Lauren Clark Fall 2011 LXFM 501

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Table of Contents

Financial Plan pg 22

Plan for Further Action pg 25

Conclusion pg 26

Works Cited pg 27

Executive Summary pg 2

Management & Organization pg 2

Introduction of New Products pg 5

The Market pg 12

Marketing Plan pg 18

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Tory Burch is an attainable, luxury lifestyle brand defined by classic American sportswear with an eclectic sensibility. Since the founding of Tory Burch the company has been known as a lifestyle brand. In recent years the brand has expanded from just offering women’s clothing and shoes. In order to continue this expansion, Tory Burch should introduce home décor such as decorative pillows, picture frames, and coffee table books. The home furnishings industry, specifically small home décor, has increased in profitability in recent years and many other fashion companies have expanded into this industry so it’s proven to be successful. By integrating the new product line into the current retail space and marketing plan, it could be a successful venture for the company. Company Description Tory Burch had always been interested in fashion and created her first collection in 2004. Her husband, Chris Burch, financed most of the project. Tory opened her first boutique in 2004 in the Nolita neighborhood of New York City. Because of her social status in New York City, celebrities, fashion columnists, and important people within the fashion industry attended her store opening. The collection was launched as a lifestyle concept with several categories including ready-to-wear, shoes, handbags, and jewelry. Wholesale was also launched in 2004 exclusively with Bergdorf Goodman and Scoop (About Tory Burch). In 2005, Tory was on Oprah as the “next big thing in fashion” and the next day toryburch.com received 8 million hits and recognition skyrocketed (About Tory Burch). Tory was awarded the Fashion Group International Rising Star Award for Best New Retail Concept in 2005 (About Tory Burch). Tory was recognized for going against the new trend of minimal retail design. Her stores have bright colors, vintage chandeliers, and big comfortable couches. Tory wanted customers to feel like they were entering her living room, not a boutique. In 2006, the signature Reva ballerina flat was introduced. The flat is named after Tory’s good luck charm and style icon – her mother Reva (About Tory Burch). International distribution began in 2006 with retailer Harvey Nichols in London and Dubai. After only three years in the industry, Tory became a member of the CFDA in 2007. Tory was awarded the Ace Award for Accessory Brand Launch of the Year by the Accessories Council of Excellence due in part to the Reva flat (About Tory Burch). Just one year after becoming a member of the CFDA, Tory was honored with the Accessory Designer of the Year Award in 2008. Tory also opened a showroom in Milan in 2008 and continued to open stores throughout the U.S. (About Tory Burch). Tory launched the Tory Burch Foundation in 2009 to help other female entrepreneurs through providing economic opportunities to American women through microfinance. Tory further expanded internationally by opening a store in Asia in 2009 and more stores in Europe in 2010. In July 2010, Tory launched a full denim collection (About Tory Burch). Management Team Tory Burch, LLC designs and manufactures clothing and accessories for women. Tory Burch is the founder and creative director. Tory’s ex-husband, Chris Burch, helped finance the company in the beginning and still holds stake in the company. Chris Burch has been rumored to be looking to sell part or his entire stake (Tory Burch, LLC).

Executive Summary

Management & Organization

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Within Tory Burch, LLC is the Tory Burch Foundation. Tory launched this non-profit organization in 2009, which provides economic opportunity to women and their families in the U.S. (Tory Burch Foundation). The foundation helps women access financial tools, which improve their lives. Because Tory is a working parent and an entrepreneur, she wants to economically empower women.

Legal Entity & Ownership Tory Burch is a privately held company that was incorporated in 2003. Tory Burch is the founder and creative director. Other key executives include Brigitte Kleine, President; Reepal Shah, Chief Financial Officer; and Robert Isen, President of Business Development and Chief Legal Officer. Tory Burch’s ex-husband, Chris Burch, also holds stake in the company and still sits on the Board of Directors. Infrastructure

Current Company Structure All items within the Tory Burch company are produced and sold as Tory Burch. There are no separate lines or brands under the company. Because of this, there is much room for growth for Tory Burch. Tory Burch is still a relatively young company, so hasn’t expanded much since the founding but should start to expand now because they have the capital and recognition from their current company structure. Expanding when still a young company allows brands to introduce themselves to new industries before they become “stuck” in their original industry. It’s hard for older companies to explore new industries and areas because they have such a strong brand image and it’s nearly impossible to change the public’s perception of the brand. Tory Burch currently sells clothing and shoes for girls but only limited pieces. If she chooses to further expand this line, it might be beneficial to separate it into its own line. Tory also just announced her plans to produce her own fragrance. This is her first venture into beauty so if it proves successful, beauty could become another line within Tory Burch, LLC. Tory Burch currently sells though Tory Burch boutiques throughout the world. There are 41 stores within the U.S. and 13 international stores. Tory Burch also sells through the Tory Burch website and outlet stores. On top of the company’s direct to consumers retail strategies, Tory Burch wholesales to 450 department and specialty stores across the world.

