Sample Marketing Report on Victoria’s Secret

Marketing Report on Victoria’s Secret

Victoria’s Secrets is one of the biggest, worldwide retailers of lingerie. Founded in 1977 by Roy Raymond, the company has grown to become a behemoth in the retail fashion industry, and expanding its product range to include beauty products and other women’s wear (Workman 61). The company’s expansion began with new store openings in different locations, as well as mail-order operations through catalogues, in addition to sales over their website. The company later changed ownership as it became less profitable and headed to bankruptcy owing to Raymond’s poor marketing strategy, which targeted male customers and not the female customers (Workman 61). The company was therefore sold to Limited Brands, a sale that became the turnaround for the lingerie company (Canadean 4). Having been made a subsidiary of the Limited Brands Company, Victoria’s Secrets has become one of the most profitable subsidiaries of the company, contributing to 42 percent of the Limited Brand’s profits. Moreover, through Limited Brands Company, Victoria’s Secrets has been able to open more than 1000 retail stores in the US, five in the United Kingdom and additional 34 stores in Canada (Canadean 4).

Apart from the stores, the company sells it products through catalogues and onlineon Victoria’s Secrets Directs, which rakes in approximately $800 million. Although the company has a number of competitors, which include Fredrick’s of Hollywood, Sara Lee, Maidenform, Warnaco and VF Corporations, its marketing strategy has continued to make it the biggest lingerie retailer in the US.

Mission Statement

Having been bought into the Limited Brands Company, Victoria’s Secrets has not had its standalone mission statement. As Limited Brand’s subsidiary, it uses the same mission statement as the parent company, which states: “Limited Brands is committed to building a family of the world’s best fashion brands offering captivating customer experiences that drive long-term loyalty and deliver sustained growth for our shareholders” (LBrands n.p.). As a guiding principle, the mission statement does indeed reflect the catalogue mix of Victoria’s Secrets. The Limited Brands subsidiary has continued to dominate the lingerie industry in the US with it high quality products, which have captivated customers and built a considerable customer loyalty to the company. Furthermore, Victoria’s Secrets sales have been phenomenon, contributing in a major way towards the overall company revenue (42 percent of the parent company revenue). The subsidiary has therefore lived to the expectation of the mission statement through its marketing and business strategy.

Corporate Goals and Strategies

Like the mission statement, Victoria’s Secrets has similar goals and objectives as the parent company, Limited Brands. Among the goals of the company is to “build its family of fashion brands in order to create sustained growth of shareholder value” (Khemsurov n.p.). To achieve this goal, the company has launched several advertising campaigns aimed at promoting the product. This the company did by involving supermodels such as Tyra Banks in their campaigns, which has done a lot in driving the company sales and therefore ensured sustained growth for the shareholder. Moreover, the company has launched several products, the Pink collection being one of the most popular for the company. Targeting a younger market of between 16 and 22 years, the Pink line of the company has its own specialty stores where customers can purchase the products, as well as online purchases and through other Victoria’s Secrets stores in the US and around the world (Khemsurov n.p.).

The Pink line of products, which has become among the most popular lines of the company, is part of the company’s goals. The goal here was to “maintain a distinct lingerie product line that targets ladies between the ages of 15 and 22” (Khemsurov n.p.). By going this, the company hopes to introduce this age group to the world of Victoria’s Secrets, and ensure that they make Victoria’s their lingerie of choice even as they grew up.

Advertising remains one of the company’s strong suits and marketing strategy. The company’s products have been launched through annual fashion shows, which have worked to the company’s advantage. The company’s fashion show is televised nationally, following a contract with CBS, a media giant in the US (Bernd, Rogers and Karen 113). The one-hour event is part of the company’s promotional strategy, which has so far worked for the company in driving up its sales.

Previously, to ensure a continuous production of good designs, the Limited Brands had a strategy that involved the knock-off, shop-and-copy system. This involved shopping for forthcoming designs in lingerie and other clothing products from designers all over the world, then producing merchandise motivated by these designs (Zmuda n.p.). Through this strategy therefore, the company would speed source the products, selling them even before production by the original brands. The strategy however lost its competitive advantage as other clothing companies took up this strategy. Today however, the company uses a different strategy, having started it between 1995 and 1998 (Bernd, Rogers and Karen 113).  The company therefore began employing apparel designers, who would design for the company, making it a distinct brand.

