Calvin Klein Product Launch Essay

This essay has a total of 10151 words and 83 pages.

Calvin Klein Product Launch

XTACY ™
The Power of All Senses
The New Fragrance From Calvin Klein


Seher Farooq



Contents
1.0 Executive Summary 3
2.0 Terms of Reference 4
3.0 Introduction 5
4.0 Situation Analysis
4.1 Market/ Industry Analysis 7
4.2 PEST Analysis 8
4.3 SWOT Analysis 13
4.4 Market Opportunities 16
5.0 Marketing Strategy
5.1 Marketing Objectives 18
5.2 Market Segmentation and Targeting 19
5.3 Market Positioning 19
6.0 Marketing Action Plan
6.1 Product 25
6.2 Place 25
6.3 Price 26
6.4 Promotion 27
6.5 Marketing Budget 29
7.0 Control
7.1 Feedback 30
8.0 Appendices
8.1 Appendix 1 31
8.2 Appendix 2 57
8.3 Appendix 3 59
8.4 Appendix 4 61
9.0 References 67
1. 0 Executive Summary

This report contains the findings of our exploration into the teen fragrance market, and
our subsequent proposals the launch of a new women's fragrance by Calvin Klein. The
women's fragrance market is a very lucrative one with competition from big name designers,
such as Christian Dior and Gucci, High Street stores such as French Connection, mail order
companies such as Avon, lingerie stores such as Agent Provocator and Chantel Thomas and
even big names celebrities are launching their own range of fragrances.


Early research had indicated that Calvin Klein was suffering from a lack of initiative in
designing fragrances for the young target market. Thus the aim of the research carried
out, was to produce a brand new fragrance form Calvin Klein for the 16-21 year old age
range, in order to enhance Calvin Klein's market position in the young fragrance market.


In order to analyse the market of ‘young fragrances' and be able to meet the needs of
those consumers to whom the fragrance is being targeted at, three focus groups were
undertaken to collate information on out target market's tastes and preferences on
fragrances.


This primary research was then followed by secondary research of a thorough analysis of
the competitors faced by Calvin Klein serving the same market.


This information then helped form the context of a SWOT and PEST analysis, which looked at
the external influences faced by the market for fine fragrances, and the strengths,
weaknesses, opportunities and threats of Calvin Klein. This market analysis, followed by
the marketing action plan, lead to the launch of a new fragrance XTACY - the power of all
senses - which was designed to meet the needs of market to whom it is being targeted it
at.

2.0 Terms of Reference

This report has been commissioned by Unilever who have appointed marketing consultants to
investigate the market for fine fragrances, with particular research and investigation
into Calvin Klein.


They have been appointed to peruse the external influences on the fine fragrance industry
by carrying out a PEST analysis. They have also been commissioned to analyse and assess
the current position of Calvin Klein by undertaking a SWOT analysis of the organisation to
decide where its strengths and weaknesses lie relative to it's competitors. A marketing
strategy for Calvin Klein will also be included to establish its objectives and also the
market it will be targeting, with reference to Calvin Klein's marketing mix, and tactics
for launch in the first year.


From the results of the situation analysis and marketing strategy, systems will be
composed to the monitor the progress of Calvin Klein's new product with reference to the
marketing objectives to ensure it's survival in the long-term.


3.0 Introduction

When the modern perfume industry began, many fragrances had a life expectancy of thirty
years. In today's fast-paced world, however, only the most outstanding fragrances last
more than ten years.


We at Calvin Klein have decided to launch a new perfume targeted at the youth market 16 -
21; this is to be launched under the brand name of the company. This perfume will be known
as XTACY. Our perfume will provide a gap in the market that has not been found with many
competing brands that are targeting the youth segment. CK themselves have not produced
enough variety for the youth market, which we feel they need to extend.


We felt that even though it was possible for classic scents to continue to rule, they had
to come in to a lighter version, possibly including new personal care products. In 1998,
companies extended their lines to essential body collections. This is an important
strategy of ours to include body care products and to extend our portfolio, instead of
just offering the perfume for sale. Women tried to define femininity their own way, either
with gentle scents or returning to the oriental, for example Carolina Herrera's 212, for
young women.


Marketing will be an important aspect of XTACY including the exclusiveness of only being
able to purchase this perfume for the first two weeks of its launch in Selfridges.


