Table of Contents

● Executive Summary 1 ○ Market Opportunity 1 ○ Summary of competitive advantage 2 ○ Summary of competitive assessment 2 ○ Net assessment 2 ○ Summary of marketing objectives 3 ○ Summary of marketing strategy 3 ○ Summary of financial results 3 ○ Conclusion 3

● Business Overview 5

● Product/Service Assessment 7 ○ Formal product/service description 7 ○ Product Technology 11 ■ Technology description 11 ■ Technology life cycle 13 ■ Service life cycle 14 ■ Market life Cycle 15 ○ Service platform. 16 ○ Evaluate competing technologies 16 ■ Relative competitiveness 16 ■ Features, advantages, and benefits (FAB) analysis 17 ■ Cost factors/drivers 21 ○ Evaluate potential disruptive technologies 22 ○ Government/Political/Legal issues 23 ○ Environmental sustainability issues 23 ○ Conclusions 23

● Market Analysis 25 A. Potential market segments 25 B. Segmentation 26 1. Segment definitions 26 2. Segment forecasts (3 years) 30 C. Segment Attractiveness Analysis 31 D. Potential new markets 33 E. Conclusions 33

● Competitor Analysis 34 A. Industry dynamics. 34 B. Competitive factors mapping. 35 C. Competitor Profiles 36 D. Competitive Benchmarks 38 E. Conclusions 38

6. Net Assessment 39 A. SWOT Analysis 39 B. Critical Factors 41 1. Risk Factors 41 2. Success Factors 41 C. Conclusions. 42

7. Marketing Strategy 43 A. Strategy Platform 43 1. Marketing objectives dashboard 43 2. Growth strategy—goal is to achieve uncontested market space. 44 3. Value disciplines 46 4. Positioning strategy 48 5. Brand strategy 49 6. Transition to 4Ps 52

B. Service Plan 52 1. Service objectives/metrics. 52 2. Service life cycle, market life cycle, technology life cycle 53 3. Service strategy 53 4. Service Platform/family 54 5. Service launch issues 56 6. Service launch timeline 57

C. Sales and Distribution Plan 57 1. Sales and distribution objectives/metrics. 57 2. Sales strategy 58 3. Channel strategy 59 D. Promotion plan 61 1. Promotion objectives/metrics 61 2. Promotion theme. 61 3. Promotion strategy 61 4. Campaign plan 63 E. Pricing plan 66 1. Pricing objectives/metrics 66 2. Pricing strategies 67

8. Implementation 70 A. Financials 1. Three-year pro forma P&L by quarter 70 2. Marketing budget 72 3. Marketing communications budget 73 4. Capital budget 73

B. Controlling the marketing plan. 74 C. Organizational requirements. 76 1. Objectives. 76 2. Organizational plan

9. Plan Conclusions 79

10. References 80

11. Appendices 85

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1. Executive Summary A. Market Opportunity Bonobos is the largest online founded clothing enterprise in America as of 2011 (Hotchkiss, 2011). As a one- As an idea that began as a student project from by two Stanford University grads. Bonobos has established itself as a major leader in the online men’s retail industry. Today, Bonobos is focused to provide customers with excellence in fit and excellence in customer service. We have created a marketing plan to speak to these values and extend on them by introducing The Bonobos Gentlemen’s University. The Bonobos Gentlemen’s University is reinventing the way men shop online: purchasing clothes is not a chore anymore; with these services Bonobos is focusing on providing an experience for customers. The Big Idea:

The Gentlemen’s University is about re-educating young professional males to be 21st century Gentlemen.

Being a 21st Century Gentleman isn’t just in what you wear, it’s a lifestyle, we want to change how men feel by assisting through their shopping experience. An updated marketing strategy to embrace what Bonobos stands for and their goals while continuing to keep path with the ever advancing World Wide Web and all of its functions will help Bonobos capture a larger market share. Bonobos will be offering three new major services under the umbrella of “The Gentlemen’s University.” Since social media and online technologies provide us an opportunity for upfront customer contact we will be introducing our first service: a personal stylist assistant service called the “Gentlemen Professor’s.” Bonobos will offer the services of a personal stylist using today’s technology, through means of personal chat sessions, video, email, and reference to a personally tailored user dashboard that will include articles of clothing that our stylist feel are just right for you. Bonobos won’t just stop with offering fashion advice from our Gentlemen’s Professors. The Bonobos Gentlemen’s University will also offer a personal online customized dashboard that personally evolves as your relationship with your Gentlemen Professor grows, to reflect more of your 21st century lifestyle and product preference. This customized dashboard will serve as a “virtual closet”-you’ll have an online closet that helps your professor and yourself find outfits that work well together, as well as the ability to have “favorites” and upload pictures of clothing from your physical closet at home. Bonobos will offer a slim down version of your online dashboard through the Bonobos Smartphone app. Here you can view your outfits, chat with a Professor, and purchase items from Bonobos. Stumbled onto a Bonobos advertisement? Really like the outfit in the ad? Use the mobile app to scan the QR code on the ad to “save” or “purchase” all or parts of the outfit. Through research, it was found that men do not enjoy the overall shopping experience because of the inconvenience to brick and mortar locations and also the lack of education and confidence when it comes to fashion. The market for menswear overall is stagnant, but in the online sector is has grown annually more than 2.0% over the past few years. Men are more apt to shop for items online and enjoy doing so (Rodgers). Since Bonobos is strictly online we will appeal to the male masses. One of the key opportunities for brands looking to grow market share is in offering fashion advice and tips. FHM a popular men’s magazine launched an online menswear shop in November of 2009, it is now the most popular areas of their site, specifically the “What to Wear” section which attracts 10% of all page views (Smith, N.). With our marketing plan to implement social media tools at the Gentle Professor and a mobile app, we can help educate the young professionals of the 21st century, not only in fashion but in being a gentleman. Also, it was found that a great majority of the market lies within the young professional. Our target market will be males between the ages of 22-55, that are active, and in a professional career where dressing with some class is essential. The growth potential of the target market is 2.4% and is broken up into the following segments (Inc.2007): • Trousers – 46.3%

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• Shirts – 33.1% • Underwear – 9.6% • Coats – 6.3% • Suits – 4.8%

Trousers and Suits combined are more than 50% of the market; this puts Bonobos in a prime position to capture more of the market share. With the newly offered value added services provided by Bonobos’ Gentleman’s University, there should be no problem capturing a larger share of the men’s fashion market B. Bonobos Competitive Advantage The Bonobos fitted pants put Bonobos on the map. With the curved waistband technology, custom fit services, and stylish products Bonobos gained competitive advantage among competitors. Other than products, Bonobos recognized opportunity through social media marketing and it has paid off. Bonobos has fully integrated Twitter and FaceBook, devoting 30 percent of daily customer interactions from social media. (CRM Magazine, 2010) Their return on investment from social media is so strong, benefiting from word of mouth and some fashion press; they sold $11,000 worth of trousers the first month. (Smart Ideas, 2011) Looking forward, Bonobos must continue to leverage social media marketing for expansion into new market segments. In order to identify future opportunity for market growth and competitive advantage we conducted a weighted competitive analysis and comparative assessment analysis-evaluating five Bonobos competitors. This analysis provided interesting insights. Found was that most competitors are behind in mobile application technology. Competitors that have brick and mortar locations are behind in online customer support-Bonobos has opportunity by focusing on personalized services and features for customers. Over the next three years we will strategically launch portions of the Gentleman’s University, starting out with the custom online dashboard and Gentleman Professor online chat. In the following years Bonobos will launch add-on features to the Gentleman’s University ending in year three with the addition of a mobile app containing your mobile dashboard, and lastly a premium service ($19.99/month) allowing online video chat with your very own Gentleman Professor. Also, it would be beneficial for Bonobos focus on their current competitive advantage. Many competitors do not provide customized/innovative products (such as the fitted pants). There is opportunity for Bonobos to extend this competitive advantage and work towards being an innovative problem solver through new products and services. This marketing plan will assess these competitive advantages and associated analyses further.

C. Summary of competitive assessment Through analysis of competition we compared Bonobos against five competitors: J Crew, Banana Republic, Brooks Brothers, Gilt, and Trunk Club. Through our competitive analysis we learned that no single competitor was consistently strong across customer value drivers. However, as stated before we recognized the Mobile Application, innovative problem solver and personal features and services to be important factors to focus on moving forward. Each competitor is different, which will be beneficial for Bonobos because it allows us to see what is working within the market and what does not work. Since Bonobos is fully online, provides innovative solutions, and offers customized products we see Bonobos as having an upfront advantage among competition. Concluding, our comparative assessment of these competitors and the competitive analysis reveal a few significant factors that we will consider moving forward. As of now, we will focus on placing more importance of the buying experience and online customer support services. These services related to online customer support and the buying experience will be addressed through our service assessment.

D. Net Assessment In reviewing Bonobos as a company it has become clear that it possess many strong factors, though like any company Bonobos also has a few weak factors. The key strengths Bonobos posses include; catering to a niche 5 market, unique and current business model, wide variety of styles and products and bettering fitting clothing. Though Bonobos holds many key strengths that set it apart from its competitors, it is important for Bonobos to get more people familiar with the company. The best way for Bonobos to get the public and potential customers excited and interested in the company would be through the proposed “The Gentleman’s University: The re-education of the 21st Century Gentleman.”Through the University Bonobos will; provide customers with personal stylist Professors, create a personalized custom online dashboard and customizable mobile application. Each of these technologies will work together and enhance Bonobos as a company and over shopping experience for Bonobos customers. The Gentleman Professor’s will work in conjunction with the online dashboard to increase the competitive advantage of the Bonobos and increase market share, by adding value to the services for no additional cost to the consumer, but also by assisting and educating our target markets so that they learn and can enjoy male fashion. The online dashboard will enhance the competitive advantage of Bonobos and allow the company to gain a larger market share by adding to the ease of shopping. The customizable mobile application will also improve Bonobos’ competitive advantage by allowing the dashboard to be on the go, as well as directly enhance the major weakness, lack of public exposure. The implementation of the pre-mentioned services will create a buzz and increase of exposure for the company, allowing more customers to find and purchase from Bonobos. QR codes within advertising will work directly to enhance the major weakness of lack of exposure and effective advertising. Installing QR codes within advertisements will allow for more effective advertising and will bring more attention, buzz and customers to the company. With the market growing at a projected rate of 2.4% and the realization that the target market doesn’t necessarily not like shopping, but just needs assistance, Bonobos can utilize these new services to capture a larger market share in men’s fashion. Also, by installing these new services into Bonobos’ current model it will work to resolve the current weaknesses’ of the company and thus enhance the current advantages of the company which will in turn show a larger market share and an increase in ROI. e. Summary of marketing objectives and strategy Our marketing objectives include increasing sales potential, user growth, track purchase patterns, and focus on increasing Bonobos’s market share. Throughout our marketing strategy section we provide a complete analysis of how we will be using our resources to meet these objectives. Provided is a growth strategy, Service Plan, Sales and Distribution Plan, Promotional Plan, Pricing Plan and Pricing Strategies. The financial breakdown of these objectives is included as well. Overall our goal with the implementation of the Gentlemen’s University is to utilize the existing Bonobos brand and provide a customer service plan that enhances the customer shopping experience. The marketing strategy section includes the marketing objectives along with the associated analysis’s and strategies that we will use to target our market segments. The marketing strategy that we are using for Bonobos includes a g. Summary of financial results

The following includes a bulleted summary of our marketing budgets and capital requirements.

• Overall Marketing Budget for 3 years (w/10% contingency): $13,993,076.90 • Marketing Budget (Pre-Launch): $2,685,893.10 • Software Development cost (Pre-Launch): $597,000 • Break-Even point: approx. 5 quarters

Through our research we have found that the campaign plan will be able to reach our target segment the most efficiently. We will also be doing on-going promotions with some alternative advertising to help create earned media. Given the size of the plan, the future growth in the market, ROI, 176.5% and the IRR, 39.174%, the Gentlemen’s University will not only bring in much needed funds into Bonobos, but will help differentiate Bonobos enough to encourage future growth in market share past the 3-year mark. h. Conclusion With the men’s fashion industry continuing to grow at a 2.4% annually, Bonobos has an opportunity to capture that growth and establish itself as a higher end online men’s retailer. By not just selling mens apparel, but 6 by selling a lifestyle to the young professional, Bonobos can differentiate itself from already establish competitor brands in the industry. With the implementation of the Gentlemen’s University and all the services included under its umbrella, Bonobos and its investors are looking at a Return on Investment and Internal Rate of Return of 176.5% and 39.174% respectively. Just with those numbers alone one can see that investing in the Gentlemen’s University is almost too easy. With already established financing for the future, any future investment will just solidify the growth and stamp Bonobos can have on the mens fashion industry. Bonobos and the Gentlemen’s University, its not just clothing, it’s a lifestyle.

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2. Business Overview

A. Business unit/company overview Bonobos was founded by Brian Spaly and Andy Dunn in 2007. The birth of the company came from a school business project by Spaly who was tired of the way his pants fit. Generic fit brands gave him that saggy bottom look, while designer made pants were too tight for his athletic thighs. Spaly borrowed his girlfriends’ sewing machine to tailor his pants and thus the first Bonobos pant was made. Dunn loved the idea and pants and they soon became business partners to start Bonobos. Early on Bonobos was funded by to angel investors, this allowed Bonobos to stay afloat while they figured out ways to market their custom pants. With sales strategies from; word of mouth, trunk clubs, FaceBook, and offering half-off prices to “honorable professions” (teachers and conversationalist), Bonobos was off and running. In just one year Bonobos had 8 employees, marketed mainly through FaceBook, and had estimated annual revenue of $1.5 million (Zouhali-Worrall, 2008). What made Bonobos a successful startup was the difference of the market intro model. Bonobos is the largest apparel brand ever launched purely over the Internet. They created an online awareness and recognition through immense social media interactivity. They created havoc in fashion industry by breaking the walls of actual stores; instead creating virtual fit rooms to give perfect in-store experience to its customers online (Adler, 2010). Founders of Bonobos are well aware that manufacturers could easily replicate Bonobos pants, so they are trying to distinguish the company with customer service, convenience and technology. Main advertising and marketing concepts for the company revolve around these ideas. Bonobos also offers free shipping both ways along with lifetime returns, and encourages people to buy and return several pairs of pants to find the right fit (Miller, 2009). Bonobos is in a unique position to really take a substantial market share in the medium to high style of men’s fashion. They are strictly online, so they are able to serve customers 24/7 and also keep a lower overhead with having no Brick and Mortar costs. With more and more men wanting to become educated in fashion or at least to look like they are, the male fashion industry is growing. Men these days want to look good but don’t want to have to take the time to shop and take the time to learn what to shop for. They are loyal and lean towards things they know, which is why you find men wearing brands that they started to wear 10+ years ago. Matt Daniels, a 26 year old digital strategist who resides in New York City has no interest in fashion, but still wants to look good when he goes out or goes to work. Matt sums up our major business opportunity in an interview with Forbes magazine: “I was on the site (Bonobos). I like Bonobos’ pants. (Gant) sounded like a cool brand. I just went for it. Besides, who has time to spend a couple hours going to the store.” Precisely Matt, what career working man has time to go to the store? Men want to be able to access shopping when they have time, from the comfort of their home or work, and also be able to trust the brand will prevent him from being ridiculed or from standing out too much (Forbes, 2011). Bonobos’ position in the market is almost ideal. They are reasonably price for the value perceived by male consumers who are looking for durable, trending, higher-end fashion, but not so out of reach on the pricing. Also with the “better-fit” pants they offer, that is value added that other companies (i.e. J Crew, Brooks Brothers, etc.) do not have. With a better-fit comes more comfort. According to a Mintel Report, 53% of men surveyed say that they dress for comfort. With Bonobos better-fit, which means more comfort, their quality construction for durability, and their classic styling which will stand the test of time, those brand attributes accounts for more than 70% of surveyed males (Mintel) and covers more than 50% of our target age demographic. Bonobos is still in the infancy of its business life cycle, which has its plus and minuses. One of the competitive strengths Bonobos does have is the fact it still is small scale and therefore still has the exclusivity dynamic, but at still a reasonable cost for products. Another advantage is that they don’t have Brick and Mortar locations, so that savings in overhead go to service related areas, such as free shipping (both ways), a lower price point for a more quality product (compared to similar brands). One of its greatest strengths is its establishment in the social media realm. They utilize their FaceBook and Twitter accounts to interact with consumers as well as to promote sales and contests to keep its customers engaged. Its strengths can also be somewhat of weaknesses, but not total losses. Granted since they do not have Brick and Mortar locations they lose out on part of that market. Research shows though, that the retail fashion industry has flattened out in growth over all, but has increased in online sales, and that trend is for-casted to continue (Men’s Attitudes, 2010). Currently Bonobos has products in the following areas: pants, shorts, shirts, tees, polo’s, suits, sweaters, outerwear, shoes, and fashion accessories. They also have some non-tangibles such as a blog, Bonobos ninjas (customer service experts), social media outlets to promote sales and contests (About Bonobos, 2011). Their flagship is there pants line. Bonobos hand-made pants have a curved waist-line to help with the fit for men and to also show off their usually saggy bottomed assets. This curved waist-line is value added for men 8 shoppers. Bonobos’ competitor’s pants follow the industry standard generic fit, which give men a look of saggy rear-ends. Since Bonobos is strictly an online retailer, they offer free-shipping, and that’s free shipping both ways. Not happy with how something fits, looks, feels, buyer’s remorse, anything at all you can just put it back in the original box and send it back to Bonobos for a refund or exchange with no shipping costs to the customer. As said before, Bonobos offers a full line of clothing for men, but they also carry other brands (75 total) to cover the areas that they not might make themselves, which really lends to being able to find great fitting and great looking outfits at one website, so shopping doesn’t have to be a chore. Just last December Bonobos just secured $18.5 million in a round of Series C financing from Lightspeed Venture Partners and Accell Partners (Laner. 2011). By securing this funding, it will help Bonobos continue to offer great style and fit to the male online community, keep them being the largest online founded clothing enterprise in America, but more importantly help assist in further developing their brand, products, and services (GQ). Also, Bonobos has created business relationships with other fashion brands to help further the products offered on their website. Products such as: bags by Jack Spade, watches by Bertucci, dress shoes by U.K. label Grenson, casual and rugged products by Timberland, and many more to round off the some 70 other brands offered on the Bonobos website. The re-education of man: great Fit, great Style, make a great Gentleman. Men don’t like to shop for clothes, they don’t like the whole shopping experience and many lack education in style, but they do like to shop online (Laner, 2011). Bonobos isn’t just selling clothes online, we are helping to educate the 21st century man into a great looking 21st century gentleman. We are going to do this by offering “The Gentleman’s University.” The University will offer Gentleman Professors; these Professors will meet with Bonobos customers via online chat, video, or email. Through a short questionnaire, our Professors will start to figure out what is your lifestyle you want. Our Gentlemen Professors will create outfits for you as well as assist in answering any fashion or male lifestyle questions. Need to know how what can go with your Bonobos Manchester Brown Blazer? We can help with that. What about knowing how to make the perfect dirty martini? We can also help with that. Anything that the gentleman needs to know or wants to know our Gentlemen Professors can assist in your education. This process doesn’t just stop with the initial questionnaire and online meet-up; it’s an on-going process. Our Professors will continue to gather your likes and dislikes as well as analyze what questions you ask, so that we can enhance your shopping experience and also make relevant suggestions to you. Think of them as mentors and not as an annoying in-store sales person. Our professors aren’t commissioned based, so don’t feel pressured to purchase anything, but just know if you do you’ll feel that much better about yourself. Our services just don’t stop at the Gentlemen Professors; this is the 21st century, so as our relationship grows your custom online Bonobos dashboard will too. When you log-in to our site you will be greeted with a custom look, suggestions of articles of clothing’s that fit your lifestyle, but also suggested outfits from clothes you currently own. How do we know what articles you own? Well we offer an online closet. You can upload pictures of clothes (Bonobos or not) into your closet, also when you purchase something from Bonobos we will gladly put it in your online closet for you. Create different outfits on your own, save your favorite outfits, and check out Professor Suggestions, all to help create your gentleman lifestyle. The 21st century gentleman isn’t without his smart phone, so we will be offering a Bonobos Smartphone app. This app will look very similar to your personal online dashboard, but slimmed down. Here you can still shop, check out your saved outfits, or ask questions to your Gentleman professor. See a Bonobos ad somewhere that has a great outfit on it? Use your Bonobos app to scan the QR code located on the ad; this will bring up the outfit right on your phone. From there you can purchase it or save it to your outfits. The 21st century gentleman, not only does he look great in his clothes he is educated in all things gentleman. Bonobos is the largest American online founded clothing enterprise. With their current products of pants, outerwear, shirts, and suits and the expansion of offering other fashion company’s products, they have established themselves in the male online fashion community. Now that they have secured future finances they can take the step to gain market share against male fashion giants as JCrew, Nordstrom’s, Brooks Brothers, and more (Laner). As well as see what new online concepts and trends of emerging competitors like Trunk Club and Gilt to adapt Bonobos’ business plan to be on the leading edge of men’s fashion. While Bonobos is small compared to its more established competitors, they have found a fairly untapped market for higher fashion for the younger, non- fashion savvy, working professional looking to leave his mark. Through The Gentleman University the customized online dashboard, and Smartphone application, and Gentleman Professors, Bonobos can take the 21st Century Gentlemen into the lifestyle he wants and deserves.

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3. Product/Service Assessment The purpose of this section is to provide an extensive assessment of our recommended service plan for Bonobos: The Gentlemen’s University. We will begin with an introduction of The Gentlemen’s University by specifically defining and descripting each of the three services that we are recommending for Bonobos. Followed by a technology description, a service life cycle analysis, service platform description, and FAB analysis with a comparative assessment. We will conclude our service assessment with discussion on cost factors, political/government/legal issues, environmental factors and an overall conclusion. With the development and creation of The Gentlemen’s University we wanted to implement a service that speaks to the Bonobos brand and customer online service orientated business model. After extensive research and analysis of Bonobos’s current products, innovations, customer service programs we found some notable opportunities. We recognized that Bonobos has established itself as one of the most successful online businesses based on its reputation, quality clothing, innovative product technology and style. (Bonobos) From our findings, we decided to push the envelope on what Bonobos currently offers and focus our attention on leveraging these current strengths. We also wanted to provide a service plan that incorporated Bonobos’s business mission: to provide excellence in fit and customer service. (Bonobos, 2011) Which is how we came to the establishment of “The Gentlemen’s University”. The Gentlemen’s University will consist of three services that will be integrated as a new service platform to the current Bonobos website. The three services that we are recommending under the Gentlemen’s University title include:

• The Gentlemen’s Professor • The Bonobos Virtual Closet • The Gentlemen’s University Mobile Application.

The Gentlemen’s Professors are personal stylist assistants, the Virtual Closet will be a personalized and customized online dashboard and a Mobile Application available for IPhone and Droid smartphone users. It is important to understand that these three services provide customers with different features but they will be unlike any other customer service model that is on the market based on their ability to communicate and reference each other’s gathered information through our technology backbones and database (we will discuss further in the Service Technology section). Moving forward, the Gentlemen’s University’s objective is to provide superior customer service, customer value and enhance the Bonobos shopping experience. The purpose of this Service Assessment is to provide an extensive analysis of the Gentlemen’s University technology, service life cycle, service platform, and associated implementation factors that will be considered. Through this assessment we will begin with a formal service description of The Gentlemen’s Professor, Virtual Closet and Mobile Application.

Formal Service Description: The purpose of this section is to provide a description of each of three The Gentlemen’s University’s services. Beginning with a description of the Gentlemen’s Professors, then the Bonobos Virtual Closet, and finally the Mobile Application.

Gentlemen’s Professors: The Gentlemen’s Professor is a complementary service for all Bonobos customers who register for a Bonobos customer account through the main Bonobos website. The Gentlemen Professors are essentially Bonobos trained personal stylist staff. Gentlemen’s Professor’s will have the ability to communicate with Bonobos customers via online chat and will be available 24/7. Their purpose is to answer product and service related questions, assist with product/service troubleshooting, and most importantly provide Bonobos customers style, fit and fashion assistance. Figure 3.1 below, shows the main features of the Gentlemen’s Professors. These Professors are men who can speak to our target segments, because based on demographic and psychographic information they will be hired based on these characteristics. They are fashionable and knowledgeable, ready to support and assist Bonobos customers. Also the visual shows a Bonobos customer chatting with a Gentlemen’s Professor via the online chat feature. Note that the Professor (Bonobos employee) will be able to directly reference the customer’s account and online chat with Bonobos customer as both Professor and customer search for preferred items. The Professor is able to walk through the purchase situation from beginning to end-Professors can go as far as placing a customer order and completing their purchase transaction via live chat for them. 10

In the event that customers just have a quick question or styling assistance-The Professors is there to simply help answer questions, directly style and provide customer support. It is important to understand that Professors are able to assist customers more efficiently because they have direct access to customer information collected through the Virtual Closet. Our overall objective with the Gentlemen’s Professors is to provide fully personalized and exclusive shopping experience; we feel that Professors can serve as “in-store” assistants. Customers will gain value and confidence through direct communication with these Gentlemen’s Professors. (Please Reference Figure 3.1)

Figure 3.1 The Gentlemen’s Professor

The Virtual Closet: Previously called the “Online Customized Dashboard”. Moving forward, this service will now be referenced as “The Virtual Closet”. The Virtual Closet is a complementary service for all Bonobos customers who register for a Bonobos customer account through the main Bonobos website. The Virtual Closet serves as a personal “area” or “man cave”-for Bonobos customers store preferred items, reference past purchases or past preferred items and reference style guides based on event, trend, style and/or profession. One major feature of the Virtual Closet is its integrated information systems (which we will delve deeper in throughout the technology section). However, the Virtual Closet will be integrated with a robust CRM information system to track and collect customer shopping behaviors, product preferences, and shopping habit information. Thus, with reference to this information gathered from the Virtual Closet backend systems-The Gentlemen Professor’s can better serve customers. As mentioned previously, Gentlemen’s professors are able to more efficiently assist customers using feedback and information from a customer’s Virtual Closet as a reference when helping that specific customer. We recognize that some customers will not want to communicate with the Gentlemen’s Professors or allow Professors to access their Virtual Closet for personal and privacy reasons. In this case, the Virtual Closet will still interactively “suggest” items, save past purchase history for customers, provide style guides, and save past searches for customers to directly reference. The Virtual Closet will be an exclusive service to Bonobos. The Virtual Closet allows for customer service/support and will provide a fun and interactive experience for Bonobos customers to find purchase success. Overall the Virtual Closet allows customers to find what they are looking for, learn how to dress, and gain confidence and achievement by being an active part of the style process. Please reference the Figure 3.2 below for a beta of what Virtual Closet will look like-note that customers will have the ability to customize their closet based on their own preferences so every Virtual Closet will look different. Also in year three we will be introducing a video chat feature to this service to better allow Professors to communicate and style customers. 11

Figure 3.2 Virtual Closet (Online Customized Dashboard)

Mobile Application: The Gentlemen’s University Mobile Application is a complementary application available to all iPhone and Android users. The Gentlemen’s University Mobile Application will allow customers to search for product information, use of quick reference scans (QR codes), provide on-the-go purchase ability, and allow customer’s access to their Virtual Closet from any location. We recognize specific lifestyle characteristics among our target market segments, and we want to make sure that Bonobos provides a service for customers that are on the go, and/or for avid smartphone users. With the ability to reference their virtual closet, look up product information via search or QR codes, and place an order from their mobile device. This also provides an advantage for Bonobos to keep competitive advantage in the application industry. Please reference the visual below, outlining the mobile application search feature and QR code search reference. (Reference Appendix: Figures 3.3, 3.4, 3.5 and 3.6) QR Code Technology: QR codes will be placed throughout Bonobos Print, Outdoor, and Ambient advertisements. QR codes will function directly with the mobile application to direct customers to the Bonobos site, provide product/service information, and provide customers with product promotions, incentives and discounts. Please reference Figure 3.6 showing a 25% QR discount promotion.

