2. Executive Summary
This report conducts an in-depth analysis of Michael Kors – it analyses their customer market
and its segmentation, competition, position in the market and its marketing mix. To do this,
a number of research methods were employed. Firstly, primary research was gathered in the
form of interviews with employees and customers of Michael Kors. Secondly, a comprehensive
amount of secondary research was conducted in order to understand more about the brand, it’s
values and what it’s product was. Then, a SPICC and PESTLE analysis was done in order to ana-
lyse the current state of their micro/macro environment. Post-research, it was easy to ascertain
what their marketing mix was and who their competition would be. Based on their competition
and sources such as Business of Fashion, a perceptual market position map was created in order
to help judge Michael Kors against its competitors. After this, a SWOT analysis of the brand
was prepared in order to weigh out their strengths and weaknesses – this was crucial in helping
to create a conclusion and any recommendations for the brand in order to move forward and
improve themselves.
At the end of the report, it was recommended that Michael Kors continue their social media
relationships with their customers. It was also suggested that the brand pay more focus on their
older clientele and quality of their products as well as try to lessen their mainstream quality
through the heightening of exclusivity by new collections with different prices or marketing
strategies.
Words: 245
4. Introduction
Michael Kors Holding Ltd is an American-based luxury designer brand. It was founded
by designer Michael Kors in 1981 and after a tumultuous journey they have recently
found themselves as on of the leading pioneers of fashion for today’s generation. Mi-
chael Kors bases their fashion on the theme of a “jet-set juggernaut” (Business of Fash-
ion, 2015), therefore becoming famous for their “fast fashion”. Their high quality de-
signer products are sold at a slightly lower price than other designer brands, making it
more accessible to the masses. They produce clothing, resortwear, accessories, handbags
and footwear for both men and women (Singer, 2013). The brand suffered serious losses
and managed to procure a staggering comeback in 2013, rising quickly to the top and
identifying itself as a luxury brand on par with brands such as Coach. According to the
Business Insider, in Fall 2010 there was no mention of Michael Kors anywhere in their
surveys of “favourite brands”, but in 2013 it was near the top (Lutz, 2013). Michael Kors
pride themselves on their campaigns and their social media outreach, making them one
of the first designer brands to be famous on social media.
Its main headquarters are located in New York, on Madison Avenue. These headquar-
ters act as a command centre, and the 1.1 million square foot building houses most of
their main offices (Samtani, 2014). As of 2014, the brand operates around 555 stores
and 1,560 in-store boutiques in department stores worldwide (Melton,2014). Their
products manufactured in China by Sitoy Holdings Ltd, as labour costs and materials
are at a lower cost in Asia. Currently MK is licensed with Estee Lauder, Fossil and Mar-
chon 9Michael Kors Holdings Ltd., 2015).
This report contains a detailed analysis of Michael Kors by reviewing who its target cus-
tomer is and their market segmentation, marketing mix, the overall retail environment
and competition. The aforementioned research will aid in coming to a conclusion that
will outline the brand’s marketing activities by identifying underlying problems that
need to be solved.
Image: (BorgenMagazine, 2013)
5. Micro Environment Analysis
SUPPLIERS Michael Kors is mainly supplied by Sitoy
Group Holdings Ltd. This factory is located
in Hong Kong and is a major manufacturer
of high quality leather goods and travel items
(Sitoy Group, 2011). Coincidentally, it also
supplies on of Michael Kors’ biggest competi-
tors, Coach (Zhao, 2014).
PUBLIC Michael Kors have their own personal News
Releases page on their website, which allows
customers an insight into their business – for
other press related inquiries they have their
own press office and also work with Italian
press group Onward Luxury Group even
though the group’s main focus is manufac-
turing and distribution (Onward Luxury
Group).
INTERMEDIARIES Resellers: Old stock from the company is
taken to outlets of factory outlets or given to
various online retailers to sell at a sale price.
Physical Distribution: According to MK’s
annual report 2015, they currently distribute
for themselves – “We also have several small-
er distribution facilities across the United
States. Outside of the United States, we have
regional distribution centers in Canada, Hol-
land, Japan, and Hong Kong, which are either
leased or operated by third-parties. In April
2015, we expanded our existing distribution
facility in Whittier, California to service our
e-commerce site. In addition, during Fiscal
2016, we plan to invest in building our own
distribution facility in Holland, which will
support our European operations.” (Michael
Kors Holdings Ltd., 2015)
6. Micro Environment Analysis
Global Licensing: Currently, Michael Kors
is contractually licensing with Estee Lauder,
Fossil and also with Marchon. MK joined Es-
tee Lauder in 2003 (Estee Lauder), following
this its products are now being sold in over
30 countries and territories. Michael Kors
will be contractually bound with Fossil until
2024 and will distribute eyewear and watches
along side the brand (Michael Kors, 2014).
