Consumer Profile & Brand Analysis

Consumer Behavior & Marketing Strategy

Fall 2018

Lauren Gronbeck, Ivy Peterson, Haley Shoebotham, Laney Spears

UGG was founded in 1978 by Brian Smith, a laid-back surfer with a dream of introducing a popular Australian product to Californians. His million-dollar idea was a comfortable intended to keep feet warm after coming out of the cold waters. Despite the initial surfer target, the gained attention from the apres-ski crowd and eventually diffused to the general public as everyday leisure . UGG took advantage of this shift by embracing mass-market distribution and prominent label placement. As A-list celebrities adopted and were photographed wearing the UGG logo, the boots became trendy for teen girls. After enjoying several years at the center of fad fashion, UGG boots became seen as passe and mainstream.

Recently, in 2017, UGG rebranded once again to include menswear and couture styles.

UGG has shown intent to shift away from its reputation as a mainstream, outdated clothing brand sold in discount stores into a more trendy, upscale, and stylish worn by the likes of Urban Outfitters shoppers and celebrities. To do this, UGG has attempted to transition its classic products to brick and mortar stores, and has partnered with retailers like Urban Outfitters in hopes of getting its boots on the feet of trendier consumers. It has also begun to break into the men’s market with an integrated marketing campaign using Tom Brady as a brand ambassador, and focusing on “UGG men of character,” which celebrates men who demonstrate passion, talent, and dedication in their everyday lives.

UGG prides itself on the consistently delivered promise of high-quality, luxurious sheepskin. The product quality has maintained a positive impression amongst women and users who believe that UGG offers a better value for its price over time. However, UGG fails with consumers due to inconsistent brand identity, “basic” stigma, knock-off replicas, female focus. Following our research findings and analysis, we propose UGG Australia refocus its brand identity by targeting higher-end distribution channels, crafting refined in-store experience, and securing social media sponsorships with mid-level influencers to advertise new products.

This allows UGG to position itself with trend leaders of a higher income target market and generate authenticity around the brand through stronger personal connections. Our goal in this proposal is to reposition the brand as relevant to a new target market, while maintaining accessibility of classic styles for current consumers through tiered product categories and appropriate outlet selection.

Current consumer profiles fit feminized, middle class stereotypes.

The current consumers of UGG shoes include a broad range of middle and upper-middle class females between the ages of 13-45 years old. In order to properly analyze the current consumer base, we have used primary and secondary research to identify two primary profile segments: suburban moms and high conformity teens. In order to analyze these two groups in more detail, we have constructed two fictional consumers, Stacy and Katie, to better understand their lifestyles and behaviors. These consumers exemplify the attitudes and beliefs of Nielsen

PRIZM Premier Lifestage Groups, “Kids & Cul-de-sacs” and “Striving Selfies.”

According to Nielsen PRIZM Groups, members of the “Kids & Cul-de-sacs” segment are upper-middle class, suburban married couples with children. Mostly homeowners, this demographic resides in newly developed neighborhood subdivisions. Claritas360 demographic data identifies 1,711,329 American households clustered in the suburbs of the upper-east coast that belong to this segment. “Kids & Cul-de-sacs” members are composed of college educated, white-collar professionals with median income of $74,573 and between the ages 25-44. These consumers typically have large families of school-aged children, and as Achievers tend to have a

“me first, family first” mentality. Therefore, spending habits are largely devoted to child-centric products and services. These consumers are likely to own an Acura, eat at Jason’s Deli, and shop at New York & Company. Free time is spent attending children’s soccer games or playing tennis.

Typical media consumption habits are above average, visiting Disney.com, watching DIY

Network, and keeping up with their favorite celebrities on Access Hollywood.

Meet Stacy, the “Suburban Housewife”

The first consumer profile is Stacy, a 37 year old Caucasian female. Stacy is best categorized as an intersection of a VALS Achiever and a “Kids and Cul-de-sacs” segment member of Nielsen PRIZM Groups. As a busy suburban mom of three, Stacy lives in Belmont, a kid-friendly neighborhood outside of Boston, Massachusetts. Stacy enjoys a comfortable, upper-middle class life supported by her husband’s income, but as a stay at home mom, assumes all of the responsibilities of childcare. She is constantly on the move: running household errands, shuffling kids to and from activities, and trying to somehow make time for herself. Stacy purchased her first pair of UGGs in 2003 after seeing them featured on Oprah Winfrey’s

“Favorite Things” list. Quickly falling in love with the comfort and warmth, UGGs became her favorite throughout her pregnancies and life as a new mom. During her daily juggling of kids’ sports, school, and social schedules, comfort and functionality take precedence over style.