XTACY will be unique in that the product will be at a price the consumers of this age
group will be able to afford, but still retain Calvin Klein's name as one of the leading
brands in the luxury industry. Undoubtedly, a successful marketing mix should influence
the consumer to activate positive knowledge on the product when exposed to it, which is
what we are trying to achieve.


Calvin Klein has shown itself capable of reaching the green star more often than many of
its competitors, and that is one of the key reasons the company has thrived ever since its
calm founding in the late 1960s. This will also show with the introduction of XTACY onto
the market.


As stated in one magazine:
"Never before had a new brand had such an impact, topping the list of men's and women's
fragrances in virtually every one of its launch markets."


Our product XTACY with its unique fragrance, packaging and exclusive marketing will allow
us to compete for the youth market of today, with the use of Calvin Klein's brand name.
Today's teens are brand-conscious, fickle consumers wielding enormous purchasing power.
Their estimated 2002 spend on personal care products alone is $9.5 billion. We are
addressing undeserved yet lucrative sub-segments of the youth market for the consumers of
today, and for tomorrow. Targeting the youth market with their disposable income who spend
relatively freely will give us the opportunity to create loyal lifelong customers, for the
future. Allowing us to target the consumers at their youth stage, will give us the step
towards them becoming brand loyal for the rest of their adulthood.




4.0 Situation Analysis

4.1 Market/Industry Analysis

• Market Characteristics - The female fragrance market is worth $20 billion dollars,
however the market is in a decline. One segment that continues to be growing within the
overall decline of the market is the 16-19 age range of fragrance consumption.


• Market Potential - Calvin Klein is one of the world's most highly recognizable
brands alongside brand such as Coke and Levi's. The immense success of CK One, with its
unique selling proposition and distinctive marketing strategy has been reported widely in
the media. For example, Calvin Klein used various outlets for distribution alongside
conventional retail stores that stocked perfumes, i.e. record stores.


• Customer Analysis - The customers CK will be targeting in their campaign will be
16-21 year old females. Not only is the 16-19 age range of female perfume buyers the most
successful, the added scope of targeting customer up to the age of 21 will allow a much
larger target market.


• Competitor Analysis - Through the use of market research in the form of three
separate focus groups (see appendix), the following competitors have been identified in
relation to Calvin Klein and the target market aimed at. The following table shows these
competitors and the price of their products .


Brand 50ml 75ml 100ml
Rush -Gucci £24 £45 N/a
Ralph - Ralph Lauren £25 N/a £34
She/Elle - Emporio Armani £29.50 N/a £44.50
Addict - Christian Dior £34 N/a £55
Chance - Chanel £28 N/a £38
Coco Mademoiselle - Chanel £34 N/a £49.99
Tommy Girl - Hilfiger £24.99 N/a £34.99
Table to show competitors and their prices

• Distribution Analysis - Fragrances are sold in many retail outlets as well as
online. The following is a comprehensive list of all outlets that sell fragrances.


1. Department Stores
2. Supermarkets
3. Pharmacies
4. Specialist Fragrance Stores - for example, Sephora and The Perfume Shop
5. Company Own Stores
6. Duty Free Shopping
7. Internet sites - for example www.beautybase.com and www.ebay.com
8. Local markets

4.2 PEST Analysis

4.2.1 Political

• Trade practices of counterfeit products and fake perfumes being sold on the
streets particularly in the London area could cause our product to be overshadowed by a
downgrading demeanour by consumers. A recent GACG report shows that brand counterfeiting
results in the direct loss last year of more than 17,000 jobs across Europe - 4,100 of
them in the UK alone, and that 10% of consumers purchased fake designer perfume.


• Our company will need to be aware of the legislation that affects marketing our
product. One legislation act to be aware of is the Fair Packaging and Labelling Act
(1966), which requires manufacturers to state what, the package contains, and who made it.


• Issues of being socially responsible, for the company to be aware of not offending
ethnic groups, racial minorities, or special-interest groups.


• There is no legislation in effect for companies like us, charging increased
amounts for our perfumes compared to other countries e.g. the USA Why is that the
identical products that retail in the USA are 60-70 per cent cheaper than the UK? The
answer is simple; exploitation of our market to charge the highest prices possible. The
European Trademark directive has given brand owners the tool to achieve this aim. It has
in real terms legalised anti-competitive practices.


4.2.2 Economic

• Downturn in retail expenditure.


Retail sales growth

Growth in retail sales volumes into February was weaker than in recent months.

