1 Table of Contents I. Title Page II. Executive Summary A. Company i. History and Culture ii. Business Mission iii. Financials B. Industry i. Current Industry Conditions C. Consumers D. Product E. Competitors III. SWOT Analysis s A. Strengths B. Weaknesses C. Opportunities D. Threats IV. Marketing Strategy A. Objectives B. Execution V. Creative Strategy A. Advertising B. Creative Brief VI. Social Media Strategy A. Facebook B. Instagram C. Twitter VII. Evaluation
Transcript
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Table of Contents
I. Title Page II. Executive Summary A. Company
i. History and Culture ii. Business Mission iii. Financials
B. Industry i. Current Industry Conditions
C. Consumers D. Product E. Competitors
III. SWOT Analysis s A. Strengths B. Weaknesses C. Opportunities D. Threats
IV. Marketing Strategy A. Objectives B. Execution
V. Creative Strategy A. Advertising B. Creative Brief
VI. Social Media Strategy A. Facebook B. Instagram C. Twitter
VII. Evaluation
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A Marketing Communication Plan Presented by Lauren DiGiglio
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I. Executive Summary
Serving customers since 1901 – Nordstrom has had a long history of being a leading fashion specialty retailer, offering one of the most extensive selections of merchandise for consumers. With their e-‐commerce business and social media presence growing, Nordstrom has come to us to help them increase awareness and promotion of a new product line. We have been working vigorously to develop a cohesive integrated marketing communications plan in response to Nordstrom’s request. Our mission is to increase brand awareness of Nordstrom’s new product line by expanding its appeal to reach new consumers, while still resonating with Nordstrom’s brand-‐loyal customers. To do so, we have conducted research that generated a foundation for a campaign by gathering the current market situation as well as its potential growth within a new and growing industry.
A. Company Analysis
Nordstrom Inc. is a department store that operates retail channels nationally, offering customers a wide selection of high-‐quality merchandise focused on apparel, shoes, cosmetics and accessories for men, women and children. The company derives its revenue from sales of designer, luxury and fine-‐quality apparel, shoes, cosmetics, and accessories. Nordstrom also sells a full range of gifts, novelty merchandise and household accessories in store, through catalog services and online. Nordstrom Inc. has 116 full line department stores and 176 discount-‐outlet stores (Nordstrom Rack) in 38 states and the District of Columbia. The company just opened a full-‐line store in Canada and plans to open 3 more in the next 3 years. Nordstrom has about 63,000 employees currently.
i. History and Culture
What started off as a small shoe store in Seattle is now one of the nation’s leading
retail stores. The company was founded by John W. Nordstrom, and started off in Seattle where it is currently headquartered. In 1905, Nordstrom and his partner’s annual sales were up to $80,000. Nearly 20 years later in 1923, they opened a second store in Seattle. In 1928, John Nordstrom and his partner retired, leaving the business to Nordstrom’s 3 sons, who built upon their father’s success. In 1929, the Nordstrom brothers doubled the size of their downtown Seattle location. Despite the Great Depression that was occurring during this period, the two stores made a quarter of a million dollars in sales.
After World War II, the brothers built their shoe company into the largest independent shoe chain in the country. In the 1950’s, the Nordstrom’s opened 2 more locations and remodeled their Seattle location by stocking it with 100,000 pairs of
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shoes, which was the biggest inventory in the country at this time. In the 1960’s, the brothers wanted to expand further and diversify their selection, so they chose to purchase Best Apparel, a Seattle-‐based women’s clothing store. The decision shaped what the modern Nordstrom department store is like today. In the late 1960’s, the company opened 5 stores that combined both apparel and shoes, and renamed the company “Nordstrom Best”. In the following years, Nordstrom Best diversified further by selling men and children’s clothing as well. In the 1970’s, the brothers decided to turn their company over to the next generation of Nordstroms. In 1971, the company went public and when sales first topped $100 million, the company changed its name to Nordstrom Inc. In 1973, the first Nordstrom Rack outlet store opened. In 1980, Nordstrom was the 3rd largest specialty retailer in the country. That year, Nordstrom was operating 31 stores on the West Coast and Alaska. The chain’s biggest growth area was in the California market. By 1984, there were seven Nordstrom stores in that state. It was during this decade when Nordstrom started getting the reputation of an efficient and upscale department store. Nordstrom’s customer service brought results, while maintaining the highest sales per square foot of retail space rations in the industry. In 1988, Nordstrom opened its first east coast location store in Virginia, which made $1 million in sales on its first day. During the 1990’s, sales grew sluggish due to the demand for woman’s apparel and the severe recession in Southern California, where more than half of the company’s stores were located. In the early 2000’s, Nordstrom was forced to layoff about 2,500 employees as part of a cost-‐cutting initiative. But Nordstrom turned themselves around through cost containment, technology initiatives and refocusing on its niche: upscale goods at affordable prices. In 2011, after Nordstrom had been enjoying its success in the e-‐commerce business, the company purchased HauteLook Inc., an emerging player in the flash sales market.