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Figure 3.3 On-the-go purchases, Virtual Closet reference, Product Information, QR Code

To conclude our Service Description section, below is a table that outlines each Service based on the service definition, function and attribute.

Table 3.4: Summary of Key Service Definitions, Functions, and Attributes

B. Service Technology Implementation of the Gentlemen’s University will require the combination of several marketing information systems, software applications, and the use of existing Internet technologies. It is important to define and analyze these technologies so that we can move forward and see where these services will position Bonobos within their 13 market and how Bonobos will gain competitive advantage. Through this section we will identify and describe the technologies, and the technology and service life cycles that will be developed and implemented for the integration The Gentlemen’s University services.

1. Product Technology description: General Technology Description: The purpose of this section will define and describe how we will use major technologies and information systems to develop and make these services function. The following technologies will be discussed: Content Management Systems, Customer Relationships Management Systems, and associated Application Software. These information systems and technologies will provide customers an exclusive and personalized Bonobos experience and allow Bonobos employees to track behaviors, preferences and shopping habits to better communicate and provide superior customer service for customers. A Custom Management System (CMS) is a method for viewing all customer and marketing-related information in an integrated way. (Harmon, 2003) CMS provides internal control in order for backend website and service updates of the website, while also providing Bonobos customers with navigation functionality and the ability to change their account preferences and appearance. (HarloInteractive, 2011) A Customer Relationship Management (CRM) include software applications manage the interaction of customers within an organization. CRM systems are able to target promotions to likely buyers, facilitate sales efforts, and deliver customer service. (Harmon, 2003) In Bonobos’s case we will use CRM system for our Central database to store and track customer information. Allowing Bonobos staff to connect with customers, access their account to assist with purchasing, place purchase for them, and track their shopping behaviors, preferences and habits to better serve the customer. An application backbone will use software to communicate with each service module. Modules will represent each service; they include their own dashboard and software applications that allow their individual functionality. (Harmon, 2003) Within our Electronic purchase system, allowing location based purchases through the mobile application. (Harmon, 2003)

The Gentlemen’s University General Technology Description: The Gentlemen’s University technology will consist of three main groups of technologies: The Central Database, The Gentlemen’s University Backbones, and the Service Modules. The Central Database will collect and store customer information and connect directly to the Bonobos main website. Communication and transfer of information from service module i.e. Gentlemen’s Professor Module to the Central Database will be facilitated by The Gentlemen’s University Backbones. (Please reference figure 3.8). It is important to understand that there will be multiple service modules related to each new Gentlemen’s University module (i.e. The Gentlemen’s Professors). The modules communicate through multiple Gentlemen’s University Backbones. For example the Gentlemen’s Professor’s will reference and access information that is gathered by the Virtual Closet by referencing data in the Virtual Closet. Therefore the Gentlemen’s Professor will not directly communicate with the Virtual Closet. All three Gentlemen’s University service modules will use CRM, CMS, and application software.

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Figure 3.5 Service Technology Platforms

This Figure 3.5 provides a visual representation of the General Technology’s for further understanding.

Individual Service Technology Description: The Gentlemen’s Professor Module will include the following technologies: interactive live 24/7 chat software, a CRM system and CMS tailored specifically for the Gentlemen’s system. The Gentlemen’s Professor or Bonobos employee module consists of a customer “user-end” module and a Bonobos employee “Professor” end module. The “user-end” or customer module wills a contentment management system for user-friendly environment and direct communication with the Gentlemen’s Professor. The Gentlemen’s Professor, “Professor” end module will use CRM systems that will be specific to the Gentlemen’s Professor Requirements. These systems will allow Bonobos staff to track customer behavior, preferences, shopping and spending habits. This information will be gathered and stored in the Central Database. Bonobos Professors will use gathered customer data to better assist customers, providing direct assistance with orders, styling, and product information within this service module. In year three we will introduce video chat for Premium Account users, which will require a video chat service module.

The Virtual Closet service module will be primarily a user end module and a reference tool for the Gentlemen’s Professors. The Virtual Closet user end module features will consist of a Content Management System (CMS), which provides user-friendly functionality for customers to personalize the look and feel of their closet, ability view and navigate their virtual closet, and reference their wardrobe style guides. The Virtual Closet back end module (for Professor reference) will use Customer Relationship Management (CRM) systems to provide the Bonobos employees the ability to track customer behavior, preference, and provide suggestions based on shopping habits. All information gathered through the Virtual Closet back end module would be dumped into the will the Central Database for other service modules to reference.

The Gentlemen’s University Mobile Application Backbone will communicate with the Central Database. The Mobile Application Backbone, will allow communication the Central Database and the above mentioned application modules. The Application Backbone will reference the Central Database to retrieve information from the main Bonobos website for product catalogs that allow customers to view and search for specific products and their product information, as well as customer information. Within the Mobile Application Backbone there will be the multiple service modules previously described, but specifically designed for the Mobile environment. In addition to the Virtual Closet and Gentlemen’s Professor Modules their will also be the QR, purchasing, and product information modules. The QR module will consist of QR reader and transcriber technology to make QR codes. To allow mobile users to be directed to proper locations from QR codes based in advertisements. QR codes will be integrated into all print material and clothing tags to allow easy access to the Bonobos website, product information, and promotional 15 activities. Due to the large amount of data a QR code is able to contain, tracking information will be embedded into each unique QR code in order to allow greater insight to the effectiveness of each promotion or advertisement and direct the information to the Central Database. The Purchasing module will consist of electronic purchasing software that allows users to buy bonobos products through the mobile application via their smartphone device. The product information module will consist of a CMS system to connect smartphone users to the Central Database to receive information about Bonobos Products and Services In year three we will introduce the Premium Account will introduce an additional service module to the Application Backbone allowing mobile text chat via mobile device.

Table 3.6 Summary of Gentlemen’s University Service Technology

From Table 3.6, the associated technologies are located on the left vertical axis. The large “X’s” convey that the technology is integrated or used by the database, backbone and/or module. From this table 3.6, you can see that Application software is installed in every service. The main platform operating system software is shared between all Service Modules, the Backbones and Central Database. The CRM and CMS are consistent in each service module. CRM is especially major for the Central Database. The mobile operating system is important for the Mobile Application Module based on service updates (Harmon, 2003)

2. Technology Life cycle:

Figure 3.7: Technology Life Cycle:

Figure 3.7 Provides a technology life cycle process flow of how we plan to evaluate, update and turnover Gentlemen’s University technologies.

Six months Prior Year one, it is important to introduce a Beta test period for technology evaluation. During this Beta period we will offer long-term Bonobos customers advanced access to services to assist in product testing and customer feedback. Based on feedback we will make evaluations and make sure the Gentlemen’s Professor and Virtual Closet are ready for the January 1, 2013 service launch. Year one will focus on the success of the Gentlemen’s Professor and Virtual Closet, their technology functionality and service software updates. It will be extremely important throughout the first six months to study account registration rates and push customer feedback surveys, and track competing or disrupting technologies that could threaten the positioning of these services. Overall we are planning to implement a continuous service technology life cycle plan that will enforce Bonobos evaluate technologies related to the Gentlemen’s University quarterly-and implement any updates depending on user feedback or competing/disruptive technologies. Quarter evaluations will be implemented throughout the entire three-year plan. 16

Year two will focus on the introduction of the Mobile Application service, which will introduce mobile application software technologies that will need to be evaluated every quarter. Users will be provided with software updates (i.e. iTunes) and we will re-evaluate technologies-making sure all services function symbiotically. Year three will focus on the Premium Account technologies that will be introduced. Again, technologies will be evaluated and assessed/updated according to evaluations, and focusing on customer feedback and plans for re- evaluation and competing technologies. Note: Mobile updates are subject to change based on iTunes and droid application software updates. Overall we do not plan on discontinuing any of the software or technologies that we are developing; we will online be providing updates. Please reference Figure 3.7 for a visual representation of the Technology life cycle.

3. Service life cycle: Figure 3.8 Service Life Cycle:

Figure 3.8 Service Life Cycle: provides a visual representation of Service Life Cycle plan that will be used to introduce each service by year.

In figure 3.8, year one service includes the introduction of the Gentlemen’s Professor and Customized Dashboard. Year two will introduce the Mobile Application which communicate with communicate with the Customized Dashboard system. Year three will introduce the Bonobos Gentlemen’s University Premium Account. The Premium Account offers Bonobos customers the ability to video chat with Gentlemen’s Professors and mobile text chat using the Mobile Application service. The Premium Account will be offered to Bonobos customers for a monthly membership fee of $19.99. The Premium Account will provide Bonobos customers an enhanced experience of all of the services, customers can build relationships with their preferred professors, ask any sort of question (i.e. how to tie your tie). Each year these services will be tested and surveyed based on their customer value, functionality, and revised based on customer feedback Bonobos receives. Finally they will be updated with technologies based on software, application, and advanced internet technologies specified in our technology life cycle.

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Market Life Cycle: Table 3.9 Market Life Cycle

Table 3.9 Market Life Cycle This is a visual representation of the introduction and market life cycle of the Gentlemen’s University services and how they will affect market position, share, and presence.

The Market life cycle is based on a classic service life cycle model. During the introduction phase, the Gentlemen’s University services will be developed and pushed into the market using advertising and marketing efforts. During the later period of the introduction phase the services will be introduced to market. Our Development/Growth phase will occur during the end of year two beginning of year three. During the Growth phase we want to maintain momentum and growth by introducing our premium account during this time period to increase Bonobos profit. Throughout this market life cycle years we will consider market conditions such as competitive and disruptive technologies that are currently in the market. Market demand and how we can evaluate our services to better serve customers and the Bonobos brand. We want to maintain Bonobos’ market sure through The Maturity stage, which will include the introduction of the Premium Account in order to entice customers to seek new service features. This premium account service is provided with a monthly fee in order to bring in revenue for Bonobos. The Decline Stage is not expected to occur in our three-year projection plan. We will prepare for the maturity phase in year four by enhancing our services with new features and still leveraging the Premium Account. We want to recognize disruptive technologies and the market demand and evaluate our positioning for success. Please refer to Table 3.9 for the Market Life Cycle visual representation.

C. Service platform The Gentlemen’s University provides a unique service to Bonobos customers. Due to the design of the product platform structure, new platforms will be easy to implement without much risk of adversely affecting current systems. Current plans for platform expansion from initial launch include addition of new application backbones as the Gentleman’s University expands to new platforms and new service modules as new features are added. Initial expansion of application backbones will focus on support for specific smart devices, such as the iPhone and Android platforms. Planned new service modules include enhanced mobile and video chat capabilities; mobile purchasing features and QR code integration. The ability to easily create new service modules and technological evaluations creates potential for development of new currently unplanned features. This including modules which provide information on other non- fashion gentlemanly topics such as food, a photo upload service to show off how you look in Bonobos clothes or maps with gentlemanly points of interests. Major upgrades to the Gentlemen’s University, such as addition of a new database will require modification of the application backbones; however such an addition should cause the cost of development and modification of existing backbones to be worth the new features gained. Additionally application backbones not initially requiring access to the new database would not require upgrades to continue functioning.

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The service module model will also allow Bonobos to offer different features to different levels of customers should they decide to implement any sort of various membership level feature. Please reference Table 3.10 for a visual representation of our Service Platform.

Table 3.10 Service Platform This visual provides a more extensive visual representation of how existing and new technologies allow these services to function efficiently.

Common elements that already exist that will affect our Gentlemen’s University services platform include Web 2.0 technology and mobile application software. Web 2.0 technologies that allow communication such as smartphone application technologies. Web 2.0 has provided businesses the ability to interact with customers and start a conversation to receive feedback pertaining to products and services. Web 2.0 technologies have provided Bonobos success through customer engagement and interaction through social networks, blogs, SEO marketing, cost per click advertising etc. and provide information system and Internet technology innovation opportunity. Web 2.0 is a major element to the implementation of these recommended services. (O’reilly, 2005). The Mobile Application and QR Codes will be compatible and available for iPhone and Droid Smartphone devices. Mobile Applications are low cost and provide a high return on investment by providing high opportunity for direct customer engagement. The Bonobos Internet features and technologies will be developed for the Bonobos mobile application to increase purchasing capabilities and customer assistance. Overall the Gentlemen’s University Platform represents a fully integrated technology system that provides an enhanced customer support and service experience. We use common elements that exist for all of the public to utilize as well as unique elements to Bonobos through the use of these services that are unlike any other. Overall we will use this platform as a blueprint for the development of these services.

D. Evaluate competing technologies

1. Relative competitiveness and disruptive technologies Through research and market analysis we have chosen five main competitors of Bonobos to assess with the implementation of The Gentlemen’s University. These competitors include: J Crew, Brooks Brothers, Banana Republic, Gilt, and Trunk Club. Through this section we will describe our process for choosing these competitors based on their innovative business models and competing technologies. When assessing competitive technologies we first want to highlight the most reputable brands among men’s business casual/business wear such as: Brooks Brothers, Banana Republic and J Crew as Bonobos’s major competitors. These companies have all been in commission for a while they have established themselves as reputable brands based on their customer service, products, and style. Some of the major competitive advantages that they have against Bonobos include there in person customer service ability-they provide Brick and Mortar 19 locations where customers can speak directly with in-store assistants. Also Brick and Mortar locations provide customers the opportunity try on products before purchase, and directly return products. When assessing these competitors we focused on current and disruptive technologies that exist. To do this we focused on each competitor’s online customer shopping experience and the competing technologies that are associated with that. By visiting each web site we learned that each company provides online shopping service, which unique customer support programs. Brooks Brothers website, customers are provided with a sophisticated style guide for their shoppers to reference appropriate attire based on event, how to wear a suit, tie your tie etc (BrooksBrothers.com, 2011). Banana republic allows customers to schedule appointments with a personal stylist or come into the store to speak with someone about their personal style needs (Bananarepublic.com, 2011). For J Crew we recognize J Crew for its innovative Personal Shopper service. The J Crew Personal Shopper customer service provides customer service features for their in-store and online customers. According to the description off the J Crew Website, Personal Shoppers For guys, there's "Jack Knows Best." Here, male customers can read basic tips on blazers and bowties from a company stylist -- but they can also email him about specific sartorial conundrums at [email protected] (JCrew.com, 2011). This personal shopper is could be considered a disruptive technology for The Gentlemen’s University, which is why we will be tracking and evaluating the development of this J Crew service. Overall, these two companies pose a threat to Bonobos business, and we will evaluate their business model throughout the integration of The Gentlemen’s University. Overall these services are direct competitors for the Gentlemen’s University and we will consider them thoroughly in our competitive analysis. It is essential that we recognize and make sure we keep up with these competing systems because they can directly affect Bonobos’s Gentlemen’s University success (JCrew.com, 2011) (Brooks Brothers, 2011). Trunk Club is an online men’s clothing retailer and their competitive advantage lies within their business model. According to the Trunk Club website they hand select a trunk of clothing based on your preferences and then send it to you. You then, are charged for the items that you like. The others are returned with no charge. Shipping and handling is free as well. If you do not like any of the items in the trunk, send it all back. This sort of competitive business model will be assessed with the implementation of The Gentlemen’s University Services to make sure we are considering all sorts of business model structures not just technologies. (Trunkclub.com, 2011) Gilt.com is another strong competitor. Although Gilt’s business model is different than Bonobos’s business model. It provides a model for Bonobos to reference when thinking about disruptive technology and competition. Gilt.com provides clothing for men and women; their goal is to promote incentives for customers to buy based on their exclusive auction item sales. We see this as a potential threat to the industry because the idea of the business model is modern and interactive with customers. Gilt will be useful for Bonobos to keep track of. (Gilt, 2011) Overall we see a common trend within our competitive market. The rise in personal style assistance is high. However, Bonobos extends their Gentlemen’s Professor Service by integrating the Virtual Closet. The Virtual Closet makes The Bonobos personal stylist Professor’s state of the art. These technologies will collaboratively gain competitive advantage for Bonobos and be unlike any personal customer service program/service that is currently in the market. Also, some of these competitors do not offer mobile applications. Our services will. We will be online and mobile which allows Bonobos to serve and communicate with more customers, providing customer service and support unlike any of these current competitor products/services.

2. Features, advantages, and benefits (FAB) analysis vs. competitive products/services. In this section, we will discuss each service’s main features, attributes and benefits and also provides a comparative assessment of those features to Bonobos competitors. The competitors that we will compare include: J Crew, Banana Republic, Brooks Brothers, Gilt and Trunk Club. Note that each Gentleman’s University service has a separate FAB analysis. Features: Each table compares each of the main service features to competitors. The Gentlemen’s Professor FAB analysis breaks down four main features that make the Gentlemen’s Professors unique and compares these features to competitors. From the table we can see the highest competitive advantage within this service lies within the Virtual Closet reference and communication capability. Please refer to table 3.11 below. The Virtual Closet features provide insight that the backend information systems that will collect data and allow the Gentlemen’s Professors to reference customer information and preference along with the style guide features, which will provide extensive service and product information for Bonobos customers. Please refer to table 3.12 below.

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The Mobile Application features that will be the most disruptive include the reference to virtual closet and on the go purchasing. In year three, the mobile text chat will serve as a strong disruptive feature among competition. Please refer to table 3.13 below. Advantages: The Gentlemen’s University services create customer service and support that goes beyond any current online retailer on the market. We have designed these services to gain competitive advantage among competitors. Again, we see a huge advantage with the introduction of each service but highlighting the Virtual Closet to be the most disruptive. These services will be unique to Bonobos brand, creating more advantage among online men’s clothing customers and be disruptive among competitor’s current business models and technologies. We want to provide the best online retail experience for Bonobos shoppers. The Gentlemen’s University will do that for Bonobos. Please refer to tables 3.11, 3.12, and 3.13 below. Benefits: Each of the Gentlemen’s University service benefits the customer by providing superior customer service in styling, fit, and product information. Each service is designed to support the customer through each step of the shopping experience. Each service benefits the customer based on value drivers such as convenience and confidence in appearance. Overall we see each of the service providing a huge benefit to the current Bonobos model because it provides an enhanced Bonobos shopping experience for customers. Please refer to tables 3.11, 3.12, and 3.13 below.

Table 3.11 Gentlemen’s Professor FAB

Table 3.11 Gentlemen’s Professor FAB provides insight that the most opportunity lies within the Gentlemen’s Professor’s ability to personally and exclusively serve customers with reference to the Virtual Closet features and specific customer information.

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Table 3.12 Virtual Closet FAB

Table 3.12 Virtual Closet FAB provides the same sort of opportunity as the Gentlemen’s Professor. Because the Virtual Closet tracks customer behaviors and preferences using information systems, Bonobos can exclusively help their customers in a unique way compared to their customers.

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Table 3.13 Mobile Application FAB

Table 3.13 Mobile Application FAB: Provides insight that overall most of the features that will be offered through the Application will provide Bonobos a competitive advantage among their competition. Many of the larger brands do not have mobile apps.

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Comparative Assessment: For this Comparative assessment, there are seven elements from the FAB analysis to compare Bonobos against five competitors (these competitors are separate from our previously selected competition). The purpose of this assessment is to compare the five competitors to bonobos based on the seven elements, and see which competitors pose the highest threat for disruption. The following elements include: Personal Stylist, Virtual Closet, Mobile Application, Brick and Mortar locations, Return Policy, Male/Female Products, and Auction Sales. A FAB analysis is helpful for us to assess our position among the market and our competitors. Now we will assess how our competitors match up against Bonobos based on specific elements. Table 3.14 below provides a visual representation of the Comparative Assessment.

Table 3.14 Comparative Assessment

(Gilt.com, 2011) (Bonobos.com, 2011) (JCrew.com, 2011) (BeSpeak.com, 2011) (Brooks Brothers.com, 2011) From this comparative assessment we can see where our competitors compare to Bonobos, and how Bonobos compares to them based on the most significant product features, attributes, and benefits. The large “X” and color background represents an element that the competitor has. Please reference the Table Below. As you can see, the main competitors to Bonobos include J Crew and Gilt. We will focus on these competitors moving forward because they pose the largest threat based on innovation and disruptive technologies. We will focus on a more extensive analysis of our competitors in our Competitive Analysis section.

3. Cost factors/drivers The Gentlemen’s Professor services and Customized Dashboard services (Gentlemen’s Professor, Virtual Closet and Mobile Application) will be complementary throughout year one and year two. We will introduce a Premium Service Account for customers who would like to use the video chat and mobile text chat with Bonobos Professors for an additional fee in year three. The reason we will be offering a premium account system based on purchase expense is to incentivize customers that these services work, and that they will receive rewarded services with a certain amount of purchases. Perceived costs to develop and provide functionality/life to the Gentlemen’s Professor will require more staff such as development managers, operation specialists, software testers, programmers and developers. Overall increasing the Bonobos team and amount of people receiving paychecks. Then allocating a budget to the development tools needed to create the technology systems. Please refer to Table 3.15 for a visual representation of the Cost breakdown.

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Table 3.15 Product/Service Cost

The technology cost structure is outlined below in table 3.15. For the initial integration of the Gentlemen’s University services we have allocated almost $600K for the development of software, specialists etc. Please review the following model below.

E. Relative competitiveness and disruptive technologies Through research and market analysis we have chosen five main competitors of Bonobos to assess with the implementation of The Gentlemen’s University. These competitors include: J Crew, Brooks Brothers, Banana Republic, Gilt, and Trunk Club. Through this section we will describe our process for choosing these competitors based on their innovative business models and competing technologies. When assessing competitive technologies we first want to highlight the most reputable brands among men’s business casual/business wear such as: Brooks Brothers, Banana Republic and J Crew as Bonobos’s major competitors. These companies have all been in commission for a while they have established themselves as reputable brands based on their customer service, products, and style. Some of the major competitive advantages that they have against Bonobos include there in person customer service ability-they provide Brick and Mortar locations where customers can speak directly with in-store assistants. Also Brick and Mortar locations provide customers the opportunity try on products before purchase, and directly return products. When assessing these competitors we focused on current and disruptive technologies that exist. To do this we focused on each competitor’s online customer shopping experience and the competing technologies that are associated with that. By visiting each web site we learned that each company provides online shopping service, which unique customer support programs. Brooks Brothers website, customers are provided with a sophisticated style guide for their shoppers to reference appropriate attire based on event, how to wear a suit, tie your tie etc. (Brooks Brothers) Banana republic allows customers to schedule appointments with a personal stylist or come into the store to speak with someone about their personal style needs. (Bananarepublic.com) For J Crew we recognize J Crew for its innovative Personal Shopper service. The J Crew Personal Shopper customer service provides customer service features for their in-store and online customers. According to the description off the J Crew Website, Personal Shoppers For guys, there's "Jack Knows Best." Here, male customers can read basic tips on blazers and bowties from a company stylist -- but they can also email him about specific sartorial conundrums at [email protected]. (Daily Finance, 2009) (JCrew.com, 2011) This personal shopper is could be considered a disruptive technology for The Gentlemen’s University, which is why we will be tracking and evaluating the development of this J Crew service. Overall, These two companies pose a threat to Bonobos business, and we will evaluate their business model throughout the integration of The Gentlemen’s University. Overall these services are direct competitors for the Gentlemen’s University and we will consider them thoroughly in our competitive analysis. It is essential that we recognize and make sure we keep up with these competing systems because they can directly affect Bonobos’s Gentlemen’s University success. (JCrew.com, 2011) (Brooks Brothers, 2011) Trunk Club is an online men’s clothing retailer and their competitive advantage lies within their business model. According to the Trunk Club website they hand select a trunk of clothing based on your preferences and then send it to you. You then, are charged for the items that you like. The others are returned with no charge. Shipping and handling is free as well. If you do not like any of the items in the trunk, send it all back. This sort of competitive business model will be assessed with the implementation of The Gentlemen’s University Services to make sure we

25 are considering all sorts of business model structures not just technologies. (Trunkclub.com, 2011) Gilt.com is another strong competitor. Although Gilt’s business model is different than Bonobos’s business model. It provides a model for Bonobos to reference when thinking about disruptive technology and competition. Gilt.com provides clothing for men and women; their goal is to promote incentives for customers to buy based on their exclusive auction item sales. We see this as a potential threat to the industry because the idea of the business model is modern and interactive with customers. Gilt will be useful for Bonobos to keep track of. (Gilt.com, 2011) Overall we see a common trend within our competitive market. The rise in personal style assistance is high. However, Bonobos extends their Gentlemen’s Professor service by integrating the Virtual Closet. The Virtual Closet makes The Bonobos personal stylist Professor’s state of the art. These technologies will collaboratively gain competitive advantage for Bonobos and be unlike any personal customer service program/service that is currently in the market. Also, some of these competitors do not offer mobile applications. Our services will. We will be online and mobile which allows Bonobos to serve and communicate with more customers, providing customer service and support unlike any of these current competitor products/services.

