Running head: CASE STUDY: EDDIE BAUER, INC.
Case Study: Eddie Bauer, Inc.
Eunice Hurh
University of North Texas
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CASE STUDY: EDDIE BAUER, INC.
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Case Study: Eddie Bauer, Inc.
1. Exhibit 3 shows a “super segment analysis” of the apparel market. Eddie Bauer
positions itself mostly to the “Durable Quality Classics” segment. What apparel
brands target the other segments in the table?
a. In this case study, there were seven segments analyzed including “Durable
Quality Classics”. The other six included: Upscale Classic Brands, Fashion
Clothes Horse, Classic Family Budget, Apathetics, Trendy Labels for Less, and
Trendy Foragers. A market study showed that Eddie Bauer’s customers included
groups ranging from “Fashion Clothes Horses” to “Apathetics” (Bell & Leamon,
2005). Below are examples of the six previously mentioned analyzed segments in
the “super segment analysis” (Bell & Leamon, 2005). An example for an
“Upscale Classic Brand” would be Chanel, Christian Dior, or Louis Vuitton due
to their classic designs and high-ticket prices. A “Fashion Clothes Horse” looking
for chic designs with a respectable price tag, might shop at stores like Carolina
Herrera or Guess. Those on a Classic Family Budget may find retailers like Old
Navy or Target appealing due to the age, size, gender, and product ranges
available to them. Since Apathetics do not care for trends or quality, places like
Wal*Mart may seem most appropriate. Trendy Labels for Less consumers enjoy
staying on top of current fashions, but cannot afford the brand name so stores like
Zara fill their needs and wants. Finally, Trendy Foragers enjoy the thrill of finding
a bargain on stylish clothes, so they would likely shop at retail stores like H&M or
Forever 21. As for companies similar to Eddie Bauer, The Gap and Banana
Republic carried similar lines, but were acknowledged leaders at maintaining high
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stock levels (Bell & Leamon, 2005). In order to consider which apparel brands
best fit each segment, demographics and purchasing behavior must be first
analyzed (Bell & Leamon, 2005).
2. Based on the buying behavior and sales data described in the case, how would you
distinguish between Eddie Bauer customers who buy:
a. In the store:
i. An Eddie Bauer consumer perusing the retail store would most likely be a
woman, shopping for herself or a man in her life (Bell & Leamon, 2005).
Similar to catalog statistics, new customers were responsible for roughly
25 percent of sales (Bell & Leamon, 2005). Although Eddie Bauer is
historically established as a company for men, women’s products equaled
to 45 percent of sales and 70 percent of retails customers were women
(Bell & Leamon, 2005). These women may be new customers that were
first reached through the catalog. Catalogs used to reach new customers
often inspired them to visit the stores (Bell & Leamon, 2005). Moreover,
the company believed that its store customers were slightly younger on
average than its catalog customers (Bell & Leamon, 2005). Perhaps the
younger customer preferred shopping in mid-to up-scale regional malls,
which was where Eddie Bauer stores tended to be located at (Bell &
Leamon, 2005).
b. By catalog:
i. Since the catalog was Eddie Bauer’s chief marketing means, one-third of
catalogs were mailed to prospects, which lead to a dramatic sales jump
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(Bell & Leamon, 2005). New customers were responsible for
approximately 25 percent of catalog sales with an average first-time
purchase of $130 (Bell & Leamon, 2005). This meant that Eddie Bauer
broke even on its acquisition cost (Bell & Leamon, 2005). About 40
percent of the remaining 2.5 million customers that received the catalog
would not make any purchases during the year (Bell & Leamon, 2005). Of
those who made a purchase, spent on average $200 a year (Bell &
Leamon, 2005). The most devoted Eddie Bauer catalog customers spent
on average $300 per year through the catalog (Bell & Leamon, 2005).
Statistics for the person making the orders over the phone were concluded
to be around 75 percent (Bell & Leamon, 2005).
c. In both the store and by catalog:
i. Eddie Bauer’s most devoted consumers typically spent $300 a year
through the catalog and another $200 in stores (Bell & Leamon, 2005).
Women had a strong hold on both the store and catalog target market for
Eddie Bauer, so if women’s business faltered, the loss was twofold.
According to the given data, the reason they had such a strong hold on
both was because Eddie Bauer’s women customers shopped for
themselves as well as for a man (Bell & Leamon, 2005). Moreover,
women were the primary purchasers and their products, such as dresses,
carried higher margins with stronger sell-through (Bell & Leamon, 2005).