Fincancial: Michael Kors’ main bank dealings
are with Bank of America, HSBC and Wells
Fargo Bank (Michael Kors Holdings Ltd.,
2015).
COMPETITION MK has several competitors with similar
brand outlooks to themselves; such as Coach,
Kate Spade and Tory Burch.
CUSTOMERS Michael Kors’ target customers are most
affluent young women who embrace the con-
cept of fast fashion. They also cater to men.
7. Macro Environment Analysis
Political/Legal -Trade agreements limiting how much can go in
and out of a country.
-Environmental and ethical restrictions limiting
imports/exports.
-Tense international relations influencing trade
agreements or retail locations.
Economical -Tax inflations which cause cost of materials and
price of product to increase
-Minimum wage boundaries in different countries
influence how much each employee has to be paid
-Recessions or inflations adding pressure on
individual spending habits as there could be less
disposable income available.
Social -Current trends influencing where people buy
from or what people buy
-Cultural differences influencing what each store
sells
-Risk of certain cultures not wanting certain prod-
ucts due to cultural preferences.
Technological -Rise in online shopping leading to a fall in in-
store footfall
-Unpredictability of social media could affect sales
as it’s mass outreach determines what the most
desirable product is at any given time.
Environmental/Ethical -Counterfeit products or subtle copies being
manufactured and sold in high street stores or
bargain stores.
-Environmental impacts of import/exports may
lead to trade limitations depending on country’s
governments and ecological footprints.
8. Market Segmentation
According to the Business of Fashion, Michael Kors is a “Teen Fashion Idol” and the
“preferred handbag label” of over 39% of average-income women (Bloomberg, 2015).
After conversing with MK sales employees (Appendix 1), it was evident that the brand
doesn’t place emphasis on who their particular demographic should be. They cater to
teenagers and adults. However, the distinguishing factor between these groups would
be their fashionability and their brand consciousness – this allowed for a accurate pen
portrait to be created.
PEN PORTRAIT
NAME Jonathon Smith
AGE 25
GENDER Male
OCCUPATION Investment Banker
RELATIONSHIP STATUS Single
LIFESTYLE/HABITS Young, sophisticated, driven - likes to have fun
but also works hard and wants to do well. Spends
money but never goes overboard. Goes out with
friends once a week to a classy bar straight after
work and on the weekends likes to relax with
friends and do outdoor activities.
STYLE/TRENDS Sophisticated and classy/relaxed and sporty -
likes to look good and work so he can make a
good impression but never ventures out of the
box in terms of style as cannot not want to be
too different from his peers in a professional
workspace. When shopping he looks for smart
clothes that are designer but of good quality but
not extremely over-priced. Loves Michael Kors
because it fits these requirements and also has
outdoor wear/resort wear perfect for lounging or
going on holiday with
10. Key Competitors
Key Competitor Table
After observing the MK store in Westfields London and Bond Street, it was easy to see who their
key competitors were. The competitors highlighted on the side were chosen based on their qual-
ity, pricing, style and trends. After interviewing customers at each store (Appendix 2), it was evi-
dent that customers who shopped at Michael Kors also like to shop at Kate Spade, Coach and Tory
Burch. However, most customers based their choices on current trends, showing that there’s no
sense of brand loyalty within Michael Kors’ customers. The perceptual map below depicts how some
of these stores fare in comparison to MK based on research conducted online and in person. Ac-
cording to Walter Loeb, writer for Forbes, Michael Kors’ biggest competitors are Coach and Kate
Spade (Loeb, 2014)
12. Perceptual Market Position
Perceptual Market Position Table:
Based on aforementioned research it’s obvious that Michael Kors is a mid-level luxury brand. While
it’s not as cheap as mid-market brands such as Zara or higher-end brands such as Reiss, it is still
cheaper than brands such as Prada and Chanel. Its position on the map acts as a bridge between
highstreet and luxury brands proving Michael Kors to be an affordable and accessible luxury brand.
13. SWOT Analysis
OPPORTUNITIES:
-To become even more active on social media: As MK
himself is the face of the brand, by engaging with consum-
ers by giving them a look into his personal life on Insta-
gram and Twitter will enhance his public image and make
him more famous by giving him a larger following.
-As they are a singular brand, they can create more lines.