F. Government/Political/Legal issues.

Governmental/Political and Legal Issues: Bonobos adheres to a strong ethical corporate social responsibly model that recognizes and is sensitivity towards political issues related to product production and customer information sharing and tracking. Each service allows access to customer information and we will work hard to make sure we are implementing privacy policies that avoid political issues, such as a breach of customer information, leak of information to third party hackers. We recognize that each of these services require customers to give Bonobos ability to track their shopping behaviors and access to profile information, and Bonobos customers will be presented a privacy policy agreement upon registration for these services through their online account registration and mobile application. The privacy policies will provide a direct explanation of our marketing efforts and allow customers to opt-in. By opting-in this allows Bonobos to track demo geographic info, search behaviors and product preferences. When registering for an account, customers will be able to adjust privacy settings. Overall the goal is to maintain customer loyalty. These systems and services will be built using robust systems and extensive privacy policies to ensure customer privacy protection and prevent any breach of personal information. To provide legal protection for Bonobos, each service will be patented and copyrighted to protect the replication of these services. We want customers to feel safe and trust Bonobos with their information and not feel pressured to share any information that they do not want. Thus each service will prompt customers with a “terms and conditions policy” outlining our efforts to protect their information. We will be honest and represent Bonobos’ as a safe place for customers to seek customer service and assistance. The Virtual Closet provides an upfront description that we are implementing information systems to track customer behavior, preference, and shopping habits to better serve customers. Overall our goal is to eliminate potential Political issues with a solid Privacy Policy which protects the information, and also allows customers to use these new services knowing that their personal information will not be exposed or used against them. We are here to support customers through these services and we will focus most of our attention on the privacy policy and legal agreements in order to avoid any political issues (Bonobos, 2011).

G. Environmental Sustainability Issues. Bonobos will continue to ensure social responsibility through integration of these services because the services will be produced and function with minimal carbon offset. In other words we will develop and construct the Gentlemen’s University services are constructed using mainly computer programming and development and are used online, through computer or mobile device. This decreases the use of paper, toxins, and pollutant materials, which is sustainable for Bonobos’s current business model. To keep up with Bonobos’s current social responsibility programs. We will make sure that the Gentlemen’s University services will have some sort of incentive for customer’s help Bonobos donate to their partnered foundations and community outreach programs. For example after a third purchase, Bonobos customers can receive 15% of that third purchase will go to one of our partnered foundations. We will incentivize Bonobos and Bonobos customers to give back through the use of the QR codes, mobile application, and frequency of purchases using our services (Bonobos, 2011).

H. Conclusion The product service assessment includes an extensive description of the Gentlemen’s University services that we are recommending for Bonobos. We have provided a service description, extensive analysis of the technology 26 components, competitive assessment, and multi-factor analysis of each Gentleman’s University service. Overall we have found that each of our services provide Bonobos with a competitive advantage that will increase brand awareness and customer support and service for Bonobos customers. We will move forward with our assessment by introducing the Market Analysis. Note that some sections will refer back to this section since it has major role in the understanding and development of our service technology and features.

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4. Market Analysis The next section is the Market Analysis. The market analysis provides an overview of our research analysis that led us to establish our three target segments for Bonobos. The purpose of this section is to define the research process that led us to our three target segments, with first a potential market segment analysis that led us to our definition of our segments, where we will define our segments and provide an overview of the customer value drivers that we chose to analyze.

A. Potential Market Segments The purpose of the Market Analysis is to research existing segments and identify opportunity for potential market segments for Bonobos. Below provides research and insights related to Bonobos customers and male online shopping preferences-identifying potential segments and opportunities for growth. First we established that we wanted to stick with some of Bonobos’s current market segment demographics. The age range that we are going to focus our market segments includes young active males 25-35. A Mintel Report states 25-34 year olds are embarking on new careers, which requires new clothing based on their professional endeavors (Men’s Clothing, 2007). When assessing potential markets we first focused on opportunities based on Bonobos’s current business model and market segment. As a NYC and has gained brand recognition among East Coast market segments based on their custom fit pants and a popular go to brand among Wall Street Professionals. (Bonobos) We recognize that NYC is a high fashion highly populated city, filled with new graduates and/or young professional males. From research of other large cities we found some associations and similarities that could potentially provide extension to the West Coast region. From census data we found that 14% of both NYC and California population consist of 24- 35 year olds. The average income in 687,500 672,550 Based on census data NYC and California share some similarities based on popularity of Bonobos in NYC we want to extend the brand to the West Coast region and target professor that fall under the same demographic as Bonobos’s NYC market segment. From this a major opportunity for Bonobos to venture and target segments based on other large cities that share population psychographic and demographic similarities. Bonobos assuming that the first opportunity for a potential segment is the West Coast region. Although very popular among East Coasters, research revealed that there is a lack of Bonobos brand awareness among large cities in the West Coast region (i.e. LA, San Francisco, Austin etc.). Placing emphasis on marketing and advertising within these cities will be beneficial for Bonobos to increase brand awareness and sales. Second, there is opportunity among younger men who prefer online shopping, quality clothing, and convenience. One Mintel Report regarding the way men shop suggests younger and middle-aged men prefer upscale and clothing stores more than older men. Research revealed many men prefer online shopping because it is more comfortable, allowing them to browse without feeling overwhelmed. Online shopping relieves the stress of sifting through mounds of disorganized merchandise while a hovering salesman breathes down your neck (Laneri, 2011). That said most of these men also are looking for assistance with style and fashion-which is not always available online. Going forward, there is opportunity for men that prefer online shopping-the challenge is to bridge the disconnect between the online and in-store shopping experience by incorporating online styling and fashion assistance. “New generation of guys that want to dress better but do not necessarily know how” (Laneri, 2011). Third, Bonobos has targeted teachers in the past, because they need comfortable clothing to wear at work (Miller 2009). This established a third potential segment; targeting men based on their professional dress code requirement (i.e. teachers) or event attire (wedding, first date, etc.) This segment will focus to provide a convenient and quick shopping experience. These men have busy schedules, are functional vs. fashionable, purchase products that they can rely, works for a specific event/profession, or personal need. “Men don't enjoy shopping or stores, so we have to deliver a product they want from people they trust, said Andy Dunn, the brand's co-founder and chief executive officer” (Laneri, 2011). Therefore, this potential segment will focus on dress code by profession. Gaining trust and loyalty among customers will provide long-term investment and return. Two potential market segments, the luxury seekers and older demographic segment were considered but decided against. Bonobos clothing is customized to fit and made with quality materials. Many related businesses emphasize exclusivity based high product price points and customer membership benefits. However, with the economic state-raising prices would decrease growth and would not be supportive for existing customers. The older demographic is a strong potential market based on disposable income and professional attire requirements. But Bonobos currently focuses to provide custom fitted pants for athletic young men. The products are not ready to tailor older aged men. In years to come, this could be a future potential segment but at this point in time it could potentially hurt the brand. Based on the research included above, the final three target segments include: The West Coaster, the Fashionably Challenged, and The Educator. 28

B. Segmentation The three target segments established for Bonobos are crucial, because they assist in determining how to understand and market to the target customers of Bonobos. The three segments being targeted are The West Coaster, The Fashionably Challenged, and The Educator. To analyze the attractiveness of these three target segments first an in-depth description of each segment was created, based on research which was discussed in the previous section. Then a likely persona of a customer within each particular segment was created to personify the possible customer within that segment. This provides a better understanding of what type of customers exists in each of the three target segments. The key customer value drivers were then determined and using these value drivers the segment attractiveness of each of the three segments was then determined.

1. Segment Definitions The three segments being targeted are The West Coaster, The Fashionably Challenged, and The Educator. These segments will be defined in order to better understand the target markets for the Gentlemen’s University services. After each segment a likely persona of a member of that market is displayed to provide an idea of what someone with that market would look like.

Segment #1: The West Coaster The West Coaster is a recent male college graduate between the ages of 25- 35 years old. The information obtained from Quantcast illustrates that 73% of Bonobos customers possess college education. He is in his first professional job/career looking to make a statement and impact in his office. He wants to make a positive impression so he can quickly move up the corporate ladder. He is extremely focused on work and making a good impression in the workplace. The West Coaster is fashionable and keeps up with business professional fashion trends by reading male fashion magazines such as GQ. The West Coaster wants to be noticed by others for his fashion and style. As far as the buying center of this segment goes, the West Coaster is the buyer, initiator, user and decider. Due to the fact that the West Coaster is a very individual, strong man, he doesn’t take much input from others when making buying decisions. In a 2010 Mintel Report on men’s purchasing behaviors showed that 56% of men shop for clothing on their own, this would likely men that the due to the confident nature of the West Coaster he would shop and making buying decisions on his own.

About Michael Michael is 27 year-old recent college graduate. He works at his first professional job in sales and is ambitious with his career. Michael knows that he is capable of handing the responsibilities of better job titles within the corporate world. He makes approximately $35,000 a year and is currently single. He is environmentally friendly and just moved in to a new apartment. Michael is spends much of his time in the business district, coffee shops, and bars. His social life is extremely important to him, as well as any new technologies that will make him appear up to date and tech savvy. Michael reads fashion magazines such as GQ and business magazines, articles and books on a daily basis. One major goal within Michael’s life is to climb the corporate ladder quickly and he is looking forward to creating a positive impact on new business associates. Michael needs to look hip and business-like simultaneously. He loves to dress to impress is his daily life. His look should reflect his energy and enthusiasm about his life and work.

Segment #2: Fashionably Challenged The Fashionably Challenged is 25-35 year old male, whose life revolves around technology. The total number of men within this market segment is 31,646,267 (Census, 2010). This technology savvy gentleman spends many hours behind a computer coming up with the next hit game, application and/ or website. A 2010 Mintel port found that on average men between the ages of 25- 34 use technology more than any other group and spend 94 hours per week using technology (Mintel, 2010). However since the fashionably challenged spends such a large amount of time alone, he doesn’t put much focus into his wardrobe. The Fashionably Challenged is looking to spice up his look and become more fashionable, because he is looking to becoming more involved in the public social scene. With a large disposable income, price is not a huge concern for this buyer. The buying center considerations for the Fashionably Challenged include; initiator, user and approver. Due to the fact the Fashionably Challenged does not have much experience picking out clothing, it would likely be someone else influencing and deciding on his purchases.

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About George George is a 26-year- old computer programmer. He makes over $70,000 a year and has a high disposable income. George has a long-term girlfriend, with whom he currently lives. He doesn’t have much of a social life; however, he looks forward to making more friends and being more involved in the social scene. George is not the mall kind of guy and his girlfriend does most of the clothes shopping for him. Functionality in clothing is far more important than fashion in George’s eyes. George is extremely interested in online Forums, social media, any new technology. Much of George’s time is spent alone in front of a computer. One current goal in George’s life is to become more involved in the public social scene. He also looks for quick and painless online purchase to provide the outlook for the social scene. George is eager to learn more about fashion and become more fashionable. However, George still wants to make sure he gets a good value for his purchases.

Segment 3: The Educator The Educator is a young scholarly male, 25-35 year old. Based on census data this segment is comprised of 357,440 males a crossed the United State (Census, 2010). The educator places a large focus on comfort, due to his long days of work. The Educator has to make sure he follows the dress code at whichever institution he is working. Due to the fact he has a limited budget, value and functionality far outweighs style and fashion. However because the Educator wants to move up in his career, he wants to begin dressing more professional. The buying center considerations for the Educator include; initiator, user, buyer and approver. The educator will likely make final decisions on his own; however will need assistance making style decisions.

About Shawn Shawn is a 29-year-old history teacher at Carroll High School in Dayton, Ohio. He is married and wants kids in the future, but currently has none. His annual income is approximately $38,000. Shawn likes spending time with his wife and going to social events such as the theater and movies on a regular basis. He is price conscious about his purchases and is a functional shopper. Shawn is far more concerned with need and value, than he is with fashion. Shawn spends a large amount of his free time reading books, using social media and cooking with his wife. He goes to the gym every day and regularly goes to coffee shops to read and meet with friends. Shawn likes to look professional, but since he works such long days he likes to be comfortable. Comfort, function and value are extremely important to Shawn when making buying decisions.

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Table 4.1 below displays the customer profile for each of the segments (Core needs, demographics, psychographics, product usage and price sensitivity).

West Coaster Fashionably Challenged Educator

Core Needs - Professional Attire - Fashionable clothing - Dress code appropriate

- Fashion forward and - Functionality of products - Value and functionality trendy clothing - Casual and comfortable clothing

Demographic - Male - Male - Male

- 25 -35 years old - 25 -35 years old - 25 -35 years old

- Income: $30- 60 k. - Income: $50- 80k. - Income: $30- 55 k.

- College graduate - Established professional

- Technology savvy

Psychographics - Works full time - One- stop shopper - Scholarly

- Enjoys fashion - Eager to become more - Enjoys reading and fashionable writing in free time - Reads business journals

Value Drivers - Fashionable, trendy - Fashion forward, - Clothing appropriate for clothing statement clothing the work place

-Convenient shopping - Convenient shopping - Comfort is essential experience experience - Functionality and value are important

Product Usage - Clothing for work and - Clothing to wear out with -Clothing to wear to work weekends out with friends friends and to social events

Price Sensitivity - Medium- More - Low- High disposable High- Concerned with concerned with style and income price and value fit than price.

(Source: US 2010 Census Data, Bureau of Labor Statistics, Mintel 2010, Mintel 2007)

Customer Value Drivers Customer value drivers are the factors within the decision making process that push customers to want to purchase a product or service. To determine what drives the established segments to use the services of the Gentlemen’s University, a set of customer value drivers was determined. The customer value drivers were determined by first reviewing what the three previously defined market segments valued. Then using the five major value driver classes--economic, performance, buyer’s perceptions about the supplier, buyer’s motivations and goals, 31 and buying situation—the relative value drivers of the three target segments were determined (Harmon & Laird 1997). Those value drivers where then provided weights according to their relative importance by the target segments based on the research done into each of the three target segments. After assigning weights to each value driver according to their relative importance, the value drivers that scored the highest were classified as the final value drivers.

Relevant Customer Value Drivers After reviewing all the value drivers for the Gentlemen’s University, the value drivers most relevant for the target segments were determined. These value drivers are important to Gentlemen’s University potential users and thus drive them to want to use the services. The relevant value drivers that define the customers’ value requirements are displayed below.

Economic • No cost to dispose of the mobile application or other Gentlemen’s University services • Premium account holders receive video chat • Complementary mobile application

Performance • Personally designed and organized to meet customer needs • Ability to connect to offers 24/7

Buyer’s Perceptions about the Supplier • Innovative problem solver • Ability to meet specific needs • Works to ensure customer success Buyer’s Motivations and Goals • Improved self-esteem • Allows customers to make good decisions • Improved confidence

Buying Situation • Reassurance that product will match their size and personal style • On the go tool to reference to current wardrobe • Users receive quick access to view recently purchased item

Final Customer Driver Set The final set of customer drivers are most important value driver for target segments of the Gentlemen’s University. These drivers are most important because they will have the largest impact on the above outlined market segments. The final set of value drivers were determined based on the findings of the segment attractiveness analysis, which is available in the appendix. The first economic value drivers for the Gentlemen’s University services is that premium account holders receive video chat for a charge of $19.95 a month. This drives customers to want to use the Gentlemen’s University services because then they can receive more customized advice from a Gentlemen’s Professor. Another economic value driver is the complementary Mobile Application provided through the Gentlemen’s University. Customers will be driven to this application because it will make shopping easier and of course because it is free. Within the performance class of value drivers, one customer value driver for the Gentlemen’s University is the fact that the services are personally designed and organized to meet customer needs. Customers will be driven to us the Gentlemen’s University services because they know that the services are organized around the idea of meeting and exceeding their needs. The second performance value driver is the ability of users to connect to the Gentlemen’s University services 24 hours of the day seven days a week. Customers will be driven by the fact that they can use all Gentlemen’s University services whenever they desire or have time. Customers will be driven by the idea that they don’t have to work around the schedules of others and rather can shop and use the Gentlemen’s University on their own time.

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The customer value drivers regarding the buyer’s perceptions about the supplier include: innovative problem solver and works to ensure customer success. Customers will be driven to use the services of Gentlemen’s University because they will know that the services solve their problems in a new, unique way. Customers will appreciate the innovative nature of the Gentlemen’s University and its ability to solve all their clothing problems. Customers will also be driven by the way the Gentlemen’s University services work to ensure their success. Both of these factors will drive customers to want to use the Gentlemen’s University services. The motivations and goals of the customer is also another large source of value. One large value driver for the Gentlemen’s University is the idea of improved self-esteem and confidence. Customers within the outlined segments will be driven to use the Gentlemen’s University services because of the increased self-esteem and confidence they will gain from the services. This will also drive customers to want to use the services repeatedly because of the increase self-esteem and confidence they will assume from the services. The last class of value drivers is the buying situation. Customers will be driven to use the Gentlemen’s University because of the reassurance that the products will match their size and personal style. Due to the fact that the Gentlemen’s University services allows customers to work with a Gentlemen professor to ensure the correct items are chosen, customers will be driven to use the services because of their confidence that the correct items are purchased. The fact that customers can have an on-the-go tool to reference their current wardrobe is also a significant customer value driver. Customers are able to match clothing to what they already own, anywhere and at any time. The last value driver is the quick access to view recently purchased items. Customers will be driven by the fact they can quickly review recently purchased

2. Segment Forecasts (3 years)

Segment forecasting is used to see what the total amount of buyers in conversion to the value they are worth. With segment forecasting Bonobos can equate how valuable that potential segment is, if everyone was to purchase. Segment forecasting is also used to prioritize what segments are most important to target. Although the market potential isn’t going to be the actual sales, it provides an objective and metric for how much market share has been acquired post product launch. The segment forecasting methods used were market build-up, chain ratio, and the pure innovation model. The three methods provide different values through the total market potential, qualified segment potential, and a break down using Forte and Woodlocks Diffusion Equation. Table 4.2: Market Build-Up Fashionably Educators 4.2 West Coaster Challenged Market Potential

Total Buyers 27,208,052 31,646,267 357,440

Average Purchase Price $1,400.00 $2,000.00 $800.00

Segment Potential $38,091,272,800 $63,292,534,000 $285,952,000 $101,669,758,800 (Census, 2010) (Bureau, 2010) In table 4.2 it shows the amount of total buyers broken down by the three segments. Relative to the average disposable income of the three segments its appropriate purchase price was applied. The segment potential amount is the case that total buyers purchase the average purchase price. West coaster, the fashionably challenged, and educator’s segment potential in dollars are summed to become the market potential of approximately $101.6 billion dollars. Table 4.3: Chain Ratio 4.3 USA West Coaster Fashionably Challenged Educators Index 100% 22.6% 26.3% 0.29% US Households 120,492,399 27,231,282.17 31,689,500.94 349,427.96 Income qualified male customers 33.59% 33.59% 33.59% 33.59% Targeted Male Customers 40,473,020 9,146,902.52 10,644,404.26 117,371.76

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Internet Access 92.00% 92.00% 92.00% 92.00% Internet Access/Males 37,235,178 8,415,150.32 9,792,851.92 107,982.02 Ave Expenditure/ Annually $1,400 $1,400.00 $2,000.00 $800.00 Total Consumer Potential $ 52,129,249,760 $ 11,781,210,446 $ 13,709,992,687 $ 151,174,824 (Census, 2010) (Bureau, 2010)

The chain ratio forecasting method is essentially going from initial market and breaking down to a smaller market potential. In table 4.3 the total US households are listed and broken down by the following: Income qualified, Internet access, and average expenditure (annually). These percentage breakdowns ultimately provide a better indication of how much money that particular segment would spend or potentially worth to Bonobos. The chain ratio in the chart above has factored out males that qualify for the income requirements to meet Bonobos’ target segments. With the remaining percentage of males it’s also known that not all potential customers have access to the internet. This 8% of the general segments was again factored out in the table. Now the internet accessible males who fit the qualified income requirement are present to multiply by average suit costs. The west coaster, fashionably challenged, and educators have been calculated with the different Bonobos suit cost to result in a more accurate amount of the segments potential value.

Table 4.4: Pure Innovation Model by target segments

Bonobos sales forecasts Bonobos sales forecasts Bonobos sales Time period for west coaster for fashionably forecasts for educators challenged Qt 1 $71,493 $118,793 $537 Qt 2 $88,504 $147,059 $664 Qt 3 $106,318 $176,659 $798

Using the pure innovation model requires assumptions to start, such as the TAM assessment. The TAM assessment for total addressable market involved: internet access for male, growth rate in males fashion, male clothing sales, men’s expenditure & growth rate, and household expenditure. Market share assumptions involved a share of market estimate, and the annual change in market share for Bonobos. Using Forte and Woodlocks Diffusion Equation (Qt = rq(1-r) t-1) the SAM estimates were deprived in dollars showing in table 4.4. This pure innovation model is a more detailed look at Bonobos is customers. This model represents forecasted sales for 3 years. The average consumer growth rate for Bonobos stood at approximately 2.4%. Using this to forecast the market it then could be calculated by the formula to get each time periods value in dollars. As shown in table 4.4 the fashionably challenged segment seems most valuable. This would be due to the size of the market in relevance to the high disposable income. Although this model shows segment 2 as the most valuable it doesn’t mean that it should be addressed as the primary target market.

C. Segment Attractiveness Analysis The segment attractive analysis is looking at the consumer value drivers in relation to the three segments. Of the top ten CVDs listed on page 13 as well as figure 4.6, which were weighted in importance of priority. For example the 24/7 accessibility was weighted higher in importance compared to improved self-esteem. After the CVDs had they own weighting, the analysis then gave prioritization by each of the three consumer segments. What the analysis shows in figure 4.5 is which segment group was most attracted to the ten CVD.

Figure 4.5 Value Analysis

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Segment Value Analysis

8 7.05 7 5.83 6 5 4.08 4 3 2 1 0 West Coaster Fashionably Challenged Educators

With the results of the segment attractiveness analysis Bonobos can now prioritize what segments are most important and will see most value from the Gentlemen’s University services.

Primary Segment: West Coaster Using the Consumer Value Driver set, along with the segment attractiveness analysis model the conclusion for the primary target market is the “West coaster” segment group. To redefine this segment, it’s a male, 20-35 year old college graduate earning approximately 30k to 60k a year. This individual does live on the west coast of the United States and works full time. This segment scored highest on the weighted average calculation because the fast pace lifestyle of a west coaster needs convenience for his shopping desire. With all the new trends coming and going in cities such as Los Angeles it’s extremely hard to keep up. Bonobos’ personal shopper helps the west coaster still live and works a busy day while looking fashionable from day to day. Secondary Segment: Fashionably Challenged The “Fashionably Challenged” segment ranked second in the analysis. The higher disposable income seems to fit Bonobos pricing model more than the other segments although it is a matured group. The age range is similar to the west coaster yet in a more developed point in their career. The fashionably challenged still ranked high in the analysis because the convenience factor still applies as well as the ability to be informed on styles and dress. Tertiary Segment: Educators Last the “Educators”, most likely a slightly older male in the teaching industry. This segment fell last in prioritization due to factors of mobile and internet use, and the fit with Bonobos pricing model. Educators tend to be more prices conscious and aware of alternatives. For example two shirts that may look similar are only differentiated by price, when in actuality the fit and materials are the benefits. The educator segment is smaller in size compared to the other two, although is in its own niche market. This was still considered a strong market to focus because of the increase in e-commerce. Bonobos’ personal shopper, website, and mobile app fit for educator’s convenience while the online chat is in place for clarity and questions.

Figure 4.6: Segment Attractiveness Analysis Results

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Figure 4.6 represents the top ten customer value drivers in correlation to each of the three segments. As previously stated the “West Coaster” on average was most appealing to the ten CVDS’. These weighted averages were assigned value according to each segment. As the chart details the “Fashionably Challenged” scored high in attractiveness for “Innovative problem solver”, “Work to ensure customers success”, and “Improves self- esteem/confidence”. Although even with scoring an 8 & 9 out of 10, it overall ranked second in segment prioritization. The bottom right legend shows the totals of all weighted averages for each segment There are large gaps between segments on many of the CVDs due to difference in lifestyles. The segments have been categorized through many aspects. Similarities among the three include demographic information such as age, income, and gender. What the analysis has shown is the difference in behavioristic. The lifestyles of these three segments are drastically different which is why certain value drivers are more important to them. Using the “innovative problem solver” CVD as an example, the west coaster may know what they want just needs ease of access to get it. On the other perspective the fashionably challenged actually needs recommendations, clarity, and confidence in the clothing they purchase due to the lack of knowledge how to dress.

D. Potential New Markets College Students Bonobos clothes have that unique fit and style that would suit slim gentlemen of all ages. Furthermore college students generally are ages 18 to 25, as well as healthy fit bodies. Some barriers come to mind when thinking of this potential market. It is likely that the market has a lower disposable income due to tuition, housing, books, etc. The market needs to be defined to prestigious colleges such as Harvard Business, MIT, Brown, Stanford, Yale, and Berkley University. The common attire at these schools is upper class such as button ups, and sometimes suit and tie. It’s traditional for students attending Ivey league schools to have parents who may be alumni. The higher disposable income of this market fits Bonobos pricing model while keeps students looking professional casual. International

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The three segments outlined in the plan (West coaster, fashionably challenged, and Educators) focused primarily on the United States. A great potential market which may or may not already exist would be overseas. The fact that Bonobos is a single channel retailer (online) it can be used from basically anywhere that supports Wi-Fi or internet. The previously outlined segments can be used in the international countries. For example say a potential target market is Germany, instead of just segmenting by a geographic profile, educators can be derived from the population such as done in the states. Homosexuals This potential market wouldn’t be targeted until Bonobos has strong market presence. The trendy casual attire that Bonobos offers fits the “metrosexual” and fashion envy males. Along with the wide variety of colors and styles a homosexual would feel comfortable representing Bonobos products. One large risk of targeting this market would be the image portrayed on the whole brand. For example if the segments that are already established (west coaster, fashionably challenged, and educators) feel they are going to be labeled by wearing the clothing they may switch to other alternatives such as direct competitors. The fact of targeting this market may result in a cannibalizing effect, deteriorating present Bonobos segments.

