Liz Claiborne Inc.’s History and Future Growth Report

Introduction

Liz Claiborne Inc. is an apparel design company founded by Liz Claiborne, Art Ortenberg, Leonard Boxer, and Jerome Chazen in 1976. Soon after the establishment, it achieved sales amounting to $2 million in the same year and increased to $23 million in 1978 (Liz Claiborne Inc. 1).

It took 4 years before Liz Claiborne Inc. could go public but by 1986, it had appeared in a coveted ranking popularly known as Fortune 500. No other company founded by a woman had appeared in the ranking by Fortune 500 before Liz Claiborne Inc made it. By this time, the company managed to make sales worth $1.2 billion (Burke 112).

Liz Claiborne changed the departmental clothing arrangements when she insisted on the significance of placing collections together. This eased the shopping activity because shoppers could buy the entire outfit in the same store.

Sooner after the company made a breakthrough in the fashion industry, the founders retired from active management. In 1985, Leonard retired followed by Liz and Arthur in 1989. Jerome’s appointment as the chairperson and CEO came from 1986 to 1994 when Paul Charron proceeded from the same year up to 2006. Charron contributed a lot to the company’s expansion through the integration of other smaller companies into their activities. For instance, he managed to get 85% possession of Lucky Brand Jeans in 1999, total possession of Mexx in 2001 and purchased Juicy Couture in 2003. After Charron’s tenure, William McComb took the responsibility of CEO from October 16, 2006.

J.C.Penny Co later became the main retailer of Liz Claiborne Brand according to reports posted on the media relations website on 8 October 2009. A contract between Liz Claiborne and J.C.Penny for 10 years aimed at changing the losses situation experienced in 2009.

Some of the Brands owned by Liz Claiborne Inc. included Liz Claiborne New York, Mexx, Juicy Couture, Kate Spade, Lucky Brand Jeans, Axcess, Concepts by Claiborne, Liz & Co, Dana Buchman, Kensiegirl, Mac & Jac, Monet, DKNY Jeans, DKNY Active brand among others (Bozarth 1).

Establishment of the Company in the 1970s

It was all started by Elisabeth Claiborne (also known as Liz) desire to become a fashion designer since her tender age. Her efforts got recognition at the age of 20 when she won Harper Bazaar magazine’s design contest. Later she secured a sketching and modeling job with New York’s garment district for 16 years where she discovered there was a need to come up with more wardrobe options for working women. The idea of stylish, sporty, and affordable clothes necessary for women working in America was hard to ignore regardless of her employer’s opposition.

This marked the turning point for Claiborne who left the company to join her husband Arthur Ortenberg and Leonard Boxer to establish Liz Claiborne Inc in 1976. The trio managed to contribute $50,000 and an additional $200,000 borrowing done from friends and families. This resulted in the launching of specialized fashionable, functional, and affordable women’s apparel companies. The company’s launch attracted the attention of Jerome Chazen who joined the company later. Liz Claiborne, Inc. registered much profit within the first year, which made it the fastest-growing apparel company in the US in the 1980s.

The company timing came at the right time as Jerome Chazen expressed to Fortune organization on niche existence that motivated the company establishment to meet the demand increase from women baby- boomers. This was a market that other designers failed to notice and Liz Claiborne Inc had to overcome the traditional trend that relied on spring and fall. They instead adopted six selling periods that incorporated new styles every two months. The introduction of cycles helped the company to minimize inventory costs and increased overseas supplier efficiency. The company’s decision to eliminate the traveling sales force catalyzed the company’s rapid growth (Odiorne 34).

Company Analysis to Date

As mentioned earlier, Liz Claiborne Inc is one company that ventured into the design market with a bang. Records were overturned and others were broken as this company attracted the attention of people, institutions, and society. Soon after the establishment in 1976, the founders worked tirelessly and the results were spectacular where the company made massive sales and awarded much recognition from Fortune 500 by the 1980s. This however reduced after the retirement of the key founders in the 1990s that led to instabilities in the company. The trend deteriorated in the late 1990s but strategic measures occurred towards early 2000.