ii. Business Mission
The company’s century old history made the brand what they are today. The goal at
Nordstrom is to provide the best possible customer service to those interested in purchasing high quality, fashionable products. To do so, the company carries a top-‐notch selection of merchandise with selections from multiple departments for the customer to choose from.
Customer service has been a hallmark for Nordstrom since the beginning, and it is especially exemplified in their return policy. Nordstrom is one of very few companies that without an actual return policy. The ultimate objective is to satisfy the customer, which means Nordstrom will take back any returns to maintain customer loyalty and satisfaction. When customers feel like they can bring back items they no longer want, it gives them a sense of trust for the company. Many customers choose to shop with Nordstrom because they know if they are not fully satisfied with their purchase, Nordstrom will work until they make sure the customer is fully satisfied. This is what maintains a strong loyalty between the consumer and the brand.
Another way Nordstrom excels at customer service is by offering customers a free shipping option on their website and in the store, which includes anywhere in the U.S. If
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a customer is looking for a product they cannot find in the store, an employee can quickly find it and order it for them online within minutes.
Nordstrom also cares about it’s employees and wants to see them excel, which is why all department employees are guaranteed a base salary or hourly wage, plus commission (percentage varies between the departments). By doing so, employees are urged further to connect and inspire the customer to buy, while maintaining personal relationships with them.
iii. Financials Nordstrom has experienced financial success in the past few years. In 2014,
Nordstrom had a total of $13.1 billion in net sales, a 7.8% increase in earnings from 2013, delivering record sales and earnings per diluted share. Nordstrom’s credit business, through their Nordstrom Rewards program, has continued to play a role in attracting new customers and enhancing customer loyalty with existing customers. Last year, $396 million was derived from credit card revenue. This program has encouraged customers to shop more frequently and spending more than non-‐rewards members. For the third year in a row, Nordstrom opened over a million new rewards accounts. With over 4 million active members last year, sales from members represented about 40% of company sales.
Nordstrom’s performance in 2014 reflected continued progress in executing
customer strategy through investments to drive growth across channels. 2014 was the 6th year in a row that Nordstrom generated over $1 billion in cash flow from operations.
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B. Industry Analysis
Nordstrom is in the Men’s and Boy’s Clothing and Furnishings Merchant Wholesalers Industry, Footwear Merchant Wholesalers Industry, Women, Children’s, and Infant’s Clothing and Accessories Merchant Wholesalers Industry, Family Clothing Store Industry, and the Department Store Industry. Their primary industry is the family clothing store industry, which consists of about 39 companies with annual revenue of roughly $72 billion, predominantly in the United States, but followed by Sweden, the United Kingdom and Switzerland. For the purpose of this exercise, however, it is important to keep in mind that Nordstrom is more of a department clothing store with a vast array of retail products, which goes beyond clothing with merchandise such as: wallets and other accessories, cosmetics, luggage, jewelry, home furnishings, and more.
As a family-‐run business, Nordstrom appeals to every aspect of a family’s needs by offering a plethora of retail merchandise. The top companies in the Family Clothing Store Industry include TJX Companies, H&M, Marks and Spencer PLC, and Gap Inc. This industry consists of establishments primarily engaged in the retail sale of clothing, furnishings and accessories for men, women, and children. Generally referred to as retail family clothing stores, this industry includes jeans stores and unisex clothing stores but excludes targeted at one sex or age group. This industry includes a mix of high-‐end stores, discount stores, and mass-‐market stores predominantly aimed at the middle class.
i. Current Industry Conditions
Apparel sales in the U.S. rose 1.6 percent between 2008 and 2014, and revenue totals $98 billion in the end of 2014. Budget retailers like T.J. Max and Ross were successful because of their lower prices. These companies guided the family clothing retail industry through the recession during the 2008-‐2009 recession period.
As of 2014, Wal-‐Mart was the largest private employer in the world and the
largest company in this industry. More than 245 million customers have visited the company’s 11,000 stores in 27 countries.
