Michael Kors research paper free essay sample

Michael Kors has been a leader in the fashion industry for over 30 years. He first entered the fashion scene as a teenager. Mr. Kors has not only managed to stay relevant in the industry, but he’s remained a major player for the past three decades. Kors was born Karl Anderson Jr. He legally changed his first and last name at the age of five when his mother remarried. Upon completion of High School, Kors attended The Fashion Institute Of Technology in New York City. However he dropped out after only two semesters. After leaving college, Kors worked a few different jobs in the fashion industry. Eventually he entered the private business world and started The Michael Kors Company. Like many successful business people, Michael Kors experienced some early failures and setbacks in the business world. In 1990 The Michael Kors Company was forced to file for Chapter 11 bankruptcy. Who would have thought that after being forced to file bankruptcy and dropping out of college, Kors would become one of the most popular and sought after fashion designers in the world. He did just that. His career covering three decades was filled with many more highs than lows. Combining fresh ideas with classic standards, Kors remains on the cutting edge. With a combination of new ideas and a commitment to the basics makes the Michael Kors lines solid year after year. Certainly Michael Kors is an example of not how you start, of how you finish. He managed to learn from his mistakes and his successes to stay on top year after year. Company Profile/ Background Today, Michael Kors is a rapidly growing luxury lifestyle brand led by world-class management teams and a renowned award-winning designer. Michael Kors career began at age 19, designing and merchandising a collection for Lothar’s boutique in New York City. With the success of these clothes he caught the attention of the fashion press encouraging Kors to strike out on his own. In 1981 the Michael Kors label was formed with his first women’s collection was launched at Saks Fifth Avenue and Bergdorf Goodman. Michael Kors launched accessories under his collection label in 2001 including women’s handbags, shoes, belts, and eyewear. In addition, the company launched a full-scale men’s collection in January 2002. Fall of 2004, Kors revealed his latest collection, Michael by Michael Kors, to an extraordinary launch in over 350 doors nationwide. The Michael by Michael Kors labels include women’s ready to wear, swimwear, handbags, small leather goods, belts and shoes; men’s sportswear, tailored clothing, dress shirts; as well as eyewear and timepieces for both men and women. Ever since this namesake brand was launched 30 years ago, Kors featured unique designs, materials and craftsmanship with a jet-set image that combines elegance and a sporty attitude. â€Å"Mr. Kors’ vision has taken our Company from its beginnings as an American luxury sportswear house to a global accessories, footwear and apparel company with a presence in 74 countries. †() Due to the highly recognized lifestyle brand in North America due to its increasing awareness in targeted international markets, Michael Kors has experienced excellent sales momentum and have a clear path for future growth. In the past couple years Michael Kors has expanded past apparel and into accessories such as handbags, eyewear, jewelry, small leather goods, watches, and footwear. The Michael Kors Company includes three brands, Michael Kors, MICHAEL Michael Kors, and KORS Michael Kors. â€Å"Mr. Kors himself owns about 12% of the company while Sportswear Holdings, the holding company owned by fashion investors Silas Chou and Lawrence Stroll, owns 50%. Parent company Michael Kors Holdings filed to go public in late 2011. † (Hoovers. com) Michael Kors the world-renowned designer leads the company’s design team. Michael and his team are the ones responsible for abstracting and directing the design of all the Michael Kors products, and their design leadership is an exclusive advantage that they possess. Mr. Kors have received numerous of high honor awards which include: CFDA Women’s Fashion Designer of the Year in 1991, the CFDA Men’s Fashion Designer of the Year in 2003, the ACE Accessory Designer of the Year in 2006 and the CFDA Lifetime Achievement Award in 2010. The awards Michael Kors has achieved recognize the contribution that Mr. Kors and his team have made to the fashion industry. SWOT Analysis: Michael Kors The following report illustrates an in-depth SWOT Analysis of the Michael Kors brand. This analysis includes the identification and evaluation of a firm’s strengths, weaknesses, opportunities and threats. In properly identifying the purpose behind the company’s continued high turnover rate, the group must first analyze the management style, factors that are both optimizing the company’s strengths as well as barriers or conditions that is preventing the company from reaching its objectives. SWOT Analysis: Michael Kors Strengths: Michael Kors is fast becoming a fashion retailer that is striving to outperform competitors in the industry. Its ability to provide consumer with a fresh and powerful branding strategy worldwide seizes to amaze its growing customer base. Michael Kors Holdings Limited is a global luxury lifestyle brand. The company operates in retail, wholesale, and licensing with a strategically controlled global distribution network focused on company-operated retail stores, leading department stores, specialty stores and select licensing partners (Bloomberg. com). Consumers look to identify with the simple luxuries the brand strives to implement in the everyday life of its customer base. The Company’s powerful branding and worldwide growth across multiple product lines and sales channels. The company bearing the name of the award-winning designer of luxury clothing and accessories with over 300 retail stores worldwide (Cook). The superior quality and intricate design across its individual product lines are equally encouraged by attractive price points, resulting in a greater emphasis on consumer purchasing power—frequent purchases within the growing customer base. It continues to grow connect with the consumers, resulting in growing sales, as the company operates in three separate segments: retail, wholesale, and licensing. The large target market includes products sold in the multiple formats that include: e-commerce, collection stores, lifestyle stores, luxury stores, and department stores—(wholesale retailers). Michael Kors also demonstrates a strong financial backing as a publically traded company. Attracting consumers and stock holders alike. Net sales of about $1. 