Another goal the company sought was to “Aggressively sort our portfolio and financially restructure our business through spins, splits, sell-offs, and store closings” (L Brands n.p.). This goal was tightly connected to the company’s objective of being a large powerful brand, which had control over its supply chain and retail distribution channel, with an aim of getting a consistent repeatable business. To achieve this therefore, Limited Brands closed its non-performing brands, spun off other brands such as Abercrombie and Fitch as well as it bank. The company then used the proceeds from these to build a recognized brand with a smaller manageable portfolio.

Social Responsibility

Victoria’s Secrets had previously been on the news for their destruction of endangered forests thorough their daily mass production of catalogues (Cervellon 132). Women had demonstrated in front of the company’s New York headquarters wearing lingerie against the company’s destruction of forest.  The company has so far changed its advertising methods and materials, using a catalogue that is made 10 percent of recycled paper (Cervellon 132).

A previous campaign by Victoria’s Secrets had made the company launch an Eastern-themed lingerie line. This line, called “Go East” was advertised as an indulgence in the exquisite beauty of the east. It was however criticized as enhancing common pan-Asian ethnic typecast, and an insult into the Asian culture. The controversy behind the line forced the company to withdraw the line as a respect to the Asian culture.

 

SWOT Analysis

As a specialty women lingerie retailer, Victoria’s Secrets operates in a competitive and fast-changing market. Moreover, there are many counterfeit product in the market that east into the company’s profits, while preventing its successful expansion in other areas (Canadean 11). Increased consumer spending and a growing economy however, provide an opportunity for growth for the company.

Strengths

Multiple Selling Strategy

This is the first in the company’s strength. Victoria’s Secrets sells its products through its catalogues, conventional store and online (Canadean 11). Moreover, the company employs multiple channels in its merchandize sales, which increases its direct-to-customer business. The company’s online portals victoriassecrets.com and VSPink.com, in addition to more than 1000 US stores, 5 UK and 34 Canadian stores, offer a good coverage for customers making it easy for customers to buy from the company. Further, the diverse retail and marketing channels help in increasing the company’s brand awareness, customer store traffic and sales.

Steady Revenue Growth

Victoria’s Secrets has been experiencing increased and steady revenue growth over the years. In 2013, the company had $6.681 billion in revenue, which was a 1.64 percent growth as compared to 2012 (Canadean 11). The company has seen rising sales in its stores and online business, which have contributed to the growth in revenues.

 

Successful Advertising and Marketing 

Victoria’s Secrets has one of the most successful advertising campaigns. Through fashion shows, media advertising through newspaper and magazines, the company has been able to grow it market presence and awareness to consumers. Moreover, the company has advertised itself as a sexy product using supermodels such as Tyra Banks, a campaign that has easily resonated with the younger population (Khemsurovn.p.).

Weaknesses

Limited Presence

The company has a large presence in the US and Canada, with a limited presence in the UK. This means that Victoria’s Secrets largely relies on the North American market for its sales. The company therefore has a weak geographic reach in comparison to its competitors such as Hanesbrands operating in more than 25 countries (Canadean 11). The dependence on the North American market therefore makes the company vulnerable to regional instability, which may reduce the demand, and therefore sales, or at worst upset the supply chain. Moreover, such reliance on a single market also restricts market share and opportunities for growth.

Opportunities

Increased Customer Spending

The US Bureau of Economic Analysis has indicated an increase in US customer spending with a 0.3 percent increase in personal income and a 0.40 percent increase in disposable income (Canadean 11). Moreover, the Bureau has indicated that there is a 0.4 percent increase in personal consumption expenditure. All these indicate increased consumer spending, which have a potential positive impact on the company’s sales.

New outlets

Victoria’s Secrets is planning on opening new stores in new domestic territories. This is in addition to opening even more stores in Canada and UK, while at the same time closing underperforming stores and focusing on remodeling and renovating older stores. This is expected to drive sales and increase the company’s market visibility especially in the territories the company has no stores.

Online Concept

The online retail market is continuously growing. More consumers are shopping online due to the convenience that this type of online shopping gives them. The Department of Commerce’s Census Bureau indicated a 3.40 percentage increase in e-commerce sales in 2013 (Canadean 12). The Bureau predicts a 16 percent increase in e-commerce sales as online shopping becomes safe and convenient for shoppers. This presents a good opportunity for the company to drive its sales.

Threats

Increase in Counterfeit Products

There has been a huge influx of fake products in most industries globally. These counterfeit products have a high penetration rate, which may lower sales and harm profit margins. Additionally, as consumers purchase these counterfeit products, the low quality affects the customer’s confidence in the company, while at the same time damaging the brand image of the company.