Three monthly growth rates into February were weaker for all sectors except for textiles,
clothing and footwear stores. Growth rates for clothing and footwear stores were
comparable with those reported in the second half of 2002, but were below those reported
earlier in 2002. Prices in non-food stores continued to fall in February.


In the three months to February 2003 retail sales grew by 0.6 per cent compared with the
previous three months, and by 4.6 per cent over the same three months a year ago. These
growth rates are lower than those reported throughout most of 2001 and 2002, apart from
those affected by the Jubilee.


Looking at monthly data, retail sales showed a fall of 0.1 per cent in February, the second consecutive monthly fall.

In value terms not seasonally adjusted retail sales in February were 2.6 per cent higher than February 2002.

• High employment




• Data for the three months ending January 2003 show a rise in the working age
employment rate, a fall in the unemployment rate and a lower growth rate in average
earnings.


In a comparatively flat labour market, the trend assessments for recent months are that
the employment rate has been increasing, the unemployment rate has been decreasing and
earnings growth has remained moderate.


(Refer to appendix 8.2.2 for continuation of analysis.)

4.2.3 Social

• Lifestyles are a major influence on the products people consume. With changing
lifestyles, comes a change in what people consume. Some products are a daily necessity
like soap and toilet paper, however in times of economic downturns, some people may resort
to using economy brands rather than luxury brands for these necessity. For example, they
may shift to a supermarket own brand of soap rather than Dove. Fine fragrances are
considered a luxury good. One may consider doing without in times of financial hardship.


• The change in populations also needs to be considered when launching any new
products, whether they are fine fragrances or not. With people living longer and more
people enjoying a better quality of life, products need to be tailored to suit specific
people.


• The product being considered by Calvin Klein in a fine fragrance for the 16-21 age
range of women. This market segment is highly influenced by their peers whether in school,
college, university or work.


• The 16-21 age range is also extremely influenced by celebrities. The last ten
years has seen a much higher celebrity usage in advertising campaigns and promotions such
as David Beckham and more recently George Clooney for Police Sunglasses. The results of
the focus group show which celebrities the target market associate most with. Some
celebrities include, Britney Spears, Jennifer Lopez, Misteeq, Ms Dynamite and Shakira.


• Consumers are becoming more environmentally conscious and there has been a rapid
advance is the number of products that are consumed that are refillable. The perfume
industry has also created bottles that are refillable in line with the demand for such
products.


4.2.4 Technological

In a world of rapid innovations and constant changes, technological advances are at the
forefront of businesses today. Organisations need to review the impact of new technologies
upon their activities. These can affect the production methods employed by the
organisation, or the products and services offered for sale. Technology today is
continuously producing more and more substitutes and cost savings for services and
products to be marketed.


Technological changes are advancing in the market for fragrances. Technology has resulted
in the availability of re-fill fragrances to allow consumers to have re-fills for their
fragrances, providing cost-saving measures to both the industry and the market of
consumers. It has also provided customers with more choice and variety, and has saved the
resources for the materials used in producing the bottles for fragrances.


Furthermore, technology has provided vast improvements to fragrances in terms of the
degree and strength of the smell of the fragrances from the eau de toilette, to eau de
parfum, and now the availability of concentrated parfums on their own.

These advances, although increase prices, provides a much longer-lasting scent. Such
technological advances in the concentration of fragrances has resulted in cost savings in
terms of materials used to produce fragrance bottles, since concentrated parfums require
less application, and thus smaller quantities being produced using smaller bottles, saving
money in terms of production and materials.


In addition, technology and technological advances in materials for fragrances, has
resulted in the development of new bottle designs and shapes, from the simple glass bottle
with plastic cap, to the more recently advances body-shaped colourful bottles with
jewellery, for example the fragrance from Jean-Paul Gaultier. These advances and
developments have widened the market for fragrances attracting more consumers. It has also
enhanced the marketing ad campaigns to market the fragrance in a way appealing to the
target consumers.


The introduction of samples has enhanced the ways in which fragrances can be marketed and
sold. Technology has led to the development of attractively designed and ‘chic' sample
fragrances, for example the sample for Angel, which could act as the E.S.P of the
fragrance. The Internet is also one of the biggest technological advances taking place,
where fragrances can be marketed, bought and sold on-line for ease and convenience of the
customers.


