Victoria's Secret

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<p>VICTORIAs SECRET TO SUCCESS</p> <p>MANAGEMENT OF CHANGE | GROUP 2</p> <p>2012</p> <p>Candice Swanepoel Victorias Secret Angel Victorias Secret Fashion Show 2011</p> <p>Victorias Secret is an American retailer of lingerie, womens wear and beauty products. It is the largest subsidiary of Limited Brands with sales over 6 Billion USD. The brand has been very creative in keeping itself relevant to customers and redefining the category as such.</p> <p>AAQUIB AL HOSSAIN ABHISHEK BHATIA AJITABH CHAUDHURI ANIKET PATKI</p> <p>August 22, 2012</p> <p>VICTORIAS SECRET TO SUCCESSVictorias Secret Angels, who are usually among the top supermodels in the world and they have helped Victorias Secret earn a tremendous following from the American teenage girls and young women. Victorias Secret Facebook page has over 20 million users and its website has a very high Alexa ranking (one of the highest visited corporate sites.)</p> <p>WHYVICTORIAs SECRET?Its amazing what they can do with a pair of bra and panties:Doutzen Kroes (Supermodel and Victorias Secret Angel)On November 9, 2011 in New York City, the annual Victorias Secret Fashion Show was telecasted across America over the prime time channel CBS. The show, unofficially termed as the largest fashion event in the world was seen by over 10.3 million people. To understand the value of the number, one should know that the average number of viewers for one of the highest rated sitcoms aired over CBS, How I Met Your Mother, garners only around 6-7 million viewers in the prime time slot. Established only in 1977, Victorias Secret has blossomed over the last 3 decades to become the fastest growing subsidiary and largest contributor to its parent company Limited Brands with a revenue over 6 billion USD. Victorias Secret was initially a brand established for womens lingerie. With some innovative marketing, distribution and supply chain strategies, the company has currently the largest share in the lingerie market in US. The company has over 1000 stores across different parts of US. It is also renowned for its popular brand ambassadors famously termed as theMANAGEMENT OF CHANGE GROUP 2 REPORT</p> <p>Although enjoying a great status now, when Victorias Secret entered, the market was cluttered, and womens lingerie was just considered as an aide for comfort (or as Victorias Secret would term: Boring). To have grown in an industry which was not openly discussed, Victorias Secret has performed exceptionally well to change the way the category is perceived and also employ a strategy which differentiates itself significantly to keep it as the market leader.</p> <p>Page 2</p> <p>August 22, 2012</p> <p>VICTORIAS SECRET TO SUCCESS UNDER LIMITED BRANDSLeslie Wexner carried forward the Victorias Secret idea and invested money in the concept to create a power brand. More stores were built on similar lines with Victorian era design and wooden paneled walls to make the dcor inviting for men. Wexner also strongly believed in the catalog business of Victorias Secret. Wexner thus hired CYNTHIA FEDUS and made her the chief executive officer of the Victorias Secret Catalog operation. This was the genesis of the two separate divisions: The Catalog (Present Day Victorias Secret Direct) and The Stores (Present Day Victorias Secret Stores).</p> <p>BREAKINGTHE CLUTTERORIGIN OF A MULTI BILLION DOLLAR IDEAThe story of Victorias Secrets origin is an interesting one. Roy Raymond, a Stanford graduate found it highly embarrassing to shop for lingerie for his wife in austere surroundings. Raymond thus founded Victorias Secret in 1977 with the vision of creating an appealing shop with a welcoming stylish dcor inspired by the Victorian era. The shops design was meant to make men comfortable while shopping for lingerie with or in absence of their better half. The lingerie was also offered in a variety of designs and styles to provide choice to women while shopping and boost sales. Raymond also popularly introduced a mail order catalog in the following year to sell the lingerie under the Victorias Secret brand. The response to Raymonds idea had been positive and Victorias Secret had earned $500,000 in its first year of operations. It had 5 stores under its name and its 42 page mail order catalog was earning 6 million USD per year by 1982. It was at this time that Raymond sold the company for 4 million USD to Leslie Wexner, CEO of Limited Brands (Hoovers)</p> <p>CYNTHIA FEDUS VISION FOR VICTORIAS SECRET CATALOGCynthia Fedus as the chief executive of Catalog Division pushed for Customer education and brand identity building. Popularity of the brand amongst men was high as Victorias Secret provided them a welcoming environment to buy and also educated them about lingerie and how to make a choice. Thus Fedus believed in importance of customer education and built a telephone operating team to cater primarily to embarrassed men who were attempting to purchase lingerie as gift items for their wife/ girlfriends. The catalogue telephone