Tory Burch, LLC

Clothing & Accessories

Women

Girls

Home Decor

Decorative pillows

Picture frames

Coffee table books

Tory Burch Foundation

Tory Burch currently only offers clothing and accessories for women and girls. The Tory Burch Foundation is underneath Tory Burch, LLC. With the new proposed product line, it will be separated from the clothing and accessories but still held beneath Tory Burch, LLC. The new home décor line will be based in the same Tory Burch headquarters. The line will be separated from clothing, accessories, and the foundation but will be integrated in the current company structure by being created and designed by Tory Burch.

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Current Brand Positioning The Tory Burch company has branded itself as an attainable, luxury lifestyle brand defined by classic American sportswear with an eclectic sensibility. The brand embodies the personal style and spirit of Tory Burch, a New York City socialite. Before Tory Burch created her fashion company, there was a gap in the market for a sophisticated American aesthetic with stylish yet wearable clothing at an accessible price point. Tory Burch has securely positioned herself in the fashion market by offering a lifestyle brand with a clear image and aesthetic. Her stores, website, clothing, and Tory’s personal lifestyle all reflect the company as a whole and give customers a clear and steady image to gauge the brand by. Customers view the company as high fashion yet are able to afford her products so they find it accessible unlike other high fashion brands. Current Products Offered

Current Target Market Tory Burch is an accessible luxury brand with reasonable price points so her brand is accessible to a wide range of customers. The Tory customer is middle to high income, affluent, educated, and lives in urban areas. Originally, the brand started out with a customer being between the age of 30 and 45. Now, it’s expanded in both directions to include women aged between 20 and 60. Younger customers come into Tory Burch for the footwear, especially the Reva ballerina flat (Tory Burch Transcript). Older customers wear the more classic Tory pieces, such as tunics and cardigans. The customers in the younger age range are young professionals who are just starting out in their careers. They live in urban areas with jobs in both creative industries and more traditional industries, for example accounting or law. These customers are not yet married and don’t have as much of a disposable income as the older customers. They buy only a few pieces that are more reasonably priced and that can be worn many different ways. The biggest category of Tory’s target market is baby boomers who are mothers. These women typically have disposable income to spend on clothing and enjoy buying new pieces seasonally. The customer wants easy and comfortable clothing that they can wear running errands with their children or out to dinner with their husband and a group of friends.

Women

Clothing

Tunics

Tops

Denim

Bottoms

Dresses

Outerwear

Swim

Accessories

Handbags

Shoes

Jewelry

Small leather goods

Hats & scarves

Belts

Children

Clothing

Sweaters

Dresses

Tops

Shoes

Ballet flats A further breakdown of Tory Burch offerings includes tunics, tops, dresses, skirts, sweaters, jackets and outwear, denim, pants, shorts, and swimwear for women. Accessories include handbags, shoes, jewelry, and small leather accessories like wallets, card cases, and cosmetic bags. Tory Burch offers sweaters, dresses, tunics, tops, and ballet flats for girls.

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Tory’s customers are interested in fashion and new trends but aren’t necessarily trend-driven. The customer likes an influence of the trend in her clothing but doesn’t want to be dressed for trends and recycle her wardrobe every season when the new trends come out. One of the reasons Tory Burch has become such a successful brand is because of their wide reach. Customers are all ages, have different incomes levels, and different family types. Tory Burch, as a brand, offers items to almost all types of women. Purpose of New Products Since Tory Burch opened in 2004, she has been known as a lifestyle brand. In the last couple of years, she has introduced candles, towels, umbrellas, and other non-fashion items. It was recently announced that she’s coming out with her first fragrance sometime in 2013. In order to continue the expansion of this lifestyle brand, she should introduce a home goods line. The first collection of home goods will include decorative pillows, picture frames, and coffee table books. Because Tory Burch is known for her signature prints and colors, the brand can easily translate to home goods and still maintain their vision and customer base. This expansion will allow current customers to incorporate Tory Burch into every aspect of their lives. It would also introduce the brand to a new market with an opportunity to grow its customer base and profits.

Introduction of New Products

The above pictures of a pillow, picture frames, and a book are examples of products that Tory Burch will introduce. Tory Burch pillows can come in multiple prints, colors, and materials. The pillows and picture frames should have Tory Burch’s signature prints and colors. The coffee table book can have past Tory Burch collections as well as pictures from Tory’s personal life as a New York City socialite. It would also be interesting to have pictures of all the Tory Burch boutiques around the world because they’re just as colorful and vibrant as her designs.

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Sample Prints for Decorative Pillows Tory Burch can find inspiration from the prints and patterns used in her clothing collections or create new prints for the pillows.

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Sample Images for Coffee Table Books Because Tory Burch stores are decorated to look more like apartments than a retail space, images of all her boutiques around the globe would be interesting in a book. Also, images of Tory’s apartment in the Pierre Hotel in New York City would give customers a personal look inside the life of Tory Burch, the NYC socialite and fashion designer.

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Unique Features Tory Burch has a strong brand image of using colorful prints and mixing those colors and prints with each other. Other designers who have ventured into the home furnishings industry, like Ralph Lauren, don’t use as many prints and colors as Tory Burch. She could easily transfer her fun and eclectic design aesthetic into small home accessories. Her vibrant and colorful aesthetic will make her unique within the home décor industry.