While Stacy does value her appearance and looking good, she realistically does not have the time every day to put together outfits and accessories. While UGGs are her go-to for household chores and quick errands, Stacy would never wear her UGGs to weekly book club or monthly date night. She regularly wears her UGGs to keep warm while walking the family dog in the morning, driving carpool to her kids’ soccer practice, or running to the grocery store after her weekly yoga class. At the end of the day, after putting the kids to sleep, Stacy unwinds in her UGG with a glass of wine, and reads the latest edition of People and Extra magazines.

To the “Stacy” demographic of consumers, owning and wearing a pair of UGGS makes them feel relaxed and comfortable. The warmth and softness of the classic style fur lining are psychologically reassuring and create a therapeutic calming effect for a stressed mom running errands and juggling childcare responsibilities. Stacy believes UGGs are a good value for her money, as they are durable, weather appropriate, and made of authentic, high-quality materials.

Consistent with the Achievers mentality, Stacy’s attitude and beliefs generally are hard-working and productivity focused. UGGs fulfill her needs of practicality, convenience, and comfort. The neutral colors and style are versatile enough for athleisure outfits, casual jeans, and even sweats.

The YouGov Brand Index reveals that in 2018, the UGGs Impression Score amongst women almost doubled from a rating of 10 in 2017, to high of 17 in 2018. This favorable impression amongst women is derived from the belief in product quality and value for money.

UGGs are not a regular purchase, as their durability do not necessitate frequent replacement. The boots are often purchased in anticipation of the winter season, or every few years to refresh the softness of the sheepskin or for a new color. Stacy is aware cheaper alternatives such as Emu,

Bearpaw and Minnetonka exist, but believes “you get what you pay for” with so is willing to pay premiums. Using price as an indicator of quality, UGG reinforces the notion of luxury splurges as being accomplished and deserved; a self-concept of upper-middle class.

The second key consumer group of the UGG brand are teens and young millennials who fall under Nielsen’s “Striving Selfies” demographic segment. According to Nielsen PRIZM, members of the Striving Selfies segment are young singles and couples with middle class status and working towards a college degree. While they may not have large incomes now, median ​ ​ income being $35,402, this segment shows great future potential. They often spend what money they do have on designer shoes and leisure activities. Making up 1,769,183 US households, these consumers typically reside in centers of satellite cities, renting apartments rather than owning houses. These consumers are avid social media users and have the highest tech use. Media habits include watching MTV.com, using Groupon, and watching Jimmy Fallon or MTV2.

Meet Katie, the “Basic Fad Follower”

Katie is a first year college student at UVA from Harrisonburg, Virginia. She comes from a middle-class family that pays for her tuition and housing, but maintains a job at the local

Panera Bread for spending money. Any free time is spent hanging out with friends, listening to

Top 40 hits and binge watching Keeping Up With the Kardashians. Katie follows fashion trends, but waits until peak popularity to adopt trends, as she has a high need for conformity. She regularly shops as a social experience with her friends at department stores, but purchases online for the best deals. She received her classic tall style chestnut UGGs as a Christmas gift years ago at the height of their popularity, and continues to wear them for their comfort and warmth. Katie values her appearance and social reputation, but due to time restraints, is selective in when and where she puts forth effort into fashion and makeup. She is confident wearing little-to-no makeup with comfortable leggings and big t-shirts to class, but never out to a party or event.

