Ch. 14 Marketing Channels & Retailing

In my opinion Michael Kors operates via dual distribution. MK has both a direct and retail marketing channel for their handbags. With the direct channel MK handbags go from their specialty stores directly to the consumers. The retail channel is utilized by partnering with department stores like Macy's, Dillards, Neiman Marcus and Nordstrom to sell their products.  These channels enabled Michael Kors expand their market share and increase revenue. Most recently, MK opened a megastore in Soho. This new location is their largest chain store in the world. It has 3 floors and one of those floors is strictly for handbags. The news about this megastore made headlines in newspapers and online publications. Due to the loyalty and increasing value place upon their products from consumers, this store is definitely considered a destination store.

Ch. 6 Consumer Decision Making

Evolving consumer behavior requires luxury brands and retailers alike to continuously adapt. Michael Kors has done this and is very good at it. MK started out targeting the upper middle class and wealthy and it worked for him. After many years MK realized they could expand their market share if they appealed to a broader audience. This was a brilliant idea, because they had created a product that many would purchase whether the customer was from the working-poor all the way up to the upper middle class and beyond. So they created different collections for different target markets and called themselves a "lifestyle brand".

MK also realized that when a customer is contemplating making a purchase there are individual, social and even cultural aspects to consider. Once you have a clear understanding of this you can market it to your advantage and pretty much convert anyone into a consumer of your product. I was one of those people. If I saved money or was given a gift, Coach was what I said I wanted. Then along came Michael Kors; their prices were competitive, it was new(at least to me anyway) and I liked it. Now whenever I buy a handbag whether it is for myself or someone else it's Michael Kors. Job well done MK!

Ch. 5 Developing a Global Vision

Michael Kors started out as a designer for someone else. He then realized that he could take his gift and make it on his own and with that move he has truly done well for himself. Michael Kors has over 350 stores and counting.  Their first international stores were opened in London and Tokyo in 2002. Since MK has opened stores across the world in France, England, Germany, Italy, Japan, Korea, Bahrain, the United Arab Emirates and China. Initially this expansion was slow moving. They were more focused on building a strong name brand here in North America. However, with the increased exposure via the different marketing campaigns MK has been able to flourish globally. MK is doing better than even they anticipated, as their latest revenue number's showed they have finally topped their fiercest competitor Coach. Being able to do that is quite the victory since Coach is also internationally known and has been around for such a long period of time. Being aware of such a huge feat MK is riding their wave of success into expansion. MK is expected to increase the amount of stores owned and/or licensed to over 700 locations globally. Due to their manufacturing plants being located in China, MK wants to expand their presence there.  In addition to opening more stores in China, they also have their sights set on the Middle East and Australia.  Through hard work and perseverance Michael Kors has become a major player in the handbag/accessories market. The demand for MK is steady and I don't see that declining any time soon.

Ch.4 The Marketing Environment

Michael Kors handbags have been selling like hotcakes. The recently released 2014 3rd Quarter sales numbers show substantial growth. Michael Kors decided to separate his brand into 3 divisions: Michael Kors, Kors and Michael. Michael Kors is the runway collection. Kors is the luxury brand. Their handbags, clutches, wristlets and wallets range from $500 - $6,000. The mainstream collection (Michael) ranges from $200 - $800. They are able to price their products this way because their target markets which are generation x (born between 1965-1978) and y(born between 1979-1994) women whose taste vary from high maintenance and sophisticated to casual yet classy. His handbags appeal to almost all women. I mean who doesn't love a good looking purse?? As I stated in one of my earlier blogs Michael Kors has been expanding, opening stores in Europe and Asia as well as opening more locations within the United States. In addition to opening more stores, MK has stopped manufacturing their bags in Italy. They are now made in China and Korea. Unlike the reports of hazardous conditions in the Apple manufacturing warehouses, I was unable to find anything similar regarding MK (thank GOD). Despite where they are made I still love my MK bags.  If I'm feeling casual to run errands, sexy to go out on the town or classy when going to work there are plenty of options to choose from.
   

Ch. 3 Ethics & CSR (Corporate Social Responsibility)

Michael Kors(handbags) has committed to a culture of honesty, integrity and accountability which outlines the basic principles and policies that every employee is expected to follow.

Michael Kors has shown support to various causes and charities including: The American Foundation of AIDS Research, the Golden Hat Foundation and the New York Restoration Project just to name a few. In 2014, Michael Kors partners with Watch Hunger Stop in serving 5 million meals to children through it's United Nations' World Food Programme. He also serves on the Board of the Council of Fashion Designers of America.