Negative Changes Notable in the 1990s

Regardless of registering massive sales worth $2.2 billion and the victory of many honors as the largest women apparel company, this came to a standstill in 1993. This year, the sales fell drastically where $300 million merchandise was not sold as planned. This to some extent contributed to an income decrease of 42% in 1993. The situation turned nasty for the company since business activities were not as usual for the company. The glory withered for a company that once regarded as the smartest and efficient in the region. It was unthinkable that employers could hire workers who had earlier worked in Liz Claiborne Inc where sales and income had quadrupled between 1985 and 1991.

The stalemate state of Liz Claiborne’s apparel was associated with the departure of the founders as some critics revealed. Also, other factors that contributed to this situation may include the decision by Saks Fifth Avenue to stop selling Claiborne core sportswear lines in 1993 and the unprofitability of some new market lines like Crazy Horse and Villagers. The only income-generating department stores in 1994 were Dillards, May, Macy’s, and Federated that contributed to profits decline to $83 million from $223 million in 1991.

As noted by Jordan (1996), the company used this period to recover from its mess. Luckily, the company was regaining trends through sales of smartly cut silk suits and cocktail dresses as well as basic blue jeans and khaki pants. The company took an advantage of debt-free from the previous period although they met a tough business environment. In an attempt to recover fully, the company went further to spend $25 million in campaigning through different media and related programs in 1996. Charron also re-launched product lines as well as incorporating new products into the market.

Another strategic plan in an attempt to recover fully for the company was the introduction of a strategic licensing agreement in conjunction with Donna Karan International Inc. in December 1997. For the first time, it was surprising to see Liz Claiborne become a licensee where they contracted Donna Karan for 15 years with the contractor receiving a minimum of $152 million in royalties. In return, Liz Claiborne received rights to the source, distribute, and market DKNY jeans and DKNY active trademarks across the western hemisphere.

This strategy also helped the company to reduce its costs, operational improvements as well as improving its sales in core product areas. The period within 1997 was then a good moment for the company since it managed to make net sales worth $2.41 billion and a net income of $185 million.

Trends for the Future

After the shortfalls experienced by the company, the company had to adopt new divisions including special markets division that dealt with moderate and value-priced brands. This led to the company profit realization in the first quarter of 1998. Some trade-off was worth doing to take the company to its former glory. Some tradeoffs included the sale of the re-launched First Issue line in sears as JCPenny offered the Crazy Horse label. Russ, Emma James, and Villager lines division. The decision received a massive boost from Charron’s relationship with VF Company that transacted with Liz Claiborne in a department store and later to a mass merchant. The company also transferred its highly-priced products to Wal-Mart, Kmart, and regional department stores that included Kohl and Mervyn.

In 1997, the company achieved sales worth $104 million with a projection that the sales were to increase by 30% in the subsequent year. The licensing agreement helped the company use its brands as securities for future growth.

The retail consolidation strategy by Charron led to some difficulties in the trading arena. The company’s sales decreased by 2.1% in the first quarter of 2006 to sales worth $1.17 billion that raised a margin of 2.4% that is, $1.13 billion for the second quarter period of the same year. This strategy reduced the number of supply since the retailers were focusing on productivity hence reducing the number of orders from the stores.

Wholesalers were therefore required to solve the situation to maintain its market margin share. Liz Claiborne decided to buy smaller companies to be part of the company that made it harder for retailers who demand discounts and concessions from the wholesalers. According to Charron, this reduced the number of players and strengthened institutions that made it hard for retailers who were used to money wringing from the company (Robertson 1).

J.C.Penny Co. became Liz Claiborne brand exclusive retailer on October 8, 2009. The Liz and Co and Concepts by Claiborne brands merchandise started appearing in the JCPenny stores in late 2010. A contract between J.C.Penney and Liz Claiborne was to last for 10 years with the expectation that the losses incurred by the company in 2009 could be overturned (J.C.Penny Co. 1).

Goals for Liz Claiborne Company

According to Liz, the initial plan was to have well-organized management, distribution, and a good sales team. Regardless of the disorders associated with the industry, she managed to get a strong team capable of carrying out the business. The goals for the company since the establishment included:

• Listening to customers’ demands.
• Creation of first-class products that addressed customers’ needs a corporate strategy.
• Pricing of products with customers in mind.
• To always do more and do it better.

Creation of first-class products that addressed customers’ needs goals. Following this goal, the company was able to produce a wide range of brands that customers enjoyed. Initially, Liz Claiborne, Inc. catered for all women categories including working, casual, and sportswear that cut across all social classes. The brands were not only of high quality but also high-valued, original, and comfortable.

