Solving a complicated retail marketing problem

1. Eddie Bauer is experiencing rapid declining sales
1) Eddie Bauer does not 2) Increasing returns from 3) Customer Relationship
understand who their Catalog channel, a synergy Management problems
customers are management problem
· Eddie Bauer
· 70% of · Channel Management currently has no
merchandising is lead to increased CRM system in
male across all returns because place
channels, however consumers can now · Eddie Bauer is
80% of all purchases return any product to having trouble
are done by females any channel getting the proper
· Target market for · 65% of total catalog CRM employee’s to
Eddie Bauer sales were returned work for them
currently is leaving a profit of because
educated, affluent, $185MM competitors or
40 year old, married getting to them first
and active men and
women
· Gearing a small · Poor management · The absence of a
marketing budget to understanding of fully operational
the wrong target synergy has led to CRM system leads to
consumers leads to higher returns and less management
less purchases chance of resale confusion on who to
market what
product to

2. Eddie Bauer takes the strong position of a high quality, timeless and upscale clothing brand
etched from rich roots in the high end outdoor segment
1920
Rugged,
outdoorsy and
tough
Tr
an
sit
io
n
to
1980
Family oriented, Genuine and down
fashionable and to earth
old fashioned
Tr
an
sit
io
n
to
1999
Casual wear for
men and
women over 30
Outdoor sporting Manufacturing, Specialty clothing Cataloging to
gear, tennis catalog, store, focused mass audiences
equipment and expedition gear, catalog approach, and providing up
customer service fishing and male/female to date casual
hunting customers wear to men and
women
1920 2000

3. An Eddie Bauer customer has changed over the years to women becoming the main gender
segment who purchase Eddie Bauer products
Retail Store Catalog
I-Media
Characteristics of EB retail Characteristics of EB catalog
Characteristics of an EB online
shopper: shopper:
shopper:
· 7% of US population that · Divided into three segments:
· 50/50 split male and female
walk buy a EB store actually Catalog only purchasers =
· 50% of I-media sales were to
purchases something $200MM (500,000
new customers
· 70% of customers are customers)
· 68% of 88% who shopped EB
women 45% of store stock is · Catalog and store
online did not purchase
geared to women purchasers = $300MM
anything
· Women that shop for men (500,000 customers)
and find something for · Extreme Loyal catalog and
themselves (TARGET) store = $13MM (26,000
customers)
· Women’s products = 70% of
goods sold
· 75% of phone calls were
women
Eddie Bauer is expelling energy, money and
time to the following customers, when the
return on investment is not yielding what
they anticipate
Eddie Bauer Primary Target Market
should be:
· Women ages 30+
· Married
· Who buy clothes for their husband
because their husband doesn’t
Secondary Target is based on ent have time to buy clothes
pm
velo
consumer spending segment via t De · High income families
rke
brand loyalty: y Ma
on d ar · Husband works many hours
· Men via women purchase from Sec
· FHH makes most purchases in the
multiple channels (2+) spending
$500+ family
· Men via women purchase from
multiple channels (2+) spending
$200+

4. Closing the Catalog and focusing on the store front and I-media revenue streams does not
fit with the Eddie Bauer brand and does not increase profits
Closing the catalog will not The positioning of this strategy does not fit with
increase profits: the core competencies of Eddie Bauer the
Company and the Brand:
1) The catalog generates close to 25%
of overall revenue and overall net 1) Eddie Bauer is as successful as it is today
profit because of the catalog driving in new business
2) The catalog has over 3.7MM 2) In order for I-media to be as popular as hoped
customers the catalog will have to drive traffic to the I-media
site
3) The catalog is Eddie Bauer’s main
marketing tool
Eddie Bauer’s Positioning within the market using this strategy:
Eddie Bauer is a customer driven clothing company that takes pride
in developing the latest high quality timeless fashion pieces for our
loyal customers.
Does this positioning fit with the following criteria?
Decision Criteria
Does the strategy fit with the primary target market and
secondary market?
Does the strategy help lower returns from the catalog
channel?
Does the strategy begin to build a CRM system?
No catalog means no traffic to I-media (central hub of CRM)
Does the strategy fit with Eddie Bauer's brand promise of
providing excellent customer service and innovative
casual fashion wear for men and women?
Will the strategy affect Eddie Bauer’s brand image of high
quality fashion?
Is the strategy profitable over time? Without the catalog as the main generator of new business
it may be difficult to have profitable growth over time
Does the strategy increase Eddie Bauer’s
competitiveness?
Will the strategy be easily implemented across all No, there will be an excess of products from the catalog
channels? channel, that will not be able to be sold
Will management be able to adopt the strategy with
relative ease?

