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Michael Kors

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Market Research Project
Module: Market Research - MG2902
Course: BComm2
Lecturer: Mike Murphy
Title of Project: Michael Kors

Executive Summary
The object of this report was to find out why Michael Kors as a brand has lost its exclusivity and no longer has the competitive edge over that of its competitors.

The market research undertaken draws attention to a number of key findings.

FINDINGS FROM RESEARCH ******

Introduction

Michael Kors has taken the Irish market by storm. However within the recent year sales have dropped from previous years. In this report, we as a team will establish the cause for the fall and why it no longer has the same appeal it had to its previous customers.
This report will examine the various competitors Michael Kors has to face with similar price ranges and products. We will do this through secondary and primary research; utilizing such tools as the internet and various articles and books. We will gather feedback from consumers through means of quantitative and qualitative research; such as surveys, focus groups and interviews.
Marketing techniques such as word association will be imperative to our research. Once collected, we will analyze our information and identify the key factors which have led to the loss in exclusivity of Michael Kors as a brand.

Our team consists of four members: Muireann Barry, Laura Dunphy, Diarmuid Cleary and Eimhin Courtney. Together we as a team chose this brand and worked together to produce this report.

Proposal
Students:
Research Question: How can Michael Kors regain its exclusivity as a Fashion Brand?
Company Profile: Michael Kors is a global luxury lifestyle brand with a jet-set austenitic that combines elements of style, elegance and sport. The company was established in 1981 and is led by Michael Kors, a prominent fashion designer based in New York City.
Project Objectives: The brand we have chosen to conduct our market research project on is Michael Kors. After some deliberation we decided on the fashion brand as it is a product that is the subject of many debate in terms of its exclusivity, given the fact we have seen an increase dramatically in terms of its popularity. Its major success in the past is also a reason we chose to investigate the brand further. In this project we aim to establish how the Michael Kors product range captured such a large part of the fashion market, and establish whether this was to its detriment and investigate how it can regain its high status. This industry has many various competitors, and due to their extensive product range eg. Handbags, jewellery, clothing, shoes etc. It is not limited to one market nor is limited to one specific group of competitors. Marc Jacobs would be brand of similar pricing and product range and so will be the subject of much comparison throughout our report. Michael Kors main consumer groups are that of young to middle aged females (24-54 age bracket), with its strategy including “targeting a younger, affluent demographic, often overlooked by luxury brands.” We aim to establish whether this strategy plays a part in its current brand failing and seek to establish what it can do to re-establish its position as a premium brand within the high fashion market.

Methodology: As there is a Michael Kors stockist store (Brown Thomas) in Cork city, we will be able to utilise this as a source of primary information. We have got in contact with Niamh O’ Connell the brand manager of Michael Kors in Cork who is happy to assist us with sales figures and brand knowledge. Through focus groups we will be able to collect important data on why Michael Kors is losing its exclusivity by its core group of customers. Surveys will also be useful as we can gauge the attitudes of the wider student population towards Michael Kors and how they view it in comparison to other brands. To gain a more balanced view surveys will also be conducted towards the upper aged parameter of Michael Kors 25-54 target market. This primary research will be analysed and compared with existing data trends (secondary data) in alternative fashion brand and Michael Kors own figures, before we draw up our findings on this report. We should then be able to see areas which Michael Kors needs to address if it wishes to improve on its brand and reclaim its previous position in the fashion market.