Because Tory Burch is only offering small items like pillows, picture frames, and books, customers could add these products into already decorated rooms in their homes. The picture frames in different prints and colors could easily be bought and placed on a side table or dresser as an added accessory. Stage of Development At the introduction of the Tory Burch home goods line, only decorative pillows, picture frames, and coffee table books will be offered. Depending on how well this new collection is received, the brand could expand even further into the category. Later collections could include kitchenware items and bedding and bath textiles. Kitchen items would include dinnerware pieces like plates and bowls as well as glassware like drink glasses and coffee mugs. Tory Burch’s prints would translate really well into bedspreads, window coverings, and shower curtains. If the first collection is successful, these areas would be the next expansion for Tory Burch’s home goods line.

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Product Limitations A major risk for any company is the ability to have the necessary liquidity, through cash flows. Cash requirements may include seasonal working capital needs (accounts receivable and inventory), capital expenditures related to the home décor line expansion, and maintaining and opening any new Tory Burch boutiques. Cash is also required for any payments to debtors for outstanding accounts payables. Tory Burch has expanded in recent years and continues to open stores so there should be a steady cash flow to fund this new expansion into home décor. Another universal risk is the general economic conditions in the U.S. and other parts of the world where Tory Burch conducts her business. The economies are unstable and low levels of consumer confidence can directly affect consumer spending. Often times, consumers slow down their purchases of discretionary items, which includes fashion apparel and home furnishings accessories. The success of Tory Burch depends on the company’s ability to anticipate and respond to constantly changing customer demands. With the market today filled with so many choices and options for consumers, it’s important for brands to take into account their customers’ wants and needs when designing and marketing products. Especially with the introduction of the home décor line, Tory Burch must listen to their customers’ responses and change their strategy accordingly. Product Liability Any products that use any kind of textiles or fabrics have the risk of being flammable. Different fibers are more or less likely to catch on fire. The chart below explains how fibers react differently to flames.

The U.S. Consumer Product Safety Commission created the Flammable Fabrics Act in1953. This act regulates the manufacturing of highly flammable clothing (Flammable Fabrics Act). In 1967, Congress amended the act to also cover interior furnishings as well as other materials such as paper, plastic, and foam used in wearing apparel and furnishings apparel

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(Flammable Fabrics Act). Tory Burch already deals with flammable regulations in regards to fibers and fabrics so the laws will also apply to her new home décor line. In order to follow these regulations, companies like Alessandra Yarns provide yarn to make fabrics flame resistant. Alessandra yarns import flame-resistant protection through barriers, sleeves, or covers for mattress types. Alessandra yarn can also be incorporated in yarn/fabric for home furnishings like Tory Burch pillows. Alessandra yarn is a patented design with propriety rights to the combination of the yarns and fibers.

Proprietary Rights Tory Burch, LLC is a trademark company, which means that her company is registered with the United States Patent and Trademark Office. This trademark identifies and distinguishes her company name and only allows her to use it. Recently, Tory Burch has been involved in a trademark infringement case. In 2010, U.S. District Court awarded Tory Burch $164 million in anti-counterfeiting litigation (McKeon). China-based counterfeiters used the company name and offered counterfeited Tory Burch branded shoes. Even though copyright laws don’t protect actual Tory Burch designs, stating that the product is sourced from Tory Burch violates the company’s trademark rights. The court ruled that the use of the Tory Burch name was trademark infringement. Any new collections that Tory Burch creates will also be protected underneath her present trademark. Governmental Regulations The Consumer Product Safety Improvement Act of 2008 imposes new testing and documentation requirements and sets new acceptable levels of several substances. These new requirements apply to manufacturers of apparel, shoes, personal care products, accessories and jewelry, home furnishings, beddings, toys, electronics and video games, books, school supplies, and other educational materials. The law specifies “small parts” as needing additional testing and this would affect Tory Burch’s picture frames. Even though this new law is really targeted to products for children, Tory Burch should still consider the regulations because children may come into contact with her products. As stated above, the Flammable Fabrics Act will also affect not only Tory Burch’s clothing line but also the décor line. Each state and country has different laws for import regulations and fabric requirements. Because Tory Burch is already established in many states inside the U.S. and many international

This is an example of the burn test done on a mattress cover with Alessandra yarn. The mattress cover burns in a concentrated area and then puts itself out.

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countries, the company is already aware of different government regulations. As Tory Burch continues to expand globally, they will have to conform to new regulations. Production & Supply Chain Because Tory Burch is already involved in the supply chain for fabric textiles, she can continue with these relationships for her new home décor line. She also already sources leather for her shoes and handbags. Tory Burch is a private company so no information is available on her supply chain or manufacturing agreements. Assuming she has overseas contracts to produce all her products, she can continue with these contracts for her pillows. However, Tory Burch will have to create new supply and manufacturing agreements for the picture frames and coffee table books. Sourcing for picture frames will require the materials for the actual frame, such as plastic or metals. They will also have to be produced in a much different way than the clothing Tory Burch currently produces. The company has recently introduced key chains and umbrellas so these relationships may be transferrable for the production of picture frames. The design and creative process will be housed in the same headquarters location as all the current Tory Burch lines. The new collection will be managed along with current Tory Burch products in New York City. At the launch of the new home décor line, the items will be sold in select Tory Burch boutiques and on her website. More information on the retail development strategy can be found on page 14.