The products, therefore, satisfied customers the factor that forced the company to venture into new lines and categories those other designers had not invested in. For instance, the introduction of men’s clothing in 1985 and the wide range of brands associated with women put in stores after a short period. This assured interception of customers’ demand at the right time. This goal was to some extent achieved through the adoption of corporate strategy.

Forecast Error = A_t – F_t

The right model associated with this goal is the forecasting models where the quantities are determined.

F_t = Y_t-1 Quantitative forecast model.

Liz Claiborne, Inc.

Linear trend analysis

Y=124.6644x – 246477 (Barney 99).

The goal of Listening to customers’ demands

The company was also concerned with getting feedback from their loyal customers so that timely adjustment or development. As one way to achieve this goal, the company had to pay attention to customers’ demand that led to the production of aesthetic and technical oriented brands (Del Río, Iglesias, and Vazquez 410– 425).

The company’s intention to get timely information helped in maintaining the customers’ loyalty. For instance, the company acquired computers that provided the necessary information on sales trends in the country. Automation of inventory boosted the marketing operations since the demands related information responding was in time. Also, there was the employment of additional 150 specialists who complimented the network through acquiring customer’s feedback at the stores. Twenty-one consultants invigilated the store’s arrangement in compliance with the company diagram.

This was possible for the company through the adoption of Information- and technology-driven strategy proper execution by the company. A model suitable for this goal is the inventory control model. This model seeks to minimize the total cost of inventory to take the benefits of interest rate, to avoid a shortage of products in the market, and to enable good decision making when setting up the cost of production. Under inventory, we can adapt to the production and consumption model.

The goal for Pricing of products with customers in mind

Pricing is a crucial and sensitive element in any economic system. The decision to come up with the right price is equally significant. In a free market, the forces of supply and demand determine prices. It is therefore right to say that pricing is challenging in the marketing mix hence any company must be sensitive to it to make sure the price arrived at considers the interest of the customer who is the consumer (Keller, Sternthal, and Tybout 80-89).

Liz Claiborne took this initiative to hit this competitive market by producing a brand whose costs were customer-friendly. The company determined the price for the existing brand by analyzing the market situation so that the brands could compete well. Fortunately, the improved quality of their brands and the uniqueness enabled good to venture into the market regardless of the higher pricing. Customers opted to buy brands associated with Liz Claiborne, Inc. due to its fame (Keller and Lehmann 26-31).

The company took caution, especially when introducing prices for brands that did not exist in the market by use of two strategies namely skimming and penetration. The skimming strategy aims at introducing commodity at the highest possible price while the penetration strategy aims at introducing commodity into the market at the lowest possible price. Skimming is probably the most used strategy by Liz Claiborne as opposed to penetration since its products are highly valued and expect less resistance from the customer. This does not mean they are highly-priced but the brands are worthy of higher prices.

Good pricing must therefore meet the following objectives:

1. To achieve a target rate of return of investment or sales
2. To stabilize the prices
3. To maintain or improve the target market share
4. To meet, follow, or prevent competition
5. To maximize profits.

The most suitable mathematical model is linear programming that helps us in achieving the best outcomes in terms of profits maximization and minimization of costs. By so doing, the company will spend wisely and produces brands that are customer friendly. Some authors refer to it as a technique that optimizes linear objective functions. The model has both the objective function and constraints function.

For instance, given the objective function:

Max f (x₁, x₂) =c₁x₁ + c₂x₂

The constraints are:

a₁₁x₁ + a₁₂x₂≤ b₁

a₂₁x₁ + a₂₂x₂≤ b₂

a₃₁x₁ + a₃₂x₂ ≤ b₃

The non-negative variables include

x₁ ≥ 0

x₂ ≥ 0

Non-negative right hand side constants

b_i≥ 0, _i=1, 2, 3

Express this model as a matrix for simplicity purpose.

Always doing more and doing it a better goal

Throughout the operations of the company, it was evident that it was successful in coming up with brands that were not readily available in the market as well as the production of high standard good that competed well locally and internationally. To fulfill this goal, the company noted different production lines that made their competitors run out of their money. Differentiation was one strategic plan that helped the company to overcome the competition that resulted from low priced good. The customers who remained loyal to the company received the products with much love.

