliances (electric cooktops, or wants. It then creates, prices, delivers, and pro- gourmet coffeemakers). There is also fashion in toys, motes a product that it believes customers will in cars, in consumer electronics, and in architecture. deem valuable to their lifestyle. If the item is well Fashion even exists in films, music, television pro- conceived and timely, and more important, if cus- grams, food, vacation hot spotsanything that is in tomers buy it, then the process is successfuland favor at a given time. We will use that broad defini- ideally, satisfied customers will reward the mar- tion of fashion throughout the text, with a primary keter with loyalty and future purchases. In short, focus on designed goods, which we'll describe fur- the ultimate goal of marketing is to bring con- ther in a moment. tinuing satisfaction to the customer and ongoing Fashion marketing, then, can be defined as profits to the marketer. Or, as Tom Asacker puts the application of marketing processes and activi- it in A Clear Eye for Branding, the purpose of mar- ties to currently popular designed products. It keting is \"to create and maintain a strong feeling encompasses everything that goes into the creation with customers so they are mentally predisposed and development of a fashion product, through its to continually choose and recommend you.\" presentation and promotion to customers, through 3 Chapter 1: Developing and Maintaining Profitable Customer Relationships 02_INT_Rath_CH_01_FNL.indd 5 5 4/16/12 6:55 PM Figure 1.3 Fashion can be found not only in clothing and accessories but in home furnishings, automobiles, consumer electronics, architecture, food, films, and other currently popular designed products. 6 02_INT_Rath_CH_01_FNL.indd 6 Part I: Defining Fashion Marketing and How It Works 4/16/12 6:56 PM its purchase and support after the sale. Fashion It oversees production of the jacket, determines marketing employs the same general concepts, where it will be sold, and communicates informa- activities, and processes as the marketing of other tion about the new garment through a variety of products, but it has its own challenges and oppor- media it thinks will reach the right customers. As a tunities that arise from the continually changing result of these activities, skiing enthusiasts become nature of fashion. Think of it this way: How often aware of the jacket through a Web site or an ad in are you inspired to buy a new brand of corn flakes a ski magazine, learn where they can purchase the or laundry detergent? But in the past six months, jacket and how much it costs, try it on in the store how many new items of apparel did you buy? Did or order it online to try at home, and decide to buy. you upgrade your MP3 player because you liked the After wearing it on their next ski trip, some of those color offered in a newer model? Fashion marketers, customers are so pleased with the style, fit, comfort, more than marketers of basic or commodity-type and other features of the jacket that they return to items, must work to address that consumer desire the marketer to find out what additional products for newness, stay ahead of fast-moving trends, and are offered that they might want to buy. apply creative marketing to capture the attention In this scenario, the marketer has approached and interest of often fickle but also savvy customers. potential customers with an integrated marketing plan. It identified what customers want that the Putting the Fashion Marketing Process into Action company can best provide. It reached out to selected The process works like this: Say that a fashion mar- made the product readily available at an accept- keter learns that more people are taking up skiing, able price. Customers responded with a purchase, so it decides it would like to offer a collection of were satisfied with the product, and rewarded the practical yet fashionable skiwear. First, the com- marketer with repeat business. These are funda- pany determines exactly who its customers will be mental marketing elements in action, where the and what kinds of garments they would prefer and customer's point of view is a marketer's primary find useful. For example, what features and styling consideration and both parties benefit from the do customers want in a ski jacket? Using market exchange. Figure 1.4 illustrates the basic steps in research, the company determines the number of the marketing process. customers with information about its product and potential customers for its ski apparel, where/how they prefer to shop, and what types of ski jackets are already being sold by other companies; then, also through research, it learns about the details customers might want in a ski jacket and the price Fashion Marketers' Long-term Goal: Customer Loyalty they're willing to pay. Armed with this informa- As stated, the ultimate goal of fashion marketers is tion, the company designs a ski jacket in a fresh to gain and keep customers over time. Long-term style, color, and fabric it believes customers will like. customer loyalty is important because returning Chapter 1: Developing and Maintaining Profitable Customer Relationships 02_INT_Rath_CH_01_FNL.indd 7 7 4/16/12 6:56 PM Fashion Marketing Process 1. Identify and analyze the potential target market 3. Plan product price and production 7. Gather customer feedback for potential product improvement 6. Evaluate product sales over time 2. Conceive the product to meet customer needs/wants 5. Inform the public of product benefits 4. Place the product where customers can buy it Figure 1.4 In the fashion marketing process, the customers' point of view is the marketer's primary consideration and both parties benefit from the exchange. by Vanessa Han and Alicia Freile