Creation & design in Tory Burch headquarters

Manufacture with contract

manufacturers ("full package")

Distribution Retail in Tory Burch boutiques

Exact supply chain and production information is not available for Tory Burch, but assuming she has a contract manufacturer, the chart above will be the production steps for the new home décor line.

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Environmental Factors The new collection will have similar environmental factors to take into consideration as the current Tory Burch products. The pillows will source the textile materials from the same suppliers as clothing. Tory Burch already uses leather in some of her clothing and her shoes so she’s already considering animal rights and leather sourcing. Because the company is already familiar with leather sourcing and animal rights, it’s not something new they need to take into account.

Industry Profile One section of the home furnishings industry is household textiles, which includes products like carpets, rugs, bedding products, kitchen linen, bathroom furnishings, window treatments, upholstery fabrics, and more. The market for home textiles is directly proportionate to the number of houses. The countries with the largest number of houses are China, India, and the U.S., respectively (Home Furnishings Industry Overview). On average, the U.S. and European Union import about $30 billion worth of home textiles a year (Home Furnishings Industry Overview). The home textile industry is expected to grow from $8.6 billion to $23 billion in the next couple of years (Home Furnishings Industry Overview). The majority of home textiles are produced in Asia, due to lower prices and high volume production possibilities (Home Furnishings Industry Overview). In the last couple of years, soft furnishings have grown to include a wide range of fiber combinations, fabrics, designs, textures, and colors. For example, performance apparel technology is now being used in home textile products like bed sheets. Sheets are now being made with moisture management technology or insulation material that’s traditionally used for outdoor performance wear (Home Furnishings Industry Overview). Cotton is still the dominant fabric but it’s now being combined with other fabrics, like polyester, to make it more durable. There isn’t a strong or weak season for home furnishings but it has been influenced by the recent economic recession. The worldwide housing bust greatly influenced the industry. People were struggling to keep their homes and downsizing into smaller homes or rented apartments; therefore, they were not shopping for new home furnishings and accessories. With the economy slowly getting better, the industry has experienced recent increases in profits. This will always be a risk for this industry because it directly depends on the success of the economy. Competition Competition for the new Tory Burch line is a combination of Pottery Barn and Kate Spade. Because not many designers have ventured into the home furnishings market, it’s tough to pick just one true competitor for the new Tory Burch line. For example, Diane von Furstenberg

The Market

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offers select tabletop and bedding items but the selection is pretty small. Kate Spade offers more items and has incorporated this line into her retail and marketing strategies. The Kate Spade design aesthetic is more similar to Tory Burch but Kate Spade doesn’t offer similar products to the new Tory home décor line. Kate Spade only offers fine china, casual dinnerware, and sterling silver picture frames. She currently doesn’t offer any textile home goods. Kate Spade’s retail approach in regards to her home décor items is similar to how Tory Burch will incorporate the new line. Kate Spade offers her items in-store in a small section as well as online. Kate Spade started out as an accessory and clothing store before venturing into the home furnishings industry, also similar to Tory Burch. The infrastructure of the Kate Spade brand and retail strategy is how Tory Burch should model the introduction of her new line.

As shown in the pictures above, the Kate Spade home décor line has the same playful colors and prints as the rest of the Kate Spade clothing and accessories. There are a lot of polka dot, cute sketches, and illustrations in Kate Spade’s home décor items.

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However, Pottery Barn does offer pillows, frames, and coffee table books. The Pottery Barn items are more classic American and don’t have the same look as the Tory Burch brand. Pottery Barn is only a home furnishings store and is a much larger company than Tory Burch. Williams-Sonoma, Inc. owns Pottery Barn along with several other home goods stores so Pottery Barn has numerous resources for expansion and growth that Tory Burch doesn’t have. There are over 200 Pottery Barn stores in the U.S. and 11 internationally. Their company is on a much larger scale than both Tory Burch and Kate Spade.

Pottery Barn’s aesthetic is much more classic American with traditional furniture pieces and accessories. Pottery Barn items are more functional than fashionable, which differentiates Tory Burch from Pottery Barn.

Most of Pottery Barn’s frames are made of wood and have a matted background. Some of the pillows offered by Pottery Barn have trendy fabrics but are still in muted color tones. The majority of pillows are either solid colors or classic prints like stripes or floral designs.

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SWOT Analysis

Competitive Advantage Currently, there isn’t one leading, strong company in the home accessories industry that’s in direct competition to Tory Burch. Ralph Lauren is an industry leader but is not a competitor for Tory Burch’s new collection. The large gap in the market for eclectic, colorful American accessories is a great opportunity for Tory Burch. Because Tory has such a strong brand identity and loyal customer base, she will transfer these advantages to this new industry. She also has a strong media presence because of her social standing in New York City. All of her movements and business dealings are covered in the media so her personal life as well as business ventures are well publicized. Customer Profile

Strengths

• Loyal customer base • Strong brand identity &

image • Past success &

recognition • Strong media platform

for collection launch

Opportunities

• Brand expansion & profit growth

• Introduction to new market with new customers

• Young brand with chance to branch out

Weaknesses

• No past experience in home goods

Threats

• Competitors who are already established within the industry

• Economic recession

Tory Burch has a blog on her website that covers fashion trends, Tory’s personal life, city guides, inspirations for new collections, and more. This is a great platform for Tory to personally interact with her customers. Tory Burch also has a Twitter and Facebook account.