With a busy schedule juggling school, work and social life, Katie often throws on her UGGs on the way to class, late nights in the library, or getting a Bodo’s bagel after a night out with friends. For the “Katie” demographic, wearing UGGs do not make them feel fashionable, but do make them feel comfortably confident. UGGs exude a casual, cute-without-trying, “I woke up like this” vibe. The classic boot style is perceived as extremely mainstream, however to the

Striving Selfies segment, this is not necessarily a negative. This group embraces the “basic” persona that has gone viral over Internet memes and social media. UGGs are considered to be an essential element of the “basic” uniform, complemented by overpriced Starbucks lattes and an always present iPhone. Urban Dictionary defines the term “basic” as being only interested in the popular or trending, and having an “unusually strong affection to pumpkin spice (specifically ​ ​ Starbucks), wears Uggs and/or Lululemon leggings, continuously saying "I literally can't even." ​ ​ While aware that UGGs are not the height of fashion trends or the most flattering footwear, Katie and her peers’ attitudes are unapologetically accepting of UGGs. Due to their proven reputation of comfort and convenience, she does not judge or feel judged for wearing

UGGs in casual settings. The shoe is almost understood as a fashion hall pass in times of academic stress or uncomfortably cold weather.

Consumers typically purchase UGGs around the holiday season, as UGGs are heavily marketed as winter wear. While UGG offers a wide variety of style suitable for summer weather, the winter classic sheepskin and fur model is the most popular and well known. YouGov

Consumer Data ranks the brand as the 79th most popular clothing and footwear brand amongst millenials and women. Brand awareness is strong, as 75% of consumers have heard of UGG

Australia. The general sentiment towards the brand is 31% positive, 30% neutral and 16% negative. The shoes are often described as “well designed, reliable, good value for money.” UGG’s popularity peaked in the 2000s, shortly after being featured on Oprah Winfrey’s

“Favorite Things” list and being photographed on the feet on many A-list celebrities. Although, in the past 10 years, popularity has waned. The brand continues to make a profit which is attributed to the perceived functionality and comfort emphasized early in the brand’s history. In

2014, the CEO of parent company Decker’s Unlimited was quoted saying, “We're not in the fashion business, per se [...] all of our brands deliver a functional benefit.” This statement is ​ ​ consistent with the common criticism of UGGs as “UGG-ly”. The signature inelegant, shapeless structure of the boot has lended to the comfort slipper reputation. However, this utilitarian reputation contradicts to most recent initiatives to release new luxe categories and high-end apparel and lifestyle products.

Primary research reveals brand perception to be passe, valued only for functional purposes

To supplement the data and testimonies online, we sent out a survey to better understand consumer perceptions of UGG. We received 65 responses, mainly college-aged, from 89.1% females and 10.9% males. This segment best represents the college-age, current market participant, “Katie.” The survey results were used to develop the aforementioned description, attitudes and purchase patterns of the “Katie” consumer. Women aged 18-22 mainly purchased their UGG boots in middle school for comfort and then-current style. They generally associate the UGG brand with the classic style UGG boot. The majority of respondents purchased the boots over 7 years ago, with 60% of consumers purchasing for comfort and 56% purchasing for the style at the time. For our college-aged consumers, UGGs now fulfill solely needs of comfort and seasonal warmth. They no longer serve their fashionable purpose, with only 20% responding that UGGs fulfilled a style need. Additionally, UGG owners report that they find their UGG boots to be made of high quality materials and craftsmanship, thus a good value for their money.

We found there are mixed feelings that come with wearing UGGs. When surveyed consumers wear their UGG boots, they report feeling younger, even immature. The boots rehash memories of middle school - survey respondents described their feelings when wearing UGGs as, “cringe,” “lame,” even “homeless.” They feel “warm,” but at the same time, they feel “bad for the animal that was killed.” Only one respondent said she thought her boots were fashionable.

They associated the following words most frequently with UGG: “comfy, ugly, childish, middle ​ ​ school, warm, fad, chunky, expensive” (see Appendix B for more in depth word association cloud). This data implies UGG needs to move away from the nostalgia and immature memories associated with the brand to reacquire trend-following consumers.

UGG also has some male consumers. Only one out of eight males surveyed had purchased UGGs. They associated the UGG brand with a more feminine vibe, associating the brand with the following top phrases: “girls, vanilla latte, Tom Brady, pumpkin spice latte, comfort, and casual.” The association of UGG with flavored lattes, especially the stereotypically overpriced Starbucks drinks, implies they consider UGGs an unnecessary expense and that other boots would do a sufficient job and be more practical. As men, they want new styles, lower prices, and more celebrity spokespeople to incentivize them to purchase UGGs.