Even though they already have MICHAEL by Michael
Kors and KORS by Michael Kors they can create more
that could be priced higher than average in order to give it
more exclusivity and a different feel to previous collections.
-As they have such a large following of teenaged females,
they could create a line specifically for them, expanding
their target market.
-They could develop their men’s range more as it’s signifi-
cantly smaller than the women’s range inherently meaning
they would gain more customer.
WEAKNESSES:
-The availability of the brand to anyone and everyone
as it lessens MK’s exclusivity.
-Bargain stores: lessens price of bags and clothes
which in turn dilutes their brand image.
-Their “jet-set” trend stops them from appealing to
a wider range of consumers, which can lessen their
profits.
-Their designs are copied by most high street retail-
ers, especially their iconic tote bag which means
customers could turn to a cheaper alternative instead
of buying the real thing.
THREATS:
-Any possibilities of an economic downturn in America
or Europe as those are their biggest markets and a re-
cession would lead to a massive fall in profits. Econom-
ic unpredictabilty leading to unstable sales patterns.
-The possibility of costs rising in an inflation as that
could mean that MK would either have to increase
prices or sell more than before in order to cover costs.
Increasing prices could harm relationships with cus-
tomers as they may not want to pay the higher price
and the need to sell more could create an added sense
of pressure to the brand which could lead to disecono-
mies of scale.
-Failing contracts: currently Michael Kors has liscens-
ing contracts with Estee Lauder, Fossil and Marchon
– if any of these were to fall through it could harm
their brand image and lessen the amount of financial
security MK has as they would have to look for new
business partners.
-Ethical problems through hiring cheaper labour in
China.
Micro-Factors
Macro-Factors
STRENGTHS:
-Brand image: leading to a better establishment in the
market and a better relationship with customers.
-Celebrity endorsements: makes the brand more
desirable as consumers want to emulate celebrities.
-Segmented independent brand: less risk financially
and the brand has more overall control over them-
selves.
-Philanthropy: “Never turn an opportunity down”
meaning they are open to more ventures than most
brands.
-Ability to stick to their trend of ‘jet-set juggernaut’
-High quality products: leading to customer trust and
possibly increased loyalty.
-Global Outreach: enables them to access a large and
worldwide market, increasing overall sales and brand
popularity as it is extremely well known.
14. SWOT Analysis
MK’s SWOT analysis depicts the strengths the brand has, with focus on its global outreach and
which allows them to come across as a leader in their category of fashion. Their independent
stature means the risk of overtaking by other companies or loss of control is lessened, increas-
ing their strength as a company inclusively. The instability of economies poses a huge risk, as
it would for any company because of fluctuating sales it could procure. This can lead to uncer-
tainty throughout the brand which can cause diseconomies of scales. They have several oppor-
tunities and pathways into which they can expand, particularly in creating a line specifically for
teenagers who seems to be their main customers (Bloomberg, 2015). Their main weakness lies
within their apparent mainstream qualities as their designs are being reproduced more, meaning
there is a loss of exclusivity. Another weakness would be one suggested in Singer’s article, which
stated that customers found fluctuating levels of quality within their products – this potentially
be a threat because if customers are unhappy with the brand quality, MK could lose a significant
amount of customers; especially if knowledge of this lapse becomes widespread (Singer, 2013).
Overall, they have more strengths than weaknesses meaning that they are a strong brand, and
they have a lot of opportunity to branch out further.
15. Marketing Mix
PRODUCT:
A product means the goods-and-services combination the company offers to its target market. It
includes variety, quality, design, features and packaging (Kotler, Armstrong, Harris and Piercy) – all
characteristics that make MK unique. Michael Kors has a large range of products - they have smart
clothing, resortwear, footwear, accessories and their large collection of handbags and wallets. MK are
mainly famous for their handbags, but they are well known for their clothing collections within celeb-
rity circles.
MK’s style derives from the idea of ‘jet-set juggernaut’ couture. Their designs are supposed to be all-
American, fast fashion that is trendy and sophisticated. The key to their product lies within simplicity,
as it differentiates them from the frills and fuss of fashion. This includes the sleekness of their packag-
ing; their symbolic card bags as outer packaging for products is a clear representative of their brand,
and the method in which products are wrapped adds an extra touch of luxury to their services.