Stiff competition

The apparel industry has stiff competition from both international and domestic companies. Stiff competition is likely to cause company to differentiate by increasing promotional expenses and reduce prices. This will ultimately affect the company’s sales and profit margins. The company’s competitors include Chico’s, Cato Corporation, Hanesbrands and Triump International, among others (Canadean 12).

Environmental Scan

Socio-Cultural Forces

As the influence of society and culture to a business, current social trends have been leaning towards more chic and sexy merchandise (Khemsurovn.p.). The company’s push-up bra has been a hit and more women are leading towards purchasing such products. This environment is therefore currently favourable for sales. However, the population is fast ageing as the baby boomer population in the US gets into the retirement age, which is likely to reduce sales. Countering this fact is however an increased in employment population mix where younger people are getting into the job market, and bringing with them a more casual dressing style into the job market. This is likely to increase sales of more casual clothing, such as Victoria’s Pink collection.

 

 

Demographic Forces

The current population is fast ageing in most of the market the Victoria’s operates. UK, Canada and US are all experiencing ageing among the baby boomers, a fact that is not particularly welcome to a company like Victoria’s that targets and markets itself to the young and chic population.

Economic Forces

Although the recent economic crisis affected consumer spending, the economy is currently showing improvement. With reduced unemployment, economic growth and forecasted rebounding of the economy, the apparel market is likely to see growth in sales (Canadean 11). Moreover, consumers are experiencing increases in disposable income, while personal consumer consumption is also on the rise, all of which are good news to the apparel industry.

Competitive Forces

The apparel industry is rife with competitors;however, the company has and continues to have a competitive advantage over its competitors commanding a 35-percentage market share of the lingerie market (Lutz n.p.). By using models that customers can relate to, the company has easily struck a balance between sexy and approachable, thereby succeeding in captivating its customers, far better than its competitors. Moreover, the company has largely given customers what the customers want and can relate to, giving it competitive advantage. Diversity in partnerships with manufacturers and suppliers has additionally given the company competitive advantage over its competitors.

 

Technological Forces

Technology is fast advancing within the apparel industry. Advertising, communication and manufacturing are all fast advancing. The internet specifically is an avenue for growth for the company for advertising, communication and for making sales. Victoria’s has additionally used online data in making smart merchandizing decisions in its stores, streamlining it physical and online storesto cater for the customer’s needs (Lutz n.p.). The internet has particularly evolved to be a strong marketing and shopping instrument through online stores and with the advent of smartphones, through mobile apps and NFC.

Regulatory Forces

Regulatory forces are laws and policies that companies are required to comply with for conducting business. In the current apparel industry regulations require that companies should state some chemicals used in their clothing and effects of those chemicals. Furthermore, the apparel industry has been affected by child labor laws from their suppliers’ side, which has indeed affected the credibility of the industry, making some people to shy away from purchasing clothing from some retailers. Thus, while some regulatory forces are helpful to the industry, others only work to diminish gains made in the industry, while others reduce profits in requiring the apparel industry to comply.

Market Research

Victoria’s uses online data to do its research on customers’ preferences. According to Lutz, the company uses online data as a way of gauging what customers want and uses the data to stock product in both their online and physical stores. From the online data collected from the company social media networks, surveys and customer’s reactions, the company is capable of gauging what customers want and using this to stock and improve on their offerings (Lutz n.p.)

Marketing Strategies

Victoria’s Secrets runs one of the most successful marketing strategies in the apparel industry. The company’s strategies involve both online and offline incentives, in addition to their brand angels and fashion shows. Victoria’s online deals are supposedly targeted at customers who do not want to wait on the store lines to be served. To drive online traffic, the company offers incremental incentives on purchases worth a certain value (Lutz n.p.).A customer can for instance get a $15 discount for a $100 purchase, a discount that increases for every incremental purchase made by the customer. Furthermore, social media such as Twitter and Facebook have also been instrumental in propagating the company’s market presence.

Victoria’s hour-long commercial on CBS has also been instrumental not only in marketing the company’s products, but also in building a strong market presence. This is in addition to the company’s brand angels who appear in the commercials, fashion shows and catalogues. The angels therefore become a statement of class and fashion, and a focus on women, who then relate to the brand (Maheshwarin.p.).

Offers are additionally a strong part of the company’smarketing strategy. Here the company used promotional offers in stores, semi-annual sales held twice a year, which drive massive crowds to the stores and coupons. Victoria’s coupons include such items as “free panty” cards mailed to customers in the catalogues every month in addition to discounts on bra card, most of which help to bring customers to the stores, and while the customer may only want to take the free items, rarely do they leave without purchasing something else (Lutz n.p).