These advanced techniques and developments which help the marketing of fragrances, may
seem costly, however, given the benefits they offer in terms of the marketing which
enhance sales and boost profits, it results in most fragrance companies improving both
their marketing and financial position not to mention that some of these technological
advances have resulted in certain cost-saving measures.

Given this, it is evident that technology within the fragrance industry is continuously
improving, resulting in the industry beginning to improve its' market position, and more
importantly, providing the best products for customers as they can.


4.2.5 Environmental

• Consumers are becoming more aware of the effect businesses are having on the
environment. This means that businesses need to be in line with government regulations on
matters such as waste disposal and chemical emissions. Pressure groups such as Green peace
and Friends of the Earth campaign heavily on such issues.


• For the Fragrance industry, where the majority of expenditure is on packaging,
companies need to consider introducing bottles that are refillable. New bottle designs by
brands such as Angel, Hugo Boss Duo and Gucci Rush, all feature a refillable bottle
concept.


• Animal testing is also an issue that businesses in the cosmetics and fragrances
have great resistance to. Animal testing is campaigned about vigorously all over the
world. Therefore, companies need to be aware of the adverse effect product testing on
animals could have on their brand image. One such company that has suffered from public
criticism for animal testing are MaxFactor cosmetics.


4.2.6 Legal

• All fragrances have to be labelled according for legal purposes. Ingredients must
be carefully categorized and the amount of liquid also needs to be clearly stated, i.e.
50ml or 75ml.


• For legal purposes, images used in advertising campaigns and promotional need to
be cautiously selected so as not to cause offence. However, many fragrance advertisements
contain images of a sexual nature, and results of the focus groups showed that the target
market approved of such images as they portrayed images of danger, sexiness and passion;
the essence of the new fragrance being investigated by Calvin Klein.


4.3 SWOT Analysis

4.3.1 Strengths
Calvin Klein. Forget the man, just think about the name. One can easily place a bet on the
fact that the majority of people either possess some item that says Calvin Klein, or knows
someone who does. That is what we call branding, and it is a testament to his work. Calvin
Klein, the marketing genius, has achieved the kind of worldwide distribution of his
products that only a handful of companies like Coke have been able to achieve.

After a brilliant and provocative ad featuring Brooke Shields in the 1970s, his name
became synonymous with designer jeans. Nowadays, he is famous for his underwear line, his
extensive line of perfumes, the All-American look, and sticking to tradition, his
provocative ads. After nearly 30 years in the fashion business, Calvin Klein has cemented
his reputation as one of the most powerful and influential people (and brand names) in
fashion .

His talent as a designer has never been put into question. With his minimalist
sophisticated styles, Calvin Klein has been able to keep both men and women of all ages
stylish with simple and elegant clothes.

Not only a fashion visionary, Klein has also become known as a marketing genius who
changed advertising by continuously pushing the envelope a little further. His
controversial ad campaigns started in the late '80s with the Brooke Shields ad, to the
waify Kate Moss modelling Ck One and his lingerie/innerwear line in the '90s. Klein has
become notorious for the nudity, blatant sexuality, and use of underage, prepubescent
models in his ads, which have not hurt his success in the least.

Known as "Calvin the Conqueror" and as one of Time's 25 Most Influential People in
America, and thanks to his minimalist designs for urban socialites, provocative
advertising, and visionary ideas, Klein has become a 20th century icon.


(Refer to appendix 8.2.1 for continuation of analysis)

4.3.2 Weaknesses

Within the fragrance industry, Calvin Klein has turned into one of the world's most
recognisable brands - along with Coke, Pepsi, Kodak, and Nike . However Calvin Klein's
successes must not overshadow its' weaknesses.


Calvin Klein's approach to the way its' products are marketed has caused controversy. It
was Calvin Klein's marketing approach that brought a mix of sexuality and masculinity into
men's fashion and also its fragrances. Over the years, the messages from the television
commercials and the images on the advertising prints put Calvin Klein under constant scope
of critics, and publicity scrutinised as a product that bases its' success on selling sex.


As public outrage over these images has caused Calvin Klein to pull the campaign, and
perhaps even more ludicrously, brought about a Federal probe of whether or not these
images constitute child pornography.


Just about a year ago, Calvin Klein launched a series of print and TV ads that were,
according to almost every critic who reviewed them bizarrely and upsettingly reminiscent
of child pornography. Even for a public made blase by exposure to CK's many other
provocative images, the seediness of this latest effort proved just too much.


