School Assignment: Detailed proposal for a new cosmetic line to add to the GUESS? franchise. I was working there at the time and thought this would be a perfect addition to the brand, especially since they had covered mens/womens clothing, accessories, cologne, perfume, it felt only nature that cosmetics would be the next step.
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Karyn Mariano Due 4/6/09 GUESS Who’s Hot? Cosmetics by GUESS, Inc. 1. Executive Summary- a. Situation analysis summary- GUESS’s situation analysis was based on several objectives: to inform, persuade and remind. Therefore in our advertising campaign we plan to create awareness about our new cosmetics line and by reinforcing brand identity. We will create understanding by providing key information about our product line. A major objective in our ad campaign is to create an attitude change, which has always been an objective of GUESS, to create a self-confident, sexy and glamorous woman, and our cosmetics pull the whole package together. Create reinforcement of the need for our cosmetic by emphasizing consumer demand for it. Finally we tend to create changes in behavior by advertising our free testers at offering stores of our cosmetics and encourage consumers to go online for free trials through signing up for email to create brand loyalty as well. b. Marketing objectives summary- The objectives of the advertising campaign for the new cosmetics line, GUESS Who’s Hot? by GUESS, Inc. are based on market research done in the markets, domestically and internationally, of our best selling stores. For the beginning of the campaign we will start by offering our cosmetics in select stores in the U.S., Canada,
Transcript
Karyn MarianoDue 4/6/09
GUESS Who’s Hot?
Cosmetics by GUESS, Inc.
1. Executive Summary- a. Situation analysis summary- GUESS’s situation analysis was based on
several objectives: to inform, persuade and remind. Therefore in our advertising campaign we plan to create awareness about our new cosmetics line and by reinforcing brand identity. We will create understanding by providing key information about our product line. A major objective in our ad campaign is to create an attitude change, which has always been an objective of GUESS, to create a self-confident, sexy and glamorous woman, and our cosmetics pull the whole package together. Create reinforcement of the need for our cosmetic by emphasizing consumer demand for it. Finally we tend to create changes in behavior by advertising our free testers at offering stores of our cosmetics and encourage consumers to go online for free trials through signing up for email to create brand loyalty as well.
b. Marketing objectives summary- The objectives of the advertising campaign for the new cosmetics line, GUESS Who’s Hot? by GUESS, Inc. are based on market research done in the markets, domestically and internationally, of our best selling stores. For the beginning of the campaign we will start by offering our cosmetics in select stores in the U.S., Canada, and Asian markets that have done the best in recent years.
c. Marketing strategies summary- GUESS strategies were based on the trends in the cosmetics industry right now as well as the pricing by our competitors. We want to showcase our affordability as well as versatility in these hard economic times. Our main objective is to keep with GUESS brand integrity and always provide the highest quality and up to the minute fashions. GUESS has always been an innovator, especially when it came to our ad campaigns, and we will continue to be attention grabbing and create a sexy attitude.
2. Situation Analysis-
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a. Definitions of industry and company business- Further, the mighty threesome of denim of the last decade are clearly hurting. San Francisco-based Levi Strauss, a division of Levi Strauss Associates, recently announced that it would lay off about 1,000 people to save $80 million, largely because sales are growing more slowly than costs. VF, with headquarters in Wyomissing, Pa., maker of the Lee, Wrangler and other brands and the nation's No. 1 jeans company by sales, is consolidating its buying and decreasing the number of employees in some divisions. And Guess, based in Los Angeles, has turned its focus more to its other apparel and to its international business.
b. History of industry – trends- Potential strategies include highly interactive shop-like websites, online only offers and attractively presented beauty tips and information. L'Oreal, Estee Lauder and Dermitage all followed this path in the run up to Christmas with redesigned websites and online marketing campaigns. Consumers are also turning towards blogs and consumer reviews in order to find out more about the effectiveness of different cosmetic products. Providing a forum for reviews and consumer feedback can help cosmetics manufacturers and retailers boost website visits and therefore increase sales. Well off professionals are becoming increasingly fussy about what they consume and are investing time and money to find out more about the food they eat and the make-up they wear. Not only can this trend be seen in the rise of natural and organic cosmetics but also in the popularity of products whose labels identify key ingredients and their sources. Red roses from Turkey and grapes from the south of France add value to a product in the eyes of the new puritan who is also likely to demand greater transparency from the manufacturer regarding the origins of the remaining ingredients.