86 billion to $1. 96 billion are projected based on a rise of about 30% in comparable store sales (Cook). The management team continues to equally represent the company accordingly through the principles and corporate values as set forth by its founder, Michael Kors. Since launching his namesake brand 30 years ago, Michael Kors effectively leads the design team. This distinct company advantage results in effective brand differentiation amongst consumers, as they have identified the correct brand resource to capitalize on the brand strength of the Michael Kors collection to meet the significant demand for accessible luxury goods. This accessibility for luxury items for the modern consumer comes to life with as unique celebrity endorsements, red carpet events, and sought after collaborations. Names in the entertainment industry includes Gwyneth Paltrow, Jennifer Lopez, Cameron Diaz, and a newly announced partnership with fellow designer Stella McCartney (Karimzadeh). In 2004, Michael Kors was asked to be a judge on a new reality television show called Project Runway, almost 10 years later, and his presence on television has clearly opened a new door for consumer reliability and consumer loyalty, as this brand exposure continues to build his fashion empire and customer base among a new generation of fashion admirers. The brand continues to expand its retail and product selection, most recently, the company added 83 net-new stores since this time last year for a total of 352 Kors operated shops (Sharf). SWOT Analysis: Michael Kors Weaknesses: Michael Kors has had many successful achievements, however, there a numerous weakness within the company that results in a high degree of competitive disadvantage. Tony Duquette, Inc. (which holds various intellectual property rights associated with the designer and artist, who died in 1999) sued Michael Kors, Inc. , in 2009 for trademark infringement. Duquette alleges that Kors â€Å"infringed the Duquette proprietary name and trademark by producing and marketing a Kors resort collection using the name ‘Duquette,† (Murge). The luxury markets consumer demands increases as the customer loyalty to the brand deepens with company- customer relationship. Consumers are looking to connect with the authenticity of the brand, the ability to differentiate itself in conceptual design, themes, and overall creativity ability. A negative image in the media questioning the legitimacy of the brand imposes a feeling of uncertainty among consumers as customer purchase from the brand for uniqueness and exclusivity. Also, â€Å"According to new research from Departures magazine and Ledbury Research, which surveyed top luxury CEOs, North America was listed as the most important market for growth over the next five years† (Frank). A strong presence specifically in the North American markets among consumers is a fundamental element in continuing to grow a successful world-wide brand image in comparison to other luxury competitors. The luxury market contains larger competitive companies with a more diversified selection of products for consumers. This enables the businesses to correctly withstand economic defaults among consumers and effectively implement a pricing and promotional strategy. The company has continued at a slow expansion rate within the North American markets, as Michael Kors states, â€Å"400, thats how many stores Michael Kors would like to operate in North America, more than doubling the size of his current fleet† (SF Gate). In the luxury market, consumer spending both domestically and internationally depends highly on the discretionary income of the customer base. Factors that affect the ability of a consumer to invest in luxury items such as products offered by Michael Kors includes: stagnant unemployment numbers, falling consumer confidence, consumer debt, political and taxation conditions, and overall lower wages. To combat the fact that disposable income is increasingly lower, resulting in a slowing market growth, the company must rely on the success of the company’s human resources- assets of selling and profitability. However, through research, that includes statements and interviews from past employees, it has been concluded that Michael Kors is continually stifling behind in clearly taking full advantage of its knowledge able human resources, resulting in a high turnover rate of its employees. Opportunities: Michael Kors is continuing to strive to in capitalizing itself as a premium brand in the world-wide market place, looking to build a successful brand loyalty with consumers, as the center of its business strategy. With a presence in 74 countries, KORS looks to capitalize on the Asia appetite for luxury brands like Coach (COH) and Tiffany. Their accessible luxury collection will likely give them an added competitive advantage as the products and price points cater to an emerging middle class in China (Cook). A strong appetite for luxury brands outside of the American market place serves as an encouraging platform for the Michael Kors enterprise. Diversity is uniquely as an important factor to gain a competitive advantage, continuing to build brand exposure in other parts of the world signals room for