Such controversy has dented the image of Calvin Klein and the ability of its' marketing
campaigns to sell its' products and fragrances due to the degree of opposition it was met
by, it can be argued that CK has a weakness in using appropriate advertising campaigns to
sell its' products.


Although CK has been successful in launching a range of fragrances, it has not produced
enough variety of fragrances for the ‘young' market.


The image and brand name of Calvin Klein also seems to be in trouble since many associate
it with being old and ‘a thing of the past', and has not done enough to revive its brand
name and image. It will thus be required to spend a considerable amount of money on
advertising expenditure to restore itself and further its position in the market for
fragrances.


4.3.3 Opportunities
• Teen's interest in fragrance, according to a Youth Market study conducted in 1999,
is at its most intense between the ages of 16 and 19.

• The age range, which our perfume is targeted at i.e. 16-25 year olds, is also the
biggest user of perfumes (see bar graph below), and so a huge potential market is out
there to ‘exploit'. Coupled with this is the fact that very few fragrances have been
specifically marketed at this age group, perhaps with the exception of Ralph, by Ralph
Lauren, Chance by Chanel, and CK one, which is in essence a ‘borderline' teen fragrance.
This means that this age group has in the past responded to the marketing of fragrances,
which do not specifically target them. Clearly an opportunity for direct age group
marketing exists. It seems absurd that so little of this has gone on in the past.


• Annual spending by this age group is rising far faster than any other. Most of the
money they spend, according to research done by the marketing group ECRM, is raised
through part-time or fulltime work, and a growing number of 18-19year olds in particular
now own a credit card. Despite the fact that most do some form of work, their parents
still contribute a substantial amount to their income. Teens therefore have more than ever
before to spend on themselves. Brands are at the moment trying desperately to tap into
this potentially hugely rewarding market.


• This generation also uses a far more diverse range of technology than before,
which means that marketers are able to specifically target sub-groups, making the
marketing of a product more cost-effective. We know for instance that teens are the
biggest viewers of MTV, and users of chat rooms and MSN messenger. This means that whereas
before the growth of internet use and more teen specific broadcasting, marketers were
largely confined to advertising on whatever channels were available, now they are able to
cost-effectively target through new mediums E.g. E4, MTV, and more teen specific magazine
titles as well as teen chat rooms etc.


• 84% of this group use magazines as their number one information source, therefore
this is clearly a favourable media to use when marketing.


• Teens are spending more and more time on the net and less in front of the TV. This
is useful to know as TV advertising is far more expensive than net adverts, and also tends
to be more audience specific e.g. If you wanted to market a new energy drink, then it
would make sense to for instance advertise on a fitness related site such as
menshealth.com.


4.3.4 Threats

• Some consumers may not wish to purchase our product, due to the specific market
segment we are targeting, e.g. the 16-21 age group.


• There is the increased competition with other competing companies who are trying
to become the market leader in this market segment. The only company at present at which
we feel we are competing with for this is Ralph Lauren.


• We should be aware that in our marketing plan we need to take into account the 4ps
of the rival firms. These firms are anyone in the perfume industry that could be a threat,
companies such as Channel, Gucci, Valentino and Ralph Lauren as mentioned above.


• There are no restrictions with any new market entrants entering the perfume
industry or any existing companies bringing out a new product to compete with ours. This
could restrict current and future profit levels, and reduce our market share.


• A competing product could also lead to our company being forced out of the market,
by extensive marketing campaigns, advertisements and price-cutting with our product.


• If our product is being imported from abroad, then issues such as strengthening
currency could make imported competition less expensive and exports more expensive. Though
if this situation was vice versa then it could lead to our product becoming relatively
expensive compared to competitors importing their perfumes into the country.


4.4 Market Opportunity

We have decided to extend the product range for Calvin Klein by introducing a new perfume
to their existing collection. Calvin Klein already has an established market with their
brand name known world wide due to their huge clientele. This will allow our product XTACY
to be engulfed into their large customer bases who only associate themselves with this
brand, and who are brand loyal. This will permit us to leap into the industry at a higher
level and to compete with other known brands, for the target segment we are encouraging
XTACY at.


The key demographics we are looking at in particularly are age, which we feel will be
between 16 and 21, and will give us the gap in the market we can fulfil and implement with
XTACY. This we feel is our market opportunity in targeting this age sector and competing
with current competition, which we feel at present, is on a small scale. This is also
shown in general by the current retail figures showing that in the last three months since
February 2003 there has been an increase in retail sales by 0.6%. This shows that
consumers are purchasing more items, which will encourage the launch of XTACY by these
increasing spending figures.