Michael Kors has diffusion extension lines within their brands – there’s the Michael Kors Collection
which is their specialist line. All materials in this collection are of the highest quality or extremely
exotic, meaning prices are extremely high. The MICHAEL Michael Kors collection includes a lot
more accessories and has a larger range than the Michael Kors Collection. This range includes formal
wear but also has denim, loungewear, resortwear and options for plus sizes and petite sizes. MK also
has licensing agreements with Fossil for its watches and jewellery, Estee Lauder for its cosmetics and
Marchon for its eyewear; ensuring higher quality in its products as each of these brands is specialised
in the products they are licensing (Michael Kors Holdings Ltd., 2015)
Michael Kors have annual fashion shows that showcase their seasonal trends to the public. This gives
their consumers an idea on how to wear a particular design, while showcasing their products. Relat-
ing to this, the Michael Kors’ website offers a ‘Trends’ page (Michael Kors Holdings Ltd., 2015), which
further develops relationships with customers and their products as they can see what is in style at the
moment and how they can wear it. MK also have a men’s range, however this is significantly smaller
than the women’s range and not as successful.
Image: (Bagzaboo)
16. Marketing Mix
PROMOTION:
Promotion is what communicates the merits of products and persuades target markets to buy particular
products (Kotler, Armstrong Harris & Piercy). MK’s promotion is one of the strongest aspects of their
brand. According to Mintel (See Appendix 4), today’s youth is more involved in social media than ever
before, making social media an important factor in any promotional aspect. Michael Kors’ social media
pages is one of its most successful forms of promotion - in 2013, they were named top fashion brand on
social media. With around 6.4 million followers on Instagram 3.1 followers on twitter, MK has a huge
social following. A great example of one of their campaigns was the ‘#WhatsInYourKors’ on Instagram,
where millions of users banded together in order to show off their products or even talk about which
bag they wanted – this hashtag is still running two years later (Quin, 2015), showing how successful the
venture was. They started the #FallinInLove holiday hashtag about customer’s favourite products – this
hashtag came with giveaways to lucky winners during the holiday season which promoted their brand im-
age by depicting them as a generous brand who gives back to customers.
MK was the first fashion brand to adopt the ‘Marquee’ method of advertisement on Instagram (Vizard,
2015), which uses 15 second videos to broadcast a product or detailing on a product or a short interview.
Their first Marquee advertisement used Lily Aldridge jet-setting around Paris. This method of celebrity
endorsement subtly promotes the idea of a ‘jet-set juggernaut’ – customers are more likely to respond to
a advert if it grabs their attention quickly (Chartered Institute of Marketing, 2015). By using Lily Aldridge
they ensured that customers recognised a famous face, and grabbed attention.
MK’s use of famous icons furthers their use of celebrity endorsements - by having icons such as Michelle
Obama wear their designs they are ensuring that they are constantly in the spotlight and customers are
always aware of their work.
Their website displays all of their campaigns for customers to view whenever they want, and they have
numerous posters up in each of their stores as well as having short clips on YouTube to further advertise
themselves.
The designer Michael Kors himself has a large twitter following, and even though his tweets are business-
centric, his followers are offered glimpses into his personal life as well as a look at up and coming designs
he is creating; furthering the brands personal selling.
Image: (Michael Kors)
17. Marketing Mix
PLACE:
A place includes company activities that make the product available to its customers (Kotler, Arm-
strong, Harris & Piercy). As mentioned before, MK have numerous stores all over the world and
each store has a similar layout (See Appendix 3). Their stores are always located near or with other
luxury brands in department stores, high-streets, or in malls. They have most of their stores in the
U.S. and Europe, however they have recently started expanding in Asia, with India being one of its
newest targets (Tewari, 2013).
MK have recently started the more unique concept of social media shopping. In a movement called
#InstaKors they are aiming to bridge a gap between its followers and e-commerce channels. It al-
lows followers to get a direct link sent to them so they can purchase any MK products they have
“liked” online (Buro 24/7, 2014). Michael Kors also has numerous 3rd party retailers such as Vali-
mar group or the websites for Selfridges/House of Fraser and numerous other department stores so
there is a variety of ways for customers to constantly access their products.
18. Marketing Mix
PEOPLE According to CIM, a brand’s reputation rests in the
hands of their staff (Chartered Institute of Market-
ing, 2015). For this reason it is important that the
‘People’ part of the marketing mix is successful. As
Michael Kors is a large luxury brand, it is impor-
tant that their staff reflects on it. For this reason,
they have extremely friendly staff who are always
ready to help and communicate with the custom-
ers on a one-to-one bases. Michael Kors’ customer
service is efficient and they have a plethora of
ways in which they can be reached in order to
answer any queries or concerns. In fact, Michael
Kors himself still conducts one-on-one fittings
and occasionally goes into his own stores in order
to converse with customers and check that eve-
rything is running smoothly, strengthening their
brand image and showing how closely knit they
are (Business of Fashion, 2015).