This goal was possible through the implementation of Knowledge Adaptive Strategy (KAS) that had IP ownership and protection making it harsh to illegal counterfeiting.

Company’s growth strategies

Corporate Strategy

A focus (or niche) approach. To estimate the effectiveness of this strategy, SWOT analysis is crucial. Before implementation, analysis of the internal strengths and weaknesses, as well as external opportunities and threats associated with the business, facilitates early precautions in the initial stages or modifications mending.

For the company to excel under this goal corporate strategy was adopted as illustrated by Johnson, Scholes, and Whittington in their model that included three key success criteria evaluation (Johnson, Scholes and Whittington 34). This strategy must address suitability, feasibility, and acceptability.

Suitability

This criterion focuses on the whole rationale that the company wants to achieve under this strategy. The key strategic issue was to create first-class products that addressed customers’ needs with the further motive of reducing competition. This had a good impact on the economic aspect since it helped the company to achieve economies of scale in the 1980s when the company registered massive sales.

Given the timely establishment and good management offered by its founder, there was no doubt that the company would compete well in the men dominated industry.

There was a transformation of Liz Claiborne, Inc. from a basic sportswear company to a multifaceted fashion house in the 1980s. Nineteen divisions and three licensees were present in the early 1990s as opposed to a single division in 1980.

Another productive move happened in 1981 when the company went public with a share costing $19 and as a result, the company accumulated $ 6.1 million from sales of these shares. Additional divisions occurred between 1981 and 1985 when the company introduced men’s clothing. The company decision met many surprises since 70% of women customers bought clothes for their husbands. In the same year, the company introduced an accessories division dealing with leather handbags, small leather goods, and bodywear.

The right decision is crucial for decision-making regarding this strategy because brands may fail to hit the market as intended. A contributing editor Vickie K. Sullivan emphasized three models that were worth adopting for a company that had the intention of branding.

Leader of a movement

Decision-making facilitates the commencement of strategy implementation since a journey of thousand miles starts with a step. However, the initial decision faces challenges because it requires the adoption of a solution to the current situation as well as the betterment of the future of the company. The executives are required to come up with an applicable content-based foundation as well as relying on the ideas through different avenues such as speeches and books that expound the ideas (Mulcaster 68–75).

This early-strengthened foundation helps in alleviating possible problems likely to affect the strategy during its implementation. The benefits accrued to this model are associated with the reduced sales cycles hence minimizing the risks. Other concepts and approaches suggested by the editor were:

“From good to great” concept

Jim Collins is popular for his success in the adoption of this concept. This approach solves problems affecting organizational growth. Poster children had a close relationship with this concept and Collins expanded the concept to the social sector through the publication of “Monograph” in 2005. Collins could receive a minimum of $60,000 for speaking depending on the occasions he had to address (Mulcaster 68–75).

It is therefore clear that this concept is worth adoption since the executives cannot just assume that they have all the knowledge required to run the company. Liz Claiborne must have failed to appreciate this idea hence relying only on the chairperson’s decisions without taking cautions to future implications the decision was to bring. Decisions to introduce new brands in the company were positively motivated but adequate knowledge was crucial since some brand’s introduction in Liz Claiborne messed the company’s progress of the company.

If consultations were previously done maybe the company could have noticed that some brands had short-term demand and the customer’s perception of these brands was somehow discriminative. A good example was the introduction of the Villagers line that received initial market demands but later this demand went down to an extent that this product was not profitable to the company. The customers must have reduced their taste and preference for the product

“Roaring 2000’s” approach

Harry Dent who took over the financial market by surprise in the late 1990s introduced this approach. This approach helps in expanding the brand through publications of materials that reflect good marketing ambitions and strategies. He succeeded through his Roaring 2000 Investor and the books that were referred to as the “next great bubble boom” between 2006 and 2010. Like Collins, Dent also received a large lump sum for his services and he received $100,000 for his appearance in an organization (Mulcaster 68–75).

It is therefore evident that strategic management crucial for any company regardless of its size, model, and scope. For smooth management, there is a need to address issues on stakeholders’ views and demands.

Feasibility

This is another concern to a company in determining the strategy implementation. It focuses on resourcing through development or acquisition. The resource required in this strategy includes funding, people to offer labor as well as experts, time constraints, and relevant information on customers’ demands and feedbacks. Following the drawbacks realized by the company in the late 1990s, there was a dire need for this strategy. The company took different measures regarding this aspect in various ways.