c. Growth pattern within industry- It is a big pie: Sales of jeans in the United States grew 8 percent last year to $10.6 billion, according to the NPD Group, a market research firm in Port Washington, L.I. Yet, with sales falling short of expectations, the big jeans companies ended up with too much denim on their hands and cut back on orders to the mills by as much as 20 percent.
3. Company:
a/b/c. GUESS, Inc. is the vision and creation of the four Marciano brothers, Maurice, Paul, Georges, and Armand, who grew up in the south of France, combining a
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love of the American West with European sensibility. It all started with silk ties that Georges began designing while working as a hairdresser. Maurice helped to manufacture them and Paul sold them in Paris out of the trunk of his car. They called there small business MGA, which stood for Maurice, Georges and Armand. Soon they were making a peasant blouse and one dress style offered in a multitude of prints. The clothes were popular and sold quickly. In 1973 they took over an old fish store and used the existing counters, displays and storage for their merchandise.
By 1976 they had 20 stores, and stone-washed jeans were the latest and greatest product on their shelves. “Nobody who sold a lot of jeans had washed the fabric from the beginning to get this stonewashed appearance; that was a revelation to us. From the day we realized that, we knew we’d do a lot of stonewashed jeans.” (Paul Marciano, “Interview magazine,” October ’97). These jeans--named GUESS, because it was easy for the brothers to pronounce--were meant to fit tightly and featured zippers at the ankles. They also featured what would soon become the distinctive GUESS triangle on the back pocket. In 1977, the brothers came to L.A. and were so enchanted with the California scene and lifestyle that they started several MGA stores in Southern California.
Georges Marciano flew to New York in December 1981. Despite his limited English, he convinced Bloomingdale's to display on consignment 30 pairs of his European-style jeans in Bloomingdale's flagship New York store. Within three hours, Bloomingdale's sold out of every pair, despite a $60 sales tag. GUESS jeans sales took off spectacularly the following year when Paul Marciano arrived in California to direct the company's advertising campaign. Although he had no previous advertising experience, Paul Marciano devised a campaign that revolutionized the way jeans--and clothing--were sold. Instead of adopting the typical studio design, Paul brought his brother's jeans, and the models wearing them, outdoors, using grainy black-and-white photography and provocative poses described by Forbes as "catering to teenage cravings for sex, power, attention and self-love ... electric not only with sexuality but with an implicit brutality and exhibitionism as well." The controversial ads and their sexy Western look swiftly created household names not only of the GUESS brand, but also of its models, in effect starting the supermodel trend that would make many of the "Guess Girls"--including Carre Otis, Claudia Schiffer, Naomi Campbell, Eva Herzigova, and Anna Nicole Smith--international stars.
By the end of 1982, the Marcianos had sold some $12 million dollars of their jeans. Demand for their product soon overwhelmed the Marcianos. Searching for the capital to expand and access to cheaper foreign labor, the Marcianos signed a deal in July 1983 with the Nakash brothers of the company Jordache, giving Jordache 50 percent ownership of GUESS in exchange for $4.8 million and use of Jordache's Hong Kong manufacturing plants. By the time of the Jordache deal, the Marcianos had already begun to expand their line beyond jeans. In 1982 they entered the menswear market through a licensing agreement with Jeff Hamilton, Inc., which marketed a line of men's clothing under the GUESS name in exchange for a 7 percent royalty fee. Between 1983 and 1984, sales of GUESS menswear rose from $2.5 million to $27 million. GUESS soon sought to terminate license agreement with Hamilton due to their
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“dumping” of GUESS merchandise into Kmart and other discount stores that was hurting the brand’s high-end reputation and image. The menswear line was brought in house in 1986.