C. Consumer Analysis Nordstrom’s consumers are fashion conscious and brand loyal. The
demographics of the company’s consumers are typically men and women between 20-‐40 years old who make a six-‐figure salary. They are confident and stylish adults who take pride in their appearance. Nordstrom has maintained an image as a luxury retailer, and therefore it’s primary target shoppers are in the upper echelons of society (upper-‐middle class and upper class demographic)
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Most of Nordstrom’s consumers are not affected by the recession, but some shoppers are turning to “cheap chic”, which means less pricey alternatives with just-‐as-‐good quality. Nordstrom has adapted to this need by opening lower priced Nordstrom rack stores, which offer Nordstrom’s usual designer and private brands at discounts of up to 70%. By doing so, Nordstrom is seeking to increase their appeal further to budged conscious customers.
D. Product Analysis
Nordstrom’s product offerings are not only of the best quality available, but are also presented in a fashion appealing to customers. Most of Nordstrom’s products (70%) are available in their stores nationally, and the rest of their products (30%) are unique to each store or region. Currently, women’s clothing holds the largest share of the company’s product line. Nordstrom carries hundreds of designer merchandise, and also their own private labels. Private and exclusive Nordstrom brands make up 25% of the company.
The most popular designer merchandise Nordstrom sells features lines from Calvin Klein, Annie Klein, David Yurman, Michael Kors, UGG, and Kate Spade. How Nordstrom selects what products appear in what stores is based on customer feedback. Nordstrom stays alert on changing times of taste and profitability of their products.
E. Competitive Analysis
Nordstrom’s top competitors are in the retail clothing store industry. Nordstrom has
competition on a local, regional, and national level. Their top 3 competitors are Bloomingdales, Saks Fifth Avenue, and Neiman Marcus. Bloomingdales currently has a better social media presence than Nordstrom does, which gives them better promotion. Saks Fifth Avenue uses narrowcasting to ensure brand is luxurious and exclusive. Their average price point is $633. Nieman Marcus gets 25% of its annual revenue from direct sales, primarily e-‐commerce, and a much higher percentage than Nordstrom.
New competition will be discussed later in this document. Nordstrom recognizes
that there will be different competition based on a new product line that will also be discussed later in this document. III. SWOT Analysis
A. Strengths -‐ Nordstrom offers an integrated multi-‐channel retailing platform through their retail stores, e-‐commerce, mobile commerce and catalogs. Nordstrom has continued to increase it’s e-‐commerce business to improve consumer satisfaction online by expanding it’s merchandise section and enhancing it’s website (Below is a breakdown of Nordstrom’s e-‐commerce innovation and development thus far). Consumers today
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are focused on saving time and getting things done quickly, so Nordstrom’s website is set up in a way that allows customers to quickly navigate, select merchandise and checkout and receive their orders promptly. The company has also continued to leverage technology as an enabler of service to save time for customers in-‐store. All stores are now equipped with Wi-‐Fi, which allows the use of mobile point-‐of-‐sale devices, which then increases speed of the checkout process and helps drive volume. These mobile devices have all of the same functions as cash registers do, and Nordstrom’s goal is to eventually become a fully mobile-‐friendly environment. By increasing the convenience quotient for customers through the multi-‐retailing strategy, Nordstrom increases consumer loyalty for its merchandise.
The economic recession led to price becoming a top concern for many consumers. Retailers like Nordstrom who are value oriented were able to sustain market share. Today, more consumers now fall in the group of price sensitive customers. In 1973, Nordstrom began Nordstrom Rack-‐-‐an outlet store that primarily caters to value oriented consumers by offering discounted merchandise. Sourcing merchandise directly from manufacturers, eliminating middlemen and their profit margins derives the low prices at Nordstrom Rack stores. The stores also serve as outlets for clearance of items from any of Nordstrom’s full-‐line stores. In fiscal year 2014, net sales of Nordstrom Rack stores increased 12%, driven by the opening of 22 new stores. Nordstrom Rack allows the company to withstand price competition from discounters or mass merchandisers.
B. Weaknesses – Nordstrom’s store network is heavily concentrated in California. Because store locations are primarily concentrated on the east and west coasts of the US (and particularly in California), the company’s store network falls short of proper national coverage. The unemployment rate in California is above the national unemployment rate. The annual average unemployment rate in the U.S. was 5.9% in the end of 2014, while the average unemployment rate in California alone was 7.3%.
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Nordstrom is vulnerable to the downturn in this state, which could be a problem for the company’s competitive advantage.