Acceptability

During production to the time a company gets finished brands, the company must ensure the brands meet expectations of the shareholders, employees, and customers. The outcomes should be receiving support from stakeholders through the accrued returns deals as well as risks deals associate with failures of the strategy. Evaluation of these criteria is accomplished through what-if analysis and stakeholder mapping.

Since the establishment of Liz Claiborne, Inc., the company was able to win the hearts of many customers, employees, and shareholders because at no time there was disagreement among the parties. This helped the company to expand and venture into other business territories due to the image it had created locally and internationally.

European acquisitions

The company also had intentions to venture into the European market for its further expansion. The company targeted the Mexx brand among other brands. This made Charron make some European acquisitions ranging from $100 million to $400 million a move that was found by many analysts as a risk due to the presence of Ted Baker, French Connection, and Diesel.

Reiss and Mulberry blended well with the company’s goals as well as some fashions and design talents that are present in the European market (Robertson 1).

More brands of its brands moved to Europe and Mexx became stronger in Britain. unfortunately, lucky brand jeans were expected to carry their operation the same year in London but the plan was called off to enable the company to concentrate on the development of Juicy Couture based in the UK. The brands received a good market in the UK with Juicy competing at very high prices (Robertson 1).

Strategic Implementation and Control

Strategy becomes complete by an implementation that includes organizing, resourcing, and utilization of change management procedures.

Organizing

This dealt with fitting the company design to the strategy initially laid through improving reporting, spans of control, and requirements for the establishment of strategic business units. Liz Claiborne, Inc. implemented the company decided to improve its business activities with Malaysia, China, and Sri Lanka because labor was cheaper and readily available as opposed to Hong Kong, South Korea, and Taiwan. Surprisingly, only less than 10% of the production of its goods was in the mother country, United States hence the company took caution by employing overseas staff who regularly visited the factories to maintain high standards as demanded by customers.

One of the strategies employed by the company was the implementation of a no-cancellation policy where merchandise that remained after the spring season could not interfere with the summer sales orders. The execution of the plan by the company worked well since clothes marked down were below the industry merchandise norm. Also, there were markdowns risks reduction through the production of lesser goods in comparison to demand projection level.

There was much business venturing in other countries such as Canada, Netherlands, and the United Kingdom among other countries. This strategy was a success since the income generated from international amounted to $108.1 million in 1992 compared to $1.4 million in sales internationally in 1986.

Resourcing

This means looking for resources that can help the implementation of the strategy. This includes human resources, capital equipment, and IT-based implementation.

Changes in management

This is a crucial process especially during implementation and a lot of opposition occurs during leadership transitions. However, the changes must be consensual to meet the desire of the stakeholders. Change agents appointment champions required urgent changes in the company to erase bad image or trend. In an attempt to keep Liz Claiborne, Inc. in business, there were significant changes that took place, especially after the founders departed from active management.

In one instance, Chazen was appointed the chairman after the founder retires from active management. His appointment came with more developments for the company. There was the introduction of new products such as jewelry, expansion of the business and new brands release into the market like the villager’s line, and working women tailored suits. Chazen had a lot of plans that were likely to increase the sales and venturing into new geographical locations.

This venture was meant to capture the consumers’ demand that was present as well as the projected demand. He therefore strategized by introducing new product lines among other products. His appointment as the CEO in 1995 from VF Corp also made some reconstructions to the company. He initiated a plan where some employees laying off happened as well as the closure of loss-making lines. He also implemented a program that hoped to minimize the expenses by $100 million, facilitate inventory reduction by 40% as well as reduction of production and delivery cycles by 25%. Lastly, he initiated a technology-related investment that improved designing and close monitoring of sales.

Denise V. Seegal offered the required solution to this company because of his rich merchandising knowledge.

Results

Ten years after establishment, it was declared the first woman initiated company to be ranked in the Fortune top 500 as well as the youngest company to have ever made such achievements. However, during this period some difficulties faced the company. For instance, the company registered a decrease in net earnings by a margin of 11% that translated sales to $102 million, and sport wares sales decreased from a 20% annual increase to an estimated 3% increase in 1988. Sales gains at this time were hardly hit instability and were realized in the company.