Marketing Mix

Product

One of the most popular products of Victoria’s is the Victoria’s Pink, an assortment of the company’s brands that features bras and panties, beddings and accessories, hoodies, backpacks and collegiate gift sets. These come in different sets of colors, and are particularly marketed to high school and college going girls. The different items under this collection represent the outgoing girl who is in touch with fashion and herself. The items satisfy different needs, such as the bedding and accessories, which take care of the dorm college girls, backpacks for high schools students and bras and panties for both high school and college girls.  Most of these products are packed in chic and enticing boxes, which are supposed to resonate with the girls as well as make a fashion statement.

Pricing

Items in the pink collection vary in price and size. Panties sell for $27 for five in different assortment of colours, while bras go for $42.50 for two. Bags on the other hand, also have a wide range of price with the least going for $18 and the highest, as 3-piece travel set going for $148. In between the ranges are both travel bags and backpacks with different sizes, colors, designs and prices. The beddings assortment has a wide range of products that include laundry bags ($19), storage bins ($34), bath towel sets ($49), sheet sets ($69), pillow case sets ($22), dorm trunks ($59), closet organizers ($39), comforters ($109) and area rugs ($59) among other products with different price ranges.

 

 

Place

Victoria’s uses both online and specialty stores for the sale of their items. These specialty stores, which operate in US, Canada and UK sell exclusively Victoria’s products. Customer who make purchases online receive their purchase via shipping using partner shipping services that the company uses. Given the fast-paced nature of the fashion industry and the need to reduce lead times, Victoria’s uses intermodal sea/air and express deliveries to reach consumers and to replenish inventories (Limited Brands n.p.).

Promotion

Victoria’s Pink line is has the word “Pink” written in capital collegiate writing. The logo stands for chic and fashion conscious girls between 15 and 22 years. The logo has been particularly successful as a means of introducing teenagers to the Victoria’s brand. The intention is not only to introduce the girls to Victoria’s but also to transition them into loyal customers for its more adult centric products such as Body and Angels.

To drive sales for the Pink line, Victoria’s uses discounts and coupons for the products (victoriassecret.com). Other offers include free shipping for online purchases from the Pink line, in addition to a $20% discount on any single apparel item (see image below).

Discount on apparel and free shipping promotion for Victoria’s Pink line

Conclusion

Victoria’s remains as one of the biggest lingerie specialty stores in America. The company has grown since its establishment in 1977 to its sale to Limited Brands to what it is today. Although the apparel industry is rife with competition, the company has managed to stay relevant and afloat due to extensive research, a wide range of product mix and a successful marketing campaign. These have seen the company grow to a claim 35 percent of the lingerie market share. However, the reliance on the North American market and counterfeit products threaten the company’s good fortunes. Opportunities however, beckon in geographical expansion, which if carefully executed can help the company expand its influence worldwide as its competitors.

 

Works cited

Bernd, Schmitt, David L. Rogers and Karen, Vrotsos. There’s No Business That’s Not Show Business: Marketing in an Experience Culture. FT Press, 2004. Print

Cervellon, Marie-Cécile.”VICTORIA’S DIRTY SECRETS: Effectiveness of Green Not-for-Profit Messages Targeting Brands.”Journal of Advertising 41.4 (2012): 133-45. ProQuest.Web. 8 Dec. 2014

Kemsurov, Monica. “Sexing Up Victoria’s Secret The lingerie retailer’s revamped New York flagship signals a new look for malls nationwide, bringing once-stuffy store design into step with the brand’s supermodel image.” CNN Money, April 1, 2004. Web. 9 Dec 2014

Limited Brands. Company Presentations. Harvard Business School, 2005

Lutz, Ashley. “How Victoria’s Secret will Continue to Crush Competition.” Business Insider, September 9, 2014. Web. 9 December 2014 2014

Maheshwari, Sapna. “The marketing secrets if Victoria’s Secret.” Bloomberg News, November 20, 2012. Web. 9 December 2014 2014

Victoria’s Secret Stores, Inc. – Company Capsule. Basingstoke: Progressive Digital Media, 2014. ProQuest. Web. 8 Dec. 2014.

Victoria’s Secret Stores, Inc.: Retailing – Company Profile & SWOT Report.Basingstoke: Progressive Digital Media, 2014.ProQuest.Web. 8 Dec. 2014

Workman, Nancy V. “From Victorian to Victoria’s Secret: The Foundations of Modern Erotic Wear.” Journal of Popular Culture 30.2 (1996): 61-73. ProQuest.Web. 8 Dec. 2014

Zmuda, Natalie.”Pink Label: Victoria’s Sales Secret.”Advertising Age7Jul2008. Web.9 Dec 2014