08 Fall 

M K T 3 0 4 ,   P r o f e s s o r   M c A l h a n y    

Bryant Edwards, Jill Hollis and Alex Zubak 

December 8th 11 

Market Segment Marketing Strategy: Female Couponers—J.Crewpon 

Target Market: Female Couponers

Female consumers are the most influential market segment when it comes to making purchases in the United States: According to Martha Barletta, it is estimated that women influence about 95 percent of United States purchases (“Female Consumers” 1,3). Women are earning more on their own, allowing them the economic freedoms to engage in the consumer market. There are many roles of the woman consumer, including the “Chief Purchasing Officer” and “Chief Thrift Officer” of the household, in addition to the more widely recognized roles of career-woman, team-worker and decision-maker, basing her decisions on her concern for the environment as well as the current economic crisis (“Female Consumers” 1). This variety of roles demonstrates the multi-tasking, chaotic lifestyle of the woman consumer. While she is balancing various tasks, she remains concerned about what the future holds for her personal finances, meaning that it is important for her to remain conscious of store sales and, most importantly, coupons. In general, women claim that they coupon as a precautionary measure because of their economic concerns, not necessarily because of a job loss or salary reduction (How the Recession has Impacted Consumer Shopping Habits 15). The majority of female couponers are between ages 18 and 40, including those still in college as well as recent graduates and young adults who are just beginning to establish themselves as successful and independent individuals (How the Recession has Impacted Consumer Shopping Habits 6). We have chosen to target female couponers aged 18 to 29, since this demographic is best aligned with our brand and overall marketing strategy. Older generations generally have greater financial stability, and therefore see couponing as more of a hassle than a necessity (Congitamus Consulting 95, 96). Female couponers aged 18 to 29 are extremely social consumers, regularly using the Internet to find deals and various social media sites to pass said deals along to their friends (How the Recession has Impacted Consumer Shopping Habits 6). This market segment relies heavily on technology in general, but most importantly the Internet because they believe it is easy to use, saves them time and money and provides a wider selection of products and services (How the Recession has Impacted Consumer Shopping Habits 21). Female couponers often use the Internet to locate and research items before they make purchases, ensuring that they find the best deals available to save the most money possible (How the Recession has Impacted Consumer Shopping Habits 21). This aligns with research that shows that the majority of female couponers budget their shopping trips, waiting for a sale or coupon before they make a purchase and generally only focusing on need-based, replacement purchases rather than “wants” (How the Recession has Impacted Consumer Shopping Habits 15). Couponers are found everywhere, crossing all boundaries of ethnicity and levels of income and socioeconomic status (How the Recession has Impacted Consumer Shopping Habits 15).

Trends

During the recession the behavior of United States consumers experienced a drastic change. Once confident buyers, not hesitant to spend, were now shying away from purchases and saving their money. From 2007 to 2009, the number of anxious consumers rose from 13 to 23 percent and the number of confident consumers decreased from 26 to 17 percent. During the second half of 2009, these numbers flipped and confident consumers increased 25 percent to 48 million consumers, while anxious consumers decreased 15 percent to 44 million consumers (The Post-Recession Consumer in the U.S. 24). The upward trend of confident consumers has caused the coupon market to reevaluate their strategy because confident consumers are less likely to use cents-off coupons than anxious consumers. However, according to Experian Simmons NCS, from 2005 to 2009 the percentage of Confident Consumers that said coupons caused them to shop where they normally would not increased from 27% to 33% (The Post-Recession Consumer in the U.S. 30). Additionally, while confident consumers are less likely to use cents-off coupons than anxious consumers, they are more likely to buy online (The Post-Recession Consumer in the U.S. 12). This is imperative information for market researchers because this trend directly relates to the upward trend of technology observed in this market segment.