In today's society consumers are becoming increasingly sophisticated due to the
proliferation of new prestige fragrances and are finding fragrances have become more
accessible due to the increase in discounted brands.


XTACY has an, "unique selling proposition," which we can use consistently in our
advertising and promotion. Our perfume brand proposition is to allow for female consumers
in their late teens to be able to purchase a perfume that will be fresh, young and vibrant
and give them confidence as a young independent person. This perfume will also be
distinctive, chic, stylish, and utterly modern. We will sell our perfume based on
"emotional values" and will encourage our users to fantasize the "benefits of a more
satisfying and fun lifestyle, acquired by using our particular brand. XTACY will fulfil
the market industry by the use of developing the teen market interest in fragrance, which
we know is the most intense between the ages of 16 and 19, according to a youth market
study.


These marketing messages will allow the consumer to be able to identify this with our associated product.

5.0 Marketing Strategy

5.1 Marketing Objectives

Marketing objectives are the marketing targets that must be achieved for the company to
achieve its overall goals. A firm's marketing objectives need to reflect the firm's
long-term aims/mission.


Objectives work best when they are clear, achievable, challenging and - above all else -
when staff believe in them. To fit all these criteria, the firm must root the objectives
in market realities.


Marketing objectives should not be set until the decision makers have a clear view of
current behaviour and attitudes. This requires a lot of market research into customer
usage and attitudes to the different products they buy and don't buy.


Through the use of the marketing research carried out (see appendix), the team was able to
identify key areas of concern that needed to be addressed in order to satisfactorily set a
suitable marketing strategy. These finding are as follow:


1. Increase product differentiation - this is the extent to which consumers see your
product as different from the rest. It is key to ensuring that customers buy your product
because they want to - not because they you are the cheapest. It is a major influence on
the added value and therefore profit margins achieved by the product.

To increase product differentiation requires a fully integrated marketing programme.
Objectives must be set which separate your product from its rivals. These include:


• Advertising which will be built upon image building. Focus group results showed
that the target market for our product was highly sceptical of the Calvin Klein brand,
associating it more for men than women. This was found to be a direct effect from the
Calvin Klein brand name adorning men's boxer shorts.


• An integrated marketing programme focused solely upon the relevant target market.
For example, advertising will be conducted using mediums assessed specifically by the
target market, i.e. Glamour magazine.


2. Launch fragrance into the market by August 2003 and to have 100% of distribution
outlets stocking the good within the first 2 months - in order to increase awareness of
the product amongst the target market, it is important to follow up the initial launch of
the female fragrance with continuing advertising. This will be through the use of periodic
advertising to develop and maintain usage. For company that own major brands such as
Calvin Klein it is essential to take a long-term view. Large firms think a great deal
about their corporate image and the image of the brands that they produce. They may
stretch their brands a little, to attract new customers.


• Launch female fragrance placing focus on customer feedback. This will provide
information on usage, channels of distribution and impact on the brand. Has the image of a
solely manly brand been diminished or does attention need to be more focused on this
goal?


• Launch a men's fragrance based on the essence of the female product. This
objective will only be put in action of feedback is positive on the female fragrance. A
men's fragrance will be considered after a minimum of 6 months retail on the female
fragrance.


5.2 Market Segmentation and Targeting

The total market, within which we are operating, is that of the female fragrance one,
within which there has been vastly varying sales performance. Whereas, according to a
number of marketing surveys this actual market as a whole has been in decline, there is
one segment which has managed to buck the trend, growing year on year far quicker than any
other. This segment is the teen to mid twenties one.


The team have decided that since few fragrances have been specifically marketed towards
this age group, despite sales continuing to rise considerably year on year, we should
specifically target females between 16-25 years. Within the total market therefore, this
is the segment, which we shall seek to as it were ‘reach out to.' We are however as a
team acutely aware that people who do not fit into this category may purchase the product,
either for someone who fits this bill, perhaps as a gift, or even for their own personal
use. This would clearly be a bonus either way.