In the fashion marketing process, the customers' point of view is the marketer's primary consideration and both parties benefit from the exchange customers tend to generate more profits for a com- need food, but you want a Taco Bell burrito. For the panyso much so that in describing customer most part, marketers of fashion address consumers' loyalty, marketers often refer to the 80/20 rule: A wants more than their needs. In addition, to achieve company obtains 80 percent of its business from 20 the long-term goal of customer loyalty, marketers percent of its customers. must appeal to their customers by creating products In order to identify the customers most likely that offer the right value, as well as by nurturing to become loyal purchasers, marketers learn all relationships with customers to keep them coming they can about the needs and wants of customers back for more. they hope to attract. A need is something a person cannot do without, whereas a want is something a person craves or desires, influenced by his or her per- Identifying Customers sonality, culture, and society. For example, you need With any product, fashion marketers must know to clothing, but you want 7 For All Mankind jeans; you whom they want to sell. This means identifying the 8 02_INT_Rath_CH_01_FNL.indd 8 Part I: Defining Fashion Marketing and How It Works 4/16/12 6:56 PM Marketer's Insight: Marketing Beauty Products to Chinese Women Understanding the needs and wants of target firm, conducted a study of more than 1,000 customers is always crucial to successful Chinese women ages 20 to 29 to help marketers marketing, but perhaps especially so in the better understand these customers. Among category of cosmetics and skin care. Even the findings were that Chinese womenunlike though the definition of \"beauty\" has become many American womenunderstand that using homogenized by the globalization of media, there effective products early in life can positively are distinct cultural and societal differences that impact their skin. However, while skin care use affect the way women in different countries view starts at an early age, color and fragrance usage and use beauty products, especially in China. normally is delayed until after a Chinese woman Beauty treatments are still relatively new finishes high school. In addition, when they to Chinese women since Mao Tse-tung forbade find something that works, Chinese women are the use of cosmetics until the 1980s. As a generally loyal to that product. result, while today's western women generally Unlike western women, who like to are initiated into the beauty ritual by their experiment with small, indie brands, the Chinese mothers, Chinese women are dependent on beauty consumer prefers to use big, well-known outside sources for their beauty information. global brands. Shiseido was the most-used skin So education is a valuable tool for consumers care brand cited by the panelists, who believe that and an opportunity for skin care and cosmetics Japanese technology is the most cutting-edge, marketers. Many companies have stepped in and also that, because Japanese skin is close to fill the void and offer training programs to to theirs, Shiseido has the best understanding their consultants at department store counters, of their skin care needs. For color cosmetics, where well over half of all beauty products are however, Maybelline was the favored brandan purchased. The payoff of that investment in unsurprising finding since L'Oral Group (the education is that Chinese women are more likely parent company of Maybelline) has aggressively to use all the products recommended to them. focused resources on all elements of the Of course, those products still must meet marketing mix in China, including sharp pricing, their needs and wants; and the Pao Principle, creative promotions, and heavy ad campaigns a New York-based global business consulting featuring global and local celebrities and models. Adapted from: Patricia Pao, \"Why Shiseido Beats Western Beauty Marketers,\" Advertising Age, September 1, 2010, http://adage.com/china/article/viewpoint/why-shiseido-beats-western-beauty-marketers-in-china/145645/ (accessed March 8, 2012). Chapter 1: Developing and Maintaining Profitable Customer Relationships 02_INT_Rath_CH_01_FNL.indd 9 9 4/16/12 6:56 PM market, or the group of actual and potential customers who have both an interest in and the ability Creating Fashion Products to buy the company's product. The market for ath- Knowing the consumers they are trying to reach is letic shoes, for instance, is all of the people who buy the critical first step for fashion marketers in order or might buy athletic shoes. to create the right offerings for their target cus- The market for any given product or for any tomers. That understanding of who their customers particular marketer is never the entire universe of are and what they want, coupled with the mission consumers. A customer who buys athletic shoes as and capabilities of the company, forms the founda- everyday footwear will not be as likely to buy a pair tion for development of the company's products. of high-tech, feature-laden running shoesand In marketing terms, any offering that marketers a serious runner might not take a second look at create and present to target markets is called a basic sneakers designed more for fashion than for product. Products include goods, tangible items function. So marketers go further and undertake such as coats and hats, iPods, or a Louis XV ormolu market segmentation, defining smaller, more mirror. Products also include services, helpful or homogeneous customer groups based on similar professional activities provided to another, such as customer characteristics. A single market seg- hair