However, the organization that he does the most work with is GOD's Love We Deliver. He has been supporting this company and their objective addressing the global hunger crisis for more than 20 years. In 2012 Michael Kors allowed their employees to volunteer for the New York based non-profit organization during business hours. To show their appreciation GOD's Love We Deliver named July the "Michael Kors month" Michael Kors also donated $5 million dollars to help build and expand their facilities. In connection with the company Michael Kors also has an award ("The Michael Kors Award for Outstanding Community Service") that is given to a nominated individual each year at the GOD's Love We Deliver annual ceremony. He was quoted to have said "I am continually dismayed by the scope and magnitude of the global hunger crisis, but it is not an issue just facing third-world countries. We see it right here in this country and in New York City on a daily basis". I like the fact that the cause they are affiliated with is such a tangible problem. You can literally help by delivering meals or serving in a soup kitchen. You see where your time and energy goes versus just donating money and not really knowing if it's going to where it's supposed to go or not. In addition, his long-term partnership with GLWD(GOD's Love We Deliver) shows he is passionate and committed to helping. What company you know would allow their employees to volunteer during business hours?? That says a lot in my book.

Ch. 2 Strategic Planning & Competitive Advantage

Michael Kors has a unique product (handbags) that is distinguishable from other's in their market. MK has a really strong brand name, loyal customers and their affordable prices accommodates their wide customer base. All of these things also enable MK to charge higher prices they wanted to because they know their consumers place value into their brand. This value is show by the increase in the 52% increase in total net revenue. However, a weakness that MK possesses is a lack of diversification.  MK is doing really well right now, they have surpassed Coach in sales which is a giant in the retail accessories market. How long will this rise last before a new younger company enters the market? To stay relevant Michael joined the reality contest show Project Runway as a judge. This created more exposure for his line and expanded his business to a wider audience. These opportunities allowed MK to open up hundreds of stores on several continents (74 to be exact). He not only opened Michael Kors stores, he partnered with retail chains like Macy's, Nordstrom and Sak's.  With all of the strengths and opportunities also comes it's threats. The accessories or handbag market is very difficult to be in. There are many international competitors that have an advantage over MK that are hard to fight. One major task is the price wars. Customer's tastes change frequently, so if you charge too much they will look for a substitute product. If you charge too little your brad is looked upon as not a luxury item. You want t appeal to both everyday consumers and the luxury consumers. Finding that balance while still trying to be competitive can be very hard to do, but MK seems to have found their niche...and taken it all the way to the bank.

        Another thing that has helped Michael Kors is that he is an awarded designer, he personally lead his design team when creating the products. Having this knowledge gave him competitive advantage over his competitors. Another thing that offered him an advantage was he used celebrities to expand his consumer base. Everyone watches what stars are wearing so what better way to gain exposure than to offer products to celebrities. This strategy worked well because they targeted generation x and y which are men and women born in the early 1960's thru the early 1980's and the 1980's thru the early 2000's respectively. That audience paid attention to actresses and singers and what they wore/carried. In today's market you have to be innovative and be able to adapt to change. Michael Kors is doing that and he is doing it quite well.

Ch.1:Mission Statement & History

Mission Statement: Michael Kors is the leading American fashion designer for luxury accessories and sportswear. The company’s heritage is rooted in producing polished, sleek, sophisticated American sportswear with a jet-set attitude. Whether Aspen, Palm Beach or Capri, our mission is to bring our vision of a jet-set, luxury lifestyle to women and men around the globe. Our products, emblematic of the highest standard of quality, include apparel, accessories and beauty. Our lifestyle-driven company embraces the highest standards of creativity, quality, technology and human resources.

 History:
 1981: The Michael Kors label was born. 1983: Michael Kors is awarded the First American Original Award from Dupont.
 1995: Michael Kors receives Elle/Cadillac Fashion Award for Excellence.
 1996: Michael Kors was named part of the ‘New Establishment’ by Vogue magazine. They even called the creative designer and namesake ‘one of the most influential designers of the decade.
 1997: Michael Kors releases a capsule menswear line, adding a new triumph to the label.
 1999: Michael Kors was given the CFDA Womenswear designer of the Year award.
 2000: The first women’s fragrance Michael Kors, called ‘Michael Kors’ is launched.
 2001: Accessories were added to the Michael Kors empire. And why stop there? This same year, the label also launches their first men’s fragrance. Michael Kors is nominated for the Accessories Designer of the year from the CFDA. 
2002: Michael Kors launches a full-blown men’s collection.
2003: Michael Kors is named the CFDA’s Menswear Designer of the Year.
2004: The Michael Kors comes out with a new line, MICHAEL Michael Kors, and KORS Michael Kors. These lines are launched in 350 stores in the United States and are made up of ready-to-wear, handbags, swimwear, jeans, footwear and other accessories. The company partners with the label Fossil to create and launch the Michael Kors watch line.
2005: The fragrance ‘Island Michael Kors’ is released.
2006: An expansion in the Michael Kors Company begins and they start by opening accessories specialty stores Internationally.
2009: Another Michael Kors fragrance, ‘Very Hollywood Michael Kors’, is launched adds to the roster of highly successful fragrances.
2010: An expansion into Japan began with the launch of K.K. Mr. Kors was given The Geoffrey Beene Lifetime Achievement Award from the CFDA was given to Michael Kors. The Michael Kors fragrance company is also recognized this year with the Fragrance Foundation’s Fifi Hall of Fame Award for Lifetime Achievement.
2011: Michael Kors continues to work with Fossil and will be creating a Michael Kors Jewelry line. The Michael Kors label recently celebrated 3 decades of his namesake line with a lavish party during Paris Fashion Week.