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The Pottery Barn target market includes mainly Caucasian, middle-aged women between the ages of 35 and 49 who most likely live in suburban areas. These women have settled down, gotten married, and started to have children. In order to afford relatively expensive home décor items, the Pottery Barn customers are middle- to upper-income families with $80,000+ incomes. The women are stay-at-home moms while the husbands work and are the only source of income. Because of their high incomes, they are well educated and have completed a college education. The Pottery Barn customers enjoy “nesting,” spending time with their families, and entertaining others in their homes. They are willing to spend money on their home because they spend a majority of their time there and want it to reflect their family values.

The Kate Spade customers are a little bit younger and range in age from 18 to 45 years old and are mostly women. Unlike Pottery Barn, the majority of Kate Spade customers do not have children but some are married. The young customers typically live in urban areas with jobs making middle to high incomes. The Kate Spade customer values luxury and is interested in the fashion industry and changing trends. Kate Spade products are colorful and playful so the customer isn’t as traditional as the Pottery Barn customer. Kate Spade customers are willing to spend more money on accessories and home goods because they value their self-image and want to look and feel good. Customer Benefits Customers who are searching for fun, colorful, designer home items don’t have a “go-to” company right now in the furnishings industry. Ralph Lauren is a leading name in the industry but has a different target market and different design aesthetic. Brands like Kate Spade and Diane von Furstenberg offer some items but don’t have the reach that Tory Burch has. Tory Burch will be able to fill this market gap and expand her lifestyle brand image. Tory Burch began her company because of her social status in New York City. Her brand extends her personal aesthetic and lifestyle so others can feel like they’re a part of this life. Tory Burch home will be no different. Customers who purchase Tory Burch home items will be able to feel a connection to the brand and to the personal life of Tory Burch.

These Pottery Barn dining and living rooms show the brand’s classic aesthetic. Pottery Barn’s target customers enjoy decorating their homes and entertaining guests in their homes.

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Target Customer Profile The target customer profile for Tory Burch home goods includes the same target market as the current company. The younger customers who can’t afford a lot of Tory Burch clothing will be able to afford a pillow, picture frame, or coffee table book. This way, Tory can expand to customers who have a lower income level but still want to own a piece of a designer label brand. The older Tory Burch customer who has a disposable income will also transfer over to this new line. The baby boomers may have multiple homes that are already decorated but they can incorporate a few throw pillows, picture frames, or coffee table books into their homes. On top of the current market, Tory Burch will also expand into a new market of women who don’t necessarily follow fashion trends but are interested in decorating their home. These customers may not shop for Tory Burch clothing but will enjoy her design aesthetic and want to purchase her home goods. The new home goods will become good gifts to give to family or friends. Clothing can be hard to buy for others because of the vast differences in women’s sizing. With the new home goods line, sizing won’t be a problem. If you know that your friend is a fan of Tory Burch, you know that she would enjoy one of the company’s new products. This way, you don’t need to worry about getting the correct size. The products would be great presents for young women getting their first jobs and moving into their first apartment or home. Market Development Plan To launch the collection, the home goods will be offered in Tory Burch boutique stores in large domestic market locations. The flagship store in New York City on Madison Avenue and the stores in Los Angeles, Atlanta, and Chicago will carry the new products from the time of the launch. The markets could serve as test markets before expanding into the other boutique stores across the U.S. and to wholesale locations. As the new collection grows in popularity, it would move into the other locations domestically and internationally. The products will always be available on the Tory Burch website.

This is the newly opened flagship store in New York City. It’s located in a townhouse on Madison Avenue. The store is decorated to look like an apartment, not a retail store. This is one of the first stores that would have the new home goods collection.

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Marketing Objectives The marketing objective for the new home décor line is split into two sections depending on the customers. The current customers are already familiar with the Tory Burch brand, the design aesthetic, and price points. The following are market objectives for current customers.

• Inform current customers of the new line a month before the introduction in order to build buzz and excitement about the new line.

• Invite 30% of the VIP customers to a launch party at the large market boutiques who will be carrying the new items.

The marketing objectives for new customers will be different because they aren’t already familiar with the Tory Burch brand. The following are marketing objectives for new customers.

• Increase product awareness among new customers by 50% within one year of new line introduction.

• After new customers make purchases, include 60% of them in the email blasts and other communications from the company.