styling, wardrobe consulting, a concert, or an ment, then, is a group of consumers displaying like airplane ride. Some products are a combination of needs, wants, values, and buying habits. Different goods and services, such as a meal in a restaurant, market segments within the athletic shoe market a manicure, automobile detailing, or the work of a might be kids, basketball players, joggers, or casual personal shopper. Products can also be ideas, such wearers. (See Chapter 6 for more detail on choosing as views on social issues like climate change and sus- and segmenting markets.) tainability, or the views of a political candidate. When they select one or more segments on which to concentrate, marketers are identifying their target market, the group of customers What Do You Think? deemed most likely to purchase a given product What goods are fashionable today among college and on whom the company's marketing efforts students? What combinations of goods and services will be focused. Depending on their offerings, are in fashion? Which fashion services seem to be fashion companies often have different target popular? markets for different portions of their product lines. Donna Karan, for instance, targets a difDonna Karan New York collection than for her Miniskirts, Flat-Panel TVs, and Social Media hipper DKNY fashions. Like other marketers, fashion marketers develop ferent group of consumers for her sophisticated their products influenced by knowledge of the wants of their target marketbut the nature of 10 02_INT_Rath_CH_01_FNL.indd 10 Part I: Defining Fashion Marketing and How It Works 4/16/12 6:56 PM fashion adds a twist: A new fashion product can quality and slim styling of the newer flat-panel actually influence customers' wants. The inherent sets, most were eager to own the fashionable new creativity and innovation that bring about changes technology. In turn, as flat-panel televisions grew in fashion mean that marketers often anticipate in popularity, furniture companies began phasing what their customers want even before those cus- out heavy wall units and armoires designed for the tomers know it themselves. So in creating products, bulkier tube models and introduced new styles of fashion marketers must not only be on top of the stands and mounts that complement the sleekness latest trends, but sometimes a step or two ahead of the thin TVs. Going further, furniture companies of them. Back in the 1960s, for example, British targeting the more affluent end of the market added designer Mary Quant was making a dramatic break desirable but more costly features such as motor- from the styles of the day when she introduced her ized lifts that raise or lower the panel at the touch of famous miniskirts. But young women worldwide a button, discreetly hiding the television in a stylish quickly validated her vision and marketing savvy cabinet when not in use. These marketers under- by snapping up the ultra-short skirts. stood that the higher-end market segment did not Similarly, up until recent years, most consumers necessarily want the television to be a focus of their were satisfied with their traditional televisions; but dcor, so they created a product designed with those once they experienced the high-definition picture customers' desires in mind. Figure 1.5 Fashion marketers' products can include goods, services, or a combination of the two. Boots are goods. A professional wardrobe consultation that leads a customer to buy the boots is a service. If the customer gets the boots resoled, the shoe repair shop is offering a combination of goods (new soles) and service (putting the soles on the boots). Chapter 1: Developing and Maintaining Profitable Customer Relationships 02_INT_Rath_CH_01_FNL.indd 11 11 4/16/12 6:56 PM At the same time, some fashion marketers are taking advantage of the two-way communication made possible by the Internet via blogs, social communities, and other sites, and are using direct customer feedback to help shape their products. At Threadless.com, for instance, the entire premise is to have users submit original T-shirt designs and other users vote on their favorites, with the most popular designs getting made and sold on the site. Other fashion marketers may not take consumer input to quite that level. But virtually all are using or exploring the use of social media as a way to gain deeper insight into how customers feel about their products, in order to continue to create products that meet customer needs and wants. Building Customer Relationships Attracting customers and keeping them are two different matters. With so many businesses competing for consumers' attention and dollars, marketers can never rest on their laurels, assuming that success today will automatically translate to success tomorrow. Especially in today's world, where information about people and products travels around Figure 1.6 Fashion products are influenced by marketers' knowledgeand sometimes anticipationof target customers' needs and wants. Sony met customer needs by taking an existing product (cassette player) and transforming it into the stylish, easily portable Walkman; then later updated it as consumers trended to CDs. MP3 players were a completely new concept to most consumers when first introduced, but Apple knew its customers would be eager to transport all their music in one device when it launched the iPod. the globe in an instant, it takes continuous effort and a willingness to adapt quickly to new trends and new customer demandsfor fashion marketers to sustain strong relationships with their customers. For that reason, an increasingly important aspect of marketing is customer relationship man- agement (CRM), the overall process of building and maintaining profitable customer