C. Opportunities -‐-‐ Having been so successful in sales to men, women and children, a new opportunity for Nordstrom would be to expand it’s product lines to include pet paraphernalia, food, clothing and accessories. More than half of Nordstrom’s customers (56%) have a pet at home. Like all of Nordstrom’s merchandise, the pet clothing, food, and supplies would be of high quality. This is an opportunity that makes Nordstrom stand out from its major 3 competitors (Bloomingdale’s, Neiman Marcus, Saks Fifth Avenue) who do not offer a product line specifically for pets.
The population of pet owners in the U.S is expected to increase 2.2% in 2018, leaving about 92 million pet owners. Last year the Pet Industry had nearly 60 billion dollars in sales. It is an industry that keeps growing.
D. Threats – The industry Nordstrom is a part of is highly competitive. Nordstrom has competitors on a national, regional and local level. Because of the array of merchandise Nordstrom sells for men, women, and children, the company has numerous competitors ranging from department stores, specialty stores, discount stores, boutiques and Internet websites. Some of Nordstrom’s competitors, such as Bloomingdales, have substantially larger marketing budgets than company’s margins and cap its market share.
In discussing a new product line for pet products, new competitors may arise as a threat. Companies such as Petco and Petsmart are among the top competitors for pet products, plus other stores already in the same Retail or Family Clothing Store Industries as Nordstrom that are cheaper, such as Wal-‐Mart and Costco. Petco, a company that offers more than 10,000 pet-‐related products, has $2.7 billion in sales as of 2015. Petco,
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a privately owned company, has 1,300 store locations in all 50 states, which Nordstrom does not. Petco also offers grooming services to customers for their dogs.
The rising labor costs in the United States are also a threat to Nordstrom. Due to present the cost of living, minimum wage rates have increased dramatically since their rate at $5.15 an hour in 1998. Some states have as high as $10 an hour minimum wage, which could increase the company’s overall costs and affect its margins
IV. Marketing Strategy
Our goal is to increase brand awareness for a new product line: PAWsome for pets. In order to do this, we will initiate an integrated marketing communication strategy to inform the public. The plan will incorporate current social media marketing practices while implementing new approaches such as traditional print advertising, promotional launch events for the new product, and social media conversations
A. Objectives
i. Create an in-‐store experience that allows customers to shop new products for their pets while maintaining a human customer service relationship.
ii. Drive existing Nordstrom customers and new consumers to the Nordstrom website and social media websites
iii. Foster two-‐way communication for product information and contests
iv. Implement a campaign using primarily social media and print advertisements
v. Launch the initial product line in Nordstrom during Q3 (July, August, September) by holding event during their Anniversary Sale
vi. Spread awareness of new product line – “PAWsome Pet” with social media contest
vii. Enhance usage of #PAWsome hashtag
B. Execution We will measure the success of the campaign by measuring the number
of visitors to the company website, newly generated social media followers, and contest submissions.
The launch event for PAWsome pet will take place during Q3, which is
also during Nordstrom’s anniversary sale in July. This has historically been when the store generates the most revenue. In 2014, Nordstrom had total net sales of over 3 billion in Q3 because it is when all of the fall fashion and back to school clothes come out, so it is a great time to launch this new
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product line because people will already be crowding the store and ready to buy.
V. Creative Strategy
We will focus our creative efforts towards fashionable and high-‐quality apparel and merchandise for pets.
A. Creative Brief
To whom are we advertising? We are talking to the typical Nordstrom shopper, as discussed in the consumer analysis. We are also aiming to target new customers in the upper class or upper middle class demographic who normally would have shopped at upper class boutiques. The campaign wants to reach out to people who consider their pets family, and therefore want to spoil them with high-‐quality, high-‐fashion merchandise. We know our Nordstrom customers want to look and feel great, so we want their pets to look and feel great too. Why should they be interested? Customers should be interested in the new product line “PAWsome Pet” because they can share the high-‐quality merchandise they for enjoy with their pets Where are we advertising? Mostly through print, Internet and out of home advertisements to prepare for the launch, which will occur during the anniversary sale Why are we doing this? We are conducting this campaign to venture into a growing industry, to increase new product line awareness, to increase awareness of launch event
B. Advertising Strategy
Advertising will introduce PAWsome Pet to Nordstrom pet owners and pet lovers aged 20-‐45 years old. We will implement a marketing communications plan using a mix of media outlets such as out-‐of-‐home billboards and ads, print ads, social media platforms such as: Facebook, Instagram and Twitter, search engine optimization, and
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sales promotion. This media mix was strategically chosen to ensure that we foster positive relationships with current consumers while attracting new consumers through creative ads.