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3. What are some examples of merchandising decisions that have been made by the
stores to support the catalog and by the catalog to support the stores? Quantify the
economic value of this cross support
a. By the stores to support the catalog
i. One of the ways Eddie Bauer stores supported its catalog was by giving
the catalog priority when products were running out of stock (Bell &
Leamon, 2005). Although $1.5 billion of $2 billion annual revenues came
from retail and 80 percent of its customers shopped the stores, the catalog
heritage continued (Bell & Leamon, 2005). Furthermore, each store had a
catalog order desk with a direct telephone line to the call center and free
shipping (Bell & Leamon, 2005). In all, these order desks produced sales
of $75 million per year (Bell & Leamon, 2005).
b. By the catalog to support the stores?
i. Eddie Bauer’s catalogs were utilized in multiple ways including reaching
new and loyal customers and inspiring them to visit the stores (Bell &
Leamon, 2005). New customer sales accounted for practically 25 percent
of sales (Bell & Leamon, 2005). Catalogs also allowed the company to
record lost demand (demand a product would have generated had it been
in stock), so product-purchasing decisions could be refined with this
information (Bell & Leamon, 2005). Also, these catalogs sent to new
customers included a listing of the nearest stores to the recipient and
promotional items only available with a store visit (Bell & Leamon, 2005).
4. What additional steps should each do to better reinforce the other?
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a. One of the main issues that Eddie Bauer faced was creating a parallel brand with
its existing channels becoming a reflection of one another. Due to lack of space in
its retail stores, products that were sold in the catalog were not carried in the
stores. Half of all women’s apparel sales were in large or petite sizes that were not
carried in stores (Bell & Leamon, 2005). Additionally, women’s dress and
swimsuits only appear in the catalog because they were not as appealing on flat
hangers, while catalogs could use models (Bell & Leamon, 2005). In order for the
catalog and retail store to better reinforce one another, Eddie Bauer must prevent
stockouts and carry all the same lines. Stockouts tended to occur up to twice a
day, so consumers perception of the brand was that Eddie Bauer did not stand
behind its products (Bell & Leamon, 2005). This might also mean for Eddie
Bauer, that some lines may need to be eliminated in order to carry all of them
within a retail store location. Previously, stores tried carrying a limited selection
of petites, but ended in a disaster with petites and regular assortments becoming
mixed together (Bell & Leamon, 2005). However, if the stores and catalogs
carried carefully researched product lines that reflected one another, sales would
possibly increase for Eddie Bauer. Similarly, product timing was a problem
between the channels (Bell & Leamon, 2005). Eddie Bauer’s holiday book
dropped on the catalog timetable at the end of September, but its holiday products
did not arrive in stores until the end of October (Bell & Leamon, 2005). While
this helped the company with its inventory planning, customers and potential
buyers were often frustrated (Bell & Leamon, 2005). These new tactics will
ultimately aid Eddie Bauer in reaching its goal of top-of-mind awareness for its
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consumers (Bell & Leamon, 2005). Most importantly, it doesn’t matter in which
channel Eddie Bauer delivers the message or the product; it needed to build the
brand and deliver it consistently (Bell & Leamon, 2005). An ideal scenario would
entail the catalog acting as marketing vehicles for the stores, and the stores
allowing customers to experience the catalog products (Bell & Leamon, 2005).
5. How do you suppose “One Brand, One Voice, One Customer” differs from
“synergy”?
a. As stated by Bell and Leamon (2005), Eddie Bauer’s “One Brand, One Voice,
One Customer” policy mean an increased emphasis on its already in place
synergy policy. Granted, they are meant to communicate the same core message,
synergy is a branch of the broader “One Brand, One Voice, One Customer”
policy. Thus, synergy will be further discussed for the purpose of this question. A
prime example of Eddie Bauer’s synergy policy in action would be its retail
window displays echoing the cover of the most recent catalog (Bell & Leamon,
2005). Eddie Bauer wanted to ensure its channels presented a unified customer
experience, regardless of which avenue used, through its synergy policy (Bell &
Leamon, 2005). A dilemma faced by Eddie Bauer’s synergy policy was that the
catalog and retail stores used different distribution centers due to different
fulfillment procedures in packaging (Bell & Leamon, 2005). Synergy also
constrained product assortment in catalogs and even within a channel, synergy
could be limiting (Bell & Leamon, 2005). Unfortunately, synergy highlighted
many problems for Eddie Bauer with others such as pricing synergy and
recruiting synergy (Bell & Leamon, 2005). As stated above, the “One Brand, One
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Voice, One Customer” policy encompasses the synergy policies put in place by
Eddie Bauer.
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References
Bell, D & Leamon, A. (2005). Eddie Bauer, Inc. Harvard Business School. Retrieved from
https://learn.unt.edu/bbcswebdav/pid-338328-dt-content-rid1517324_1/courses/MDSE_4660_001_11235W2/Eddie%20Bauer%2C%20Inc..pdf