This product is therefore distinguished from the competition, firstly because it is the
first Calvin Klein fragrance to target this market, and secondly because there is very
little direct competition currently. This segment is shown to have in the past bought
fragrances directed at other market segments, as few if any designer fragrances have
targeted/ appealed specifically to their age group. Our fragrance marketing, message,
name, packaging and bottle design will all be of appeal to these consumers. Our extensive
research into this segment, which has included a number of focus group sessions, designed
to gain feedback, ideas, likes and dislikes as well as star ratings of both our own
fragrance and our competition, have enabled the team to gain a detailed insight into the
behavioural and psychographic variables of the group (see below). Coupled with this
invaluable insight, is the fact that three members of the team actually fall within our
target market themselves. This means that we are in ‘tune' with our market and are able
to effectively relate to and understand it.


(Refer to appendix 8.3.1 for in-depth examination of market segmentation)

5.3 Market Positioning

In order to see how our fragrance compared with that of competitors, a research was
carried out on 90 individuals from the general public and our focus groups to obtain their
opinions on the characteristics of our fragrance and those of the competitors including
Chanel Chance, Ralph Lauren, Tommy Girl and also CK one as a border line fragrance. The
average results of the 90 candidates were then plotted on a series of star diagrams each
representing the different fragrances and conclusions drawn from it.


To obtain an unbiased view of the fragrances it should be noted that the research was
conducted from a range of individuals in the 16-21 year old age range from the public and
the focus groups. For reasons of clarity and ambiguity the average of opinions was chosen
to be represented since it is difficult to draw conclusions from a series of 90 axes
diagrams representing five different fragrances.


The characteristics chosen in order to obtain individual's opinions on the fragrances were:

 Bottle Design - This is very important since bottle design is one of the key
features of a fragrance, which determines whether it would sell, and one of the key
features, which draws customer's attention to a fragrance. Obtaining opinions therefore on
the attractiveness of different bottle designs is thus an important factor to consider.


 Advertising Campaign - This is extremely important when it comes to launching
a new product. In certain ways advertising plays a key role in determining a profit or a
loss to the organisation launching the new product. It is also important to see how well
different advertising campaign catch consumer's attention.


 Price - Because the age group 15-21 year olds is being targeted, price is
very important since many of the individuals from this age range are likely to be students
on a limited budget, thus pricing will be one of the important determining factors in the
purchasing of a fragrance.


 Smell - Of all the characteristics listed so far, smell can be argued to be
the main component in the sale of a fragrance. Smell is what at the end of the day people
are looking for and thus determine whether or not the fragrance will be purchased.
Obtaining differences in opinions on fragrances and whether or not it meets their
expectations is a relevant factor to consider.


 Packaging - Although packaging may not be one of the key characteristics
individuals will be looking for when deciding to purchase a fragrance, it still plays an
important role since ‘appearance makes an impression'; and since most fragrances are
purchased as gifts, then packaging continues to play a vital role.


 Name - Name is something, which subconsciously has an indirect affect on
individuals wishing to purchase a fragrance. Names of fragrances if "catching" combined
with bottle design will encourage the consumer to test the fragrance lead to its' sale.


 Accompaniments - This refers to things such as shower gels, deodorants etc
that may determine an increase in sales. If certain fragrances are very popular, the
launch and availability of its' sub-products would appeal to the public.


 Uniqueness - Many fragrances today, are being criticised for a scent that is
too similar to another fragrance. Uniqueness refers to how different a fragrance is in
terms of ad campaigns, name bottle design, and all other characteristic listed above.


5.3.1 Results:

Chanel Chance:




Tommy Girl:





Ralph Lauren:



CK One:





XTACY:


From an analysis of the above diagrams representing the sample group's opinions of the
characteristics of the above fragrances, it can be argued that XTACY was in the lead than
those of its' competitors. The key differentiators were the name, bottle design,
advertising campaign and packaging, which made XTACY better than it's competitors, it can
be argued that this is because this product is designed in a way which is ‘eye-catching'
to the target market and thus in terms of appearance including bottle design, name and
packaging XTACY is deemed to be successful.


One downfall may be that the price was not as cheaper than some of its competitors like
CK1, despite this XTACY is still a fragrance affordable to the target market. Given the
uniqueness of the new fragrance many of the sample said they would purchase XTACY even if
the price was set higher; this would also enable CK to recoup its costs of advertising
campaign and creative bottle design including packaging. And from this it can be concluded
that XTACY is in the lead of competition in the market for ‘young fragrances.'



6.0 Marketing Action Plan

6.1 Product

The product being launched is a new fragrance by Calvin Klein, aimed at the young female
market aged between 16-21. After much primary and secondary research, the fragrance has
been designed to meet the needs and expectations of the target market.