Marketing Target Profile In order for Tory Burch to market to their target market, they must place their products in media outlets the customers visit, read, or watch. The current Tory Burch customer most likely reads fashion magazines like Lucky, InStyle, Elle, Glamour, and Vogue. Tory Burch already gets publicity in these magazines so the company should continue in these magazines by placing their new products. The spreads can include the whole Tory Burch lifestyle brand and how to incorporate Tory Burch products into every part of your life. The new customers they will attract with their home décor items that aren’t necessarily as interested in fashion don’t always read these fashion magazines. Therefore, Tory Burch should consider home decorating magazines with national distribution channels like House Beautiful, Town & Country, and Elle Décor. They should build relationships with these magazines similar to the relationships they already have with fashion magazines.

Marketing Plan

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Market Penetration Product Development & Merchandising Plan As mentioned above, products offered in the initial line will include decorative pillows, picture frames, and coffee table books. Depending on how well this new collection is received, the brand could expand further and introduce kitchenware items and bedding and bath textiles. Kitchen items would include dinnerware pieces like plates and bowls as well as glassware like drink glasses and coffee mugs. Tory Burch’s prints would translate really well into bedspreads, window coverings, and shower curtains. The new line will be placed in Tory Burch boutiques. Tory Burch stores always have large white couches for customers to sit on while trying on shoes or waiting to check out. This would be a great way to incorporate the pillows by simply placing them on couches that are already present in the stores. Depending on the store, some couches have white pillows and some have printed pillows like the picture below. There are also display tables around the store where the books and picture frames could be placed. Because there are already display locations for the new line, a big shift in retail strategy is not necessary. The Tory Burch website could easily add a section for the selling of new home décor items.

Pricing Strategy The new product line will reflect Tory Burch’s standing as an accessible luxury fashion brand. The decorative pillows will range from $125 to $225. The use of embellishments and trims will determine how high the price will go but the price shouldn’t exceed $225. Picture frames will be priced between $50 and $115, also dependent on the materials and embellishments. Coffee table books should begin at $50 and not go above $100. The larger books with images of Tory Burch stores and Tory’s personal life will be more expensive due to the number of pages. The coffee table books are priced modestly so customers who like the brand but can’t afford her clothing can buy a book and feel some kind of connection with the brand. If these consumers get a promotion or pay raise hopefully they will continue to purchase Tory Burch goods at the more expensive price points.

This shows how Tory Burch could merchandise the new pillows in her store by simply adding them to current displays. The table behind the couch could serve as a display space for the coffee table books and picture frames.

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Distribution Channels As mentioned before, the new products will be offered in select domestic Tory Burch boutiques and online in the beginning. Only large market stores will sell the new line, serving as test markets. The flagship store on Madison Avenue in New York City will be the first store to receive the new line. These stores see the highest customer traffic and produce the highest revenues. The new line will be offered online so all customers will be able to look at the new line and purchase the items, even if they don’t live in these large markets where the products will be in actual brick and mortar stores. Once the line becomes successful, more boutiques will begin to carry the items. Eventually, all Tory Burch boutiques will carry the line, domestically and internationally. Wholesale locations will also begin to carry the line after it proves to be successful in Tory Burch stores. Market Penetration Plan Tory Burch, as a women’s clothing and accessories company, is very well established in the fashion industry but they need to move into the home goods industry. To be successful in this new industry, Tory Burch must carry over their current loyal customer base. Because there isn’t a strong industry leader with the same design aesthetic at Tory Burch, there’s a gap in the market that Tory Burch can take advantage of. Tory Burch can also penetrate the market by gaining competitor’s customers. People who currently buy small home accessories may buy accessories from non-fashion brands because there aren’t many options. By expanding into this industry, Tory Burch can gain competitor’s customers who enjoy fashion and want to decorate their homes with items from the brands they enjoy wearing. Branding & Marketing Strategy Branding Tory Burch has done a great job of branding her company through consistent packaging and labeling. Her classic “T” can be seen on her shoes, clothing, and handbags. One of her most popular items, the Reva ballerina flat, is a simple flat shoe with the T emblem on the toe. All Tory Burch handbags also have these T emblems, sometimes it being the biggest embellishment on the bag. The T emblem also comes in fabric prints for clothing.

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Advertising & Promotion Plan Currently, Tory Burch doesn’t do a lot of national advertising. However, the company gets a lot of publicity through placements and spotlights in magazines. Tory also gets a lot of publicity due to her social standing in New York. This type of advertising is free for the company but still puts the company in the spotlight. The new line would also be placed in magazines- fashion as well as interior decorating magazines. This would be a great way to inform the public about the new products, what’s offered, and the prices. Tory Burch does do a lot of promotion within the company. Tory Burch sends out email blasts and updates to customers who have signed up for their emails. These emails would be a good way to introduce the new line because it will be offered online so customers could go straight to the website to see everything that’s offered and possibly order something. Once these home décor products have been incorporated into the Tory Burch brand, any advertisements and promotional materials can show all Tory Burch products. Customers will clearly be able to see what the company has to offer and how everything is encompassed within the brand image. There are often VIP customers events and “fans and family” events. To introduce the new collection, an event could be held at the stores selling the new items and VIP customers could be invited to get a sneak peek.