PROCESS Process is the delivering of a product or service
and the behaviour of those who deliver it, factors
which are crucial to customer satisfaction (Char-
tered Institute of marketing, 2015). Michael Kors
has an online store which delivers worldwide,
and there are different delivery platforms for each
country. Michael Kors partners with multiple
delivery services in order to reach their customers.
They are informed from the beginning of when
their product is shipped out to when it is delivered
to them. This ensures that the customer is satisfied
constantly throughout the process without waiting
too long.
19. Marketing Mix
PHYSICAL AMBIENCE Their store design is sleek and simple; as their
main attraction are their bags and accessories,
those are always at the front of the store as that
makes it easier for the customer to find what they
are looking for. Their clothes are located towards
the back of each store, along with the footwear.
Each store has numerous mannequins styled in
a particular way to showcase different products
adding a sense of uniformity to their stores. Their
retail atmosphere is relaxed and friendly, custom-
ers are offered beverages in the larger stores as well
as testers for their new fragrances.
PRICE Price is the amount of money customers must pay
to obtain a certain product (Kotler, Armstrong,
Harris & Piercy). MK’s pricing is perceived to be
within the mid-level luxury band. It offers high
quality products but at a slightly lower price than
luxury couture houses such as Gucci or Chanel.
Pricing includes discounts and sales which MK
frequently has, both in-store and online. While
their pricing may be lower than other luxury
brands, it is still higher than normal high street
stores, adding a sense of exclusivity to it. In terms
of differentiation, Michael Kors embodies the
idea of ‘affordable and accessible luxury’ – some-
thing that luxury brands were not perceived to be
to general masses. It was only after their rise to
popularity that mid-level luxury products became
mainstream.
20. Conclusions/Recommendations
In retrospect, Michael Kors have a successful marketing mix, with their strength lying in their product
and promotion. Their promotion is particularly strong due to their unique relationship with various plat-
forms of social media, that their competition is yet to possess. With the concept of their “jet-set” fashion,
they have been able to create a distinguishable brand, giving them a strong USP. Overall, their marketing
strategy comes across as efficacious, as it manages to attract a wider audience and communicates with
their consumers constantly, giving the brand a more personalised feel. At this point in time, Michael
Kors is experiencing positive sales due to the popularity of their products, however they could face a
reduction in sales due to increased competition from other brands and the end of their popularity. Their
weaknesses lie within quality consistency and the loss of exclusivity their brand has experienced in the
recent years – especially with their products being favoured by younger generations. This takes away from
the sophistication of the brand as older consumers may think the brand is too ‘youthful’ for them now.
To rectify this, Michael Kors can consider creating new diffusion-extension lines, other than the two
they already have. These new lines would have to be marketed differently as currently their products are
marketed through social media and smaller scale campaigns. The products would have to marketed in
a manner that would cater to MK’s older consumers, in order to depict their products as something that
can be accessed by all ages. There is also scope for them to expand their men’s range as it is currently sig-
nificantly smaller than the women’s range; an expansion of men’s ranges would increase sales, especially
as metrosexuality increases in men today. Overall, Michael Kors has a successful brand strategy and with
a few slight changes, it will continue its reign at the top.
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23. Appendix 1
Interview @ Westfield (manager)
Q: What age group comes into your store the most?
A: 21-30 years old.
Q: Do you get more male or female customers?
A: Mostly female.
Q: What product of yours sells the most?
A: Definitely our accessories, the classis tote or our chunky watches.
Interview @ Bond Street (assistant manager)
Q: What age group comes into your store the most?
A: It varies, I would say 17-40. 17-19 year olds usually come with their parents and they buy things
for them, otherwise people buy things themselves.
Q: Do you get more male or female customers?
A: Definitely female.
Q: What product of yours sells the most?
A: Our tote bag and wallets
Appendices
24. Appendix 2
Interview @ Westfield (customer)
Q: Do you have a lot of Michael Kors products?
A: I have two bags and a wallet as well as a shift dress.
Q: How would you describe your style?
A: Classic, sophisticated, not fussy
Q: Are you a loyal MK customer?
A: I wouldn’t say that this is my only place to shop, I like to browse different places and choose what I like.
Interview @ Bond Street (customer)
Q: Do you have a lot of Michael Kors products?
A: Yes, a lot actually.
Q: How would you describe your style?
A: Elegant, smart casual mostly, very British I would say!
Q: Are you a loyal MK customer?
A: Yes, but my other favourite is Kate Spade.
Appendices