By utilizing a comprehensive media mix, we will stimulate interest in Nordstrom’s newest products to the company’s target audience, plus try to target secondary audiences of pet-‐lovers. The blend of advertising platforms that were chosen will allow the agency to optimize our marketing strategy to increase brand awareness and put Nordstrom at it’s best positioning.
Print ads will be displayed in Nordstrom’s annual Anniversary Catalog, Men’s
Health Magazine to reach a male audience, and the fashion magazine Vogue to reach the classic female “Nordstrom Shopper”. We also want to place ads in Best Friends magazine, a magazine for animal lovers that features engaging stories, photos and tips for pet owners.
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A majority of Nordstrom locations are in major cities or suburbs outside of major cities. Considering the urban environment we are targeting, we want to implement out of home ads, which will include billboards and advertisements on buses and bus stops in major cities on the west coast (Seattle, San Francisco, San Diego, Los Angeles, and Las Vegas). The west coast has the most stores-‐per-‐region in the company. We would like to include these advertisements on local highways leading to these cities for commuters to see. The copy on the out of home advertisements will remain light, making it easy for people to read with memorable image use. We would also like to utilize these ads at sporting events for a male audience to notice (Los Angeles Dodgers Stadium, Seattle Seahawks Stadium). The tone of the ads will convey product knowledge and excitement of the opening.
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(Advertisement has an autumn theme because the Anniversary sale is when Nordstrom’s fall fashion and back to school clothes come out)
VI. Social Media Strategy
Nordstrom already has a growing social media presence. In 2014, the company had
10.5 million fans/followers on 10 social media accounts and 16.6 million engagements on those accounts. Customers tagged more than 460,000 photos on Instagram with the hashtag #nordstrom. Nordstrom also launched the Like2Buy app, making it easier for customers to shop for items that they saw featured on Instagram.
We want to have a contest via social media that will encourage people to use the
hashtag #PAWsome on Facebook, Twitter and Instagram. Because the hashtag #nordstrom was hugely successful on Instagram last year with 460,000 hits, it is clear that Nordstrom customers are engaged in conversation on social media platforms. The photo contest will encourage conversation over the new product, and build product awareness. Nordstrom pet-‐lovers will enjoy being able to show off their pet using or wearing the new PAWsome pet collection. The contest will reward winners regionally, and each winner will get a thousand dollar gift card to spend anywhere in the store, which will encourage consumer participation.
The countdown, news and information regarding the launch will be updated
regularly on social media
A. Facebook
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Last quarter, Facebook had 1.19 billion active users, making it one of the largest social media sites in the world. Nordstrom’s Facebook currently has 746,000 followers. We want to use Facebook to create an event page for the launch of PAWsome Pet and invite existing customers along with new ones to ‘attend’. The event will have a detailed description of what it will entail, what products will be on display, prices and more. The event will encourage invitee’s to share the event with friends to increase the awareness of the product launch. We also want to utilize Facebook for users to post pictures of their pet using or wearing the new #PAWsome Pet products, which will spread quickly on Facebook newsfeeds and hopefully spark curiosity for other users.
B. Instagram
Instagram, a newer social media platform, currently has over 300 million active users. We want to implement the billboard ads for the promotion of the new product line, and make them into Instagram format. These advertisements and will be posted on the Nordstrom Instagram for their 900,000 followers to see. We want to encourage followers to participate in the #PAWsome Pet contest via Instagram as well, to increase product awareness. When an Instagram user posts the picture on their page, we hope their followers will show interest and click the hashtag as well, creating a domino effect of familiarity with of the new product between Instagram users. (See examples below)
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C. Twitter Last quarter, Twitter had 288 million active users. Nordstrom has an
established Twitter page already with 580,000 followers. The Twitter account is used about once a day, usually showing off products or the “Outfit of the Day”. But we want to boost the amount of Tweets sent out to followers and promote PAWsome Pet. (See Below)
We also want to encourage users to participate in the #Pawsome Pet
contest by tweeting photos of their pet using or wearing Nordstrom’s newest collection. (See example below) Nordstrom should then retweet users photos to expand on the popularity and hits on the hashtag.
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VII. Evaluation
A pre and post-‐test assessment will be done before and after the campaign It will measure:
i. In-‐store and online traffic of new products ii. New social media followers iii. Increased number of #PAWsome hashtag use iv. Contest submissions v. Increase in revenue