Upward trending technology can be seen in consumer and market behavior; the Association of Coupon Professionals said digital coupons are the fastest growing segment in the coupon industry (Summer 2011). In 2010, digital coupon usage on retailer websites increased 69.8% and in 2011, 194 manufacturers distributed digital coupons, which was a 2.6% increase since 2010 (Summer 2011). In recent years technological advancements and technology use have moved to the forefront of communication and consumerism. In 2010, Dr. Robert Brown estimated that 34% of Millennials spend ten or more hours per week using a computer (Brown 97). Millennials are the up and coming generation and are beginning to shape the future of communication around technology. However, not only millennials are utilizing technology in abundance. Burst Media ‘Online Insights’ survey stated that 69.4% of women say the internet is their primary resource for information required to run their household and 62.3% of women said they research products or services online before making a purchase (Brown).

In addition to computers and Internet being utilized more often, another trend that can be observed among the female couponing segment is an increasing use of mobile technology to shop. Market research data shows that consumers 19 to 29 years old are more likely to utilize their cell phones to shop in stores (Brown 106). The use of mobile technology to complete purchases is

clearly defined in market research data in 2010, EBay consumers bought and sold over $2 billion by means of wireless devices and Apple made $1.8 billion in sales from mobile device applications (Special Report: Global M-Commerce Set for Strong Growth Potential).

In addition to mobile purchases, American consumers are increasingly making purchases online: In 2010 the United States was deemed the largest market for Internet retail sales in the world, with revenue of $109.8 billion (Special Report: Global M-Commerce Set for Strong Growth Potential).

Brand: J.Crew

Mission Statement:

J.Crew is committed to conducting business with sensitivity to our impact on the world around us. We are proud of our efforts and continue to look for ways to have a positive effect through everything we do. We appreciate that our customers share our commitment to social responsibility (J.Crew).

J.Crew began in 1983 as an apparel catalog and produced $3 million in sales the first year. The brand continued to grow and flourish and in 1989 the first J.Crew retail store opened in New York City (Hoover's Company Records - In-depth Records). Today, J.Crew operates 271 retail stores and 97 factory stores nationwide.

Through multi-channel retailing J.Crew offers a variety of products for varying market segments. J.Crew achieves this task by operating several different brand extensions: J.Crew, Madewell, Crewcuts, J.Crew Wedding & Parties, J.Crew Collection, and specialty men’s and women’s boutiques. Each brand extension offers a slightly different product line to reach its specified segment.

The J.Crew brand offers classic women’s and men’s apparel and accessories targeted toward young professionals and is the most well-known and consumed brand. Madewell is a specialty brand aimed at females 18 to 40 that provides upscale trendy, classic apparel. Crewcuts is a children’s apparel extension for children age 2 to 14. J.Crew Weddings and Parties is an occasion specific extension. The J.Crew Collection consists of exclusive and limited edition pieces and is targeted to a couture audience. Both the men and women’s specialty boutiques are exclusively in New York City and carry high end, one-of-a-kind products (J.Crew).

On November 23, 2010, J.Crew Group Inc. entered a partnership with TPG Capital and Leonard Green & Partners, L.P.. Together these companies acquired the entire share capital of J. Crew Group Inc. in a leverage buyout transaction for $43.5 per share, a total value of $2.773 billion. TPG Capital is the international buyout group of TPG, which is a private investment firm. Leonard Green & Partners, L.P. is a private equity firm. This partnership and buyout transaction mean that J.Crew is now privately invested in (J.Crew).

J.Crew is Missing the Mark

The J.Crew Brand offers a variety of products greatly sought after by female couponers, however the brand does not have any offerings that cater to their buying behaviors. J.Crew currently offers a ten percent discount to college students and teachers, which is a step in the right

direction for the company in targeting the market being discussed; however the brand needs to take this a step further. J.Crew’s major competitors include the Gap, L.L. Bean, and Land’s End, among many others (J Crew Inc Snapshot). All of their competitors offer consumers a Smartphone application that can be utilized for purchasing and browsing directly from their mobile device. J.Crew dissimilarly offers no Smartphone applications. The female couponing market segment is a prime segment for J.Crew to take advantage of, and doing so through a mobile application will entice sales among this segment in addition to increasing sales with current loyal consumers. Another potential benefit of the J.Crew brand creating a Smartphone application targeted toward female couponers is increasing its competitive standing.

