Exhibit 3 shows a “super segment analysis” of the apparel market. Eddie Bauer positions itself mostly to the “Durable Quality Classics” segment. (What apparel brands target the other segment in the table?).
The “super segment analysis” table has four quadrants that are: “Quality-Timeless,” “Quality-Newest,” “Inexpensive-Lasting,” and “Inexpensive-Trendy.” Located within the “Quality-Timeless” quadrant are the “Durable Quality Classics” and “Upscale Classic Brands” segments. Eddie Bauer positions itself in the “Durable Quality Classics” segment, while their competition targets the “Upscale Classic Brands” segment. The main competitor included in this segment is L.L. Bean. Lands’ End, J. Crew, and Gap can technically be considered targeting this segment, but L.L. Bean is the primary retailer.
Based on the buying behavior and sales data described in the case, how would you distinguish between Eddie Bauer customers who buy:
a) In the store
Eddie Bauer is a unique store when it comes to distinguishing between customers who shop in their store and buy items from their catalog. Eddie Bauer, Inc. first began in 1920 as Eddie Bauer’s Tennis Shop. This single store located in the Seattle area was known for their customer service, outdoor sporting gear, and tennis equipment. After closing their retail stores for a while and just concentrating on the catalog or mail order side, it wasn’t until 1970 when Eddie Bauer opened another store in the Seattle area. These new stores continued to attract the same customer base as 1920 and were now known for cold-weather garments. However, when General Mills bought the company in 1971, they wanted it to grow. To achieve this goal they used the brand’s image to their advantage by placing a majority of the retail stores in northern cities.
It wasn’t until the 1980s that the Eddie Bauer brand evolved again. The store was no longer located in the downtown areas; you could find the brand in malls. With this shift comes a more diverse product assortment. These new stores started carrying street wear for men and women. Soon the Eddie Bauer stores prospered; 80% of their customers shopped the stores, which equates to $1.5 billion (Eddie Bauer’s annual revenues were $2 billion).
In today’s market, Eddie Bauer stores can be found in middle to upper scale regional malls. This fact means the stores are attracting middle to upper class customers. Statistically these customers are mostly women, 70%, and the women’s line or products were 45% of the sales. The customers that shopped at their retail locations also typically were younger than the catalog customers. Eddie Bauer describes their target market as educated, active, married, in their 40s, and wealthy. Customers that shop in the retail stores might have the body shape that is average or “common,” as the case study states. This is due to the catalog carrying larger and more petite sizes.
b) By catalog
Eddie Bauer uses their catalog as main marketing tool. They would use it to attain new customers, inspire customers to visit the local retail store, and to generate direct sales. Customers that purchase items from the catalog can be distinguished for a couple of reasons.
First, the customers might be of older age than the majority of the retail shoppers. The older generations like to shop from the catalog due to them not having to leave their home to shop and not deal with the stress involved in dealing with mall crowds. Also, the customers that purchase from the catalog might not have the typical body shape but love Eddie Bauer clothing. The catalog is the only place customers can purchase clothing in sizes that are more petite and large. The third characteristic that distinguishes catalog shoppers from the retail shoppers is the retail store’s stock levels of products. Shoppers that want those items and cannot purchase them from the store can only get them from the catalog. These shoppers would also not care about the wait. Customers that shop at the retail locations typically need the product right away and cannot wait the amount of time it would take the catalog warehouse to ship the items.
c) In both the store and by catalog.
Customers that shop both in the retail store and by catalog can be for different personal reasons with each customer. However, one of the biggest explanations can be from the catalog order desk that is located at each Eddie Bauer retail store. These desks have a direct line to the call center and offer customers free shipping if purchased at these desks. This form of shopping is proving to be profitable since they earn roughly $75 million each year. The desks help Eddie Bauer maintain customer satisfaction by being able to offer the products even if they are out of stock in that retail location.
Another explanation of the dual shopping can be from the mailings of the catalog. Eddie Bauer ships to prospective customers as well as loyal customers. The loyal customers are already familiar with the brand, its products, and the local store location. The new customers are the complete opposite. Eddie Bauer prints on the back cover where the closest retail store is in comparison to their home. This helps to entice a possible visit to the store and possible purchase along with what was purchased from the catalog.
What are some examples of merchandising decisions that have been made (a) by the stores to support the catalog and (b) by the catalog to support the stores? Quantify the economic value of this cross support.
Eddie Bauer’s main goal, through the use of synergy, was to create the assurance that each customer would have the same shopping experience regardless of the channel used. To accomplish this, Eddie Bauer must first become aware of the difference between the channels. After these have been identified, they then must implement a plan to centralize the workings of both channels to be the same. By making the retail stores and the mail order catalogs more alike, in terms of the consumers shopping experience, Eddie Bauer hoped to cold their consumers into ones that shopped both channels consistently. Eddie Bauer hoped to achieve this by making decisions that involved changes in the stores that supported the catalog, and in the catalog that supported the stores.