5. Separating the catalog from the retail store and I-media will prove to be a logistical
nightmare
Separating the catalog from the
other channels does not fit the · The over stock of catalog items will not
Eddie Bauer brand: be re-sold and therefore will be a major
hit on the bottom line
1) Eddie Bauer will lose sight of · Spending over a year trying to
their target customers implement the idea of synergy and
deciding now to not be synergistic will
2) Separating the channels means lead to employee confusion and
re-branding each channel customer confusion
separately, which takes time,
money and patience
3) This is a very high risk strategy,
with minimal reward and high
potential of client loss
No real
differentiating
position from
the previous
strategy
Eddie Bauer’s positioning within the market using this strategy:
Eddie Bauer is a customer driven clothing company that takes pride in
developing the latest high quality timeless fashion pieces for our loyal
customers.
Does this positioning fit with the following criteria?
Decision Criteria
Does the strategy fit with the primary target market and
secondary market?
High potential of losing sight of target market
Does the strategy help lower returns from the catalog
channel?
Does the strategy begin to build a CRM system? All channels are separate, therefore separate CRM is needed
Does the strategy fit with Eddie Bauer's brand promise of
providing excellent customer service and innovative
casual fashion wear for men and women?
Will the strategy affect Eddie Bauer ’s brand image of high
quality fashion?
Is the strategy profitable over time? N/A data not available to check
Does the strategy increase Eddie Bauer ’s
competitiveness?
Will the strategy be easily implemented across all Building channel brands are not easy, getting noticed in
channels? channels that are unfamiliar is difficult (I-Media)
Will management be able to adopt the strategy with
relative ease?

6. In order for Eddie Bauer to increase sales a three prone strategic plan should be
implemented
Phase 1-Change Target Market
· By focusing 70-75% of our marketing efforts on women Eddie Bauer can increase sales
because we are marketing directly to decision makers
· The first goal of this phase is to increase traffic to the retail store and catalog phone
purchases through I media
· The second goal is to increase sales to women who are purchasing clothes for there
significant other either in the retail store or through the catalog/I-media
Gender Comparison Chart of
Purchasing Via Channel (in millions)
5
4
3
Women
2 Men
1
0
Store Catalog I-Media
Plan of Action: Showcase female products in the front of the
store to increase the amount of visits into the
1) Make the store front more appealing to store
female shoppers inside shopping malls
2) Within the store have 60% of merchandise
geared towards women and 40% geared
Women are impulse buyers, if the right size
towards men and colour are on hand, there is a greater
chance of purchase
3) Increase SKU’s for women’s sizes and colours
4) For specialty sizes and colours; retail stores If the sizes are specialty sizes that are not in
will have non-sellable products for the purpose stock, the value of having at least one sample
of sizing only, purchasing of these products can size for a women to try on is huge as Eddie
be done through the catalog or I-media Bauer will increase the chances of a catalog
purchase
5) The catalog images will be a 50/50 split
between the latest men and women fashions

7. Keep the idea of a synergistic brand image in the customers eye, but in terms of
management combine the catalog and I-media logistics together and keep the retail store
separate
Phase 2- Lower the risk of
returns
· Eddie Bauer is losing a great deal of money because of the idea of synergy
between all channels. This leads customers to return catalog bought items to the
retail store which then have an increased chance of not being purchased
· The main goal of this strategy is to lower returns to the retail store of catalog
purchase items by separating the retail store bought items from the catalog and I-
media items
Ratio of purchases to return in the catalog
channel via gender
Purchases
Women
Purchases Men
Returns Women
Returns Men
*Returns were estimated on gender buying behaviour*
· The catalog and I-media hub will be in Seattle
where all global purchase orders for these two
Plan of Action: channels will be distributed
· The retail store distribution will be separate
from the two other channels to avoid
1) Introduce two distribution hubs one for
confusion and lost product during returns
the 600 retail stores and the other for all
online and catalog purchases
Catalog and I-media returned items will be shipped
2) Develop a promotion strategy where to the Seattle distribution hub through free
shipping vouchers given to customers who want to
returned catalog items are offered as a exchange the items
discount on I-media before next seasons
catalog gets distributed
3) Introduce skimming pricing for new season
goods and lower the price point of last season
The left over stock from last season will be offered
products through a special catalog section at a lower price point to encourage loyal and value
and I-media customers to purchase an older item at a discounted
cost, therefore preventing unsold returns

8. Develop a CRM strategy to transform a value customer into a loyal customer
Phase 3- Develop a CRM System
· Eddie Bauer the brand is known for high quality and timeless clothing items,
these brand attributes must be shared to a larger audience and not just the
loyal followers
· Over 90% of profits come from value customers who don’t necessarily know
the Eddie Bauer brand
· The goal of the CRM system development is to transform a value customer
into a potential loyal customer by understand their buying behaviours and
targeting their needs and wants for Eddie Bauer items
Segment Analysis based on consumer spending habits
Type of Customer Spending amount Percentage of Eddie Profit (estimated on
per year Bauer Customers average spending of
segment)
Value $200-$500 90% $1,743MM
Loyal $500-$1000 1% $26MM
Other >$200 9% $150MM
Plan of Action:
1) Increase the salary of a CRM
veteran and retain his knowledge to
develop the CRM system By Changing 30% of
value customers to
2) Focus the CRM strategy on loyal customers will
turning value customers into loyal return over
customers via targeted promotions $800MM in overall
profit
3) Encourage frontline staff to
extract customer information to
build CRM database
Type of Customer Spending amount Percentage of Eddie Profit (estimated on
per year Bauer Customers average spending of
segment)
Value $200-$500 60% $1,046MM
Loyal $500-$1000 31% $1,801MM
Other >$200 9% $150MM
*Estimated numbers, a thorough investigation of consumer spending is needed to calculate true potential growth