Product—J.Crewpon:

Homepage:

After installation, the consumer will be directed to the home page of the application. The J.Crewpon application will have many different functionalities stemming from this page. The user will be able to shop the J.Crew website for either Men or Women’s clothing. If the user frequently makes purchases via the J.Crewpon application, the website will store the consumer’s information to a database making for smart transactions and purchase suggestions. If the user would like to make a purchase in the future, the application will remember what the user had bought in the past and suggest sizing and color selections. Another function of the J.Crewpon application is the coupon search engine. Through this application, J.Crew can send the end user daily coupons and information regarding savings. With this application, the user can also browse past coupons before they expire. The last function of this application is its online shopping capabilities. This application allows the user to make purchases via their mobile device and put items on hold at their local store. Using its GPS capabilities, this application can find the nearest store and find the desired item nearest the consumer.

Shopping:

From the homepage of the J.Crewpon application, the user can search items and shop via their mobile device. They can make purchases and even apply coupons to discount their current purchase. In addition the user can locate the store nearest them with the desired item in stock. This application also allows the user to keep track of their current purchases with a shopping bag function.

Coupon Page:

Another function of this application is the Coupon page. This application allows the user to receive daily deals and coupons from J.Crew. The user can also browse previous coupons and apply them to their current purchases.

Positioning Statement For young professional female couponers, J.Crewpon is the ultimate iPhone application that delivers the best deals on your favorite J.Crew products, both in-store and on mobile devices; because only J.Crewpon is dedicated to providing consumers personalized service within their budgets. Market-Product Goals

The J.Crewpon mobile app will be distributed through the iPhone Mobile App store. According to a 2010 Toms Guide study, 43 percent of all iPhone users are female compared to the 27 percent of Android users that are female (McEntegart). These statistics lead us to believe that the J.Crewpon app will be most successful in the iPhone market. After the first quarter of its initial release, we will determine if it would also be profitable to distribute through the Android App store. Two months before the J.Crewpon app is available for public download, it will be released to J.Crew enthusiasts, including

bloggers and managers of fan Facebook and Twitter pages. These people will spread the word through blogs and Internet product reviews to build hype among the targeted audiences. The selective initial release will make people educated and excited about the app before they are able to download it. One month before the J.Crewpon app is available for public download, it will be released to J.Crew store employees. While customers are shopping in the store, employees can demonstrate the application’s benefits and even let consumers try it out. This will allow customers the opportunity to experience the application first-hand before they are able to download it themselves, leading them to be more informed and experienced with the application when, one month later, they are able to directly reap its benefits. In the J.Crew third quarter report, published on December 1, 2011, 368 stores were reported in the United States (“J.Crew Group, Inc.”). By the end of the quarter, revenues had increased five percent, with store sales increasing 10 percent and direct sales increasing 18 percent (“J.Crew Group, Inc.”). These numbers demonstrate the continuous growth of the brand. Based off of these numbers, we are setting a goal of 50,000 downloads for the J.Crewpon app within the first quarter of its release to the public.

Pricing:

Cost:

The production of an application is very expensive. There are many different fixed and variable costs involved in the sales and success of an application on the iPhone App Store. The fixed costs of designing the interface and backgrounds of the application usually max out at $1,500. On top of this number there are many different variable costs involved. The J.Crewpon application requires both GPS and Social functionalities in order to truly be successful. These two components alone could cost anywhere from $500-$2,500 dollars. In addition to adding GPS and Social functionalities, the application also requires access to the J.Crew website which could cost $1,500-$5,000 dollars. The final expense for producing an application is the cost for having available to the public on the app store. This is a crucial component and could cost anywhere from $500-$10,000 dollars (How much does it cost to develop an app?). 

Price:

In order to be competitive with the other applications on the market that are similar to J.Crewpon, the application must be free. There are no other discount and coupon applications on the market that are not free. If J.Crewpon was $.99 cents or more, it would be a huge failure. No consumers want to purchase the ability to purchase items from the same company.

Place

Distribution:

J.Crewpon will be available exclusively through the Apple App store upon launch. We have chosen this form of distribution based on the Smartphone usage of females seen in market research. In 2010, it was reported that 73% of Android users were male. While they hold the majority for iPhone usage as well, their market share with iPhones is drastically lower than that of Androids (McEntegart).