E. Conclusion of Market Analysis After overview of potential market segments the following three were used for further analysis: West coaster, Fashionably Challenged, and Educators. These segments can be profiled accordingly to by the Bonobos personal shopper as well as the online dashboard. Of the three primary segments the West coaster has greatest potential to benefit Bonobos. Using the chain ratio as a forecasting method it revealed a potential 11.8 billion dollar market. With Bonobos capturing a new 2% percent of that market would result in a 2.36 million dollar increase in sales. During the segmentation process to define customer value requirements CVD’s were contrasted by the three segments. The customer value drivers were weighted in importance which helped comprise the evoked set or primary drivers. Mainly the convenience factor applied highest in customer requirements as the service is “on the go”. Such as 24/7 availability, mobile purchasing, customized dashboards, and the personal shopper. These CVD’s further prioritized the segmentation process to get label “West coasters” as the primary candidate. Aside from the three primary segment groups, there is other potential market that needs to be considered. First college students, typical body type of an average student would fit Bonobos sizing model. Although a barrier comes to play with consumers who have low disposable income such as many college students. Bypassing the barrier by tailoring to prestige universities such as Harvard, Brown, MIT, Etc. Considering a higher disposable income among this segment group brings an untouched market for Bonobos to target. This market penetration strategy will bring a new group of consumers who have large networking pools to spread word of mouth.

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5. Competitor Analysis

A. Industry Dynamics New potential entrants have a number of opportunity and barriers for entering the fashion industry. The growth of the online market place means new firms can quickly set up operations without establishing physical retail locations and still have direct connection to the consumer. Many business operations such as distribution and customer support can be outsourced further reducing initial startup activities. Barriers for entering the industry include competition with well established brands developing product awareness. For new firms there are two main sources of competitive advantage in this industry, first is providing the latest trend. This has the potential to provide periods of high interest and consumption of your product; however the time frame is relatively short as competitors are quick to copy or introduce a new trend of their own. The second source of competitive advantage comes from strong branding. While latest trends provide short term advantage, branding provides long term advantage and the ability to be less affected by competitor’s trends. Buyers in this industry are technically inclined and quick to share their opinion. The many social media platforms available to them allow buyers to voice their positive or negative experiences with a company or product very quickly and easily to a large number of people. Firms must be aware of this and provide satisfactory customer service in order to prevent customer's issues from greatly affecting their image. With buyers engaging in various social media platforms they also provide firms with a great deal of information about them useful for data mining. While buyers share a vast amount of information willingly, they are also very concerned with personal privacy. This causes an unwillingness to provide much additional detail without clearly seeing the value added by doing so. The technical abilities of the buyers also cause them to be inclined to purchase items online, often preferring it to the hassle of going to a physical retail location. Due to the risk involved with purchasing new clothes outside familiar brands, buyers must see great product differentiation and added value before trying a substitute product. Brand affinity due to familiarity and comfort with the clothing products also cause buyers to have great resistance to trying substitute products. Most clothing retailers require little buyer investment before purchase, however personal shopper/profile type services require greater buyer investment and they may be less willing to abandon previous efforts or begin new investment before purchase of a substitute. Despite these difficulties, fashion is greatly affected by current trends and fads. Buyers will be much more willing to purchase substitutes which match current fads and trends. Smaller firms are more dependent of suppliers. Despite vast supply of various suppliers, prohibitive costs of transferring operations create greater restriction of movement among suppliers. Larger firms are less dependent on suppliers as they are able to move operations in house and have greater buying power. While many firms offer direct sale to customers, many still sell their products through outside retailers. Competition among existing firms is fierce, with larger companies dominating the market and smaller companies filling in specialty gaps left by the larger firms. While the larger companies have well established brands and strong budgets in traditional media advertising, the smaller companies have utilized social network platforms and technological tools to make them stand out and gain a wide customer base. All companies, large and small, depend on developing new fashion innovations and trends to stay competitive in the market. If they do not continually develop new styles and features they will quickly be left behind as new fashion trends overtake previous ones. When a firm introduces a new trendy item the other firms are quick to copy in order to not loose customer share. As it is the consumers who adopt and drive new trends, firms must be connected and responsive to consumer demands. Firms constantly analyze their consumers in order to identify new and future trends. Primary government interaction with the industry is through import regulations on goods purchased outside the country. As such companies may be affected by international regulations. Additionally government regulations limit ways in which a firm can advertise itself and its products. Companies also feel pressure from various activist organizations with issues ranging from working conditions of suppliers of a company's product to the values the industry presses onto its consumers. Besides causing damage to a firm’s image, brand and bottom line, these organizations can have the ability to affect government regulations.

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B. Competitive Factors Mapping Competitive factors identified relating to the marketing plan includes elements of the customer's buying experience, technological features and customer support offerings. Features relating to the customer's buying experience include premium account levels and the ability to personalize and organize your account, providing reassurance that the product will fit the customer and match their style as well as improving the customer's self esteem and confidence. Technological features include availability of on the go tools and mobile apps, ability to review recent purchases and the ability to offer these tools on a 24/7 basis. Features of customer support offerings are innovative problem solving and efforts towards ensuring customer success. Leading competitors for this analysis are fashion retailers J Crew and Brooks Brothers, Gilt Groupe which offers bargains on luxury clothing and other merchandise, Trunk Club that sells hand-selected outfits based on customer profiles and app based men's fashion consultant Be Speak.

Table 5.1

Table 5.1 shows each competitors rating for each factor.

Our analysis of leading competitors revealed that no competitor was consistently strong across all factors. The weakest factors collectively among competitors were availability of a mobile application, personally designed and organized features and premium account levels. Additionally a number of competitors received low marks for on the go tools. It should also be noted that competitors which received high marks on technology features were not the leaders in the features relating to buying experience. This suggests that there exists a void in the market for a mobile on the go product that also provides significant increased value to the buying experience. The typical leaders in the buying experience and customer support areas are also the competitors whose main focus is selling clothing. This suggests that clothing retailers are expected to have focused efforts in these areas. This is further confirmed by comparison with segment attractiveness analysis where all segments placed importance in the areas of the buying experience and customer support. 39

C. Competitor Profiles Bonobos Men’s wear has a variety of competitors in men’s apparel industry. Competitiveness is measured considering their relevance in fashion and business style. The graph provided below gives the classification of major competitors. Competitors are analyzed in three groups depending on their relevancy to the basic principles with which Bonobos operates, core, direct, and indirect competitors.

Figure 5.2 Competitor Profiles

About GILT Groupe Inc. Gilt is an online retailer who offers access to an exclusive, invitation-only program where you have access to scheduled sales of all sorts of hand-selected luxury fashions for men and women. Gilt Groupe was founded in 2007 and had 3.5 million members by 2010. The company was founded by Doubleclick co-founder Kevin P. Ryan, eBay executive Alexis Maybank and Louis Vuitton merchandising executive Alexandra Wilkis Wilson. The headquarters of the company is located in New York City, NY. Gilt Groupe has revenue $425 Million in the fiscal year ending with June 2010. The company maintains incredible 250% increase in revenue between 2009-2010. The company has only $45 million of inventory; equivalent to about 10% of 2010’s sales numbers. Majority of their cash flow occurs through financing by the private investors. As Gilt CEO indicates “loyalty, personalization and good customer service are the top ingredients needed for a successful multichannel retail strategy.” Gilt follows this path word by word. They make their employees their customers so that they can gather information about how customers feel about the services. The work with many e-mail marketing strategies to encourage women to purchase more on Gilt’s website. Approximately 61% of customers being women all around the world, it shows the success level of their positioning and marketing efforts. The company is earning value by their response capabilities for the needs of their customers as well as connecting the customer to the designer brand for further questions and issues. The company maintains more than 400 brand relations, the most of it being worldwide known apparel brand such as Gucci, Prada, and Armani. However, Gilt also promotes and offers apparel from smaller, local boutiques, which offer the same quality with the name brands. Increasing competitiveness in the e-commerce seems to be the biggest threat for the firm as well continuous changes in disposable income in U.S. the biggest market for the company. However their intense customer oriented communication tools, pricing structure and price range ($25-$1400) are adding value for the firm (Gilt, 2011).

About J. Crew Group Inc.

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The retailer is known for its preppy fashions, including jeans, khakis, and other basic items sold to young professionals through its catalogs, websites, and some 335 retail and factory stores in the US. It was launched in 1983 by Millard Drexler and Jenna Lyons. The company is financially staple and successful with its continuous increasing shopper number and amount of products offers. J. Crew maintains revenue of $1.7B in 2010, increasing 9.1% from the previous year. The company retains a steady 7.0% profit margin in 2010, matching with the last few years. They are one of the major players in the industry therefore their main growth strategy consists of maintaining current market share and eliminating potential threats. Their product lines extent from children clothing to women’s apparel, men apparel to accessories. Women’s apparel is the biggest percentage of their sales level with 62%, however the company is attracting more male customers each year, reaching to 22% in 2010 increasing %4 since 2009.4 The company does maintain a decent customer service both through its online help and offline store specialists. Price range is between $14- $450 for online shoppers. Store pricing is considerably lower keeping mind that stores do not have certain catalog products. The company is the top of the non department store food chain however, the major weakness of the firm is ongoing high level costs related to March 2011 acquisition of J. Crew by TPG Capital and Leonard Green & Partners leading the company in loss. Company has been losing money for the second and the third quarter of year 2011 (J Crew, 2011).

About Banana Republic, LLC Banana Republic, LLC operates as a subsidiary of Gap Inc. engages in retail of apparel, shoes, and accessories for men and women. The company was founded in Mill Valley, CA in 1978 by Mel Ziegler and Patricia Ziegler, acquired by Gap inc. in 1983. Their headquarters are located in San Francisco, CA. The company operates internationally, both via online sales and via store sales. Their revenue for the fiscal year 2010 was $2.58B, 5% higher than previous year. They have a high profit margin (14.15%) considering the rest of the industry (7% - 8%), using the resources provided by the parent company, Gap Inc. Banana Republic current growth strategy is more on the global scale. The launched a campaign called “Flagship Store” to enhance company profile in outside of their comfort zone. The flagship store is an ongoing strategy to bring Banana Republic’s affordable luxury offering to new markets around the world, including Europe. Last year, the company made its appearance in Milan. Banana Republic also made its products available to European customers online by launching a dedicated e-commerce site. Banana Republic is a brand that represents “luxury”. The company maintained a great brand image by the help of its parent firm. The target age segment for Banana Republic ranges from ages fifteen to forty-five consists of teenagers, single women and men, and career-oriented married couples. The income segment includes middle to upper-class individuals who reside near urban or suburban areas in developed countries. The major strength for the company is that Banana Republic is the top of the GAP Inc brand pyramid, so they’re everywhere. They have a high budget for advertisement and expansion. Although their weakest area is that majority of the production is made in China therefore this bring an opposite view of the company for the customers. Moreover the colors on the website for the products do not match the actual colors which are a frustration for the customers (Banana Republic, 2011).

About Amazon.com Inc. Amazon.com Inc. is the leading global Internet Company and one of the most trafficked Internet retail destinations worldwide. Amazon was founded in 1994 by Jeff Bezos and is headquartered in Seattle, WA. It has direct international operations in the United States, Canada, France, Germany, Japan, and the United Kingdom. Amazon.com is one of the most revenue generating e-commerce firms by reaching $34.2B in fiscal year 2010. With the excess of interest in online shopping, they increase their revenue 39.6% comparing to the year 2009. However the company has a low profit margin, approximately 3.40% in 2010. The company is globally grown and their brand strength is at worldwide level. Their growth strategy consists of maintaining the current markets and to have every single product which customers might have a tendency to buy, not necessarily directly, but including through third-party sellers, available for very fast delivery globally. The company maintains relationships with more than 400 affiliates for warehousing, transporting, purchasing etc. Amazon being a powerful global brand is recognizable because of two main factors: It is one of the original dotcoms that developed a customer base of over 30 million people in a period of about 10 years, and also known as an initiator for online technologies for e-commerce that made it one of the first online-retailers. They use a very satisfying CRM strategy to maintain the current customer base and increase number of shoppers by the individual testaments. Main weakness of the company is the amount of reliance on the third-party companies. Problems with any third-party inevitably result in loss in brand image and customer loyalty (Amazon, 2011). 41

Table 5.3 Summary of Competitor Profiles

D. Competitive Benchmarks The competitive benchmarking has been analyzed with certain key indicators consisting of: 1. Industry Leader vs. Innovation Leader 2. Financial Stability, compared with the competitors. 3. Efficiency and Gender, compared with the competitors. 4. CRM Effectiveness For benchmarks to be useful, they must share at least some common features. Although no company will be exactly like Bonobos, LLC in all respects, a balanced representation can be achieved across the entire set. Findings conducted through research is given below: • Indirect competitor Amazon.com is the leading e-commerce company as well as one of the most innovative companies in Worldwide Web. Bonobos is in no position to match the innovation level with and the market share with Amazon.com. • Even though Bonobos has been securing substantial amount of financing, it is nowhere close to the apparel e-commerce leaders like J. Crew, they are financially stable considering the size of Bonobos. • Previous researches indicate that efficiency and gender orientation goes opposite directions. • Companies that sell for both genders are believed to be more efficient. Therefore Bonobos has a technical disadvantage in apparel industry. • Bonobos is very competitive with CRM systems, after failing with their initial approach. Since their online engagement has been growing by about 25 percent each month, and posted feedback has risen by about 50 percent.10 the major competitor J. Crew does not possess the same tools and customer engagement processes as Bonobos Inc.

E. CONCLUSIONS Bonobos does not generate revenue numbers as high as certain major competitors such as J. Crew. Considering the size of our firm, number of employees and amount of facilities, Bonobos has a long way to go to generate the financials as J. Crew does. Also it does not operate under a parent company that would invest cash and resources, like Banana Republic, LLC does under Gap Inc. The company stands for outstanding tailoring style, which sells itself; this puts Bonobos in front of competitors such as Banana Republic and J. Crew. Moreover being an icon for style of pants, Bonobos is also competitive in customer relationship. They try to maintain contact during and after the purchase by making it easy for the customers to purchase. The factors will affect competition going forward are listed below: • Competitor selling Bonobos products with discount. • Possibility of fluctuation in economy affecting disposable income of customers. • Possible new entrants • Change in online shopping patterns

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6. Net Assessment The net assessment provides a clear and distinct view at the internal and external factor s that will make or break Bonobos’ success. Some of these factors can be managed by the company itself and other factors have to be forecasted for preparation. In the net assessment the SWOT (Strengths, Weaknesses, Opportunities, and Threats) will be analyzed for current and future aspects concerning Bonobos’ strategies. After the SWOT analysis, the critical risk and success factors will be detailed. To ensure Bonobos’ success in the industry all elements must be thoroughly analyzed. A. SWOT Analysis The SWOT analysis will detail what strengths, weaknesses, opportunities, and threats that Bonobos currently is challenged with. The positives in the SWOT are the internal strength such as competitive advantages and the external opportunities Bonobos has such as untouched markets. Furthermore the negatives detailed in the SWOT are the internal weaknesses such as poor customer service and the external threats like increasing competitors. Refer to figure 6.1 for outline of the SWOT analysis:

Figure 6.1: SWOT Analysis

Strengths Bonobos.com has come a long way for a start-up organization in one of the most competitive industries. With no brick and mortar locations fixed costs are minimized, although could be at the expense of exposure. Another internal strength is the Business culture at Bonobos; it fits the mission of the company while staying aligned with its core competencies. This strengthens the internal environment and atmosphere in the work place. With transparency in a business it enables the team to concentrate on more vital issues. The last strength is the degree of social networking that Bonobos is involved with. They use Facebook, Twitter, and a company blog to be responsive with their customers. Along with communication, Bonobos uses these channels for exposure, feedback, and promotions.

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Weaknesses Many of the weaknesses exposed by Bonobos relate to the size of their business in the market. Considering the fashion/clothing industry is a fairly saturated market due to the large amount of players it leaves a small share of market for Bonobos to capture. This in turn relates to the amount of exposure or lack thereof, to the general public. Traditional advertising isn’t necessarily incorporated through Bonobos’ promotional strategies. Majority of promotional efforts are either social media (Facebook Twitter) or online sources. Opportunities With Bonobos being a smaller company in the industry it has the opportunity to focus on niche markets some of the larger companies may bypass. These niche markets are discussed further in the Market Analysis section on page ___. With direct targeting of these markets such as “Educators” or “College Students” it will put more emphasis about the importance of Bonobos products and services tailored to that particular group. This market penetration strategy will expose how “Cool & Hip” the brand is and result in word of mouth. Another opportunity Bonobos has is with positioning in the male clothing industry. The opportunity is to disrupt the image men portray of themselves concerning their attire. “A better look….for a better you” isn’t just a tagline. This needs to be placed in the minds of Bonobos consumers to reevaluate what that person wears in what situation. Last is the advancement of technology in the purchasing stage regarding mobile devices. The Bonobos mobile app allows for viewing of the full line of products. With the introduction of quick purchasing through the mobile app will automatically update the online dashboard for your virtual closet. With the incorporation of being able to scan a QR (Quick Response) code from an advertisement and then purchase it directly from the mobile device will shorten the purchasing time benefiting the customer with convenience. Threats Many of the external challenges that Bonobos currently faces involves large competitors in the market. With Bonobos such a small share of business it could easily be bought out by larger companies. Many of these situations happen when a small competitor of a large company captures share of their customers. A large company may see a competitor as a threat so acquiring it seems profitable. Another threat to business at Bonobos is change in trends and fashion in the industry. The fashion apparel industry rapidly changes through the image from the public. The sector in professional casual could shift leaving Bonobos with unsellable products. This threat is intangible so best preparation is to stay as current as possible with market shifts through trends and fads.

1. Current Situation The situation that Bonobos is currently facing is the challenge of what to do next in the business. As stated earlier trends in the market are always changing and the product life cycle of clothing styles is shortened. The social media efforts by the Bonobos staff have resulted in a whole promotional strategy via Twitter including discounts and clearance sales. This increase of market presence needs to be transferred into brand loyalty, or repeat purchases. The next step in their business involves exposure and technology to ease the shopping experience to the tailored markets. 2. Future Prospects Prospects to be considered have been identified in segment forecasting section IV D. The potential markets outlined include international, college students, and homosexuals. Risks and benefits have been contrasted by each segment as costs and profits are associated. Another future prospect that Bonobos may want to consider would be collaboration. An internal business move to join with an alliance brand. This would increase exposure as well as increase capital. Although the big decision from the business perspective it creates more opportunities to capture market share. 3. Conclusions The SWOT analysis provides an inside view of where Bonobos stands today. The single channel retailer has small market share in comparison to the lengthy list of competitors. With the implementation of the technology through mobile devices and the internet, Bonobos will become more of a threat to direct competitors. The main aspects of the SWOT that are most critical would be the lack of exposure of brand as well as the focus of niche

44 markets. Exposure and positioning in the minds of the general public is significant to their success. People need to be informed about the benefits Bonobos products give, such as fit, style, and convenience. This message can be effectively communicated through current channels such as blog and social media. The incorporation of traditional advertising such as print and gorilla marketing will increase the word of mouth. Lastly the focus of niche markets such as “Educators” gives an advantage to Bonobos. The needs of these small markets can be fulfilled though the custom tailored services Bonobos will have in place. For example the personal shopper can critique an outfit for any occasion, occupation, and situation. The incorporation of these products while focusing on the opportunities given Bonobos will gain market presence while increasing their bottom line. B. Critical Factors After identifying the strengths, weaknesses, opportunities and threat of Bonobos, it is important to review the risk and success factors of the company. The key weakness and the key strengths have been classified as critical risk factors and critical success factors accordingly. Using the success and risk factors a plan to mitigate the risk factors and leverage the success factors of Bonobos will be outlined in two tables below.

1. Risk Factors Using the threats and weaknesses from the SWOT analysis, table 6.2 below was created. The left column displays the list of all the key threats and weaknesses from the SWOT analysis, which are entitled critical risk factors. The critical risk factors were determined, by deciding which would have the greatest impact on Bonobos. The middle column is the metric for determining the extent of that particular threat or weakness. Lastly the column to the right displays how this particular threat or weakness can be mitigated to decrease its impact on Bonobos. After completing and reviewing this table, it appears that there are multiple crucial critical risk factors for Bonobos.

Table 6.2 Critical Risk Factors Critical Risk Factor Metric Mitigation Approach

Ever-Changing fashion trends Loss of market share, decrease in sales, Training of designers set the market customer reviews, and social media trends, as well as using human channels (Facebook, Twitter, and Blog). resources to forecast industry.

Increase of direct competitors Shrinking market share, loss of market Insurance by purchasing and coverage, and decrease of media integrating a patent therefore copy presence. writing the platforms used on a 7 year lease.

Government Regulation of E- Internet privacy Using the current strategy commerce concerning privacy issues has not Internet regulation brought any more risk.

Increase of Oil prices Increases shipping costs indirectly Analyzing logistics in the shipping realm may forecast costs to build Bonobos’ shipping and returns are free into product price. therefore increases their operating costs with oil fluctuation

Internet and Mobile Carriers shutdown network and Auto save feature, users can go back to refresh current page. carriers go out of business

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2. Success Factors Similar to the critical risk factors, the critical success factors of Bonobos must also be determined. Using the key opportunities and strengths from the SWOT analysis table 6.3 was created below. This table displays the most significant critical success factors to the left, which are the opportunities and strengths of Bonobos that are most important to the success of the company. The middle column displays the metric for determining the importance or impact of that particular success factor. Lastly, the column to the right displays how Bonobos will maintain and employ that particular success factor. After completing and reviewing this table it is obvious that though Bonobos may have a large amount of risk factors, the company also has a large amount of success factors. Most importantly it would appear that catering to a niche market and having a large selection and variety of clothing are the most crucial success factors for Bonobos. Both these factors provide reason for customers to choose Bonobos over competitors.

Table 6.3: Success Factors Critical Success Factor Metric Leverage Point and Approach

Have 50,000 or more engaged Continue brand awareness, use followers of Twitter. Reach over 1 leverage to partner with more sales million “Likes” on Facebook. and distribution channels. Possibly retail in the future. Increased Brand Awareness

Be proportionately one of the top Using sales to standardize a Adds value to brand loyalty and three online male clothing retailers percentage of market share in brand recognition. Possible will in the U.S. comparison to indirect and direct result in national publicity/awards. competitors

Bring in more venture capitalist to continue expansion process. Capital Again sales can standardize the increases likely hood of moving to percentage of market share in emerging markets. Having a proportionately substantial relevance to top competitors. market share internationally

C. Conclusions In reviewing Bonobos as a company it has become clear that it possess many strong factors, though like any company Bonobos also has a few weak factors. The key strengths Bonobos posses include; catering to a niche market, unique and current business model, wide variety of styles and products, bettering fitting clothing, and exceptional customer service. Though Bonobos holds much key strength that set it apart from its competitors, it is important for Bonobos to be more recognizable to the target segment. The best way for Bonobos to get the public and potential customers excited and interested in the company would be to implement The Gentlemen’s University which includes; an online closet, a customizable mobile application integrated with QR code scanning, and Gentlemen Professors. Each of these technologies will work together and enhance Bonobos as a company. The online closet will enhance the competitive advantage of Bonobos and allow the company to gain a larger market share, by adding a differentiating and value added service. The customizable mobile application and QR codes will also improve Bonobos’ competitive advantage, as well as directly enhance the major weakness of lack of exposure and recognition. This will create a buzz and increase of exposure for the company, allowing more customers to find 46 and purchase from Bonobos. QR codes within advertising will work directly to enhance the major weakness of lack of exposure and effective advertising. Installing QR codes within advertisements will allow for more effective advertising and will bring more attention, buzz and customers to the company. The Gentlemen Professors will work in conjunction with the online closet to increase the competitive advantage of the Bonobos and increase its market share. Clearly installing these new technologies into Bonobos’ current model will work to resolve the current weaknesses of the company and thus strengthen and create recognition of the Bonobos brand.

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7. Marketing Strategy In order to market unordinary clothing company, such as Bonobos, a strong marketing strategy is a must. This section will explain the metrics of the industry, possible growth strategy by using the Ansoff Matrix and the possible threats for the future growth. The value drivers, positioning and brand strategies will also be addressed. Then product and service plan will be presented to outline the proposed product and service changes and the time line of their launch. The sales and distribution of the marketing strategy will then be displayed to outline the sales and channel strategy of the proposed plan. The promotional plan will then outline the plan for promoting the Gentlemen’s University. The section will conclude with a review of the pricing strategy for Gentlemen’s University.

A. Strategy Platform Strategy platform is the “root” of the marketing strategy for Bonobos. It is a platform where all the pieces of the marketing plan are put together and stay in perfect harmony and balance. Strategy platform is explained in 5 different elements, as Dr. Harmon explained it; Strategy Objective Dashboard, Positioning Strategy, Branding Strategy, Growth Strategy and the Value Disciplines. With every element, the marketing strategy gets stronger and more accurately planned. Also each element creates an auto-correctional functionality to maintain the balance of the platform by giving red flags if any uncertainties occur in a specific part of the platform. This platform also provides a road mapping for the marketing strategy.

1. Marketing objectives dashboard: Sales, market share, profit, ROI, return on marketing (ROM), other objectives. Marketing objectives dashboard is to clear out the basic questions about the proposed marketing plan and give you statistical data to establish the points that are to be made in this marketing strategy plan. With each set of graphics you can gather a different type of information regarding to the effects of the plan. With the given graphs, the detailed information about sales growth, user growth, sales per user and the market share of Bonobos. Figures below show what a hypothetical marketing objectives dashboard would look like for Bonobos LLC.

Figure 7.1 Sales Potential $135,000,000.00 The given graph on the left hand side $120,000,000.00 explains how the proposed plan affects on the sales potential of the $105,000,000.00 Project w/out company for the next three years. $90,000,000.00 With the projected plan, the sales Project w/plan numbers are reaching out to $120 $75,000,000.00 Million Dollars while without the proposed strategy it stays around $90 $60,000,000.00 Million Dollars in next three years. Year 1 Year 2 Year 3 Figure 7.2 User Growth

The given graph on the left side demonstrates the growth of the users of our services/products through our website for the next three years. The projected three-year growth reaches to over sixty three thousand users while the projected number without the strategy is only around forty seven thousand users.

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Figure 7.3 Purchase Patterns

The table above, figure 7.3 provides the details of the purchase patterns of our users of our services. We projected that with the given service approximately difference in income generated through sales is $30 Million Dollars.

Table 7.4 Market Share

67000 64000

61000 58000 55000 Bonobos w/out 52000 Bonobos w/ 49000

46000 43000 40000 Year 0 Year 1 Year 2 Year 3

Last but not least, the given graph above figure 7.4 shows the incremental increase in the market share of Bonobos for the next three years with and without the projected plan. The vertical axis represents the amount of users the firm will have from the market

2. Growth strategy—goal is to achieve uncontested market space.

Considering the current market penetration managed by Bonobos Menswear, they are still down in the food chain and need to increase existing product market share in existing market before moving to a new market or coming up with new products lines. The growth matrix chart below explains its positioning in market strategy and its’ aim to accomplish its strategically aligned goals.