Eddie Bauer’s retail stores, in a given year, have 10 million people entering the store, with 7 million of them making a purchase. With this many people exposed to your products, it would be a loss not to direct the customer’s attention to the catalog. These retail stores though did not have nearly as many sizes, color options, or even items themselves in the actual store. This became a problem for women that needed petite sizes or larger sizes up to 20, as well as men that needed tall sizes. When a customer in the retail store needs one of these sizes, that the store does not carry, the customer will more than likely go to another store in the area that does carry the size, therefore Eddie Bauer is loosing the sale. It is just very unlikely, unless a customer really likes the garment, that they will go home and order the garment through the catalog or I-media.
To create the synergy between the retail stores and the catalog they made it so that each store had a catalog order desk. These desks had a direct telephone line to the call center and free shipping, but not handling. By having these desks, customers have an advantage over just shopping the catalog alone. They will actually be able to see the garment and how it fits (if on a mannequin), can see accurate colors, and can touch and feel the fabric. If they like the garment, but the store does not have their size, or desired color choice, it can be easily ordered for them from the store desk and then delivered to their door.
Eddie Bauer also made changes to the catalog that would support the stores. On each catalog, the nearest Eddie Bauer retail store location would be printed on the back cover. The catalogs also included promotional offer information that would only be available in the retail stores. The catalog was also used as a marketing tool, with one-third of the mailing list being consumers who had never purchased Eddie Bauer before. If consumers in this group preferred shopping in stores rather than a catalog, then at least they cold view the products being sold, know where the nearest store was, know what promotional offers the store was offering, and hopefully make a trip into the store.
What additional steps could each do to better reinforce the other?
To reinforce that the retail stores can offer the same experience as catalog shopping there are a few options that Eddie Bauer can take into consideration to make these experiences more alike. A major problem is that Eddie Bauer can easily add more pages to the catalog a very miniscule cost, but they cannot add more square feet to the store. We suggest that Eddie Bauer remodel the design and layout of the merchandise in the store to allow more selling space. They should carefully find a way to do this, but at the same time without overcrowding the garments, leading the customer to feel overwhelmed. This extra selling space could allotted to fit in the petite and larger sizes for women, and the tall sizes for men, that are all offered online. These customers who purchase these sizes would love to be able to receive their garments quickly than having to wait for them through snail mail. This extra space might also want to be used to keeping more popular sizes stocked consistently. If this proposition were to put into action, then returns would obviously be easier. This is so because the customer would probably be able to make an exchange instead of a return if the garment was being returned due to a wrong size or dislike of color.
Because catalog shopping can be done at one’s home, any time of day, and even in your pajamas, it is a very relaxed experience. Shopping in the retail store can’t duplicate this, but we suggest that the stores have a laid-back atmosphere where customers feel welcome to take their time. For example the design of the stores could duplicate that of a living room. There could be a lounge area with a couch and television and some of the fluorescent lighting could be replaced with natural lighting.
For the catalog to mimic the retail stores there are also more options that could be taken. Since there is a very low cost for adding pages to the catalogs, we suggest that with every garment, there is a picture of the garment being worn by a model. We also suggest that models throughout the catalog should be all shapes and sizes. This is so because women that are a size 20 cannot gauge how a garment will fit and look on them by seeing it on a size 4 model. Also for each garment, we suggest that a more detailed description of each garment be given, such as all the information given on the care label and how the garment fits (if runs small or large).
While shopping in the retail stores there are sales associates readily available to help with issues or to answer any questions the customer might have; this is obviously lacking with the catalog. We suggest that there be a toll-free customer service line with knowledgeable staff that would be able to answer questions or concerns.
We would also suggest that both the retail stores and catalogs offer the same markdowns and sales promotions at the same times. Another option that Eddie Bauer could do is that if a customer spends a certain amount in a retail store, they could gain a coupon only redeemable online, and vise versa. This would increase the number of customers using both channels to purchase merchandise.
How do you suppose “One Brand, One Voice, One Customer” differs from “synergy”?
“Synergy”, in Eddie Bauer’s case, is what the company has hoped to accomplish with its different shopping channels (retail stores, catalogs, and I-media). Each one of these channels is successful for the company, even if each was to stand alone, but with all three working simultaneously synergy is created. The aspiring goal of this synergy was ensure that every Eddie Bauer customer share the same shopping experience regardless of which channel was used. We feel that “One Brand, One Voice, One Customer” does not differ from “synergy”, but helps define the term more deeply. “One Brand, One Voice, One Customer” is just one part of what helps Eddie Bauer create synergy within the company.
“One Brand, One Voice, One Customer” is a policy that was put into action to only govern communications and policy, not every aspect of the company. Through this policy Eddie Bauer has understood that they are “One Brand”; no matter what channel customers purchase from, they are still purchasing an Eddie Bauer product. “One Customer” links in the same way in that no matter what channel the customer uses, they should all be treated equally and all deserve the best service possible. “One Voice” we feel ties “One Brand” and “One Customer” together. When the customer communicates with the brand they do not want to feel like they are speaking or dealing with different companies, for example if they were to shop online rather than the store. Therefore, our understanding of Eddie Bauer’s policy is that they want customers to feel as ease and know that they serve the customer and handle any issue equally, no matter the channel.