relationships through providing superior customer value and 12 02_INT_Rath_CH_01_FNL.indd 12 Part I: Defining Fashion Marketing and How It Works 4/16/12 6:56 PM satisfaction.5 (See Chapter 6 for more discussion of this topic.) Managing customer relationships and building customer loyalty is a multifaceted effort. As discussed above, it is based in part on understanding target customers' wants and needs and creating products that meet or exceed customers' expectationsin other words, delivering a product with a high perceived value, a customer's internal calculation as to whether or not a product is worth its cost (both in money and in effort to obtain it). In deciding on a purchasewhether it's a Starbucks Frappaccino, a silk shirt, or a BMW sedanconsumers weigh the actual cost of the product against the benefits they believe they will gain from it. If the product's benefits equal or exceed its cost in a consumer's mind, the perceived value makes the purchase worth the money and effort. Wherever they fall in the price range, fashion marketers' aim is to communicate to customers how their products' benefits exceed their cost in other words, to enhance the perceived value of their offerings for their target customers. When Walmart, for example, touts its \"always low prices,\" cost-conscious customers perceive value in the fact that they're paying less than they would elsewhere for the same or similar goods. At the other end of the spectrum, when Herms has its artisans layer each color on separate screens and then handroll the hem of its designer silk scarves, it hopes that customers will perceive that the quality and uniqueness of the scarves offer value to match or exceed the lofty price tag. Or when the nowdefunct Filene's Basement held its renowned periodic bridal gown sales, customers would line up long before the doors opened and were willing Figure 1.7 For luxury goods consumers, the perceived value outweighs the cost of the item. Chapter 1: Developing and Maintaining Profitable Customer Relationships 02_INT_Rath_CH_01_FNL.indd 13 13 4/16/12 6:56 PM Marketer's Insight: Zappos Makes Customer Service an Obsession When Zappos first began selling shoes on the the woman a flower arrangement and condolence Internet, consumers were skeptical about buying card. A blog the customer wrote about the event, footwear that they couldn't first try on. So how did \"I Heart Zappos,\" bounced around the Web, with the company overcome that hesitation? It made other customers contributing their own good customer service a cornerstone of its marketing experiences with the company. strategya strategy that remains solidly in place That culture and philosophy starts at the even after Zappos' sale to Amazon.com. And top with Zappos' CEO, Tony Hsieh, who once its customer-centric approach runs the gamut announced a surprise happy hour on Twitter and from everyday free shipping and free returns bought drinks for the 200 people who showed up to directing consumers to competitors if the with \"Zappos\" written on their hands. To make company doesn't have a style or size available. sure the customer obsession permeates the Zappos pays close attention to all details of entire organization, Hsieh requires each new customer service. Its customer service center is hireeveryone from the chief financial officer to staffed 24/7 with 500 employees answering 5,000 the children's footwear buyerto go through four calls a day. The service reps do not rely on scripts, weeks of customer loyalty training. Customer but rather engage in regular conversations with service reps are trained to look on at least three customers, and are given latitude to go the extra rival Web sites if a shopper asks for specific mile to address customer needs. For example, shoes that Zappos doesn't have in stock. when the payment deadline for shoes a customer \"My guess is that other companies don't do had ordered came and went, a Zappos rep that,\" Hsieh states. \"For us, we're willing to lose e-mailed the woman to remind her the money that sale, that transaction in the short term. was due. The woman told the rep the reason: She We're focused on building the lifelong loyalty had meant to send back the shoes, which were and relationship with the customer.\" Does his for her ailing mother, but in the meantime, her philosophy work? No question about it: Some mother had died. The company rep arranged to 75 percent of Zappos' sales come from repeat have UPS pick up the shoes; then actually sent customers. Adapted from: Natalie Zmuda, \"Zappos: Customer Service Firstand a Daily Obsession,\" Advertising Age, October 20, 2008, p. 36; Brian Morrissey, \"These Brands Build Community: How These Web 2.0 Companies Build Good Relationships to Build Their Brands,\" Adweek.com, May 12, 2008, www.adweek.com/aw/content_display/news/digital/e3i5e732e045deaaba3f3762d92cf386637?pm=1 (accessed March 8, 2012). 14 02_INT_Rath_CH_01_FNL.indd 14 Part I: Defining Fashion Marketing and How It Works 4/16/12 6:56 PM to scramble for the merchandise because the per- handwritten note of apology for the customer's ceived value of a designer gown at a discounted inconvenience. Marketers need to build trust with price made the search well worth the effort. their customers by ensuring that their products perform as expected, and they need to ensure sat- What Do You Think? isfaction by listening to consumers and offering excellent customer service if something should go What has a fashion marketer done recently to wrong. These are important aspects of the overall attract your interest and loyalty? A fashion show? marketing process that we'll explore further later Discount coupons? Gifts-with-purchase? Did that in the text. effort win you over? Why or why not? Enhancing a product's