In 1992, the company managed to achieve a 9.3% increase translating to $2.2 billion, which was still a tangible achievement in the existing industry. However, the company had another hindrance in the 1990s when the population demand trend changed. Demand from working women registered a drastic fall in the 1990s to 25% from 43% demand registered in the 1980s among women aged 25 to 54.

This put the company in a business quagmire and resolution to this problem was critical for the company to secure a tangible market share. To make matter worse, there were effects of the recession and increasing competition in sportswear sold at an average price that made Liz Claiborne upgrade its business profile. This was through a print advertisement for both apparel and accessories in October 1991.

Denise V. Seegal’s appointment as the president in October 1996 led to an increase in women’s sportswear by 10.8% translating to $1.23 billion. Further increase in sales resulted from Dana B. and Karan lines that boosted by 38.5%, which means sales amounting to $188.7 million.

Information- and technology-driven strategy

This strategy has been studied by many researchers including Peter Drucker in 1950, John Nesbitt in 1984, Daniel Bell in 1985, Peter Senge in 1990, and since then more and more theorists have written on this strategy (Drucker 1). Though much discussion occurred on information profitability, according to Nesbitt, the presence of computers made easy accessibility of information. It was clear that automation of technology and improved information technology was beneficial to managers and worker through decentralization, teamwork, knowledge sharing as well as providing central knowledge workers (Zuboff 1).

Basing on the learning organization notion by Arie de Geus at Dutch Shell, Senge expanded the idea to become popular. He termed the strategy as significant for the company’s possibility to get, analyze, and use the information for the improvement of business (Senge 21).

The benefits accrued to this strategy is the continuous learning capacity, nurturing of new thinking patterns, encouragements through aspirations, and people can share a common idea simultaneously.

Implementation and Control

Liz Claiborne must have noticed these possible benefits and that is why a project that sought to improve the company-customer relationship operated in North Bergen, New Jersey at a budget of $10 million. There was the acquisition of IBM computers that provided the necessary information on sales trends in the country. Automation of inventory boosted the marketing operations since the demands related information responding was in time. Employment of Additional 150 specialists complemented the network through acquiring customer’s feedback at the stores. Twenty-one consultants invigilated the store’s arrangement in compliance with the company diagram. Retailers got a chance to seek answers to their questions through the 95 customer service telephone operators.

In an attempt to recover the company from a downfall, Liz Claiborne company made a market survey whose results encouraged the company to venture into specializing in the apparel of large women that most designer companies ignored. This step received a warm welcome since it offered all kinds of dressing to women in this category hence improved the market leadership. Charron commenced a technology-related investment that improved designing and close monitoring of sales.

Results

The company’s sales increased by 23.4 % translating to sales amounting to $161 million in 1992. Liz Claiborne stores opening complemented the suburban malls as well as to offer a platform for new design testing and product presentation. State-of-the-art barcoding made milestones in the company since market trend information acquisition was timely for companies’ decisions. Also, data from the stores were made available for management through other electronic data interchange systems.

These retail divisions collectively registered a 20% sales increase translating to $92.9 million in 1992. Fifty-five factory outlet stores sold the earlier inventory to achieve the records level of 34% increase translating to $113.9 million. Merchandise sales were through contracts to over 50 nations since the company had no factory that posed a great challenge.

Knowledge Adaptive Strategy

In a business field filled with mechanics of management strategies, it was wise to device a new strategy that could deliver better results especially in this post-industrial world where scale is insignificant. Currently, accessibility to capital and global markets has led to many developments in the business world. This situation facilitated the possibility of Simultaneous multiple organizations. The advantages that emanate from processes improvement are insignificant due to competitor’s adoption and imitation of the processes. The customers’ loyalty regarded as vital for brand sales is facing suppression due to the emergence of new brands and products into the market.

This strategy emphasizes the role of differentiation in economic stability and market dominance over the competitors. A good company’s Brands should therefore differ from that owned by their competitors. Similarly, IP ownership and protection adds an advantage to the freedom of compromise by competitors who illegally make counterfeit products.

The principle behind this strategy falls under the idea of evolution through differentiation, selection, amplification, and repetition. Survival is the name of the game under this strategy where utilization of trial and error method occurs before implementation (Handler 59).