a growing customer base for the brand. As the brand as already proven, it can sustain the long-term advantage with consumers oversees as seen in the company’s strength in Europe, a market in which it faces against some of the most well-known brands in fashion Louis Vuitton, Prada, Gucci and Burberry. The ability to innovate, adapt, and integrate while staying true to the core promise is key to building an enduring brand. As a highly publicized luxury brand in the media, Michael Kors can ultimately capitalize on further branding their values—exclusivity and differentiation through its online formats. Embracing a much more effective online marketing channels, for example, developing the user experience results in a higher recall of brand awareness and consumer identification with the products. Outside of online marketing efforts, recent studies show, â€Å"â€Å"By driving a frequent flow of new and innovative products through its own stores and wholesale shops, the company is generating consumer excitement in a way we’ve never seen in the luxury accessories category† (New York Post). Michael Kors is a brand that build upon is vast product selection, promoting the success image of global marketer, designer, and distributor. By making luxury items more accessible, Michael Kors has captured a niche in the luxury market that makes its products both stylish and in demand among fashion-conscious consumers. The company can grow its product assortment by offering a greater selection of young woman’s contemporary (20-30 years old) items. . It has certainly grabbed the attention of the 20- 30 target market segment, best described as the â€Å"trend driven† consumer. In a strategic means of marketing to this segment of consumers, Michael Kors may initiate an interactive website for shoppers, offering live webcasting of runway shows backstage interviews at the start of every fashion season. Threats: In a luxury market segment with a vast number of consumer and a diversified customer base both domestically and internationally, Michael Kors must clearly measure and satisfy customer needs (fashion demands) with a wide-ranging customer base. The overall brand image the company represents, including the exclusivity and one of a kind luxury the products offer consumers is a direct reflect on the designer and founder himself, Mr. Michael Kors. Moreover, increased competition for Michael Kors is a constant threat as their accessories and licensed accessories are growing front runners in the fashion luxury business. The two companies (Coach and Michael Kors) are seen as direct competitors and in some department stores their wares are placed next to each other, Michael Kors needs to distance and differentiate itself from Coach products. The consumers in Asian markets are looking for increasingly exclusivity and luxurious in products. For example, Louis Vuitton is courting Chinas wealthy with one-of-a-kind shoes and bags it is branding as unique works of art to reclaim its exclusive cachet in the luxury market. China is the worlds third biggest market for personal luxury goods, worth at least 160 billion yuan ($25 billion). In the next three years, it is expected to leapfrog over Japan and the United States to take the top spot, with the luxury segment expanding to 180 billion yuan ($28 billion) (Lee). However, the weak economy of China continues to decrease, resulting in a shrinkage in consumer purchasing power on luxury goods. In its quest to dominate the market, Michael Kors must clearly differentiate itself in its price and product selection in comparison to growing competition. A decrease in consumer spending (purchasing power) in a frail economy threatens the business infrastructure, operating expenses international, and its overall financial position. The company subsequently cannot decrease prices, as the initial business strategy must change, decreasing production and operating costs that will ultimately lead to a failure within the organization- a lack of profitability. SWOT ANALYSIS Strengths 1. Multiple retail and sales formats 2. Global company image branding 3. Accurate price points- cost advantages 4. Excellent executive design team 5. Media Accessibility- Celebrity endorsements Weaknesses 1. Negative brand image 2. Discretionary income from consumers 3. Lack of presence in North America 4. High Employee Turnover Opportunities 1. Emerging demand for luxury in outside markets 2. Innovation of multimedia marketing 3. Increasing Diversity 4. Expand 20-30’s target segment in retail clothing for â€Å"fashion conscience† consumers Threats 1. Increased competition 2. Distinct differentiation among competitors 3. Weakening economy of international consumers 4. Consumer spending patterns domestically Despite some setbacks, Michael Kors remained focused on success. Mr. Kors has certainly experienced his share of ups and downs. A college drop out, later forced into bankruptcy, he later rebounded to become one of the most sought after designers in the world. Michael Kors is an example of someone that can manage to come back from early setbacks to become a great success. Most recently he has designed for many A-listers around the world, including the first lady Michelle Obama. The career of Michael Kors demonstrates that one can become a great success even after some early failures. In conclusion, it has been the ability to adapt and remain classic that has kept Michael Kors amongst the industry leaders year in and year out. Kors designs have a classic look that most of his fans have come to expect. His ability to combine classic looks with fresh changes allow him to remain on the cutting edge of fashion. He has shown that new ideas can be combined with those that have worked for years. Flexibility and a commitment to excellence have made the Michael Kors lines successful for many years. His past success suggests that this trend will continue. Michael Kors is truly a giant in the industry.