operators were trained to be patient and helpful to the male customers who formed a sizeable portion of the customers calling for help. However, this concept had not taken off with women although being a hit amongst men To develop the brand following amongst women, focus was shifted to building Brand identity, Fedus changed the focus in the catalog from steamy shots of men and women to that of women posing alone in romantic and seductive, yet socially acceptable settings. The change led to doubling of catalog sales within a year to a value exceeding a million USD.Page 3</p> <p>MANAGEMENT OF CHANGE GROUP 2 REPORT</p> <p>August 22, 2012</p> <p>VICTORIAS SECRET TO SUCCESSVictorias Secret. Nichols also appointed a person from Marks and Spencer for quality management.. The person was responsible for assuring quality work by suppliers as per the contractual agreements. Having obtained the right vendors, Nichols next step after laying the building blocks for private label creation was to create the image of Victorias Secret lingerie as an extension to wardrobe. Having developed the supplier database, Nichols pushed for increase in Stores and communicating the message. Nichols went on an average of creating 50 stores every year. Nichols achievements during her stint as an EVP took Victorias Secret in the top 10 apparel brands in the US.</p> <p>Hence Fedus move to focus on women and increase revenues had paid off. In fact the same theme has carried onto present day catalogs.</p> <p>GRACE NICHOLS: THE SAVIOURIn the nineties, the Company had begun to face issues with quality. Victorias Secret was a premium lingerie brand and quality was one feature that could not be compromised upon. In the beginning stages, Victorias Secret had mostly made use of designs which were knockoffs from other popular brands. Later on, Victorias Secret sourced designs from various vendors. The marketing strategy had worked effectively to establish a premium image, however the quality did not back up the message Grace Nichols was the executive Vice President of Victorias Secret Stores and held the position from 1986 to 1992. When complaints regarding quality of the lingerie upon washing came under question, Mrs.Nichols known for her outgoing nature, took the problem head on. She identified two reasons for the lack of quality. The first being poor vendor choice and the second being lack of quality testing. These functionalities were weak in Victorias Secret as the two primary divisions were catalog and Stores whose prime responsibility and core competency was selling designs. Victorias Secret before Nichols had a 5 member team in the Stores division who were responsible for obtaining merchandise. To ensure quality, Nichols developed relations with reliable vendors such as Vanity Fair and Hanes. She convinced these major suppliers to remove their tags and name them as Victorias Secret by assuring them considerable sales, which although the suppliers were reluctant about, they were convinced later with the results. Nichols hence started the system of truly developing the quality private label ofMANAGEMENT OF CHANGE GROUP 2 REPORT</p> <p>Page 4</p> <p>August 22, 2012</p> <p>VICTORIAS SECRET TO SUCCESScommunication and customer service and generate lesser confusion. The division has become an essential part of the Direct Division and has a budget of over 10 million dollars annually with a size exceeding 40 members. The website has accomplished what it was established for and has grown to become a great interaction medium between the company and its customers. The e-commerce of Victorias Secret has been profitable too. Ken Weil attributes the success to his following moves Developing an in-house content</p> <p>PIONEERSOF THE INDUSTRYVictorias Secret could not have become a 6 billion dollar brand just by having a clutter breaking concept. The company is known for its extensive innovative marketing and one of the best adopters of e-commerce in the industry. The key to Victorias Secret Success has been its adaptability and ability to set trend and make them traditions.</p> <p>VICTORASSECRET.COMTHE ONLINE PIONEERSVictorias Secret entered the online medium through www.victoriassecret.com in 1998. The web group was headed by KEN WEIL, a veteran from an Internet professional services firm (Proxicom). The website was launched with two goals Strengthen and support the Victorias </p> <p>Secret brand Increase Sales goals.