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Figure 7.5 Growth Matrix a. Growth matrix Bonobos currently lies within the Product/Service Development section. Considering that they are a new start up, it would be quite unlikely for them to be placed in different section. However following up with their growth rates and ambition marketing plans, we predict that the company will move to the other sections quickly to make its strategies more towards long-term. Explaining the short-term growth, in just over three years we have grown from a team of two to a team of almost 40 and sold over 125,000 pairs of pants direct to our customers on www.bonobos.com. In 2010 alone, we launched our own line of dress shirts, casual shirts, suits, sweaters, golf wear, and much more. (Bonobos) While doing that they reduced the operating costs to a minimum while still being able to offer variety of styles and products in general category. Within the same segment of the market, they still hold some valuable growth opportunities, which the company is exploring currently. The Bonobos is a brand associated with new hip and cool look in the business environment. This is a first step to introduce young and ambitious men to a workplace. This itself gives Bonobos an edge in online customer profile, considering the amount of young professionals in the U.S as well as globally. Furthermore it is aimed to introduce mobile technology use to enhance the shopping experience for it’s’ customers. In order for the company to make more realistic long term marketing plans, they also need to know where they are at currently. Within the products being sold at Bonobos, the purchase weights are given below: (Chafkin) • Trousers – 46.3% • Shirts – 33.1% • Underwear – 9.6% • Coats – 6.3% • Suits – 4.8% The company needs to look into expanding their market share in given segments before looking into more realistic long-term plans. The stage two of the segment “Market penetration” requires increasing existing product market share in existing markets at the risk of price deterioration and commoditization. A report from the London Business School identified six common factors associated with successful growth companies. If we were to apply these concepts to Bonobos the following is the alternative growth strategies Bonobos management should consider: 1. Innovation and flexibility in marketing, which the Bonobos has not invested much yet. 2. A focus on profit not sales, with good management systems controlling costs; with the recent financing received by the company, it will be a great time to regulate the costing structure.

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3. Operating in a growing market, considering the menswear is a small portion of apparel industry and it is quite stable. Each time you move into a new quadrant (horizontally or vertically) you increase risk. Therefore the least risky transition is the market penetration strategy. You will stay in your current market and increase market share to control the market. Bonobos is on track of reaching the market penetration but in order to achieve that, marketing and advertising should be considered and improved. Having a market development plan indicates taking your offering to a new market. Bonobos has had an idea of becoming worldwide but it failed due to the current domestic investments to maintain market penetration. But in order to achieve market development strategy they need to expand their markets to overseas, most preferably Europe and/or Australia. Diversification is the most risky strategy but if it is worth it, the most profitable. In order for Bonobos to use this strategy, they need to look outside of menswear and may introduce a new line of apparel for workingwomen. b. Growth by Acquisition Bonobos, with the current financial status and production volume is in no place for growth strategies that involves acquisition of other firms in the industry. The company should not be aiming for this style of growth yet. c. Growth by innovation and new ventures Innovation is the essential part of the success of Bonobos as a start up company. The innovative design of the products and the innovative way of shopping are the key value drivers for the Bonobos brand. Therefore growth opportunities related to innovation will always be a part of future strategies of Bonobos. At this proposal, the innovative virtual closet is being unleashed and customers will be able to create combination of clothes that will fit your style online, without putting them on themselves actually. d. Growth by partnership At this stage majority of the partnerships are with the financial institutions for the necessary start up expenses and exploiting the growth opportunities within the market. Some of the ventures Bonobos is associate with are Lighspeed Venture Partners, Accel Partners and certain Angel Investors. (Rusli, 2010)

3. Value disciplines (Value delivery factors for market leadership): The value disciplines section will display the kind of value that the Gentlemen’s University needs to create for its customers. Each of the five metrics describes a type of value the Gentlemen’s University needs to create for its customers. The five metrics consist of: knowledge, time, operational excellence, customer intimacy and innovation. These value discipline metrics were given a weighted average based on the customer value drivers that were previously established. Once weighted averages were determined, the information was used to create the radar chart below. Detailed explanation of each of the five metrics and their relation to the Gentlemen’s University follows Knowledge Knowledge is essential to the Gentlemen’s University because customers will use the Gentlemen’s University to obtain knowledge about fashion, trends and a variety of other topics they may have questions about. The Gentlemen’s university creates values for its customers through the abundance of desired knowledge it provides. In the radar chart below, knowledge scored the highest for value creation for the three target market segments of the Gentlemen’s University, because this is the most important metric to potential users. Time The value discipline of time refers to delivery time, time savings to the customer and speed. Due to the fact that the Gentlemen’s University is meant to be a convenient way for men to shop, time is a large factor in the creation of value for customers. Customers will find value in the time savings and speed that the Gentlemen’s University provides. Innovation

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Innovation refers to the value customers place on the new and streamlined services that the Gentlemen’s University provides. This metric was one of the highest weighted because of the great value the technology and innovation of the Gentlemen’s University provides to potential customers. The technologies provided through the Gentlemen’s University create value through the improvements provided to customers through the process of shopping and learning about fashion. Customer Intimacy Customer intimacy refers to the customer service, customization and focus on customer results. Due to the fact the Gentlemen’s University is centered on the idea of customizing to fit the needs to its customers the metric of customer intimacy scored relatively high in comparison to other metrics. Customers will find value in the focus the Gentlemen’s University places on customer service and the success of its customers. Operational Excellence The metric of operational excellence focuses on Bonobos and the people within it. While this metric is important for creating value to customers through the interaction with Bonobos employees, much of this aspect focus on the people and process Bonobos employ to make the company run more efficiently. Because of this it scored relatively low compared to other metrics because of its limited direct contact to the customer. Figure 7.6 the Value Disciplines Radar Chart Value Disciplines

Knowledge 1

0.5 Innovation Time 0

Operational Customer Intimacy Excellence

Harmon, Robert R. (2010), “The Marketing Strategy Platform,” Marketing Strategy.

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4. Positioning strategy The positioning strategy takes into consideration two direct elements: benefit and user positioning. With all the interaction between the Gentlemen’s University and the end users, the services are characterized to the actual consumer, which in turn relates to benefits. The benefit positioning is all the added value through the Gentlemen’s Professor. Differentiation includes the service to go beyond just clothing advice but answering lifestyle questions or “man” questions. Also, with the personalized dashboard, auto-closet updating, and mobile app. we can standout our service even more. The user positioning uses the depth of the customizable dashboard to be personable to the particular user or customer. Giving lifestyle advice it creates an interpersonal connection between user and the Bonobos brand. All of the positioning strategies used are to in place reliance between business and consumer. a. Desired market position Our customers are young professional males, who according to our research want an interactive, relatively quick, and educational service. Bonobos, with the new plan we are suggesting, will position us parallel with our customer requirements. The custom dashboard and closet will allow for a more interactive and quicker shopping online experience, while having our Gentlemen Professors give tips, suggestions, and advice to handle the thirst for knowledge our customers require. With our more custom online experience it will differentiate us from our competitors who are doing a more general personal online shopper.

Bonobos in the future wants a market position that will increase a requirement state from the consumers. With brand recognition and exploited brand awareness consumers will need to support the Bonobos brand to be socially accepted in the work place. Although this is the desired market position it’s still in relation to competitors. Bonobos is primarily in the e-commerce business, which has risk due to the lack of barriers to competition. With the use of intellectual property it creates difficulty for competitors to mimic the Gentlemen’s University. b. Key value drivers: Bonobos is in a great position in coverage of the value driver in comparison to the direct competitors. This is detailed more in depth in section 5, competitor factors mapping. The customer requirements outlined in our research have helped define what the products became along with the key value drivers. The key value drivers are put into place in order to assess what value is being delivered at an optimal stance, and what are lacking the whole benefit portrayed. Table 7.4 shows what drivers are close to the competitor’s service/product as well as what is different. The value drivers below are ordered in importance of the target audience.

Table 7.7: Key value driver’s competitor comparison

Value drivers Bonobos J Crew Gilt

24/7 availability 10 7 9

Premium acct. holders 9 2 4

Personally designed and 9 6 0 organized Mobile application 9 0 8

Reassurance of product fit 8 7 6

Access to recent purchases 8 6 7

Innovative problem solver 8 6 2

Ensures customers success 7 6 6

Improves self-esteem 7 4 7

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On the go tool 7 3 8

As seen in the table above Bonobos has an advantage over the competition by implementing the Gentlemen’s University plan. The on the go tool that Gilt uses has a slightly higher rating because of how long the competitor has been using it. In years to come Bonobos should surpass Gilt, they just need a higher number of downloads of the mobile application once launched. c. Market view: How should the market view your product/service? Bonobos customers demand a great fitting and hand-made pant, but it’s more than that. Through research, we have found that male shoppers necessarily don't like to shop, but that they don't like the traditional shopping experience. They are goal and focus driven, but struggle with knowing what to buy and wear. Some of our current competitors (J Crew and Trunk Club) offer simple versions of a personal shopper. J Crew personal shoppers can assist you in-store or online, but it’s very general along with their generic cut clothing. Trunk Club takes what types of clothing you like and creates a “trunk” of outfits to ship to you, and then you must try them on and decide on your own if you want to keep certain/all items, and then ship the rest back to then be charged for what you kept. With Bonobos, we will be offering the personal shopper experience, but also educate our customers so they can make decisions on their own too. The saying give a man a fish, fed him for a day, teach a man to fish, feed him for life. We are teaching our customers to “fish.” With our custom dashboard featuring your online closet you can mix and match current and future clothing options. These additional services will be value added to the customer, which we know that customers are willing to pa for products if the perceived value is present. These value added services will help differentiate Bonobos from our competitors.

Bonobos needs the market to view the Gentlemen’s University as a privilege and develop a reliance on the products and services. If for some reason a consumer cant access the University then they should feel eager to find out why. Considering there isn’t any exact alternatives to what Bonobos is offering, users must value what benefits they receive. The overall services can be substituted by using individual Google search’s although sources may lack credibility and the time taken to do so would be very consuming. The convenience of having an on the go tool such as the Gentlemen’s University will accurately give answers to the “man” questions which is a great out for our users especially depending on the importance of their questions.

5. Brand Strategy A. New Value Proposition Bonobos has built its brand based on a value proposition that was focused on their mission: to provide excellence in fitted pants and excellence in customer service support. Through our marketing plan we are introducing three unique services to the Bonobos business model to extend off of that original value proposition; but focus on the customer service portion. With the integration of these new services, we will focus on extending the classic value proposition and transforming it into a new value proposition focused on The Gentlemen’s University introduction. The Gentlemen’s University services were created with consideration of our Customer Value Drivers identified in the beginning of this analysis. The three services provide Bonobos customers with styling assistance, customer service and support, purchase success, innovative shopping support and solutions, and an overall more exclusive shopping experience. All of these values are ones that we have established through our CVD analysis and speak to our target segments. Thus our new value proposition will be focused on communicating the value that these services provide Bonobos Customers. A major focus of the new value proposition will be based on the big idea of the Gentlemen’s University. Which is based on the Gentlemen’s University services help Bonobos customers by “educating” them on how to dress and be a 21st century gentlemen. “It isn’t just what you wear it’s a lifestyle.” We want to communicate the big idea with the new value proposition. Going forward, the new value proposition will incorporate the Gentlemen’s University Big Idea and focus on how these service features increase Bonobos customer value. In other words to educate and dress the 21st Century Gentlemen for success and confidence. Its not about what you wear it’s how you feel when you wear it. We want these services to provide knowledge, which will increase customer value and happiness while also increasing the return rate and sales for Bonobos. With this new value proposition we will communicate how the Gentlemen’s University provides the brand with exclusivity; prestige and confidence gained by using the Gentlemen’s University

55 services and also make sure we are promoting the existing value proposition or business mission-excellence in fit and excellence in customer service.

B. Brand Identity Bonobos’ values a particular lifestyle choice, which is represented by the customers, stakeholders, and employees of the business. Not only the customers that purchase the clothing but the employees that work and sell the products. The lifestyle that we are speaking to is those men who are driven and lead fast-paced lives which balance work of play. Men who shop at bonobos can identify with the brand based on the products and services that they provide and the business mission. A major part of Bonobos’s brand identity was that they provided a custom fitted pant for the athletic younger male. These younger males were demanding a product that provided a solution to the typical saggy bottom pant. And Bonobos found their solution. From this innovation Bonobos has leveraged brand loyalty and awareness. As a one-channel retailer and strictly online we must not forget about customers service. This is why we have introduced the Gentlemen’s University. With the introduction of the Gentlemen’s University we will incorporate the new value proposition, the brand personality. We recognize the brand personality is based on exclusivity, style and customer confidence we want to make sure we speak to the brand identity that is currently in place but also provide services that show off the new service value.

C. How to Execute We will execute the Gentlemen’s University services with a brand strategy that focuses on leveraging Bonobos’s current market position, building brand equity, and using our marketing/promotional plan to increase customer support and increase brand awareness. The current brand position is strong and will provide us with an advantage when targeting our desired market segments. We will leverage the bonobos brand because it is a male online retailer they and provide quality and innovative products they have an advantage over other competitors that have more of a basic and general inventory of clothing. The segments we are targeting chose the Bonobos brand for the products and services. We will implement the branding strategy through our advertising campaign described further in the Promotional Plan section. There will be various ads that will run to encourage the use of the Gentlemen’s University. We will leverage current customers by gaining their feedback and track how the implementation of the services has affected the perceived Bonobos brand identity. We will build brand equity through our promotional plan activities. Which include advertising campaigns, sales promotions and direct marketing activities. We see word of mouth marketing a huge and low cost opportunity with the introduction of the Gentlemen’s University. Media channels that we will use will provide us with this sort of response where we can see what our customers think and recommend. We will use traditional ads to increase traffic to the Bonobos website. We will use our promotions, word of moth, and products to promote customers to build brand loyalty and repeat purchases using The Gentlemen’s University. We will make sure that through our marketing and promotional activities we will introduce these services with a new value proposition but make sure that we are not straying away from the current Bonobos brand. We will do this by making sure everything is constant with the current aesthetics and content style that is presently on the website. We will measure how effective each metric is by using customer feedback surveys and keeping up with customer review sites. If there is any negative response we will critique our Brand Strategy to better communicate these services under the Bonobos identity.

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6. Transition to 4 P’s

Table 7.8 Marketing Strategy Transition Map

Harmon, Robert R. (2010), “The Marketing Strategy Platform,” Marketing Strategy.

Table 7.5 above displays the marketing strategy transition map, which prioritizes the four main variables of the marketing strategy. This map shows the importance each of the four marketing principles of the Gentlemen’s University, within the established market. The map was created by assigning values to each of the variables listed on the x- axis. Then based on the perceived value the established segments placed on each variable a weighted average for each variable was determined. Below will be an in-depth discussion of what table 7.- means for the marketing strategy of Bonobos.

Product The transition map created for Bonobos displays that the product is the most important aspect of the marketing strategy. The product is crucial for Bonobos and the Gentlemen’s University, because this is what customers reach out for and are exposed most to. For the marketing strategy of Bonobos, this means that the product and services need to be well established and displayed to the customers. Customers need to know and understand what makes Bonobos and the Gentlemen’s University superior to other products and services available.

Promotion The next most important aspect of the marketing strategy, as established by the transition map, is the promotion of the Gentlemen’s University. Promotion is essential because customers need to know about Bonobos and the Gentlemen’s University in order to desire the product/ service. Brand awareness is crucial because there are so many other competitors in the men’s apparel market that customers need to know why they should choose Bonobos.

Price Price is the third most important marketing variable, as determined through the marketing strategy transition map. Price is important variable in marketing the Gentlemen’s University because of the large emphasis 57 placed on price with society. The Gentlemen’s University services are free, except for the online video chat, thus it will be important for the potential customers to know and understand the pricing of the services.

Distribution Through the marketing strategy transition map it was determined that distribution was the least important of the four marketing variables. Distribution is not a huge concern for the Gentlemen’s University because the product is accessible online to users. It will be crucial to explain to potential users the fact that they can simply access the services of the Gentlemen’s University easily through the internet.

Conclusion In reviewing the marketing strategy transition map, it apparent that product and promotion will be the two most important variables of the marketing strategy plan. For the Gentlemen’s University it will be important to create brand awareness for the services provided. Customers need to know about the services the Gentlemen’s University provides in order to use and/ or want to use the services. The information gained from this transition map will be put to use later within the product/service plan and the promotion plan.

B. Product/Service Plan 1. Product Objectives The Service objective of the Bonobos’ Gentlemen’s University is to enhance and personalize the Bonobos shopping experience. We have created the Gentlemen’s Professors to provide personal styling assistance and access to Bonobos customer service representatives 24/7 via online chat. The Custom Dashboard’s objective is to provide a personal profile “virtual closet” for customers to store preferred items, look up past purchase history, view style guides, and provide Bonobos Professor’s access to customer purchase information to better assist them through their shopping experience. The Mobile Applications objective is to provide an on-the-go purchase and product information resource for customers who have busy schedules. These three services work together to provide Bonobos with brand recognition, customer consideration, and customer value.

2. Service Life Cycle Year one services include the introduction of the Gentlemen’s Professor and Customized Dashboard. Year two will introduce the Mobile Application which communicate with communicate with the Customized Dashboard system. Year three will introduce the Bonobos Gentlemen’s University Premium Account. The Premium Account offers Bonobos customers the ability to video chat with Gentlemen’s Professors and mobile text chat using the Mobile Application service. The Premium Account will be offered to Bonobos customers for a monthly membership fee of $19.99. The Premium Account will provide Bonobos customers an enhanced experience of all of the services, customers can build relationships with their preferred professors, ask any sort of question (i.e. how to tie your tie). Each year these services will be tested and surveyed based on their customer value, functionality, and revised based on customer feedback Bonobos receives. Finally they will be updated with technologies based on software, application, and advanced internet technologies specified in our technology life cycle.

Market Life Cycle The service Market Life Cycle will consider a classic product life cycle process. We will consider the market environment based on the Introduction, Growth, Maturity and Decline phases. Please reference the Service, Market and Technology life cycle analysis’s described in the Service Assessment section.

Technology Life Cycle The Technology life cycle will include a three year analysis that includes quarterly evaluations and introductions of expected new technologies. Please reference the Service, Market and Technology life cycle analysis’s described in the Service Assessment section.

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3. Service Strategy We will build up awareness of the introduction of The Gentlemen’s University using a strategic platform strategy. This strategy will involve internal training of Bonobos Gentlemen’s Professors, Analysis of services based on our key customer value drivers, and finally analysis of customer Gentlemen’s University account registration and product sales.

A. Service Platform/Family: ID Common (reusable) and Unique Platform Elements . Like all technological systems, Bonobos’ Gentlemen’s University will be supported by a few core platform elements. These core platform elements provide a central location for data exchange between applications as well as create backbones for applications to run on specific devices. The central element of the Gentlemen’s University is a new central database. Working alongside Bonobos’ existing product and purchasing databases, the central database will focus on storing all information relating to customer information, preferences, style information, virtual closet, interactions with Personal Stylist and purchasing habits. Aside from allowing all applications on various backbones to access the same information and allow the user experience to seamlessly transfer from one device to another, the central database will allow Bonobos to data mine the collected information in order to discover new trends in consumer behavior and track shifts in current fashion preferences. Gentlemen's University backbones provide an environment for various service modules to operate together on a specific platform. As Bonobos plans to continually upgrade and expand the capabilities of its Gentlemen’s University across multiple platforms, an application backbone is required for each specific platform. The application backbone will allow features of the Gentlemen’s University to be added or removed from the existing application without requiring the entire application to be rewritten or redesigned. This creates a lower development cost for future modules and allows for quicker deployment of the new modules. Backbones for personal computers are web based and will not require the user to download additional software to use. Additionally it will allow the Gentlemen Professors to be able to use any computer to communicate with users. Backbones for mobile devices will be in the form of downloadable apps. Each service module is designed to provide a specific function of the Gentlemen's University. The self- contained design and display of the service modules within the Gentlemen's University backbone will allow users the ability to choose what modules to display and how to arrange them on their screen. Some modules, particularly ones designed for interaction between users and Gentlemen Professors, will have two versions: one for user and another for the professors. The user end modules will contain information designed to assist them in their styling and purchasing in an attractive graphical interface. The Gentlemen Professor modules will contain the same information as well as additional information about the user their assisting, such as purchase history, buying habits, recently viewed items, past interaction with professors, a more detailed style guide and notes about that specific user. A simpler laid out interface will be utilized in order to display all the additional data.

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Figure 7.9: shows the relationship between the central database, Gentlemen's University backbones and service modules

Figure 7.9: Product Platforms

B. CVD and FAB Each service provides an innovative solution for Bonobos customers based on no cost, enhanced customer service, and providing a purchase solution focused feature. We have recognized many value drivers throughout our analysis and each of these services speaks to those values. Please reference our CVD analysis and FAB analysis’s for more extensive understanding of how these services focus and meet Bonobos’s customer value.

C. Product/Service Development Due to the design of the product platform structure, new platforms will be easy to implement without much risk of adversely affecting current systems. Current plans for platform expansion from initial launch include addition of new application backbones as the Gentlemen’s University expands to new platforms and additional service modules as new features are added. Initial expansion of application backbones will focus on support for specific smart devices, such as the iPhone and Android platforms. Planned new service modules include enhanced mobile and video chat capabilities, mobile purchasing features and QR code integration. The ability to easily create new platforms creates potential for development of new currently unplanned features. This including modules which provide information on other non-fashion gentlemanly topics such as food and alcohol, photo upload service to show off how you look in Bonobos clothes or maps with gentlemanly points of interests. Major upgrades to the Gentlemen’s University, such as addition of a new database will require modification of the application backbones; however such an addition should cause the cost of development and modification of existing backbones to be worth the new features gained. Additionally application backbones not initially requiring access to the new database would not require upgrades to continue functioning. The service module model will also allow Bonobos to offer different features to different levels of customers once they begin implementation of their tiered membership levels. Rather than providing different software packages, specific service modules can be easily enabled or disabled without affecting operation of the other service modules .D. Packaging The Gentlemen’s University will stay aesthetically true to the main Bonobos’ website look and feel. We want these services to coincide with the Bonobos brand and build recognition. The design, look and feel, personality will need to be constructed and decided by Bonobos.

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E. Warranty The Gentlemen’s University, Customized Dashboard, and Mobile Application are all complementary services for Bonobos customers. The only service that Bonobos will receive direct profit from is the Premium Account service. Instead of a warranty plan, we will provide a customer terms and conditions policy that provides assurance that these services are under the customers control, at any time a customer does not wish to use the service or terminate their account they may do so by deactivating their Gentlemen’s University Account. There will also be a cancelation policy provided for all Premium Account holders, and at any point in time customers can log into their Gentlemen’s University account and cancel this service-which will stop the direct monthly payment associated with the service. Overall the warranty is based on the customers personal terms, they may stop using the service and deactivate their account at any time that they wish.

4. Product cost model (spreadsheet). Major costs of initial development of the Gentlemen’s University come from the cost of the software design team. An initial team of 7 will cost $567,000.00 for the one year of initial development. After initial development of the Gentlemen's University the team will not be required year round to develop additional service modules and will therefore reduce future cost. A hybrid cloud server used to host the Gentlemen's University will be purchase through a server hosting company at a monthly base cost of $2,500.00. ("Hybrid Hosting Solutions", 2011) As the Gentlemen's University user base expands additional hosting capability will have to be purchase based on current rates at the time. Table 7.10 further breaks down the cost of initial cost of the Gentlemen's University.

Software Staff # required average salary/year timeline (months) total Software Design Manager 1 $125,000.00 12 $125,000.00 Software Developer 3 $82,000.00 12 $246,000.00 Software Operations Specalist 1 $80,000.00 12 $80,000.00 Software Tester 2 $58,000.00 12 $116,000.00 Total $567,000.00

Hardware # required price/month timeline (months) total Rackspace Hybrid Cloud Server 1 $2,500.00 12 $30,000.00

Initial Development Grand Total $597,000.00

Table 7.10: Breakdown of cost for initial development of Gentlemen's University

5. Service Launch Issues: As with any software product launch there is a real possibility unknown complications to occur once the software leaves the testing environment and enters the real world. As these issues are unknown the best solution to handle any potential problems is to have a rapid response plan ready to react to them. This will primarily consist of the software development team being on call 24/7 during the initial Gentlemen's University launch. Additionally the Gentlemen's University will go through a beta test period in which select Bonobos customers will be selected to preview the Gentlemen's University before initial launch to provide feedback and test the functionality of the software. Also during the beta period the software testers will be checking for capability issues within web browsers and with unexpected 3rd party software. Security is a main priority for the Gentlemen's University. As our target audience is concerned with their personal privacy, the software development team must ensure that customer's private data does not accidently be distributed to unauthorized individuals. Additionally considerations need to be made to prevent hackers from subverting

61 security measures and accessing private information. To prevent these software testers will attempt to break into the Gentlemen's University in order to uncover any security flaws. Additional server and database protection will be provided by the hosting company. ("Hybrid Hosting Solutions", 2011) To prevent total loss of data and operations should there be a total crash of the Gentlemen's University system, Bonobos will not only rely on the hosting companies backup systems but also keep incremental onsite backups of the server and database. While depending on the nature of the system crash infrastructure may need to be rebuilt or transferred, data backups will ensure that customers will not have to rebuilt their accounts or lose their history of interactions with the Gentlemen's University. When developing Gentlemen's University backbones for mobile devices special considerations need to be made to ensure app compliance with device rules and regulations. Such rules include proper signing and inclusion of version information code for the Android market, ("Publishing on Android Market", 2011) to receiving app approval from Apple for the iPhone market. ("Apple Developer Programs", 2011)

6. Service launch timeline.

Figure 7.11 Service Life Cycle

As previously discussed we will introduce The Gentlemen’s University services over a three year timeline. Figure 7.11 shows which services will be released each year. For more information please reference section 3. Service Assessment: Service Life Cycle.

C. Sales and Distribution Plan

1. Sales and Distribution objectives/matrix Bonobos has four main objectives for sales and distribution. The following objectives are designed to decrease distribution time and increase sales for Bonobos within the next three years.