This strategy works well with promotion and promotion management strategies.

Promotion and Promotion Management Strategy

This strategy employs four main elements that are crucial for the strategy’s success:

Advertising

Liz Claiborne Company successfully utilized this element to ensure their brands hit the market with customer awareness. This applies the non-personal visual or oral message to customers with information concerning certain brands through media and related communication devices. This happened occasionally, especially when the company received some difficulties during its operations where sales reduced and the income reduced significantly.

For instance, Liz Claiborne, Inc. interventions in the early 1990s. An intervention was worth carrying to overturn the current hardships facing the company after the retirement of the member founders who left for other interests. Liz Claiborne and Art Ortenberg Foundation establishment was the alternative option for the retired founder who took this opportunity to take care of wildlife and the environment.

The advertisement was the strategic plan at this period for Liz Claiborne to enable the company’s competitiveness against other companies. This was to enable the company to strengthen its fashion image and popularizing its image globally. It also sought to maintain the customers’ loyalty to the retailers as well as penetrating the European market where the competition was stiff. This strategy was a success because Liz Claiborne’s products met the required standards similar to that in Europe and Japan in terms of quality value and fitness.

The company spent a total of $6 million during this advertisement campaign that included consumer publications such as Vanity Fair, Elle, and HG. This advertisement campaign also sought to increase the goals for the visibility of the company to the consumers.

The evaluation of this criterion uses the knowledge of using cash flow analysis and forecasting among other analyses.

Personal selling or salesmanship

This element involves the use of a field sales force. The main significance of the field sales forces is to assist and persuasion prospective customers to buy a brand. There many benefits accrued to this element, as the company is likely to popularize its products as well as increasing its sales in existing and new brands introduction into the market (Management study guide 1).

Sales promotion

This element utilizes samples, coupons, displays among other activities. Companies also venture into opportunities provided by events such as trade fairs and exhibitions. The rationale for this strategy is the complementation it offers to personal selling and advertising elements. Utilization of this by Liz Claiborne, Inc. was poor and therefore we could have expected sales increase attributed to this strategy (Management study guide 1).

Publicity

In this element, promotion takes various forms such as sponsorship. Companies and business organizations can portray and convey their images and brands they provide through involvement in activities that the other elements did not meet.

Besides the efforts through advertisement, the company carried out activities that are more vibrant through the interaction of the community and the company in projects focusing on women’s contributions, domestic violence, and conflicts in homes and work.

The move by the founders after the retirement from active management to establish Liz Claiborne and Art Ortenberg Foundation whose responsibility was wildlife and environment protection was a strategy to maintain the role of the company.

Implementation and Control

As discussed above, this strategy has to undergo trial and error to measure its fitness in competing in the current market. After the trial and error process, the dropping of the strategic plans that fail to deliver good results happens or the business seeks an alternative utilization. Tradeoffs between risk and returns are crucial in the decision-making under this strategy. The development of this strategy is through the help of the Cynefin model and adaptive cycles of business.

In 1988, the company started the first retail apparel that offered First Issue Brand designed for casual women sportswear. Some management members viewed this decision as an expensive as well as a risky initiative but it turned to be a good move in diversification.

This strategy helped the company to differentiate itself from low-price retailers. These products focused on high fashion and high –margin lifestyle brands. There have been trends of low-price competition that have led to renowned shops such as Wal-Mart and Target to lower their prices to cope with the competition.

The advantage of these brands is that they are not easily affected price-wise since customers are easily attracted hence the loyalty associated with the products and its uniqueness motivates customers to make higher prices. Strong customer loyalty is crucial in the branding process because low brands receive less attention from the customers. Basing on the competition related to a product, the company must focus on products that have product offerings as well as making a proper assessment of how well the product will outdo its competitors. The main problem that has affected the company is the lack of Claiborne-owned stores and factories. This in return affects the brand’s pricing since the decision leaves stores owner to introduce their prices (Keller 15-19).

This strategy will only be successful if the company strengthens itself through the production of lifestyle brands that outdo others. According to Bill McComb, This strategy implementation required the adoption of Brand–Centric, decentralized approach with much focus on high-quality products that are special and attracting customers in terms of pricing.

Sullivan emphasized the adoption of differentiation for the company to excel in marketing (1). There is therefore urgent need for branding through maintaining clarity to win customers’ confidence in the product. The company that produces such brands since they meet the customer’s demand therefore secures customer loyalty.