References: http://www.businesswire.com/news/home/20130304005694/en/Research-Markets-Michael-Kors-Holdings-Case-Study#.Vgm25I2JnIW Secondary Research
In gathering information on the Michael Kors brand and researching how it can regain its exclusivity in its market, we focused on topics such as Michael Kors General Market Place, their New Products, and its Competitors.
Competitors:
In 2011, Michael Kors went public, and in doing so it became one of the largest IPO’s in history. The brand has in the past few years chosen to take an aggressive approach and open multiple new stores both domestically and internationally, thus feeding its strong customer demand while all the while expanding on its multiple product categories so to be competing at all price points. Michael Kors has many large competitors in its market, as it a brand stocking various products such as both handbags and purses, along with jewellery and accessories. These multiple product options can be both to the benefit and the detriment of the brand. We identified the main competitors of Michael Kors to be Marc Jacobs and Kate Spade, of which both brands are available in Brown Thomas stores across the country.
Marc Jacobs – The Marc Jacobs brand produces high end bags, clothing and accessories, similar to Michael Kors. In 2008, the brand also launched a range of fragrances, which to the current date still continues to do so, with this expansion further benefiting the brand. Along with the original line, a Marc By Marc Jacobs line was added to the brand in 2001. However, in March of this year, it was announced that the Marc by Marc Jacobs line was to be discontinued, with speculation rife that the return to the single label brand see the company include “a diverse range of merchandise and disparate price points”, the first step in an ambitious plan to “grow the company in anticipation of a possible IPO” http://www.marcjacobs.com/press/REVIEW_WWD_MBMJ_CHANGES.html
Kate Spade – Kate Spade is an American fashion design house, offering a diverse range of products, similar to Marc Jacobs and Michael Kors. The once handbag company has expanded its range to include clothing, watches, jewellery, etc. Like Michael Kors, Kate Spade has too felt the pinch as consumers chose to spend less on the premium brands. To combat this the company has chosen to shed dozen of labels; such as Lucky Brand, and shutter it’s Kate Spade Saturday stores and focus on its flagship Kate Spade New York Brand. Whilst doing this, Kate Spade has also chosen to edge into more attractive markets such as athleisure, with their brand Beyond Yoga. On November 5th, it was announced that Kate Spade had seen a jump in sales of 11% this 3rd quarterhaving seen a drop of 39% this year. Overall, Kate Spade reported a profit of $2.3 million, or 2 cents a share, up from a loss of $9.13 million, or 7 cents, a year earlier.Chief Executive Craig Leavitt credited the 11% jump in third-quarter sales to “diversified offerings and the introduction of new product categories. The increase came even as the retailer continued to pull back profit-eating promotions” (http://www.marketwatch.com/story/kate-spade-swings-to-a-profit-as-sales-climb-2015-11-05)
Here is a table contrasting the three brands: | Michael Kors | Marc Jacobs | Kate Spade | Logo | | | | Brand Mantra | ‘Jet-set aesthetic that combines stylish elegance and a sporty attitude’ | ‘This is my love of high and low. Taking ordinary and making it extraordinary’ | ‘crisp colour, graphicprints and playful sophistication are the hallmarks of this brand’ | Brand Image | | | |

Competitive Advantage:
Michael Kors over the years has managed to develop a distinctive brand image, through a consistent product range that is ever diversifying. The premium quality of its product is evident and is confidently displayed through its price points. Its premium status encourages repeat purchases and has created a strong consumer following. Celebrity purchasing of the products (Such as Jenifer Lopez, Cameron Diaz) is one element that has helped enforce its place in the market. Social media sites have acted as free advertisement for the brand, with users showing off their purchases on sites such as Instagram and Facebook. The company has also managed to maintain strong relationships with its premier wholesale customers worldwide, such as Macy’s, Harrods, Brown Thomas; thus enabling them to access large groups of their specific consumers in a targeted, direct manner..

Primary Research
Interviews:
Our interviews consisted of 4 different interviews with people of different age demographics, who all have products from the Michael Kors brand. We had one from the 18-25 demographic, one from the 25-35 demographic and one from the 40+ demographic. We also interviewed an employee working in Michael Kors in Brown Thomas in Cork. The main issues that came up time and time again was how over popular Michael Kors as brand has now become. ‘In UCC you literally see the Michael Kors logo on bags everywhere’ states Claire, 21. Mary 45 expresses ‘I love how affordable the brand is however the amount of knock offs and fakes around the place would turn you off the brand completely’. ‘My experience working in Michael Kors in Brown Thomas has shown me that people would prefer to buy a brand more like Marc Jacobs or Kate Spade as they are more exclusive and less common’ Sales in Michael Kors have dropped significantly in the last year it no longer has the same appeal it once had. People are now willing to spend that bit more for a product which has more exclusive value and won’t be the same as everyone else they see around Cork City,’ says Brown Thomas employee Emma. We also discovered from our interviews what people’s perspectives of the brand are. Across the board it was described as ‘over-exposed’. ‘Michael Kors is the thing you will see mostly on Instagram. If you search it millions of photos come up. This to me brings down the brand, it makes it common and over seen. There is nothing significant about the product it is the exact same as thousands of others around the world. Marc Jacobs or Kate Spade however, does not have this ‘high maintenance’ esk image, which, as a result, appeals to me’ says Niamh 28. It was also stated that Michael Kors is now available is discount stores such as Tk Maxx there is nothing exclusive about this it and turn people off it’. As far as recommendations, the major one was to increase the price so as to make it a more of a luxurious item. There was also a mention of forbidding the sale of products of the brand in discount stores across the border as that would result in an increase in exclusivity of the brand.

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