The Marcianos sued the Nakash brothers and Jordache in 1984, charging that company with unfair competition and claiming that the Nakash brothers were using their position on the GUESS board of directors and their access to GUESS designs in the Hong Kong plant to produce knockoffs of GUESS clothing in their Jordache line. The Marcianos' suit asked the court to undo the 1983 agreement that had given the Nakashes control of half of GUESS. The battle for control of GUESS continued for the next five years.
Despite GUESS' legal distractions, sales continued to grow, reaching $350 million in 1987, with profits of $100 million. While much of its sales continued to be in jeans, GUESS had successfully entered the women's market, with its upscale Georges Marciano label, as well as children's, leatherwear, and footwear. Re-launching its menswear line in 1986, GUESS began to make inroads in that market as well, placing its products in men's departments of most major department stores. Licensed products, including GUESS watches, eyewear, and a GUESS women's fragrance line produced by Revlon, also contributed to overall sales: in 1990, GUESS watches alone sold an estimated $60 million. By 1990 sales reached an estimated $575 million.
The legal battle between the Marcianos and the Nakashes finally ended in early 1990, when a jury agreed with the Marcianos and returned 100 percent control of GUESS to them. A second trial was set for May 1990 to determine damages. However, as the jury in that case was deliberating, the Marcianos announced that they had reached a settlement with the Nakashes for an undisclosed amount. With their resources freed up, the Marcianos increased their advertising budget to $22 million in 1991. The company also expanded its retail chain, to 33 stores by the end of 1991, including its European flagship store in Florence, Italy. While the recession of the early 1990s slowed growth somewhat, to 7 percent in 1991 compared to double-digits throughout the 1980s, GUESS menswear took off, with a 41 percent sales growth in 1991 alone. By the end of that year, menswear accounted for just fewer than 40 percent of company sales. International sales were also becoming more important to overall revenues. Licensing arrangements brought GUESS clothing to more than a dozen countries, with sales particularly strong in Canada and Japan.
In 1993 GUES and its licensees registered an estimated $700 million in sales. Advertising spending reached $28 million in 1993; international sales were expected to reach 25 percent of total sales by the end of 1995. Licensing also continued to be an important source of revenue, with products now including home furnishings, infant wear, and junior knitwear. Sales of GUESS watches topped $100 million in 1994, and Guess footwear sold more than $60 million.
In 1996, GUESS became a publicly traded company when it made its initial public offering in July. 1998, GUESS launched its new line of high-end ring-spun denim jeans called Premium Denim for both men and women. It started, in early 1999, its first virtual
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retail (e-commerce) store at its web site, http://www. Guess.com. The web site, since its inception, had consistent interactive success in combining fashion images, information, and technology. Annual retail and wholesale sales increased by more than 32 percent. However, the company's profitability declined greatly because of higher retail occupancy costs due to less productive stores along with additional expenses for new stores; large inventories due to excessive buying and slowing sales trends; low productivity in its new Kentucky distribution facility; increased consulting fees; increased expenses with GUESS Canada; and higher advertising expenses. At the end of 2000, GUESS had 212 stores in the United States and Canada.
With increased competitors, GUESS decided to emphasize what other companies could not offer customers: the complete GUESS lifestyle of jeans, accessories, and image. The company continued to be hurt in 2002 with decreasing consumer confidence and continuing negative economic and political developments. However, the company was able to effectively manage its inventories and costs while product lines were enlarged, which increased customer interest. The style of the men's line was improved in order to create products that were more appealing to customers and more consistent with the GUESS brand. Extra money was injected into marketing and advertising programs in order to reinforce the brand's appeal. As a result, independent surveys showed that GUESS was ranked as one of the top five brands in total U.S. spending by teenage girls. The next GUESS girl, Paris Hilton, was hired in 2004 to help recapture business along with the company's glamorous image. The company's web site showed Hilton in various sexy poses. In the summer of 2004, GUESS launched the Marciano chain, an extension of its brand Marciano that was designed in the style of sexy, yet sophisticated apparel and accessories.