Survey respondents that do not own UGGs had mostly similar perceptions as UGG owners. The key difference noted was that non-users were more likely to perceive the brand as overpriced, while users report they had gotten good value for their money. This implies the product has high post-purchase satisfaction, as price premiums are justified after trial. Non-users recognize a reputation of comfort, but also characterize them as “basic” and ugly.

Current issues are the perception of comfortable loungewear and mass conformity.

UGG’s main challenge for expanding its consumer base are due to the brand’s perception as unfashionable loungewear, which denotes slouchiness and laziness. This is likely attributed to the abundance of images of jet-lagged celebrities wearing UGGs in the airport or trying to run errands under the radar. In the minds of the consumer, examples of UGGs worn as slippers, in a rush or during travel are readily available and recalled. This contributes to the “UGG-ly” connotation and perception that these boots are no longer fashion, purely function. Another faction contributing to negative evaluations of the style is the association with stereotypical teen girl. This is a dissociative reference group for any high NFU, higher income social groups who avoid mainstream, suburban culture. An additional issue is the surplus of cheaper knock-offs, which harm the perception of a unique design. Knock-off UGGs pose a conflict for the proposed target consumers’ high need for uniqueness.

UGG customers value high quality and fashion trends, however UGG boots do not meet a style standards and are instead demoted to loungewear. They would be willing to pay more for a trendy, exclusive brand. However, with UGG’s current perception as a practical and mainstream item, UGG does not deliver these consumer’s desires. UGG’s brand perception is inconsistent with its efforts to reposition itself as a lifestyle brand featuring high end high fashion, apparel and home offerings. This further underscores why UGGs are popular almost exclusively with women rather than men, because UGG is missing out on crucial customer segments.

UGGs should target a high-end, fashion-forward male and female demographic

UGG should switch its target demographic to a more sophisticated, upscale crowd. We have identified Nielsen PRIZM’s category, “The Cosmopolitans,” as an ideal segment. These are educated, forward-thinking socialites, who host parties and participate in a vibrant nightlife scene. Refined and leading leisure-intensive lifestyles, Cosmopolitans reside as couples without children in older homes and apartments in fast-growing major metro areas. They focus on bettering themselves and their partners. They are knowledgeable, between the ages of 25-44, and experienced, worldly. They listen to alternative music and stay active by vacationing, going skiing, and snowboarding. We recommend UGG focus on this target demographic because they have more disposable income and a higher willingness to pay high margin premiums. In order to analyze this group in more detail, we have constructed a fictional couple of target consumers,

Isabella and Oliver, to better understand their lifestyles and behaviors.

Meet Isabella, the “Millennial Market Maven”

Isabella, 32, lives in a trendy townhome with her husband, Oliver, in Charlotte, NC. She works as a professional buyer for Nordstrom, and enjoys an upper-middle class lifestyle with no children. She and Oliver enjoy hosting dinner parties where they can entertain other couples and with flavorful food and wine in their professionally styled home. She rides horses on the weekends, and enjoys trying new Charlotte restaurants. Isabella danced throughout high school, so about once a month, she likes to dress formally and go to the ballet for date night. She has recently picked up Spanish and flamenco dancing because she and Oliver are planning a trip to

Spain. Isabella also runs a moderately successful blog with a few thousand followers, covering fashion, Charlotte lifestyle, as well as some personal topics such as environmental conservation. Isabella always tries to look her best, but manages to give off a sensible, independent impression. She loves hiking and being outside, and manages to look polished while doing it.

She recharges by reading books and being one with nature, but loves putting on luxurious, beautiful dresses and fashionable outfits. As a professional buyer, Isabella is up-to-date on all the latest trends. Her friends look to her for a review or recommendation on a new product - she is a

“Market Maven” with a high need for uniqueness. UGG should target Isabella for their new positioning. UGG celebrates Isabella’s laid back-yet-luxurious philosophy.

Isabella would purchase UGG’s functional yet stylish items and will splurge on items she thinks will stay in style for some time. Isabella would wear the black Kristin boots, which are casual enough for everyday wear and nice enough to wear to one of her many dinners or nights on the town. Isabella would also wear the Seashell Pink Fluff Yeah Slides for a more casual, weekend-lounge look to local farmers markets or spa days with her girlfriends.