Tory Burch already has a great website blog and other social media pages but the company doesn’t have an app for phones or tablets. The app could have a photo library that shows images from current collections available in stores, images from runway shows, and images of celebrities wearing Tory Burch. Any upcoming events (sales, promotions, etc.) at your local Tory Burch boutique could also be featured in the app. There could also be a store locator and a section that features where Tory Burch has been featured in magazines and media outlets in the last couple of months. The app could be a good way to incorporate the new home décor items and inform more customers about your brand. A true e-commerce app isn’t necessary but having the ability to purchase Tory Burch items no matter where the customer is located would be a great addition.

These two invitations show how Tory Burch incorporates her prints in non-fashion items. She could follow this same template and invite VIP customers to the unveiling of the new home décor line.

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Measurement & Evaluation The number one way to measure the success of this new line is by looking at the profits. Because this is a brand new product line, it may take a couple of years to turn a profit. Another numerical measure is return on investment. Tory Burch may decide to pay to advertise or place their new products in magazines. In order to determine if this marketing avenue is profitable, they must look at how much it cost to advertise and then how much profit they earned. Did they make money or not? Was the marketing tactic successful and worth the investment? Another way to evaluate is to measure awareness about the new product. Have the magazine placements and promotions been successful? Because Tory Burch is already an internationally known brand and the brand awareness is already high, it may be hard to separate the new line from current products and accurately measure. Marketing Calendar Tory Burch currently follows the traditional marketing calendar for fashion and introduces collections in the fall and winter as well as resort and holiday collections. Tory Burch should produce new home décor items twice a year- the spring and holiday seasons. Because she utilizes so many prints and colors, the spring would be the best time to introduce the textile products. Tory Burch can use similar or the same fabrics for the pillows and picture frames that are used in her spring clothing collection. Spring collection would also be in stores in time for graduation gifts. A special holiday collection should also be produced so new products would be available for gift giving. If the line becomes successful, Tory Burch could produce the home décor items with every new clothing collection. Three Years Sales Estimate Because Tory Burch is a private company, there are no current sales figures to base a sales estimate for the new product line off of. In order to have some sort of comparison, Kate Spade financial information will be used. Liz Claiborne, Inc. owns Kate Spade so only limited information is available specifically on Kate Spade. According to the 2010 Annual Report, Kate Spade had net sales of $184.3 million, a 30.5 percent increase compared to 2009 (Liz Claiborne, Inc. 2010 Annual Report). This growth was due to increases in e-commerce, specialty retail, wholesale non-apparel and outlet operations (Liz Claiborne, Inc. 2010 Annual Report). Wholesale non-apparel most likely means the handbags and small accessories that are available in wholesale locations like Nordstrom and other department stores. The chart below shows an estimated breakdown in sale percentages, based on the merchandising category. Clothing was the most popular item sold at 45 percent, but shoes were close behind at 30 percent. However, handbags and small accessories accounted for 15 and 10 percent, respectively.

Financial Plan

23

In order to give Tory Burch time to produce, market, and insert the new items into the store, the new merchandising mix for 2013 through 2015 will have the following percentages. As you can see the home décor line will only account for 5 percent of sales in 2013 but grow up to 11 percent in 2015. Because 2013 is the first full year it’s available online and in stores, it will not produce a large amount of sales. It takes some time for customers to become aware of the product and begin buying the items.

45%

30%

15%

10%

2010 Sales

Clothing

Shoes

Handbags

Small Accessories

45%

30%

10%

10% 5%

2013 Sales

Clothing

Shoes

Handbags

Small Accessories Home Décor

40%

35%

10%

9% 6%

2014 Sales

Clothing

Shoes

Handbags

Small Accessories Home Décor

40%

32%

9%

8% 11%

2015 Sales

Clothing

Shoes

Handbags

Small Accessories Home Décor

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Tory Burch’s 41 stores, Kate Spade’s 44 stores, and both brand’s multiple wholesale locations make their company sizes pretty comparable. Since Liz Claiborne’s annual report states that Kate Spade’s net income for 2010 was $184.3 million, an estimate net income for Tory Burch in 2010 is $198 million. Overall, Tory Burch is a more widely recognized and respected brand, which is why they have an estimated higher net income. By the end of fiscal year 2015, Tory Burch’s net income will have increased to $337 million due in part to the introduction of the new line and the growing economy. For years 2010 through 2012, the company experienced a 10 percent growth. After the initial introduction of the new line, a 12 percent growth was seen for two years. In 2015, there was a 14 percent growth when compared to the net income of 2014. These growths are partly due to the introduction of the home décor line as well as further expansion of the current company into new international and domestic markets. Another reason for the growth is that consumers are gaining confidence again and are no longer afraid to splurge on designer brands.

The following table shows the projected timeline for how the new line will be distributed within the next three years in the retail stores, wholesale locations, and online.