XTACY, the new fragrance by Calvin Klein, is one, which is able through its name only to
stand out from its competitors. The name, XTACY, is mysterious and is designed to
represent the market of individuals being targeted. A name, which screams out excitement,
fun, joy and power, and a name, which certainly has more strong representation and
expression than leading competitors such as ‘Tommy Girl' whose name, has not a deep
impact on the same market being targeted.


XTACY, has been designed to have a fresh, clean yet sweet scent, a scent which appeals to
most young females aged 16-21, a scent which is not strong or overpowering, yet a young
fresh scent with a hint of sweetness, out-doing competitors fragrance such as Chanel
Chance which is not as appealing to the target market due to the stronger scent, which has
been commonly associated with an older age group.


Furthermore, the bottle design of XTACY, the new fragrance by Calvin Klein, is deigned to
be of a long, narrow rectangular see-through plastic, with a pink coloured liquid
fragrance, and bold metallic silver branding of XTACY coming vertically down from middle
to bottom of the side, on one side of the bottle, and from top to middle on the other side
representing a unique design. The pink coloured liquid fragrance, thus representing the
feminine touch, and the bold metallic silver branding representing the theme of power,
danger and passion, an affect, which the fragrance is intended to have. Such a design is
appealing and representative to the young market, which also stands out from competitors
such as ‘Ralph Lauren' whose bottle design, does little to represent the theme of the
fragrance or the affect it is intended to have.


In addition, the packaging is designed to be of the same shape, and design of the bottle,
yet with shimmery silver colour all over and bold black branding of XTACY. Such packaging
represents the theme and intended affect of XTACY on the outside, and the actual fragrance
bottle, representing the feminine touch of the fragrance on the inside. An affect, which
is contradicting, yet full of expression. A design, which is unique and outstanding of
those of competitors; and a fragrance, which is representative of the target market.


6.2 Place

Our perfume will be introduced to the public in the following action plan: -

• XTACY will be launched in New York City in Macy's department store; this is where
our product will be exclusively sold for a period of two weeks.


• Two weeks after this initial launch we will introduce our perfume XTACY to the
London market. This will be by launching the fragrance in one of the most prestigious
department stores in the capital, Selfridges. This will also take into affect the other
two Selfridges stores in the country, these being the stores in Manchester and Glasgow.


• After this progressive four week span, our fragrance XTACY will be sold in every
department store and perfume shop in the UK and globally.


This above plan does not take into account the pre-introduction of our new perfume; this
event will be initiated, with the involvement of MTV in Times Square, New York. The same
time as this event, we will be promoting the forthcoming of our new fragrance for women,
by advertising in two of Selfridge's windows.


Our action plan shows that the distribution of XTACY will firstly be exclusive and
selectively distributed, and after the four-week time plan will move to being intensively
distributed, by selling it in every store.


Places where consumers will be able to purchase this fragrance will be through the shops,
and the use of e-commerce. We will be setting up our own website www.xtacy.com, where
consumers will be able to purchase the fragrance on-line as well as visiting stores via
the internet, where they will be able to make their purchases.


6.3 Price

We have assessed the fragrance prices of our competitors in the following graph, and as a
result came up with the price plan for our products. We set the target of coming into the
market below the price of our competitors.




We decided to sell our 50ml bottle at £22.95 and our 100ml bottle at £32.95 in the UK.
Our US prices are as follows $25 for 50ml and $32.50 for our 100ml bottle.


The reasons for this are that we wish to undercut our competition, but also our bottles
are refillable. It will cost £13.95 to refill a 50 ml bottle and £18.95 to refill a
100ml bottle. A 50ml bottle in the states to refill will cost $12, and 100ml will cost
$16. Variations in price reflect the willingness of UK customers to pay more for their
goods than their US counterparts, and we shall unashamedly exploit this fact.


The objectives of our pricing plan clearly reflect our need to both make a profit, and get
a return on our investment, whilst also; through our more competitive pricing establish a
strong market share. Our pricing also reflects the fact that the perfume bottles, which we
sell, are refillable, we therefore expect a lot of revenue to come in from customers
refilling. This should, together with our strategic price plans enable the fragrance to
survive the onslaught of competitors. Our customers needs are also taken into account by
our pricing strategy, as our target market are not high earners, the refillable option in
particular caters for their needs, as it takes the costs out of what is in essence a
Continues for 42 more pages >>




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