Meet Oliver, the “Rugged, Indulgent Millennial”

Oliver, 33, lives with his wife of 5 years, Isabella, in a townhome near Charlotte’s thriving brewery scene. Like Isabella, he enjoys hosting dinner parties and soirees with other upper-middle class couples. He works in distribution at an alternative energy startup and prides himself on being self-made and independent. Oliver enjoys going to the local craft breweries and gastro pubs with friends from college and from the energy industry. He frequents the modern art museum, never missing an exhibit. He takes Isabella on a ski trip to Vermont every year to celebrate their anniversary, and values spending time with her.

Oliver is tasteful and fashionable in a rugged, adventurous way. He wears items that can be easily transferable from day to night. He likes shoes that can be worn every day, and wants to get his money’s worth when he buys something nice. Oliver does not often spend money on material items, typically valuing experiences over things. However, when he does buy clothes and shoes, he looks for high quality in his purchases. Oliver would wear something like the

Nuemel Boot. He can wear this boot every day during the fall and winter, to energy plants with his coworkers or to fun places with his friends and Isabella. This boot has a subtle brand logo, which Oliver appreciates because he values authentic brands but does not want to be flashy.

Oliver is a perfect target for UGG, as he would appreciate the quality of long lasting sheepskin, while still feeling polished in his fashionable boots. Oliver would endorse the uniqueness and comfort of the UGG brand, and sensibility of a warm pair of boots.

UGGs should repositioning brand perception to align with more profitable demographic

The company has lacked consistency, going through shifts in identity and product offerings. The most dependable element of the UGG brand promise is its craftsmanship and premium sheepskin and leather quality. Recently introduced product lines consist of expensively-casual couture fashions for men and women, which we recommend UGG emphasize and market exclusively to the right segments to de-stigmatize its reputation.

Looking at product line sales, UGG’s classic style comprises 30% of its sales revenue.

Therefore, UGG would suffer if it discontinues this style. While the familiar classic style should remain available, advertising efforts need to be pivoted towards lesser known styles. UGG should emphasize the products in lifestyle apparel and ‘Classic Luxe’ collections, which feature trendy boots, and sleek apparel for men and women. These products still maintain the comfort and quality that consumers associate and value UGG for, but are more refined and exclusive. With regard to distribution channels, UGG must move its distribution focus to high-end channels that appeal to upscale consumers and convey high-fashion exclusivity. Physical stores like Nordstrom, Bloomingdales, Saks Fifth Avenue, and their associated E-Commerce sites will vamp up the brand’s appeal with wealthier, stylish young people. Additionally, many fashion and lifestyle brands with influencer appeal such as MMLaFleur, Everlane, and Glossier have opened flagship stores that emphasize the hedonic experience of shopping and trying on items. These stores are in larger, hip cities and feature Instagrammable decor to intrigue young people and attract influencers. UGG opened its own flagship store in 2006 in SoHo, New York, which provides customers with a luxury shopping experience and features the entire product line.

However, the majority of owned brick-and-mortar properties are discount outlets for parent company Deckers Unlimited. We recommend that UGG change the design of this store to feel more like a galley. Brighter lighting, luxurious lounge seating and personal styling assistants allow UGG to elevate shopping experiences. In addition to altering the design of the store, UGG should open more flagship stores in large cities with celebrity appeal such as Los Angeles and

Miami, as well as international locations like Amsterdam and Milan. UGG should be careful to only open these stores in affluent, urban areas to avoid losing the exclusive appeal of a flagship attraction. Our third recommendation for UGG is to clearly distinguish different stores for men and women. After opening their first NYC UGG for Men store in 2005, efforts to target men have not been consistently carried out in other cities. Men are often turned off by shopping in a women’s store and would prefer to shop in a store designed for them. In order to corner the male market, it is essential that UGG design men’s flagship stores that emphasize style, versatility, confidence, sophistication, and ruggedness. UGG needs to move away from its middle-aged Oprah fan base and secure trendier endorsements from new celebrities and socialites. UGG will reach more of its new target consumer base by partnering with niche Instagram models, influencers, and socialites that only on-trend young people know of and idolize. The exclusivity of the brand can be conveyed through the people UGG associates its products with.