Year 1 Year 2 Year 3

Stores ✓ Large market stores like NYC

✓ Expanding into more Tory Burch stores

✓ All Tory Burch boutiques

Wholesale ✓ Sell to wholesale locations who carry Tory Burch clothing

✓ Expand to other wholesale locations such as ABC Carpet and other home furnishings stores

Online ✓ ✓ ✓

$150

$200

$250

$300

$350

2010 2011 2012 2013 2014 2015

Tory Burch Estimated Net Income Growth

Net Income (in millions)

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Cost of Products & Gross Margin Pottery Barn states their costs of goods sold at $2.13 billion for fiscal year 2010, 60.8% of their net revenues. Because they are such a large company with a much larger presence, all their financial information is much greater than Tory Burch’s. However, their products are similar so the costs of production will most likely be similar. Tory Burch can expect the cost of products to be about 45% to 55% of the company’s revenues. Because of rising labor and transportation costs, the percentage may increase. It will be important for Tory Burch to always look for less expensive ways to produce the products so not as much revenue will go into the costs of goods sold. Risk Analysis One of the biggest risks for any business involved in the home furnishings industry is the housing economy. There’s nothing Tory Burch can do to lessen this risk. However, because the company is only offering smaller items at reasonable prices, they will not be as affected as expensive furniture companies. Customers will continue to buy small accessories even if the economy is bad and they can’t afford to buy new furniture sets. Another risk is the possibility of line failure. There’s no guarantee that the home décor line will be successful even if Tory Burch’s current company is successful. This is a completely different industry with different customers and industry leaders. Tory Burch may be underestimating the competitors and there may not be such an opportunity gap for designers like Tory Burch in the industry. If this happens, the company will have to adjust their pricing and marketing strategy in order to compete with other companies or completely discontinue the line. Future Markets As the Tory Burch home décor line becomes successful, more stores will carry the products. After only being offered in large markets, like New York City, Los Angeles, and Atlanta, all Tory Burch stores would carry the items at the end of the third year. The items would also be sold in current and new wholesale locations after three years. These new wholesale locations would include home furnishings stores like ABC Carpet in New York City. After completely expanding within the U.S., Tory Burch should expand into the Tory Burch boutiques and wholesale locations internationally. The home décor line would also expand into kitchenware and home and bedding textiles. The colorful Tory Burch prints would easily transfer to bedspreads, shower curtains, kitchenware, and other items. However, any future expansions will depend on the success of this first line. Long Term Strategy After three years, the Tory Burch home décor items should be available in all Tory Burch boutiques in the U.S. and many domestic wholesale locations. If the line continues to be successful after three years and through the expansion in the U.S., Tory Burch should consider expanding internationally. Currently there are 13 international stores with flagship stores in London, Seoul, and Hong Kong. The flagship stores should be the first to receive the home line to serve as test markets, similar to the test markets used in the U.S. at the launch of the line. Depending on how these markets react, other international Tory Burch boutiques could begin to carry the items. Despite the possibilities of future successes for the Tory Burch home line, I don’t see a separate Tory Burch home store opening. Because her brand is an incorporated lifestyle brand, it’s smarter to always have all her products in one store together. To successfully merchandise all the items, future stores may have to have more square footage. Tory Burch strives to model her retail stores more like apartments than actual shopping spaces so this will fit into her retail

Plan for Further Action

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strategy. Because these new items can be seamlessly placed in existing stores, remodeling of current stores is not necessary. However, when opening new stores, the company may want to consider larger spaces in order to maximize merchandising potential for all of the brand’s items. The expansion to small home accessories seems like a logical choice for Tory Burch, LLC because of their company emphasis of being a complete lifestyle brand. The company has experienced early successes and now would be the perfect time to further expand their brand portfolio. With the first line of home décor accessories including decorative pillows, picture frames, and coffee table books, a wide range of customers would be attracted to the items. The pieces could be added to previously decorated rooms or could be part of a new room design scheme. Depending on the success of this first line, Tory Burch could further expand into more home accessories like bedding textiles and kitchenware products. The Tory Burch eclectic and colorful design aesthetic and the company’s image as an attainable, luxury lifestyle brand opens them to multiple avenues to explore. Home décor is just one of the future possibilities for Tory Burch.

Conclusion

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About Tory Burch. Tory Burch. http://www.toryburch.com/about-us/about-us-

main,default,pg.html Alessandra Yarns: Bedding. Alessandra Yarns.

http://www.alessandrayarns.com/applications.html Flammable Fabrics Act. U.S. Consumer Product Safety Commission.

http://www.cpsc.gov/businfo/ffa.html Home Furnishings Industry Overview. Textile Exchange. http://www.teonline.com/home-

furnishings/industry-overview.html Liz Claiborne, Inc. 2010 Annual Report. Liz Claiborne. http://phx.corporate-

ir.net/External.File?item=UGFyZW50SUQ9NDIwMjYzfENoaWxkSUQ9NDMzODk4fFR5cGU9MQ==&t=1

McKeon, Owen District Court Awards Tory Burch $164 Million in Anti-Counterfeiting

Litigation. Gibbons IP Law Alert, 13 June 2011. http://www.iplawalert.com/2011/06/articles/ecommerce/district-court-awards-tory-burch-164-million-in-anticounterfeiting-litigation/

Tory Burch Foundation. Tory Burch. http://www.toryburchfoundation.org/ Tory Burch, LLC. Bloomberg Businessweek, Oct. 2011.

http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=22253255

Tory Burch Transcript. CNBC, 29 Feb. 2008. http://www.cnbc.com/id/26076277/

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