</p> <p>Amazon.com was established in 1995 and Victorias Secret made its first online sale worth 39 dollars only three years later. The new web group was here to stay and it was directly incorporated into Victorias Secret Direct instead of being made into a different division. The company felt that this would ensure betterMANAGEMENT OF CHANGE GROUP 2 REPORT</p> <p>management and database management capability called WENDI. The in-house system helped Victorias Secret in easier customization of its look and also enabling changes on a very short notice, thereby keeping the website interesting and dynamic. Ken was able to utilize the call centre support of Catalog division (now the Direct Sales Division) and he successfully digitized the catalog. He enabled live streaming of Victorias Secret fashion events in the mid-nineties, and the experience at that time was phenomenal for the customers. Victorias Secret parties and events had gained a great reputation, and since the customers werent able to gain access to the same, the online viewing made the site very popular. Development of the website also helped in a demographic and historic analysis of buyers. Customized e-mails were sent to cater to the customers as per their likes. The same could not have been imagined with mail catalogs.</p> <p>The success of the online medium was truly phenomenal with sales increasing from near zeroPage 5</p> <p>August 22, 2012</p> <p>VICTORIAS SECRET TO SUCCESS</p> <p>in 1998 to over 200 million USD in 2001. Infact, Victorias Secret in 2000 beat Amazon and Paypal to win many e-retailing awards. The web presence has also taken Victorias Secret directly to the customers. The importance of the medium for Victorias Secret can be gauged from Appendix F. Although webcasts are common now, its impact in 1998 is tough to gauge but was a remarkable feat which helped make the brand more popular</p> <p>Develop the RFM (Recency, Frequency and Monetary Value System totrack customer behavior so as to mail catalogs accordingly in proportional volumes to more profitable buyers as mail catalogs costed more than web catalogs.</p> <p>THE VICTORIAS SECRET FASHION SHOWED RAZEK: THE MAN BEHIND THE ANGELSWith the increasing contribution of Victorias Secret to Limited Brands revenue, it was deemed necessary to develop the brand with a unified marketing effort across the distribution channels. Hence in 1993, the marketing efforts of Victorias Secret were brought under the Chief marketing Officer of Limited Brands, Edward Razek (popularly called Ed Razek). Before this, the Direct Sales and Stores Division took their own marketing initiatives and this sometimes confused the customer as they were not always aligned. Ed Razek introduced two of the most innovative and unique features of Victorias Secret; they were the Angels and the Annual Fashion Show. Ed Razek is also popular for the eye-catching and creative Victorias Secret Commercials aired on TV. In 1995, Ed Razek organized the first Victorias Secret Fashion Show. The show was organized on a budget of 120,000 dollars and was in Razeks opinion, more of a learning experience as they had no idea of the future of the concept. However the show was termed by media as the lingerie event of the century and thus, a potential brand building tool was discovered. The show was since, held annually except in 2004.</p> <p>PACIFYING CATALOG AND WEBThe web medium inspite of being a success was under the Direct Sales division whose Catalog Sales department had a proud legacy and had basically spearheaded its revenue up until now. Hence merging the two channels did bring up issues regarding resource allocation and appraisal calculations. The web was also blamed for cannibalization of sales from the other channels. Irrespective of a definite cost advantage over mail catalogs, the web still drew some flak as its returns and necessity of existence as additional brand builder tool was questioned. SHAREN TURNEY, the current CEO of Victorias Secret Megabrand was named Chief Executive Officer and President of Victorias Secret Direct, in May 2000. In midst of the problems mentioned, her thoughts were clear about the necessity of the catalog and e-commerce arms to exist together. With extensive experience in retail, her major actions to reduce the tension were Align incentives for the management with</p> <p>perks and bonus dependent upon divisional performance rather than channel performance Not calculating Channel profitability but releasing Divisional sales and profitability to enhance collective responsibility.</p> <p>MANAGEMENT OF CHANGE GROUP 2 REPORT</p> <p>Page 6</p> <p>August 22, 2012</p> <p>VICTORIAS SECRET TO SUCCESS</p> <p>In 1999, the show was also featured through a live webcast which received viewership of almost 2 million. In 2000, the show was aired over television for the first time in the ABC network. Since 2001, the fashion show has aired on the prime time slot of CBS network. With the success of the fashion show, Ed Razek introduced the concept of Angels, where some of the top supermodels became the brand ambassadors for Victorias Secret, and famously walked in lingerie during the annual fashion show. The Angels initially introduced for the glamour factor were soon used to enhance the positioning and create role models for the target audience. The Fashion Shows and Angels have in the current day become unanimous with the brand and have resulted in huge popularity for the brand. Ed Razerk infact has a team of 200 people assisting him to manage a marketing budget of 250 million USD, one of the highest in the industry. The fashion shows now hire the best of the designers and have a much higher prod...</p>