UGG should raise the prices for luxury boot product lines, which indicates to wealthy consumers that they are high quality and reliable, and exclusive to those who can afford upwards of $400. The new target demographic would be willing and able to pay these premiums, as these products signify high status and wealth amongst their social group. Keeping this price premium is essential to UGG’s brand identity and association with quality. The classic styles should remain at the the current price point ($100-$200) in order to retain current consumer groups, and keep select products isolated but accessible to middle class buyers.

Whenever a brand attempts to reposition, there is always a concern that the current target market will no longer be interested in the brand. With UGG, the continued sale of its popular classic style in lower-scale department stores will keep those product lines accessible to its current consumer base and hold on to the steady revenue stream. However, not selling the higher end lines in low-scale department stores will separate the new lines from UGG’s current consumers. Outlet isolation will attract its younger, higher income target market without the risk of tainting its new product lines, maintaining its uniqueness and exclusivity separate from classic

UGGs. Furthermore, the addition of flagship stores and more men’s stores should only strengthen the brand’s relationship with its current consumers.

Conclusion

UGG Australia is a well-known brand, but suffers from the cyclical peaks and valleys of the retail industry. After a period of mass popularity in the 2000s, UGG has become associated with mainstream, immature, and outdated trends of the past. While the perception of the boots’ style has been on steady decline, the brand sustains a favorable impression on quality and functional warmth. The current consumer base is constrained to middle-aged suburban moms and high conformity teens which stagnates potential growth into higher income demographics.

UGG has begun rebranding initiatives by creating a “Luxe Collection,” however, it must reposition itself to be successful. We propose UGG pivot its focus to a new trendier, affluent target demographic by increasing prices for new product lines and placing in higher-end distribution channels and experiential flagship stores, as well as securing endorsements from mid-level niche influencers. This will generate a more exclusive, high-end association, consequently elevating the brand equity. By isolating the distribution of new fashion lines from classic styles, UGG can continue satisfying current consumers while appealing to more profitable target market. By continuing its commitment to product quality, UGG can refocus its product design and advertising to incorporate high fashion into its brand identity.

Appendix A: Primary Research ​ ​ ​ Our group conducted primary research in order to supplement the secondary research available online. The following survey questions were distributed via Google Forms to 65 men and women within the age range of 18-64. These survey respondents were intentionally selected to represent a members of UGG current consumer demographic (female teens and womens) as well as potential male target demographic. The results of this survey were used as basis for our current consumer profile’s beliefs and attitudes toward the UGG brand and inform our repositioning strategy.

Primary Research Questions: 1. Gender (male/female) 2. Age 3. If you have UGGs, when did you purchase them? 4. Why did you purchase them? 5. If you do not already own UGGs, what would make you purchase them? 6. What needs do UGGs fulfill? 7. Do you think the amount you paid for your UGGs was worth it? 8. What words do you associate with UGGs? 9. How do you feel when you wear your UGGs?

Appendix B: Word Association Cloud: size and color based on frequency ​

Appendix C: Secondary Research Materials ​ https://www.nielsen.com/content/dam/corporate/us/en/docs/solutions/segmentation/prizm-premie r-segments-may-2015.pdf

Striving Selfies: https://claritas360.claritas.com/mybestsegments/#segDetail/PZP/47 ​

Cosmopolitans: https://claritas360.claritas.com/mybestsegments/#segDetail/PZP/2 ​

Kids & Cul-de-sacs: https://claritas360.claritas.com/mybestsegments/#segDetail/PZP/14 ​ https://today.yougov.com/topics/consumer/articles-reports/2015/12/04/uggs-brand-health-hits-2- year-high https://medium.com/the-budding-marketer/uggs-the-ultimate-positioning-machine-f78f23def2aa https://www.theguardian.com/fashion/2016/mar/30/ugg-the-look-that-refused-to-die https://www.cnbc.com/2014/09/05/ugg-chief-how-weve-avoided-becoming-a-fad-brand.html https://www.fastcompany.com/1779173/how-ugg-got-its-y-chromosome-back https://www.forbes.com/sites/brandindex/2018/03/19/uggs-arent-just-back-theyre-starting-to-loo k-more-popular-than-they-have-in-years/#18e5948e66dc https://www.retaildive.com/news/15-experiential-stores-to-see-in-nyc/514528/ http://www.msi.org/reports/the-short-and-long-term-impacts-of-fashion-knockoffs-on-original-it ems/