1. Decrease search time on the web for the customer by introducing “Gentlemen’s University”. 2. Create an app to carry your Bonobos virtual closet with you, on the go. 3. Provide promotional incentives through different channels (rather than Goggle Ads) that will increase sales by 10 percent. 4. Increase market share by market development with introducing the new way of shopping clothing. The first objective is focused to enable customer to reduce the time spend on finding the right products. Bonobos wants to focus on customers’ convenience by providing the service called “Gentlemen’s University. The gentlemen’s University is a concept of enabling online shopping experience at its best. The online closets will hold onto everything the client purchases, make recommendations considering the previous purchase or similar customer preferences, and giving fashion tips personally via video chat. The main concept of this marketing campaign is to “teach men how to dress like gentlemen.” The second objective of Bonobos is the extension of the first objective. In order for second objective to get in action, the first objective must be successful. Second objective can be explained as an effort to assist customers to

62 a comprehensive shopping experience. Bonobos will not only sell clothing to men but also creating a style of being gentlemen even on the go. With any questions regarding their next steps of the day whether concerning their clothing or general gentleman questions, Bonobos will be of assistance “on the go”. The third objective is focused on increasing sales through promotional offers. Currently Bonobos is using major search engines to optimize customer search for men’s clothing and direct the customers to Bonobos website. As a web company, Bonobos should increase World-Wide-Web appearance in order to attract more customers and increase sales. Forth objective is an additional step to third objective. When the online appearance increases, the brand equity will increase eventually. With an additional advertising campaigns emphasizing on the innovative way of shopping at Bonobos, the company can increase its market share by reshaping the shopping experience for all. The metrics put in place for the objectives can easily be measured by the amount of time a user spends on the website in relevance to what they purchase, if anything. Channels are already in place such as social media avenues to get feedback from customers. Facebook, Twitter, and possibly the most important of them all are the Bonobos blog. With this increase of social expression, customers can now post what they actually feel in an anonymous context revealing the truth of what people think. Metrics concerning the actual increase of sales such as objective 3, will be in measured through MROI. The amount of capital used for marketing and promotion can be compared to the sales increase over the three year plan. Although the increase of sales could be from other aspects of business the efforts in consideration of evaluating objectives will be first analyzed from MROI. Increase in market share will be evaluated in comparison of direct and indirect competitors in the industry. For example again, using the current social media avenues as a key indicator, “Likes” on Facebook as well as engaged followers on Twitter can represent the increase of traffic towards Bonobos’ sales channels.

2. Sales Strategy a. Sales Force Structure The sales force structure of Bonobos is much different in comparison to traditional retailers. With Bonobos a single channel retailer and that includes being primarily online there is a lack of need of in person sales people. A sale in this instance does not include a direct B2C interaction with social interaction. The closest sales interaction would be a reference from a Gentlemen’s Professor to a particular item on the website. When the user goes to the product on the website it is all automation to the point of purchase. Although questions may be answered by either the customer service Ninjas or staff of the Gentlemen’s University all sales made is through the direct sales channels. b. Sales Force Automation Automation services are already in place as far as the point of purchase on the Bonobos website. These automation services are prompts to guide consumers through the purchasing experience. Currently the Bonobos website confirms the order through the “view cart” feature. Later a form must be filled out with traditional information such as billing and shipping addresses. To complete the purchase credit or debit card information must be valid and approves with a secondary confirmation page. Once order is complete a transactional online receipt is then sent to the current email account for documentation purpose. With the implementation of the Gentlemen’s University, the process of purchasing is much faster and efficient. The format is just as secure although the users account information is stored with-in the website. Logging in through the sales channels (online & mobile) a customer can pick the items, view cart, click for purchase, and verify the order at the touch of their fingers. Shortening the purchasing time not only gives more time for the consumer to further shop and browse; but offers them more time to devote to other day to day errands therefore providing more value.

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3. Channel Strategy a. Channel Design Bonobos is a single channel retailer, they rely on the support of online access through internet as well as mobile networks for consumers to access they’re products. Being primarily an e-commerce business it decreases some operating costs in comparison to a multi-channel retailer which has to maintain brick and mortar locations.

In Table 7.12, shows a diagram representing the channel strategy of Bonobos: Table 7.12 Channel Strategy

Bonobos E-commerce Business.

Direct Channels

Online Mobile Service Service

Target Customer Target Customer Segments Segments

Bonobos operates its distribution and sales channels through two avenues; the online service and mobile service. The online service was detailed as a consumer would log into the Bonobos’ website and then click on the tab “Gentlemen’s University”. Once entered the service has been distributed. For the purchasing of product will be directly through the website as well. The mobile service is distributed through network markets such as the Android and Apple. The customer can either r scan the Quick Response code from the Bonobos website, or off promotional activities to directly access the mobile application. The mobile application can also be accessed by searching for it on the mobile markets. For example if a consumer types in “Bonobos”, “Gentlemen’s University”, “Personal Stylists” or other key words on the Android market; the Bonobos application will be distributed. With the application then downloaded to the mobile device the user then can use the Gentlemen’s University services as well as access their virtual closet or make purchases “on the go”. 64

These are both considered direct channels because Bonobos is directly working with their consumers. An example of an indirect channel would be using outside or third party agents/representatives to do the job for them. Direct channels are considered more expensive due to the creation of the channel, training, and staffing. Indirect channels such as outsourcing a company’s customer service may be cheaper although could bring risk for quality issues.

B. E-Commerce As stated previously Bonobos only operates in the e-commerce realm of retailing. They must introduce the Gentlemen’s University services to create or enhance their competitive advantage because the e-commerce channel has a small number of barriers for competitors to enter. With that said, online retailing has its benefits and costs. For example yes Bonobos can minimize operating costs without having to support other sales and distribution channels such as telephone, magazine, or brick and mortar locations. On the other hand online strategies can be developed fairly quickly by competitors as well as technology. Concerning mobile innovation and mobile functionality; applications can be developed at a low price with high value to end users. If one of Bonobos’ competitors wanted to mimic the Gentlemen’s University they could, although this is a 3 year plan and the competitors cannot forecast the product/service platform.

C. Customer Relationship Management CRM will continue to be a big part of Bonobos and how it interacts with its consumers. As we have discussed the technology systems that will be integrated within these services in Section three, Service Assessment. CRM will be a huge part of the Gentlemen’s University success. Bonobos’s current customer service strategy is to provide customer support through the service “ninjas”. These service ninjas will guide and answer questions directly through the website or on a telephone call. Customer service ninjas will still be present. However, we are integrating robust CRM systems with the integration of the Virtual Closet and the ability for the Gentlemen’s Professors and Mobile Application to reference and gather information that the Virtual Closet collects. Bonobos will be providing a whole new customer support and service experience for their customers. when introducing the Gentlemen’s University although online, mobile and video chat will be available. (Hansen, 2003) For further information of how we will use CRM please reference the Technology Description within Section 3: Service Assessment.

D. Channel Management A continuous semi-annual revision must take place to further manage the channel. The basic analysis of the channel is to make sure it fits the current goals, policies, and products with in the target segments. This is done to ensure that the right people are receiving the intended products and services. If the channel management reveals a problem in vertical integration then changes must be made to adapt the target segment’s needs. Many internal and external factors can disrupt the channel strategy such as critical risk and success factors developed in the Net Assessment section of the plan.

E. Legal Issues Legal issues in the e-commerce retail industry mainly concern the user’s privacy. The risk of online shopping and now mobile device purchasing has increased in recent years. This risk for consumers using their credit and debit cards online can lead to identity theft as well as hacked accounts. Luckily this risk has already been evaluated with the current sales platform Bonobos uses (online shopping). Bonobos has not reported any incidences regarding privacy issues of their previous customers. The mobile service concerning the downloading of the application from the Android & Apple market brings terms and conditions. When downloading any application through your mobile device it requires the user to accept to the terms and conditions. The terms and conditions very on what the application does, for example if a user downloads a navigation application the terms and conditions would require access to the users GPS location. The

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Bonobos mobile app terms and conditions will require acceptance of the amount of data downloaded anywhere from 3-7 mega bytes. Also the mobile app will need to track purchases made from online or “on the go” but will be in comparison to the users account history which is already done through the online channel.

F. Supplier Qualifications / Certifications As stated before in order for a user to access any of the Bonobos channels it’s going to require them to have a supplier. The online channel will require support from some internet company. Most popular would be Comcast or Century Link, these commercial or residential internet providers will give access for a user to log on to Bonobos.com/Gentlemen’s University. Without the support of an internet provider then the customer cannot use Bonobos services. The mobile application can be accessed only if the mobile device is connected to Wi-Fi or has a network connection. Verizon and AT&T offer data plans through 3g and 4g networking connections that would enable downloading of the application. Again if the mobile device does not have a network connection the mobile app will not run. Furthermore; without the mobile app running the end user will have a barrier to accessing Bonobos’ sales channel.

D. Promotional Plan

1. Promotional Objectives/metrics Through this analysis we want to focus on promotional activities that strategically and efficiently reach our target demographics. We will measure the success of our promotion plan by tracking metrics such as subscription rates, impression rates; TRP’s and click through rates of our various mediums. We have strategically chosen the various magazines, online sites, transit and ambient publications, sites, companies and locations that will provide the most return on investment for Bonobos. 2. Promotional Theme: Our promotional strategy will include advertising campaign, sales promotions, and direct marketing efforts. We will focus our strategy on building brand awareness, increasing product sales and conveying customer value through the introduction of the Gentlemen’s U new services. 4. Promotional Strategy Our Promotional strategies will include advertising, sales promotions and direct marketing efforts. The next few sections provide insight and understanding of each of these strategies and how they speak to our promotional objectives and theme and will provide Bonobos success. a. Advertising The following advertising plan will be focused on building Bonobos brand awareness with the introduction of the new services. Below is a three-year breakdown of our advertising imitative.

Year 1: Bonobos Gets Personal Campaign In Year One, we will introduce the Gentlemen’s Professor (Personal Stylist) and Virtual Closet (Customized Dashboard) using a “Bonobos Gets Personal” advertising campaign. The advertising campaign will speak to each of our target segments and their customer values: West Coaster, Fashionably Challenged and Educator. Ads will target West Coaster’s by advertising the custom fit in pants/suit, fashionable products, and confident in appearance. The Fashionably Challenge male will be targeted using a head to toe fashion makeover theme focusing on style guidance and increasing customer confidence in appearance. And, the Educator targeted

66 using am innovative wardrobe solution theme; for example with a presentation of a full dress code appropriate wardrobe for everyday of the work week, and an alter ego closet for the weekend. With this campaign we want to attract and get to know the “West Coasters”, “Fashionably Challenged guys” and “Educators”. To show how these new services provide them an enhanced convenient shopping experience. This campaign will introduce the two services and also build awareness for the release of the Gentlemen’s University Mobile Application in year two.

Year 2: On-The-Go Bonobos Campaign: With the introduction of the Gentlemen’s University Mobile Application, we will run a “Bonobos Gentlemen’s University On-The-Go” Campaign. Which will extend off of the “Bonobos Gets Personal” theme. We will stress the key features of the mobile application including: the purchasing capability, access to virtual closet, access to product information and QR code capabilities.

Year 3: Service Updates and QR Code Integration Year three will include advertising for the Gentlemen’s University Premium Account we will focus the campaign to introduce the new features to the Virtual Closet and Mobile Application. Year three will focus on a campaign that communicates any changes and updates relating to the services. The prior two years introduce our complementary features and year three will be about premium account promotion. The Premium Account includes a $19.99 fee so we want to make sure we are marketing these new features with high benefits for customers as an incentive to sign up.

Figure 7.13 Advertising Campaigns

•Bonobos Gets Person Year 1 Campaign

•Bonobos On the Go Year 3 campaign

• Bonobos Premium Account Year 3 campaign

Figure 7.13 provides a visual representation of the advertising campaign that we are recommending for the introduction of the Gentlemen’s University. b. Sales Promotion Though sales promotions we will welcome to try the new services by rewarding customers with product discounts and promotional incentives:

• Registration for an account 67

• Downloading the mobile application • Purchasing from the mobile application • QR code usage • Referring a friend (customer referral reward) • Like/Follow Bonobos through social media

The goal within this section of the promotional strategy is to provide customer appreciation by providing discounts and incentives to sign up and use these new services. We want to retain our current customers and also build new customer service accounts. c. Direct Marketing In a digital world, Bonobos has gained brand recognition and identity through word of mouth advertising, Facebook advertising, and blogging. We are recommending the following direct marketing efforts for Bonobos with the integration of these new services: Email, Social Media, and SEO SEM advertising.

E-mail alerts: • Exclusive Customer Trials: Six months before the launch of each service we will filter Bonobos’s long- term, high purchasing customers and invite them to try an exclusive trial of the service. We will ask them to sign a privacy policy that protects Bonobos from any breach of information about the service and ask them for their feedback at the end of the trial. • Invitations to Large Auction Sales: By being on the Bonobos email list through registration of a customer account-customers will be invited to save big on popular items throughout the year. • Customer Feedback Survey: To gain insight and customer feedback on the Bonobos online customer shopping experience we will survey customers through email, providing incentive discounts and free products, or enter to win contests. d. Social Media: Currently Bonobos has a great Social Media plan. On Facebook Bonobos has 67,583 Likes, and they are actively engaging with their customers by utilizing the page for catchy promotions like “Happy Hour” deals, or “TGIF” discounts, and also their customer service Ninjas use it to address customer questions. Bonobos has two Twitter accounts to engage with customers. One is their @Bonobos account where they do the same promotions as on Facebook, and the second is their @BonobosNinjas which handle any type of customer service questions. With the deployment of our Gentlemen Professors we will phase out the Ninjas and establish the Professors in their place. Since Bonobos is fairly well established in the social media world our plan will just incorporate the current social media plan and just direct it towards promoting the launch of the Gentlemen’s University.

4. Campaign Plan The following campaign plan includes a breakdown of the advertising media plan, schedule of timeline of when we will be placing these ads, and the financial budgets that we will allocate to the various mediums. a. Media Plan Each medium was selected based on its reputation and popularity among our three target segments. The following provides an estimated financial breakdown of each medium and how it provides a return for Bonobos. The following mediums include: • Print: GQ, Men’s Health, Sports Illustrated • Online: Facebook, Twitter, Business Week, Wall Street Journal • Outdoor: Billboard/Transit • Ambient: LA and NYC

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PRINT: From analysis we recommend running print ads in GQ, Forbes, and Men’s Health. Below is a price estimate. The estimate is based on four, three-month flights throughout the year. We have chosen these three magazines based on their readership demographics, impressions, rate base and estimated cost. They are each reputable men’s magazines that speak to our three target segments and will provide a return on our advertising investments.

Table 7.14 Print Advertising

Table 7.14 below shows media kits from the listed magazines.

ONLINE: Online ads will be placed on social media sites: Facebook and Twitter. As well as reputable journal websites: Business Week and The Wall Street Journal. We have researched click through rates, user demographics, impressions, and cost. Below is an estimate of our projected cost. The numbers below were provided directly from the companies in their media kits or sample accounts.

Table 7.15 Online Advertising

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OUTDOOR: Outdoor ads are costly but the return is high in populated cities such as LA and San Francisco. We feel want to consider billboards in large cities where people are walking and driving constantly. Below is a price estimate of what it would cost to place a billboard ad id downtown LA. The numbers below were provided by CBSOutdoor Media Kits

Table 7.16 Outdoor Advertising

AMBIENT: Ambient advertising is creative way to get the brand out there and show off the new Bonobos services. We want to introduce each campaign with ambient advertising initiative. For example, have a large crew of Gentlemen’s Professionals in the center of downtown LA or San Francisco styling men off of the street. The numbers below were supplied by associated website and/or by setting a range budget based upon the Rate Base to keep CPM below $1.00.

Table 7.17 Ambient Advertising

b. Schedule and time line

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For our advertising media plan we have forecasted each of our ad mediums, and scheduled them based on a three year forecast. Magazine and Online will have quarterly flights throughout the whole year. Outdoor ads will run throughout the year, either on transit or billboards. We will schedule two major ambient ads to run during the first half of 2013 during the second quarter, and the second half of 2014 during the fourth quarter. A flash mob will be schedule for one day during the introduction phase of the campaign. Each medium is scheduled for best return on investment; our goal is to increase awareness and sales.

Table 7.18 Advertising Schedule and Timeline

c. Budget (in financials) We will allocate a budget of $1,506,796 for the following media plan. The campaign will run over the next three years. Magazines ads will run year round, with each month being a different magazine. For example GQ will run January, Men’s Health February, and Sports Illustrated in March. The flights will run quarterly. Online/internet ads (i.e. Facebook and twitter ads) will run with the current media to emphasis the Gentlemen’s University. The Forbes and ValueClick will run constantly within budget restraints.

E. Pricing Plan With the current business model of Bonobos, it is vital to determine an efficient pricing strategy where the costs of manufacturing and operations are covered and the price is reasonable for the customers’ perceived value at the same time. The table below will guide us to determine the pricing strategy with the best interest of the company in mind.

Table 7.19Pricing Plan

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Harmon, Robert R. (2010), “Strategic Marketing Planning: Marketing Mix,” Marketing Strategy. Level of Desire for the Product and/or Service Clothing and especially men’s apparel is one of the most demanded products, considering the work schedules and shopping attitude of male customers. Bonobos has a piece in the pie, where the customers have a high level of desire to purchase goods.

Distinctiveness from the Competitive Offerings Bonobos carries out a very unique distinctive offering, their design of pants. Their pants are tailored in a specific way to fit men’s waist perfectly without making the bulky look on the back of the pants. (Lipke, 2011) This style makes it very unique for Bonobos customers’ experience with their purchased products.

Importance of the Price in Value Equation One of the biggest difficulty for web-based firms such as Bonobos is that their competitive analysis can be done while doing shopping online. Blogs, forums and customer reviews are usually very effective on purchase patterns. Moreover, the concept called “impulsive shopping” does not apply to online shopping, since you have a chance to double check price differences and also you have to wait for the item to arrive. For Bonobos, importance of price is less important that the value perceived by the customer.

Ease of Duplicating the Competitive Advantage Fashion is continuously changing and one of the major threats for innovative brands like Bonobos is that the competitors can adopt/ duplicate the styles to attract your customers for low prices. Bonobos can overcome this problem by purchasing patent for their style. With this way, Bonobos has a patent application pending currently. (Patent Genius, 2008) Moreover one of the other competitive advantages for Bonobos is the free shipping matter, which can easily by adopted by other competitors. But Bonobos currently is offering the best shipping option and should maintain this to create a distinctive competitor advantage.

Speed of Return on Investments Bonobos is able to perform monetary actions through its selling operations through their website. Since the company started operating, the company did not fail to announce profits for each period of operation. This was also a sign for the investors and because of their skills of capitalization they received $18.5 Million financing at the end of year 2010. (Lipke, 2011)

Importance of Innovation Bonobos is an innovative business, trying to reshape the purchasing habits for customers. The showed the apparel industry that you do not need to have brick retail shops to manage sales. Moreover, the proposed 72 technological changes will enable Bonobos to engage with further innovative operations such as “Gentlemen’s University” concept.

Importance of Personal Selling For the Bonobos business model, importance of personal selling is very high. They created an online platform, where the shopping experience evolves. With the additional services proposed in this paper, the company will improve its personal selling factors. The key indicator analyzed above gives us the understanding of the market and evaluated direction for our pricing strategy. Considering the analysis above, the dynamic pricing model of Bonobos leans towards skim pricing.

2. Pricing Strategy The pricing strategy of a company is crucial because it can either draw customers in, or turn customers off from your products. Before deciding about the price strategy following models have been reviewed and evaluated for the compatibility with Bonobos business model:

A. Penetration • Random discounting: Bonobos offers such social media offers that introduce the company to the new customer group(s). At the same time they give discounts to increase ROI as well as to decrease the level of ongoing inventory.

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B. Skim • Price signaling: Bonobos keeps continuous connection with their customers, alerting them through social media. Via social media, they manage 1200% ROI. • Image pricing: Bonobos carries out a word-of-mouth advertising. Considering the quality of Bonobos products, customers are suggesting the company to their social circle, enabling customers to purchase Bonobos products just for the image of the brand for the customers. • Premium pricing: Bonobos produces individually designed clothing. They are mainly custom made and require additional effort; therefore the company can get away with premium pricing. C. Hybrid • Cost-Plus pricing: Like any business, the basic and the fundamental goal of the business are to cover the main costs of operating and manufacturing. Bonobos is aiming on covering these cots primarily. • Periodic discounting: The method skims inelastic demand of innovators. Bonobos has done this and continue doing it over the social media services. They reduce the prices and change the demand for their products for certain periods of time.

We believe that Bonobos has a competitive advantages and majority of these advantages maintained by the perceived value of the products and services. As an innovative company with futuristic business ideas, we believe that, it is important to give value to the products and calculate that through perceived value than cost-plus valuing. We created a Pricing Strategy matrix, pointing out our current pricing strategy and the futuristic prediction of the strategy. Price skimming is defined as setting prices high during the introduction of a product and then dropping the price over time (Price Skimming Paradoxes). The attractiveness of the price skimming strategy for Bonobos is the idea that Bonobos is so new that pricing can start high, and lower as the customer base increases and more efficient processes and procedures can be established. With a throughout research on which method to choose for the pricing structure of Bonobos, we decided to go with Value-Based Pricing Model in order to meet our overall marketing strategy of maintaining more market share.

2. Customer Reaction In reviewing the reactions of Bonobos customers, it appears most customers of Bonobos react positively to the prices of Bonobos. In reading customer reviews on the Bonobos web-site, most reviews consisted of customers praising the quality and styling of the product rather than stating any price issues. The Bonobos Facebook page was also consistent with this same theme. In reviewing weeks of the comments listed on the page most customers 74 discussed the quality of the clothing or any kind of ordering issue they may have come across. Only a few mentions of price concerns were shown only on the Facebook page of Bonobos. However it definitely seems that customers see the value of Bonobos products matching the perceived value of the products. This would likely be the reason little regard is shown to price on the Facebook page and customer reviews of Bonobos.

3. Competitor Reactions The main competitors of Bonobos include J Crew and Gilt, who both use similar pricing strategies to that of Bonobos. However, Gilt uses more of a limited time only “sale” type strategy of pricing. Designer prices are displayed on the site and crossed out to show customers how much they are saving by purchasing the product through Gilt. This strategy is definitely different from that of Bonobos, where price cuts are not listed and advertised in the same extreme manner. Looking at the pricing strategy of J Crew, it seems the pricing is fairly similar to that of Bonobos. The majority of the clothing within both the J Crew and Bonobos lines run in the same price points. Due to the fact that Bonobos is a newer company in a somewhat saturated market, competitors of Bonobos have not reacted to the pricing strategy of Bonobos, because it is not disruptive in nature. Perhaps if Bonobos came into the market at an extremely low price point competitors would have more of a reaction to Bonobos.

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8. Implementation

The implementation section of this plan will display the information needed for Bonobos to carry out the plan that was established in the marketing strategy section. Essentially an in-depth plan of how the marketing of the Gentlemen’s University will be accomplished. This section will provide the financial information of this plan, the plan for controlling and maintain the marketing plan and the organizational requirements of Bonobos.

A. Financials The financials will show the estimated costs for the Gentlemen’s University. Pre-launch costs will be much higher than the average annual cost due to having to employ a software development team to help get the Gentlemen’s University built, as well as a larger advertising campaign to help establish the service. The plan will help direct the costs for Bonobos over the next three-years and help them differentiate themselves in the growing Men’s Fashion market.

1. Three-year Pro Forma Profit and Loss by Quarter The tables below are the projected breakdown of the income of Bonobos for the next 3 years. The standard profit and loss model has been applied to calculate the potential of Bonobos with projected sales amounts. Since Bonobos is a product oriented sales company, we projected our sales numbers for the next 12 quarters as it is shown below: We estimated the sales volume for the next 3 years depending on the current sales numbers. At the second stage, where we needed to calculate the COGS we include the costs of direct material per unit, shipping per unit, supplies per unit, commission per unit and to overestimate we added other expenses per unit. In order to reflect on the tax cuts from the profits of Bonobos, the approximate rate of 35.00% has been applied. One of the reasons why the administrative costs are declining is that, Research and Development of the project and proposed solution requires additional hiring for a certain period of time, which creates the hike in wages. Towards the end of 3-year period, these expenses slowly diminish due to keeping only the core team for research and development.

Financial Ration Analysis According to the Break Even analysis done and showed above, the breakeven point in volume is 140,710 units. We expect to reach that point within our Quarter-6. According to this information, our cash flow will be positive approximately in May 2013. Considering that the total budget needed for this project to be in motion is $13,993,077 and the revenue numbers provided above the Internal Rate of Return (IRR) would be 39.174%. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment, which gives us approximately 176.5% of Return on Investment.