Now a billion-dollar multinational retailer, GUESS was one of the most widely recognized brands in the world. Known for quality, marketing creativity, and popularizing new trends and styles, the company had seen increased competition throughout its markets during the first few years of 2000. While jeans remained the foundation of their style, the company continued to expand its lines to include comfortable, casual clothing and accessories for women, men, children, and babies to meet every lifestyle. GUESS possessed licensees and distributors in 232 retail stores in 77 countries throughout North America, South America, Europe, Mexico, Canada, Asia, Africa, and Australia. Their wholesale business was represented in over 846 establishments in the United States. The success of GUESS? can clearly be attributed to the wide range of skills each brother brought to the table. Maurice was the expert on the business end of things while Armand had the retail knowledge. Georges provided the fashion sense and creative direction, and Paul knew how to promote and market the GUESS? image. Today Maurice and Paul remain the two brothers running the business, both as Co-Chairman and Co-Chief Executive Officer. GUESS' advertising campaigns are well known for their innovative and creative images, having been highlighted in international ad campaigns in nearly every major magazine, on television, and other such mediums. GUESS advertising has been awarded nearly every distinguished design award, and The Metropolitan Museum of Art chose the Guess Press Book and Nashville catalogue for its Permanent Library Collection.
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d. Reputation - Since the early development and creation of the GUESS? image, the Marciano brothers have always worked toward a reputation of high quality, high-end merchandise that provided the overall “GUESS lifestyle,” which was laid back California cool, sexy and glamorous.” I have worked at GUESS for a year now and there are several rules we go by and ways we interact with customers. The number one rule is the “It’s all about attitude,” they want to encourage confidence and sexiness. According to the GUESS associate training guide, GUESS is represented by their words, “We are…Different. Passionate. Innovative. Sexy. Alluring. Glamorous. Young. Focused. These words describe who we are and who we want to be to our customers.” GUESS has always been seen as on the cutting edge, with trendy, innovative styles, always fresh. They take the latest styles and trends and put their own unique twist on them.
e. Stage of Product Life Cycle- Depending on what the year and the decade, GUESS has at some point, been at every stage of the product life cycle. In the early 1980s, particularly in 1981 when the Marciano brothers opened their first U.S. store in Beverly Hills, California, their business was in the rising stage. Then GUESS reached the acceleration stage when they began to expand, grow and their advertising started to feature new and creative ideas with models featured outside. GUESS has been in the mass acceptance stage for the majority of the 1990s and into today. In the early 2000s GUESS was going through a slight decline stage because of the September 11th attacks and the recession that followed. For the new cosmetics line called, GUESS who’s hot? The rising stage would best describe this new line. Up until now, GUESS has been able to offer their customers almost everything they need for a complete outfit, whether for daytime chic or nighttime date. However now with the introduction of our new cosmetics line, the consumer is now able to have a “one stop shop” for all their high-end shopping needs, and all from a brand that they know and love. The line will be in the rising stage or introductory stage for a little while, during which a lot of money and time will go into the advertising and promotion of the line in order to get the word out and create buzz around it. Our ads have always featured beautiful women who embody sexiness and glamour, and therefore we wanted to introduce a new GUESS spokeswoman to represent our new cosmetics line, who absolutely embodies everything GUESS stands for, Eva Mendes. Having a celebrity as the focal point of our campaign is another surefire way to create commotion around our new line and draw attention to our cosmetics. We want to show our customer that they can expect the same great quality in our cosmetics as they have come to expect from our other GUESS lines. We will discuss her role in the campaign further when we get into what the ad campaign is composed of. The Company's operates in four segments: retail, wholesale, European and licensing. During the fiscal year ended January 31, 2009,(fiscal 2009), 46.7% of the Company's net revenue was generated from retail operations, 14.2% from wholesale operations, 34.3% from European operations and 4.8% from licensing operations.