Late implementation of this strategy means that the company cannot cope with the rising competition in the market dominated by low priced products. As we all know, the objective of most companies has been profit maximization and cost minimization. The effects of low-priced goods are that they impact unhealthy competitions since highly placed companies are forced to lower their prices to compete well with retailers that companies find hard to cope with. According to Charron, emphasis on retail consolidation and the significance of lifestyle brand development reduces completion geared by low-priced products (Jarillo 47).

Hybrid model

Following an exclusive interview between Paul Charron, chief executive officer of Liz Claiborne Inc and just-style revealed that the company intended to adopt a hybrid model. This model intended to transform the company into both a wholesaler as well as a retailer.

This is due to fact that Liz Claiborne expresses both large retail business relationships as well as its traditional retail supply. This model reduces the number of intermediaries as well as price decision at farm gates on their products. The advantage of this decision is the acquisition of both the wholesalers and retailers’ margins (Robertson 1).

The future and control of Liz Claiborne

According to a publication made by Bloomberg on October 12, 2011, revealed a new turn is expected based on the decision made back in 1987 where Liz Claiborne sold its brands to JCPenny Co. and the renaming of the company to concentrate on the Juicy Couture, Kate Spade, and Lucky Brand lines(Timberlake and Lutz 1).

According to CEO William McComb, the sale of Liz Claiborne, Monet, and other brands will approximately bring $328 million which in turn will reduce the debt (J.C.Penny Co. 1). The sale of the company that prospered in the 1980s was the solution to the company whose progress had met challenges at that time. Robin Murchison, a Nashville, Tennessee-based analyst at SunTrust Banks Inc., echoed this move where she emphasized on challenges facing older brands in attempts to make changes with time. According to her, strong brand names such as Liz had become surplus in retail markets and there was a need for the company to seek consumers who still needed the brands from other regions.

The expectation of the renaming the company was to take one year after its sale to allow new identity decision. It was unbelievable that the company decided to reduce its prices as noted on its website. A dress in Juicy couture could cost $325 while Liz Claiborne offered the same dress at $70 (Timberlake and Lutz 1).

The company is focusing on coming up with an identity that will strengthen the three global lifestyle brands namely Juicy Couture, Lucky Brand, and Kate Spade as disclosed by McComb. The decision on the new name for the corporation yet arrives but soon it will be clear. The sales income will facilitate debt settlement that is projected to rise from $270 million to $290 million by the end of this year.

McComb was optimistic that besides the current risk of recession, the company would adapt well, improve its efficiency, and become growth-oriented.

Completion of Mexx Kensie line sale to the Bluestar alliance depends on Dana Buchman brand sale to Kohl’s Corp. This will bring $328 million in cash in the fourth quarter. The majority sales of the stake from Mexx will go to Gores Group LLC.

There is also a move by the company to lower its profit forecast to eliminate profits and losses likely to result from the company’s portfolio change. There will be a reduction of the forecast from the previous year $120 million to $90 million this year on adjusted earnings before interest, taxation, depreciation, and amortization. This will affect the Profits since it will reduce in next year to $150 million compared to the projection of $220 million (Quinn 23).

Expected Results

The move to the sale of the brand is positive since Lucky Brand and Juicy Couture lines registered increase returns a factor that made Edward Yuuna, a New York-based analyst at KeyBanc Capital Markets to recommend investment in the new company’s shares. Since the company sale of its license for its entire brand to J.C.Penny, Murchison regards it as advantageous given that the waived burden in paying for these licenses will save the company some expenditure. He also noted that the move was worth it because the Liz line progress is commendable for its ability to succeed where other retailers failed.

Also, the company through Kate spade New York had planned to take the business in China in collaboration with e.Land group. In a publication in New York, this move will strengthen the brand in the future market in China. The same move will extend to southeastern Asia by 2014 (Harris 135).

However, many risks are surrounding these moves by the company where some are beyond the company’s control. The company risks reducing liquidity ratio as well as creditworthiness due to the transition. The change to increase the prices for the new apparel will affect the consumers’ purchasing power and loyalty maintenance to the new company identity.

The move to offer a license to another company will also affect the company operations since it will have to follow the conditions laid by the licensee (Harris 135).

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