Table: 8.1: 2012 Pro Forma Budget 2012 Q-1 Q-2 Q-3 Q-4 SALES $10,000,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000 Cost of Sales $2,770,000 $692,500 $692,500 $692,501 $692,502 GROSS PROFIT $7,230,000 $1,807,500 $1,807,500 $1,807,499 $1,807,498

Administration Expense $567,000 $208,125 $208,125 $208,125 $63,375 Other $50,000 $12,500 $12,500 $12,500 $12,500 TOTAL EXPENSE $617,000 $220,625 $220,625 $220,625 $75,875

Net Income Before Interest & Taxes $6,613,000 $1,586,875 $1,586,875 $1,586,874 $1,731,623 Taxes $2,314,550 $555,406.25 $555,406.25 $555,406.25 $606,068.25 Capital Funding NET INCOME AFTER TAX $4,298,450 $1,031,468.75 $1,031,468.75 $1,031,467.75 $1,125,554.75

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Table 8.2: 2013 Pro Forma Budget 2013 Q-1 Q-2 Q-3 Q-4 SALES $11,500,000 $2,875,000 $2,875,000 $2,875,000 $2,875,000 Cost of Sales $3,478,750.00 $869,687.50 $869,687.50 $869,687.50 $869,687.50 GROSS PROFIT $8,021,250.00 $2,005,312.50 $2,005,312.50 $2,005,312.50 $2,005,312.50

Administration Expense $265,500 $66,375 $66,375 $66,375 $66,375 Other $50,000 $12,500 $12,500 $12,500 $12,500 TOTAL EXPENSE $315,500 $78,875 $78,875 $78,875 $78,875

Net Income Before Interest & Taxes $7,705,750.00 $1,926,437.50 $1,926,437.50 $1,926,437.50 $1,926,437.50 Taxes $2,697,012.50 $674,253.13 $674,253.13 $674,253.13 $674,253.13 NET INCOME AFTER TAX $5,008,737.50 $1,252,184.38 $1,252,184.38 $1,252,184.38 $1,252,184.38

Table 8.3: 2014 Pro Forma Budget 2014 Q-1 Q-2 Q-3 Q-4 SALES $17,192,240 $3,306,200 $4,463,370 $4,628,680 $4,793,990 Cost of Sales $4,637,954.06 $1,104,270.80 $1,490,775.60 $1,545,985.80 $1,601,192.66 GROSS PROFIT $12,554,285.94 $2,201,929.20 $2,972,594.40 $3,082,694.20 $3,192,797.34

Administration Expense $117,500 $38,750 $38,750 $38,750 $1,250 Other $50,000 $12,500 $12,500 $12,500 $12,500 TOTAL EXPENSE $167,500 $51,250 $51,250 $51,250 $13,750

Net Income Before Interest & Taxes $12,386,785.94 $2,150,679.20 $2,921,344.40 $3,031,444.20 $3,179,047.34 Taxes $4,335,375.08 $752,737.70 $1,022,470.54 $1,061,005.47 $1,112,666.57 NET INCOME AFTER TAX $8,051,410.86 $1,397,941.50 $1,898,873.86 $1,970,438.73 $2,066,380.77

Table 8.4: Three Year Budget 3-YEAR BUDGET YEAR-1 YEAR-2 YEAR-3 SALES $38,692,240 $10,000,000 $11,500,000 $17,192,240 Cost of Sales $10,886,704.06 $2,770,000 $3,478,750.00 $4,637,954.06 GROSS PROFIT $27,805,535.94 $7,230,000 $8,021,250.00 $12,554,285.94

Administration Expense $950,000 $567,000 $265,500 $117,500 Other $150,000 $50,000 $50,000 $50,000 TOTAL EXPENSE $1,100,000 $617,000 $315,500 $167,500

Net Income Before Interest & Taxes $26,705,535.94 $6,613,000 $7,705,750.00 $12,386,785.94 Taxes $9,346,937.58 $2,314,550 $2,697,012.50 $4,335,375.08 N.I. AFTER TAX $17,358,598.36 $4,298,450 $5,008,737.50 $8,051,410.86 77

The tables above are the projected breakdown of the income of Bonobos for the next 3 years. The standard profit and loss model has been applied to calculate the potential of Bonobos with projected sales amounts. Since Bonobos is a product oriented sales company, we projected our sales numbers for the next 12 quarters as it is shown below:

SALES VOLUME UNITS We estimated the sales volume for the next 3 years (Approx.) depending on the current sales numbers. At the second stage, where we needed to calculate the COGS we Quarter - 1 25,000 include the costs of direct material per unit, shipping per unit, supplies per unit, commission per unit and to Quarter - 2 25,000 overestimate we added other expenses per unit. In order to reflect on the tax cuts from the profits of Quarter - 3 25,000 Bonobos, the approximate rate of 35.00% has been Quarter - 4 25,000 applied.

Quarter - 5 28,750 One of the reason why the administrative costs are declining is that, Research and Development of the Quarter - 6 28,750 project and proposed solution requires additional hiring for a certain period of time, which creates the Quarter - 7 28,750 hike in wages. Towards the end of 3-year period, these expenses slowly diminish due to keeping only the core Quarter - 8 28,750 team for research and development. Quarter - 9 33,062 Financial Ration Analysis Quarter - 10 44,634 According to the Break Even analysis done and Quarter - 11 46,287 showed above, the breakeven point in volume is 140,710 units. We expect to reach that point within Quarter - 12 47,940 our Quarter-6. According to this information, our cash flow will be positive approximately in May 2013. Considering that the total budget needed for this project to be in motion is $13,993,077 and the revenue numbers provided above the Internal Rate of Return (IRR) would be 39.174%. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment, which gives us approximately 176.5% of Return on Investment.

2. Marketing Budget The budget includes a Marketing Communications budget, Marketing Team, Customer Support, and the Software Development Team. We also included a 10% contingency for any unforeseen expenses along the way. The budgets do not include any of the already established services and pricing at Bonobos, it is strictly for the implementation and running of The Gentlemen’s University over the next 3 years. What is also not included is the elimination of the Ninja customer service positions, with the elimination of these positions it will help open up more capital for The Gentlemen’s University. As seen on the Marketing Budget the Pre-launch costs will be relatively low given what is included, just below $2.7 million. The remainder of the 3 years, the budget will run at a lower cost due to not needing a full development team, just a system management team, and also due to staggering our advertising so that not everything runs at the same time. Bonobo’s marketing budget is planned conservatively. Since the newly acquired funds of over $18 million from financing last year, using less than 15% of that to finance a high growth and differentiating service seemed very reasonable. The following table shows the totals of the three-year budget including the pre-launch budget.

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Table 8.5 Marketing Budget

Marketing Budget Prelaunch 2013 2014 2015

Marketing Comm. $575,897.00 $2,333,756.00 $2,225,506.00 $2,209,756.00

Marketing Team $15,614.00 $187,360.00 $187,360.00 $187,360.00

Customer Support $95,010.00 $1,140,120.00 $1,140,120.00 $1,140,120.00

Software $597,000.00 $265,500.00 $265,500.00 $155,000.00 Development

Contingency (10%) $118,851,10 $278,661.60 $267,836.60 $255,211,60

Totals $2,685,893.10 $4,205,397.60 $4,086,322.60 $3,947,447.60

3. Marketing Communications Budget With the Marketing Communications Budget, again we didn’t base our budget based upon a sales percentage, but rather use what is reasonable considering the newly acquired finances. Since Bonobos is still fairly new to the market, getting them involved in some traditional advertising should be done. GQ Magazine, Men’s Health, and Sports Illustrated all fit our target segments. Since traditional print advertising is very costly, we will be utilizing our established online presence in social media. Since Bonobos is already well established in Social Media, this is not included in this budget. To reach our higher HHI audience, Bonobos will establish advertising on Forbes.com. Included in the online marketing will be the already used Behavioral Target Marketing. Also, outdoor and ambient advertising will be utilized. Alternating advertising between billboards and transit in high traffic, high fashion cities such as New York and Los Angeles will be established. For the pre-launch to get the buzz going for the Gentlemen’s University, Bonobos will advertise on all media’s listed plus the already established ones. The planned 3-year budget will help maximize our dollar per connection. Below is the budget for the next 3 years including the pre-launch.

Table 8.6 Marketing Communication Budget

Marketing Communications Budget Pre-Launch 2013 2014 2015

Traditional Advertising $488,814.00 $2,33,756.00 $2,225,506.00 $2,209,756.00

Internet/Web $11,333.00 $136,00.00 $136,000.00 $136,000.00

Outdoor $72,750.00 $229,500.00 $134,250.00 $106,500.00

Ambient $3,000.00 $13,000.00 $0.00 $12,000.00

Totals $575,897.00 $2,333,756.00 $2,225,506.00 $2,209,756.00

4. Capital budget a. How much money is needed to develop and implement the plan? Bonobos will require additional capital in order to implement the Gentlemen’s University over its initial three year period. A total of $13,993,076.90 will be required to develop the Gentlemen’s University. Of the total capital requirement approximately $7.4 million will be used towards marketing communications objectives,

79 approximately $4.8 million towards development and running the Gentlemen’s University and the remaining amount used as contingency funds. Further breakdown of the budget can be found in appendix X.X. b. What are the major Initial spending priorities will be towards the initial development of the Gentlemen’s Initial spending priorities will be towards the initial development of the Gentlemen’s University including the hiring of the software development team and purchasing a contract for a hybrid cloud server. After initial development and launch of the Gentlemen’s University spending priority will be shifted towards marketing communications efforts with additional focus on maintaining our Gentlemen Professors c. What is the schedule of capital requirements? Initial spending priorities will be towards the initial development of the Gentlemen’s University including the hiring of the software development team and purchasing a contract for a hybrid cloud server. After initial development and launch of the Gentlemen’s University spending priority will be shifted towards marketing communications efforts with additional focus on maintaining our Gentlemen Professors. d. ROI and IRR In order to calculate the Internal Rate of Return and the Return on Investments we need to know the projected cost of this project, which is stated before as $13,993,077 and the revenue numbers, which can be found in the financial section of this paper. In order to calculate the Internal Rate of Return, the initial investment cost and the revenues for the next three years have been computed. The calculated IRR is 39.174%. This means that the company creates enough revenues to generate a bit over 39% profitability from the investment. On the other hand, to calculate ROI, the benefit (return) of an investment is divided by the cost of the investment, which gives us approximately 176.5% of Return on Investment. This means that the company creates 1.765 times more than initial investment. e. Breakeven Analysis

Table 8.7 Break Even Analysis

The breakeven analysis was executed by keeping the sales volume and quarterly timeframe in mind. We calculated the break even point by assessing approximate sales price per unit, multiplying that number with the proposed sales volume. Furthermore we deduct the costs related to the sales from the total sales revenue and calculate the quarterly net profit and/or loss. Bonobos needs to sell 140,710 units with the approximate price of $100.00 in order to breakeven. f.: Positive Cash Flow The current cash flow of Bonobos is projected to stay negative for the first 5 quarters. According to the Break Even analysis done and showed above, the breakeven point in volume is 140,710 units. We expect to reach that point within our Quarter-6. According to this information, our cash flow will be positive approximately in May 2013.

B. Controlling the Marketing Plan Please refer to Appendix 8B to see full Gantt chart of key marketing events and milestones. The chart provides a time line for when each aspect of the marketing events will take place. Considering there are “pre- launch” and “post launch” events, it’s broken down into durations such as start and finish. In the case of an event becoming over deadline it must reported and monitored in accordance with the next milestone. This also must be done because many of the key marketing events are in place to run back to back. The overlapping of these events can become more costly if not started and ended according to the timeline.

1. Timeline-launch 80

Please see appendix for full Gaunt Chart.

a. Marketing Budget Items The items in the marking budget were broken down into subcategories. • Marketing communications: The way Bonobos will communicate to the market is in 4 general ways. One using traditional advertising such as print will exploit the new offerings that the Gentlemen’s University provides. These services must hold value in the way they are explain and portrayed by the target audiences.

• Marketing team: The marketing team head consists of the marketing director, search engine optimization director, and the graphic designer. With Bonobos putting so much emphasis on the online marketing it’s vital to have transparency between the head marketing team members.

• Customer support: Customer support besides the in place CRM system will be the actual in person Gentlemen Professors as well as the customer service ninjas. The customer service ninjas are already accounted for because they are in the current plan, therefore not labeled in the marketing budget.

• Software development team: This is the last item in the marketing budget as the software development team will be in control of creating the Gentlemen’s University. There are five subsets in this category detailed as the software manager, software developers, software operations, use of software testers and buying the cloud server.

b. Marcom Budget Items The items in the marcom budget were broken down into subcategories. • Traditional advertising: This is a new avenue for Bonobos to use, although print media has lost value it still fits the target demographic of Bonobos’ segments. The print media channels used are GQ magazine for men, Men’s Health magazine, and Sports Illustrated.

• Internet/web based: There is only one primary avenue being used for internet/web based material. Forbes.com seemed to fit the demographic best so it is being used for online exposure.

• Outdoor: Billboards as well as transit advertising will be used for outdoor exposure. Considering this is an initial launch of the new products and is a new way for exposure, the outdoor marketing efforts will be just for east coast and west coasts cities to minimize costs. The two cities used as New York City, New York and Los Angeles, California.

• Ambient: Ambient or better known as “Buzz” or “Gorilla” marketing increases word a mouth by the public and provides a fairly inexpensive way to market while has deep stain power in the industry. The planned ambient marketing events consist of the flash mob, two giant mannequins (NYC & LA), and the Gentlemen’s University 101 launch. All of the Gentlemen’s University products/services will be aligned with the marketing key events and milestones. With any discrepancy or the items being exploited could take value from the target consumers. Furthermore in the marketing budget a 10% contingency was developed to anticipate any fluctuations in the expenses.

2. Tracking and Monitoring To ensure that the plan is implemented efficiently there must be variables and metrics established to measure the progress over the three year time period. This reporting will reveal the positives and negatives of the plan in relevance to the actual income and expenses. Without the objectives and metrics in place Bonobos would be left out to fail in the industry. Considering that the breakeven point was about just before the 6th quarter, Bonobos can’t afford anything in the plan to not match up prior to seeing profits. The plan is in sync with the reliance on accuracy through the forecasting methods.

a. ID Variables to be tracked The variables that need to be tracked follow the fluctuation of expenses. In the case that expenses increase or decrease it directly affects the overall outcome of the plan. When an expenses is higher than anticipated it must be reports to ensure the accuracy of the plan.

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Aside from the actual hard numbers such as marketing budget, marketing communication budget, and the capital budget the intangible must be tracked as well. The intangibles are many of the objectives from the marketing strategy. Components such as brand loyalty, word of mouth, publicity, and increasing the exposure of Bonobos in the marketplace. b. Metrics The financial data will be compared and contrasted from the pro forma spreadsheets created to forecast projected numbers. The spreadsheets are in 12 quarter increments therefore creating it to be analyzed over the whole 3 year timeline. The activities will be looked at pre-launch as well as post-launch. A key indicator of the accuracy of the plan would be the breakeven point just shy of the 6th quarter. Intangible variables will be measure through the current social media channels as well as any publicity in the media. As stated before Facebook and Twitter followers provide a metric to assess share of the market and also Bonobos’ increasing exposure. The more attention Bonobos is receiving shows how effective the marketing communications plan has been. c. Reporting To make sure that every aspect of the plan is effectively managed there must be reporting to monitor and revise any aspects during the implementation. The employees at Bonobos must be supportive of the plan in order to analyze each aspect and report back to website maintenance as well as the managers there at Bonobos. In order to standardize the reporting process all employees must follow the same format. The format to follow is shown in Figure 8.8

Figure 8.8: Reporting Metric

Bonobos managers

Website maintenance

Customer service Markeng staff Sales staff ninjas Finance Staff

The figure above represents the bottom up formation of reporting. The bottom level shows employee categories directly creating or interacting with customers. Functionality issues will be reported to the website maintenance staff as well as Bonobos mangers to know what issues need to be addressed. The purpose of this reporting is to further critique and revise the plan if need be.

C. Organizational Requirements The purpose of the organizational requirements section is to summarize the objectives for the purposed plan, the people needed to fulfill the plan, space and information requirements, the systems, equipment, and software needed to fulfill the purposed plan. Establishing an in-depth, well thought out plan will allow Bonobos for a smooth transition into the new technologies and services presented within this marketing plan. 82

The model used for analysis is the market leadership model adapted from Dr. Robert Harmon. The model consists of ten market leadership factors including; basic approach, competitive advantage, targeted segments, customer focus, integrated marketing, use of information, integration, brand strategy and promotion strategy and assigns each a level between 1-5 consisting of naïve, informal, linked, aligned and fully integrated planning respectively. This model allows for an analysis of each of the ten factors and a plan as to how Bonobos can reach level five in each of the ten areas.

1. Objectives The objectives for Bonobos are as follow: 1. Maintain the high level of organizational culture of Bonobos with the integration of new people, services and process to the organization. 2. Ensure successful growth of Bonobos through hiring and training of the Gentlemen’s University processes. 3. Increase the level of customer focus of Bonobos, especially with the new services established through customization available with the Gentlemen’s University. Please refer to Table 8.9 on the following page. Table 8.9 -: Market Leadership Model Market Leadership Factor Current State Recommendation

Basic Approach Bonobos currently only reacts to Disrupt the traditional way men purchase market changes after they occur clothing online, forcing competitors to react to (Level 1) Bonobos’s strategy (Level 5)

Market and Competitive Through the use of social media Bonobos should establish a system to Analysis sites such as Facebook, Twitter synthesize key market and competitive data and blogs Bonobos assess its (Level 4) current position within the market

(Level 2)

Segmentation, Targeting, Bonobos currently identifies its Through the Gentlemen’s University Bonobos and Positioning key customer segments and has will have a better understanding of its customer programs such as online base. behavioral targeting to market towards those who have (Level 5) previously used or visited the Bonobos website. (Level 3)

Customer Focus Customer value creation is the The Gentlemen’s University will allow primary goal of Bonobos. Bonobos to build customer relationships and Bonobos focuses on its customers involve them in value creation. (Level 5) through the Bonobos Ninjas and quick social media responses to customer inquiries and comments.

(Level 4)

Integrated Marketing Bonobos recognizes marketing is Bonobos business culture brings strong more than simply communication transparency through the firm with the need to

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with its customers but more a result in a fully integrated marketing and sales direct interaction. (Level 2) mixture. (Level 5)

Use of Information in Bonobos currently uses social Bonobos must make a connection regarding the Decision Making media channels as a marketing knowledge strategy in regards to the current information system to receive platform for marketing information systems. feedback concerning Bonobos’s (Level5) target consumers. (Level 3)

Integration with Other Marketing plan linked with other ValueClick has already been in place through Areas functional and corporate Bonobos although integrated into more strategies. (Level 3) mediums will increase the traffic to the Gentlemen’s University Services (Level5)

Branding Strategy Bonobos currently relies on its Creating the Gentlemen’s University provides branding strategy as a key part of more established brand recognition for users to its overall strategy. (Level 3) relate to.

(Level 5)

Promotional Strategy Bonobos currently uses multiple The creation of the Gentlemen’s University methods of promotion to address will integrate sales, advertising, and PR and marketing objectives. (Level 3) internet promotions for Bonobos. (Level 5)

Organizational Culture Bonobos portrays their core Currently following the organizational culture values directly through the while incorporating more interaction with its products sold as well as its consumers will only strengthen its website. (Level 5) organizational culture. (Level 5)

Harmon, Robert R. (2010), “Implementation,” Marketing Strategy.

Table 8.9. Displays the current organizational state of Bonobos and the recommendations needed to move the company to a fully-integrated organization. Each of the ten variables on the left was reviewed and the current state of Bonobos was discussed. Recommendations as to how Bonobos needs to change to become a fully-integrated organization are listed to the right.

2. Organizational Plan-“Level 5” considerations a. People/ Headcount In order to fulfill the established plan for the Gentlemen’s University more people will need to be hired by Bonobos. Due to the fact the creation and maintenance of the Gentlemen’s University will require a large amount of work and technological expertise, the 38 current employees of Bonobos will not be enough. For the development of the new software Bonobos will need to hire a development team consisting of one software development manager to oversee the team and manage software projects. The rest of the team will consist of three software developers in charge or writing the software, one software operations specialists to oversee implementation of the software and ensure its compatibility and finally two software testers to ensure the software runs as intended. To operate the Gentlemen’s University, 130 gentlemen professors will need to be hired to answer user questions and otherwise assist users of the Gentlemen’s University.

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B. Infrastructure To support the plans of the Gentlemen’s University information, systems, equipment and software will need to be put in place. The current space Bonobos encompasses in New York and California will be used for the Gentlemen’s University, so no new space will need to be acquired. Support of the Gentlemen's University will require a server system including an attached database. Rather than purchasing an onsite server and required support assets, Bonobos will hire a hosting company to maintain and support the Gentlemen's University server and database. The hosting company will utilize a hybrid cloud server in which combines the benefits of a managed and cloud server. Key components of the setup, such as the database, are run on the managed server while other lesser server functions are run using cloud technologies. This will allow for more cost effective and quicker expansion of the server as our user base grows. ("Hybrid Hosting Solutions", 2011) Each gentlemen professor will be issued a laptop computer to allow them to connect to the Gentlemen's University and communicate with customers.

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9. Plan Conclusions:

It’s safe to say that Bonobos had established points of interest in the market while becoming extremely in-tune through their social media channels such as Facebook, Twitter, and the Bonobos blog. Although competing in the e- commerce business on top of the clothing industry creates many obstacles and barriers to succeed in the highly competitive environment. Through extensive research of the industry and furthermore the particular segment of business menswear, it’s been concluded there is a direct opportunity to create a strong competitive advantage for Bonobos. Using the “Gentlemen’s University” Bonobos is disrupting the traditional way men go about shopping. Developing this reliance relationship between business and consumer will renew how value is portrayed in the perspective of the end user. The marketing strategy plan has direct target segments while providing metric based objectives in the overall efforts of increasing the Bonobos brand, provide extensive value to the market, while receiving financial rewards to all stakeholders.

In depth analysis of the market has revealed where Bonobos stands in comparison to its direct and indirect competitors. Although business among these companies is slightly different, they all compete for the same consumers. Using the consumer value driver analysis it’s proved that the “Gentlemen’s University” will satisfy what Bonobos’ target audience is seeking. Much emphasis was put into this section of the plan to verify that Bonobos is targeting the correct segments; furthermore the accuracy of the segmentation forecasting relied on this data.

The strategy used in the plan consists of first exploiting the brand in traditional fashions as well as gorilla marketing efforts summarized as ambient. The increase of Bonobos’ brand awareness was an essential component to the success of the plan. The products and services being implemented are in place for the target audience to receive value-added products. The direct interaction between the “Gentlemen’s University” and the end users will result in benefits, creating brand loyalty, or repeat purchases.

Through the research, we have found that the campaign plan will be able to reach our target segment the most efficiently. We will also be doing on-going promotions with some alternative advertising to help create earned media. Given the size of the plan, the future growth in the market, the Gentlemen’s University will not only bring in much needed funds into Bonobos, but will help differentiate Bonobos enough to encourage future growth in market share past the 3-year mark.

Bonobos with the given target segments has reported a total market potential of approximately 101 billion dollars. Through implementation of the plan, the breakeven point will be just after the 5th quarter. Using the strategic product platform versions will increase future annual profits to Bonobos’ stakeholders. The Internal Rate of Return (IRR) for the plan will be 39.174% along with the Return on Investment (ROI) is approximately 176.5%. The ROI represents how profitable this will be to investors.

Bonobos stands for reeducating the 21st century gentlemen, not only through the clothing suggestions in relation to current market trends; but also to further develop the lifestyle of Bonobos’ customers. This affordable out for men offers the stylish user friendly “Gentlemen’s University” to assist them on a day to day basis. The use of Bonobos’ current products such as wardrobe attire only creates more value to the end users.

The marketing plan provides all essential topics needed to evaluate the profitability of the investment. As previous stated in this plan we have concluded the return of investment of being approximately 176.5%. This is a great opportunity for both parties in the agreement to see profits post-5th quarter while impacting the general market in the industry. Aside from reaping large financial gains from the investment, it’s also an opportunity to be a part of redesigning how men purchase clothing in the 21st century. Using the “Gentlemen’s University” service/product platform along with the additional innovative products they sell, Bonobos is destined to be on the leader in the men’s fashion industry. Bonobos….Exclusive, Prestige, Confidence

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Appendix 1- Team Roster

TEAM ROSTER

Course: MKTG 464 Term: Fall 2011

Team Number 2 Topic: Bonobos – Mens Online Clothing

Full Name Voice E-Mail L1. Chris Sears 503-409-8451 [email protected] 2. Katie Hellman 503-317-3622 [email protected] 3. Ian Tiryaki 503-382-9658 [email protected] 4. Karl Kuchs 503-701-2284 [email protected] 5. Marcus Thompson 971-645-7668 [email protected] 6. Rachael Kelly 503-705-8284 [email protected]

Please indicate team leader by (L) designation before name.

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Appendix 2- Market Plan Proposal Template

Project Proposal Template State the Business Case Team Number 2 Instructions: Use this form to submit your marketing plan proposal. Fill in the expandable boxes on the right. You should expect the final document to be 3-5 pages in length. Document your work with reference citations. ● Project title: Bonobos ● Describe the business opportunity. Bonobos is reinventing the way men look in their clothing as st ● Describe the maximum well as bringing them into the 21 century by creating a custom opportunity (narrative) fit available strictly online. We are proposing a marketing ● What is the BIG Idea? strategy to embrace what Bonobos stands for and their goals CHRIS while continuing to keep path with the ever advancing World Wide Web and all of its functions. Since social media is the wave of the present and future we will be encompassing its capabilities into an old concept of a personal stylist. We will offer the services of a personal stylist using todays technology, through means of personal chat sessions, video, email, and a personally tailored user dashboard that will include articles of clothing that our stylist feel are just right for you.

-Creating a customized personal shopping experience for men. -Virtually styling, fitting and assisting customers online via email, chat, or webcam - Initial launch of personal shop: “One day in NYC and LA” -“One day” will provide opportunity to leverage foursquare check in, FB check in, etc.

Add On: QR codes Product placement with celebrities Ambient advertising in subway station/wall street/ major business areas

BIG IDEA: Include Bonobos values: provide excellence in fit and excellence in customer service, by supplying the customer with a personal stylist experience through online mediums of chat, email, personalized shopping dashboard, and even video. ● Market size and growth potential The company is in U.S. men’s clothing industry. However this industry particularly shaped as “U.S. men’s clothing retailer Ian industry”. However the big idea behind this start-up was to reshape the industry by taking the walls of actual retail shops and turning them into virtual retailers. Industry revenue for 2011 was $8.9 Billion with a stable revenue growth rate of 2.1%. (Reports, 2011)

Market Growth Potential of 2.4% Market Segmentation: Trousers 46.3% Shirts 33.1% Underwear 9.6% Coats 6.3%

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Suits 4.8% (Inc., 2007)

New virtual business model has a high chance of being accepted overseas, creating more space for company to grow overseas. (Australia was the first example) Growth of the firm in this industry has a sensitive relativity with the economy, evidently the profits flourishes when there is a low unemployment high disposable income. Therefore market value is expected to grow up until 2016. (Reports, 2011)

● Describe the potential segments to be Segment 1: 25-55 active male targeted. Segment 2: Trendy professional attire ■ Segments 1-3 Segment 3: business professional attire ■ Who is the customer in each case? Segment 1: General Rachael Segment one includes Bonobos’s general target market. Males aged 24-55 who lead active lifestyles. These customers appreciate Bonobos online store shopping capability and ability to order customized form fitting apparel

Segment 2: Trendy Professional Segment 2 will be a subset of Segment 1. Segment 2 will target customers who are looking for trendy professional attire. These men do not require a strict day-to-day dress code. Customers in this segment could be classified as school teachers, small business professionals, professors, freelance graphic designers, web developers, photography artists etc. These men have the ability to dress professionally while also incorporating their own personal style and desired trends into their wardrobe.