This observation led us to place the J.Crewpon application only in the Apple app store initially, however if the product is successful it will be intensively distributed to all Smartphones. Additionally, the market segment behavioral trends of increased shopping with smartphones and increased technology use makes the distribution and usage of J.Crewpon appropriate with the target market segment of female couponers.

Shopping:

The market segment and other consumers will become aware of J.Crewpon mainly through the promotional strategies and word-of-mouth. After becoming aware of the product, J.Crewpon will be easy to download and use. Users will simply have to download the application, for free, through the Apple App store and can begin using it when the download is complete.

Steps to download J.Crewpon: 1. Open Apple App Store on iPhone 2. Search applications for J.Crewpon or J.Crew 3. Click Free

4. Click Install

5. Enter your Apple ID password

6. Use and enjoy!

Learning:

Promotional strategies and exclusive deals offered through J.Crewpon will aim to increase interest in the product. Consumers will learn about the products offerings through a brief description prior to installation and continue to learn through use of the product. Each page of the application will be clearly labeled and simple to use.

Testing:

Consumers can engage in trial through simply downloading the application and trying it out. The steps for download are listed above.

Buying:

Consumers will be able to utilize the product in several forms of transaction. After the initial download, consumers will be able to browse the application. There will be coupons for exclusive mobile use, as well as coupons that can be used with multiple transaction types, i.e. in store, online, and mobile device. A barcode is displayed on each coupon that will be scanned for in-store use. The number accompanying the barcode can be entered at online checkout or a promotional code can be utilized. For mobile transactions, users must simply click the “apply coupon” button and the discount will be automatically calculated for checkout.

Promotion / Communication Congitamus Consulting Studies have shown that couponers are social consumers (Congitamus Consulting 95). They not only use social media sites to pass deals along to their friends, but they also have a heavy reliance on the Internet for coupons. Most pertinent to our product, couponers often use their smartphones to find deals. Loyal customers are a brand’s best marketers. J.Crewpon needs to tap into the market of social consumerism and use the couponers’ vocal tendencies to its advantage. Mickey Drexler, CEO of J.Crew, reports that vocal fans have contributed most to the success of the brand (Bourne). The official J.Crew Facebook page has more than 390,000 fans, while the official Twitter page has more than 57,000 followers. In addition to these official social media sites, there are J.Crew fan blogs such as JCrewAholics and JCrewAficionada. Fan blogs like these demonstrate the loyalty of J.Crew consumers while simultaneously working to promote the brand. Couponers and J.Crew customers are both described as social consumers, meaning that it would be the most profitable to promote the J.Crewpon app online. Through the J.Crew website, Facebook and Twitter pages, the company can get the word out to interested consumers about the newest J.Crew offering. J.Crew can also send a personalized email to its loyal customers, providing them an exclusive look at the new application.

The J.Crewpon app will be promoted through non-traditional media. The primary means of promotion for the J.Crewpon app will be through its early-release store demonstrations and word of mouth. As previously noted, J.Crew fans are loyal and vocal, so not much promotion should be necessary past the initial product release. Evaluation The J.Crewpon app will be evaluated by its success within the first quarter of its release. Success will be measured through an increase in brand awareness and recognition, the quantitative amount of mobile app downloads and the amount of product purchases made through the mobile app device. If the J.Crewpon app does not reach its first quarter goals, then the product will be reevaluated in terms of its competitors. Are the competitors’ offerings facing similar results? If not, then why and how is the competition more successful than J.Crewpon? The product’s unique deliveries will be reevaluated to see how J.Crewpon can improve and better serve its customers. Promotions strategies will be increased, and we will evaluate the benefits and profitability of reaching out to the Android app market. Yet we expect tremendous success for the J.Crewpon app, more so than has been seen with many of its competitors’ products. As a company, J.Crew continues to reach greater success and a J.Crew mobile app will only make it easier for customers to connect with the brand for which they have a tremendous passion.

Works Cited

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