Segment 3: Formal Professional Segment 3 is a subset of Segment 1 as well. Segment 3 will target the original Bonobos market. These men lead formal professional lifestyles that require formal business attire. The customer in this case could be classified as a CEO, recent business graduate, attorneys, accountants, sales representatives etc. These men will be looking for fitted stylish suits and business attire for the office and the field.

● Describe the product or service High end Men’s clothing specializing in a better more advanced fit Katie -Providing a personal shopper service ● Describe the underlying technology Implementation of the marketing strategy will require the combination of several existing technologies. Central to the new Karl customizable shopping experience is an improved customer database which not only tracks order history and demographic information, but also tracks the customers browsing history and personal preferences. Software similar to that used in customized internet advertising will be used to scan the central database and suggest items a customer may be interested in. Live chat software will need to be integrated to allow fashion 94

assistants to not only communicate with the customer. Additionally the assistants will need real time access to the customer database in order to make their own suggestions about what the customer may like. A user control panel will allow the customer to modify the way they view the website as well as provide additional personal information to the central database. An online application will bring together these elements to allow the customer to learn about Bonobos' products, receive recommendation on products they may be interested in. communicate with fashion assistants and allow both the customer and fashion assistants to dress a virtual model so that the customer can preview potential outfits. QR codes will be implemented into all print material and clothing tags to allow easy access to the Bonobos website. Because of the large amount of data a QR code is able to contain, tracking information will be embedded into each unique advertisement QR code in order to allow greater insight to the effectiveness of each promotion. ● What is the product or service value Convenience of online shopping proposition? Personalized styling/support New shopping experience Chris QR code ● Business description: ■ Brief company profile -CEO: Andy Dunn ■ Is the firm a startup or an SBU? ■ If SBU, name the parent company. -Bonobos.com is an online retail store selling men’s clothing Marcus and accessories. Product categories range from shoes and pants, to suits and ties.

-Bonobos.com commonly relies on its clearance, discounts (via Twitter, Facebook, and Mailing Lists), and a large variety of trendy styles to generate revenue and new customers.

-Bonobos.com is a startup company located near Madison Square Park at 45 W. 25th St 5th Floor, New York City, NY, 10011

● Identify and describe the primary competitors in the industry that you are Direct: Ben Sherman, Brooks and Brothers, Express for Men, J targeting. Crew, and Men’s Warehouse. Marcus Indirect: Banana Republic, Gap, Jcpenny, Nordstrom. Note: All competitors provide a multi-channel retail strategy (Brink and Mortar, Online, and Telephone Orders).

● What is the significance of this project? ■ Why should you do this? The significance of this project is to create awareness for the ■ What is a likely outcome 3 years company. The social media presence of Bonobos on Facebook hence? and Twitter is medium with 50k+ likes and 23k+ followers Chris & Rachael respectively. And although that number is good, they still arent getting the brand awareness they want. Through our marketing strategy plan we believe Bonobos will be able to get the exposure they are wanting to their current target demographic and the future potential demographic. This new 95

plan will also take them into the next realm of the online clothing shopping experience giving users the comforts of home but with the service of being in a respectable mens boutique. We also believe that in 3 years the trend that Bonobos has pioneered will become the expectation for men looking for a custom fit and the custom shopping experience. ● References ■ Provide10 full-source citations ■ Use APA style

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Appendix 3- Market Research Plan

Marketing Research Plan

1. Issue Identification:

Technologies

• Personal Online Dashboard o Online Closet • Mobile App o Purchase on the go • QR Codes o Virtual/interactive advertising • Online Stylist o Video Chat o Chat rooms o Personal sidebar clothing/accessories suggestions

Marketing Segments

• West Coast, up and coming professionals, trying to keep with current trends • 20-25 demo. Fashionably challenged and/or dislike shopping • 35k-50k income/year, Teacher(esk), Business casual dresser, value quality and durability in their clothing

Competitors

• JCrew • GAP • Banana Republic • Brooks Brothers • Express for Men • Mens Warehouse • Trunk Club • BeSpeak

Industry Issues

• Change in fashion trends • What is the male perspective on fashion 97

• Increased raw material and manufacturing cost • Increase in e-commerce • Technology learning curve • Online security

2. References Sources. Identify and list the potential sources you will use for company, technology, market, and competitor research information (be specific). Although some resources will be available through internet and online library resources you should expect to visit physical library resources as well.

a. PSU Online Databases:

§ Business: Business Source Premier, Gartner, Investext, Lexis/Nexis, MediaMark, Mint Global, Mintel Reports, etc. There are many other databases in the business section. Give them a try. § Computer Science: IEEE XPlore, CiteSeer, ACM Digital Library § Engineering and Technology Management: Compendex, Conference Papers Index, Science.gov. § Health and Medicine: Look for specific databases under these key words

b. Source categories:

§ Publicly available company documents: financials, business plans, government filings, 10K reports, etc. § Government publications: Federal Reserve Bulletins, Statistical Abstracts, State, County and City publications, Department of Commerce reports, Census reports, etc. § Industry publications: Industry associations, such as CTIA, Multex Investor, CRM Magazine, The Wall Street Transcript, Zacks.com, Hoover’s, Trac.org, etc. § Academic journals and publications § Business periodicals and online resources: WSJ, Barron’s, Financial Times, Economist, Forbes, BusinessWeek, InfoWorld.com, CIO.com, etc. § Commercial Data: MINTEL, Nielsen, MRCA, IRI, SAMI/Burke, Gartner, Forrester, Simmons Market Research Bureau, Standard Rate & Data Service, Arbitron, D&B, Starch, McKinsey, Juniper Research, commnow.com, etc.

3. Reference List—Source Material. Develop your market plan references. a. Style manual. Use the APA style manual. b. Number of references. 40-50 sources (or more) for the entire plan. c. Class resources. You may include your book, and assigned articles in your reference list if you use specific content from them.

4. Literature review(s) and taxonomies of findings.

c. Research taxonomies. Create research taxonomy chart(s) to show the relationships among the key findings for (Hint—organize the charts on key issues, findings, strategies, timelines, etc.). d. Topics:

§ Market segments analysis—target market selection § Segment profiles and personas § Product/service technology assessment, FAB analysis 98

§ Competitor profiles, benchmarks, and analysis § SWOT, risk factors, and success factors. a. Readings on literature reviews and taxonomies. § Randolph, J.J. (2009), “A Guide to Writing the Dissertation Literature Review,” Practical Assessment, Research & Evaluation, 14(13), 1-13. § Mahajan, V., Muller, E., and Bass, F.M. (1990), “New Product Diffusion Models in Marketing: A Review and Direction for Research,” Journal of Marketing, 54 (January), 1-26. This is an excellent article with many taxonomy chart examples.

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Appendix 4- Customer Value Driver (CVD) Assessment

Customer-Value Driver Assessment

Bonobos Project Title Course Name: MKTG 464 Team Number: 2 Team Members: Chris Sears Katie Hellman Ian Tiryaki Carl Kuchs Marcus Thompson Rachael Kelly

Robert R. Harmon Copyright © 2010 All Rights Reserved For Course Use Only

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ANALYZING YOUR VALUE DRIVERS

STEP 1: SPECIFY MAJOR MARKET SEGMENTS

Key Segment Descriptors (You may expand the sections below as needed)

A. Define three major market segments (potential target markets) to be served. S1. West Coast, Male, Young and Upcoming Professionals, Likes to stay with current trends.

S2. USA, Male, Fashionably Challenged, Does not like to shop, 20-35 age group.

S3. USA, Male, $35k-$50k/year, Teacher(esk) profession, Business Casual dresser, value quality and durability in clothing.

B.1. Provide estimate of the TAM/SAM in dollars for each segment above (Cite sources). B.2. What criteria will you use to analyze the segments? TAM/SAM:

b.1 TAM Units SAM Units

Segment 1 120,492,399 27,208,052

Segment 2 120,492,399 31,646,267

Segment 3 120,492,399 357,440

Sources: http://www.census.gov/prod/cen2010/briefs/c2010br-03.pdf http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_10_1YR_B240 10&prodType=table

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b.1 TAM Dollars SAM Dollars

Segment 1 $ 47,313,191,999 $ 12,678,928,000

Segment 2 $ 47,313,191,999 $ 13,576,134,000

Segment 3 $ 47,313,191,999 $ 10,103,673 http://www.bls.gov/cex/2010/Standard/age.pdf http://www.bls.gov/cex/2010/Standard/income.pdf http://www.bls.gov/cex/2010/Standard/region.pdf b.2 Segment Analysis Criteria: ● Age ● Gender ● Income ● Region ● Expenditures

C. Describe the profile/persona of the primary customer for each segment. S1: Newly college graduate in his first professional job/career looking to make a statement and impact in his office so he can quickly move up the corporate ladder.

S2: Tech-savvy gentleman who spends many hours behind a computer coming up with the next coolest game/app/website who is looking to becoming more involved in the public social scene.

S3: A young teacher who want to dress nicely, but still keep it casual and affordable but not look like he is shopping at GoodWill.

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STEP 2: PRODUCT DEFINITION

Key Product Attributes FEATURES ● List and define the key features for each product ● Prioritize from most important to least important Your Product Reference Product(s) Bonobos JCrew ■ Online Personal Stylist ■ Brick and Morter locations - Visual Chat ■ Well made durable product - Chat Room ■ Online availability - Custom outfits ■ Mens and Womens products - Online

■ Customized Online Dashboard - Personalized look while shopping - ability to find clothing that works with product you are viewing. - ability to keep track of your P.O.’s to assist in future purchases - upload photos into dashboard

■ Mobile App - ability to shop anywhere

■ QR Codes on Advertisements - More info. on product displayed on ad. - ability to track customer demographic

ADVANTAGES Your Product Reference Product(s) JCrew

■ Online Personal Stylist F. Brand awareness st ■ 1 to Market G. Globally Known H. Brick and Mortor locations ■ QR Codes on Advertisements - Allows us to gather customer information - Help track ROI of advertising

■ Mobile App ■ Customized online dashboard ■ More personal than current “custom” dashboards in the market 103

BENEFITS Your Product Reference Product(s) JCrew 1. Online Personal Stylist 1. Plently of locations ■ Convience 2. Able to visit a store and try on clothes ■ Customization 3. Ease and quickness of returns or ■ Price included “Free” exchanges due to brick and morter 2. QR Codes on Advertisements locations ■ Convience ■ Ability to purchase exact advertised outfit ■ Perks “20% off advertised outfit” 3. Mobile App 4. Customized online dashboard ■ Personalized style ■ Ability to create a virtual closet

STEP 3: CUSTOMER VALUE DRIVER IDENTIFICATI ● Refer to Harmon and Laird (1997) and Lecture 2. ● List and describe the key Economic value drivers (value requirements) customers consider when evaluating the firm and its products/services. ● Do the same for the reference product(s). ● Highlight the top 2-3 Economic value drivers for your product and the reference product. a. Economic Value Your Product Reference Product(s) Bonobos.com Jcrew, Amazon, IGoogle

1. Personal Online Stylist: 1. The J.Crew Personal Shopper:

-Incurred costs are built into -Online Chat: All services are the pricing of products of Bonobos. “complimentary”, costs incurred to customer are included through pricing of products. -Website maintenance to Bonobos can range $1400-$1800 year -Telephone service: Service built into not including updates. pricing of products, “free to customer”.

-Premium account holders -In Store Personal Shopper: Delivered

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(enables online video chat) costs are built intro pricing of products free to subscription is $19.99 per month. customer. - http://www.webpagefx.com/How- http://www.jcrew.com/footie/personalshopper.jsp much-should-web-site-cost.html

2. Quick Response Code: 2. Quick Response Code: - Free to scan with mobile online -Free to customer for data packages (i.e Verizon 4g lte package). scanning with proper mobile data packages in place (Mobile internet). http://www.mobilemarketer.com/cms/opinion/colu mns/9094.html -No disposal costs.

http://www.fly4change.com/http :/www.fly4change/low-cost-high- impact-the-growing-potential-of-qr- codes/2485 3. iGoogle.com 3. Online Personal Dashboard (Virtual Closet) - Free with account registration (gmail.com). - The costs of maintaining and creating the function will be included - IGoogle is complementary service at no into the costs of products offered. charge. Advertising costs repay for the initial setup of website. - Ownership costs are free to users with account registration and - No environmental costs personal profiles. considering paperless technology.

- No termination fee of http://www.google.com/support/websearch/bin/an disposing of the service. swer.py?answer=20324

4. Amazon Mobile App 4. Mobile App - Was $9.99 now Free through mobile - Costs to Bonobos approximately markets (droid/apple store). The costs to $6,453 for creation. This cost will maintain application and/or creation is integrated marginally be added into the pricing of into the price of products through mobile app. products, therefore appearing “Free” to customers. - “Free” ownership with sign in, maintained by user. - Download costs is complimentary with all current mobile - No volume discounts acquiring the data packages (Droid/IPhone application. It’s one per mobile device/market. markets). - Disposal costs is the uninstallation from 105

- Space costs of ownership (12 device (no additional charge to do so). mb of data)

- No Disposal Costs. http://www.amazon.com/gp/feature.html?ie=UTF 8&docId=1000291661 -Paperless & intangible, no environmental costs. http://appmuse.com/appmusing/how- much-does-it-cost-to-develop-a- mobile-app/

CUSTOMER VALUE DRIVERS (CONT’D) b. Performance Value ● List and describe the key Performance value drivers (value requirements) customers consider when evaluating the firm and its products/services. ● Do the same for the reference product(s). VII. Highlight the top 2-3 Performance value drivers for your product and the reference product. Your Product Reference Product(s) 3. Personal Online Stylist 1. J.Crew Personal Shopper - Superior service and support - Superior service and support - Outperforms competition - Exclusive Sneak Peeks - Improves shopping experience - Convenience/ delivery by your by tailoring styles to individual shopper customers

2. QR Codes 2. J.Crew QR Codes - Outperforms competition - Find an offer that the business has - Adds efficiencies to marketing posted to their Place Page processes by communicating directly to - Promotions on the go customers with targeted messages and promotion(s). - Promotions on the go.

3. Online Personal Dashboard 3. There is no reference product, this would - Innovative solution be a first prototype in this industry. - Personally designed and organized to fit in your needs.

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- Visually appealing to operate with. - Creates a online persona that represents you to fit your design prospects. 4. Amazon Online App. (JCrew doesn’t 4. Mobile App have one) - Fashion and style on the go. - 1 Click order - QR Code effectiveness - Order tracking - Ability to connect customers - Promo Code Effectiveness with most exclusive offers 24/7.

CUSTOMER VALUE DRIVERS (CONT’D) c. Supplier Value ● List and describe the key Supplier value drivers (value requirements) customers consider when evaluating the firm and its products/services. ● Do the same for the reference product(s). VIII. Highlight the top 2-3 Supplier value drivers for your company and the reference competitor(s). Your Company Reference Competitor(s) Shared values with customers: Shared values with customers Bonobos will provide a personalized online J Crew: shopping experience, catering to the -In-Store locations which provide customer customer’s specific needs and wants, providing support and service information, styling assistance, and ease with -ability to see the clothing on before purchase future purchases. Loyalty to customer: -Return policies

-delivery by shopper 2. Loyalty to customer: -in store promotions/activities

New applications and systems provide further assistance/support to build customer loyalty. Innovative problem solver: -ability to try on clothes before purchase 3. Innovative problem solver: ** -Provide delivery options -in store promotions/support/service Bonobos will implement new systems and features to solve online shopping challenges and better serve the customers needs. These Ability to meet specific needs -Location: ability to serve and support customers systems will bridge the disconnect that face to face 107 shoppers experience when shopping online. Works to ensure customer success -instore support and service 4. Ability to meet specific needs:** -ability for customers to try on clothing Bonobos will tailor to individual customer needs with the implementation of new Mobile App competitors systems. Providing customer support and BeSpeak personal shopper assistance. TrunkShow personal shopper

6.works to ensure customer success:** Implementing systems to provide a personalized shopping experience. These systems will style, provide wardrobe suggestions, allow convenient purchase power for customer success. CUSS (CONT’D) d. Buyer’s Motivations & Goals

● List and describe ● Do the same for the key Buyer the reference Motivations & Goals product(s). value drivers. ● Highlight the top 2-3 Buyer Motivations & Goals value drivers for your product and the reference product.

Bonobos J.Crew

Improved self Yes, self-esteem will likely be Yes, Self-esteem will likely be esteem improved by the purchase of improved by the purchase of these clothes. these clothes.

Yes, consumers will know Allows consumer they are making the right No, consumers have no way to to make good decisions, because the online know if they are making the decisions stylist will guide them through correct decision. their purchase.

Yes, prestige will likely be Adds a level of gained. Yes, prestige may be gained. prestige to

108 consumer Yes, consumer will likely feel Maybe, the consumer may feel more confident because of the more confident but not as likely Improved assurance they will gain from as with Bonobos. confidence the online stylist.

Yes, the tools Bonobos No, there is no real way to provides will allow consumers provided by J.Crew to allow to solve their style problems. consumers to feel like they are Desire to be problem solvers. viewed as a problem solver

CUSTOMER VALUE DRICONT’D) e. The Buying Situation 7. List and define the elements of the Buying Situation that impact customers’ perceptions of the value provided by your firm and its major products and services and their willingness and ability to buy. 8. Do the same for the reference product (s). 9. Highlight the top 2-3 Situational value drivers for your product and the reference product(s). Your Product Reference Product(s) 1. Personal Online Stylist 1. So Stylist F. Access to detailed product ● Makes online shopping a social knowledge experience G. Reassurance that product ● Single location to purchase clothing will match their size and matching personal report personal style ● Increased product knowledge H. Able to ask specific 2. IGoogle.com questions about purchase ● Quickly access customized information I. Reduced time finding ● Feeling of personalization matching clothing 3. Amazon Mobile App

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2. QR Codes ● Research and purchase products 3. Quickly access products and anywhere promotions ● Ability to review purchases and 4. Less chance of not finding account information on the go product due to manually 3. J.Crew miss-entering product link ● Experience product first hand before 3. Online Personal Dashboard buying in retail store D. Customized layout creates ● Personal shopper available familiarity and ● Save shopping bag for future purchase personalization and review previous orders through E. Quick access to recently online site viewed and purchased items ● QR Codes to quickly access products F. Short initial sign-up process, and promotions full utilization requires profile setup 4. Mobile App. ● Ability to research and purchase products anywhere ● On the go tool to reference current wardrobe ● Requires smart phone

Create Your Company's Value Proposition

● Describe the unique value combinations of features, advantages, benefits, and price that are desired by your customers. ● Identify how the customer perceives the value of your offering vs. the value offered by key competitors. ● Considering your company’s products and services, and the preceding value driver discussion, develop a statement to describe your company’s customer value proposition. ● Value propositions consist of three primary elements: 1. Target market. Who are you trying to sell your product or service to? Identify the primary customer. 2. Reasons for the customer to buy. Value requirements, situational factors, how and where, and under what conditions the product is used. Why should they choose your solution? 3. Comparison with other products/services. Points of differentiation, how should the product be positioned? 110

Our Unique Value Key Competitor Value

● Online store JCrew ● Low overhead due to no Brick and ● Brick and mortar locations Mortar locations ● Tangible products before purchase ● Online personal stylist ● Online capability ● Very active presence and effective ● Larger Market Share in social media through discounts, ● Brand Recognition customer interaction, and contests ● Men’s and Women’s products ● Premium service gets you video available chat with a personal stylist Gilt ● Superb fitting pants ● Ongoing sales ● Multiple clothing vendors ● Very diverse selection ● Online capability

Our Value Proposition

Pants that help you create the lifestyle and the feel of confidence that the world is your oyster.

A better fit for a better you. Pants!

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Appendix 5- Segment Attractiveness Analysis

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INSTRUCTIONS 2. Read both articles by Kim & Mauborgne before proceeding with this analysis. 1. For the to support your target market choice. Document your sources. d. Bring your results into the paper draft and discuss the findings and implications fully c. segment candidates: criteria (segment attractiveness factors—SAF) that you will use to analyze the b. a. Segment contrast analysis contrast Segment overview detailed a provide and Identify Segment Analysis: market segmentation market 3. average is the most attractive segment by your criteria. average for the segment attractiveness inventory. The highest rate the segments with the objective of computing a weighted 2. summarized in the text. candidate segments by the SAF’s. This chart should be 1.

For the For the For the In an Excel workbook third spreadsheet third second spreadsheet spreadsheet first analysis set up, you should: --you should identify the segment attractiveness of your candidate segments. : —descriptive content that contrasts —SAF chart—SAF (display in segmentation section). —weight the and SAF’s then Label all onSAFs the chart. 113

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Appendix 6- Segment Profiles & Personas

Segment Definitions and Customer Profiles/Personas ● To develop your segment definitions first review Lecture 3 and Chapter 5 in the Roger Best text. ● Do your market research to create the segment profile based on the segment criteria from the lecture and text. Also look at the Marketing Plans from past classes to see how those teams handled these issues. ○ Search MINTEL marketing reports, Lexis/Nexis, Google, and Google Scholar as well as the business databases. ● Make sure that your segments do not overlap in terms of market space. They should be as orthogonal as possible. ● ● Consider developing a perceptual map to display the segment clusters on key attributes. ● ● Develop a table that details the defining characteristics for all three segments.

● Develop “personas” to characterize the average buyer/consumer in each segment. Review the “Personas” material in the “Class Notes” folder. Segment 1: The Westcoaster: Name Michael Background 23 Year-old newly college graduate. Works as his first professional job with a sales title. He makes approximately $35,000 a year. Single. He is environmentally friendly. Just moved in to his new apartment. He is ambitious with his career. He knows that he is capable of handing the responsibilities of better job titles within the corporate world. Context/Drivers Business district, coffee shops, bars, social cycle, any new technology, fashion magazine such as GQ Important Goals To climb up the corporate ladder rapidly, looking forward to create an impact on the new business associates. Pain Points/Needs Must look hip and business-like simultaneously. Dress to impress is his daily motto. His look should reflect his energy and enthusiasm about what he does. 117

Segment 2: Fashionably Challenged

Name George Background 26 year-old computer programmer. Makes over $70K a year, with high disposable income. Has a long-term girlfriend. Lives with his significant other. Not much of a social person but looking forward to make more friends and be more involved in the public social scene. He is not a mall kind of guy. His girlfriend makes majority of the shopping for him. Functionality in clothing is more important than fashion for him. Context/Drivers Online Forums, social media tools, any new technology, Important Goals To become more involved in the public social scene. He also looks for quick and painless online purchase to provide the outlook for the social scene. Pain Points/Needs He is eager to become more fashionable. Wants to get good value with his purchases.

Segment 3: The Educator Name Shawn Background 29 year-old History Teacher at Carroll High School in Dayton, OH. He is married. He has no kids. His annual income is approximately $38,000. He likes spending time with his wife and going on social events such as theater and movies regularly. He is price conscious about his purchases. He is a functional shopper, needs are important for him, not wants. Context/Drivers Books, social media, coffee shops, gym.

Important To look professional at the same time keep it causal while making Goals sure not to exceed the budget he can spend on clothing. Pain He wants to dress nicely, but still keep it casual and affordable but Points/Needs not look like he is shopping at Good Will. He looks for value and durability in clothing.

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The Buying Center Define the key participants in the buying process for each segment. ■ Initiators: The person that request the purchase. ■ Users: Those that will use the product and in most cases define the requirements. ■ Influencers: Individuals that influence the purchasing decision usually by defining the product technical specifications. ■ Deciders: People who make the decision on requirements and/or suppliers. ■ Buyers: Have the authority to select the product and supplier. ■ Approvers: Authorize deciders and buyers to act. Approvers are usually managers or executives. ■ Gatekeepers: Have the power to prevent information from getting to the right members of the buying center. Purchasing agents, receptionists, sales people, and administrators often act in this role.

Note: You may not be able to identify all the roles listed here. However, it is important that you identify the key individuals for the development of your segment personas. Typically personals are development for decision makers and/or users.

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Appendix 7- Market Forecasting & Sizing

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Total ConsumerPotential Total AveExpenditure/ Annually Access/Males Internet Access Internet Customers Male Targeted customers male qualified Income HouseholdsUS Ratio Chain Potential Segment Price Purchase Average Buyers Total Build-up Index $38,091,272,800

############# West CoasterWest $40,164,361 120,492,399

37,235,178 40,473,020 27,208,052 $1,400.00 92.00% 0.00% 100% USA $ $ Fashionably Challenged Fashionably #VALUE! $120,492,399.00 $63,292,534,000 West CoasterWest

27,231,282 31,646,267 $2,000.00 Fashionably Challenged Fashionably 92.00% 316.40 0.00% 22.6%

- $ $ $285,952,000 #VALUE! 31,689,501 Educators

$316.40 $800.00 357,440 92.00% 368.20 0.00% 26.3%

- $ $ #VALUE! Educators

349,428 $368.20 92.00% 0.00% 0.29%

4.06 123

- $101,669,758,800 Market Potential Market

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Time Period Time Assumptions Share Market for R-CO Mens clothing TAMASSESSMENT:Product Market Total Q Q Q t q r Q t t t t 9 8 7 6 5 4 3 2 1 Total potential sales as a fraction of all buyers all of fraction period a as Time sales sales potential potential Total of fraction constant) (a as potential "t") untapped of time at penetration of Rate Sales (ie. sales cumulative in Increment Annualchange dollars) in market in share [Change TAM in share USA as f(new entries Share(Total in market)] of market estimate (Y clothing on Spending Male USA Total Average Forecast HH Expenditureyear) -10.15)Clothingon Mens x (Price per (Potential Annual (Estimate) Growth Rate clothing in on Mens Shoppers Spending Expenditure on Clothing Male Average (% Price Clothing Current Change) Male Internet Total Potential-Units) TAM Industry Fashion USA Male in Rate Growth (Total Access/Males Internet Q 3 2 1 t Assumptions = rq(1-r) = Fourt & Woodlock Diffusion Fourt&Woodlock Equation Incremental Sales AnnualSAM Estimates t-1 ForecastModel 10.33% 14.76% 7.23% 0 initialshare for product) Cumulative Sales Cumulative 32.32% 25.09% 14.76%

Total Bonobos Total Shoppers

63,482 58,607 52,507 $ $ $ $ $ $

52,129,249,760 spe nding pe r r pe nding spe Baseline

37,235,178 customer Bonobos Bonobos Average Average 0.0010% 0.120% 10.00% 1,863 1,694 1,540 1,400 2.4% Y0 $ $ $ $ $ $ Total Customer Total 58,718,386,930 Spending($)

118,292,992

99,279,558 80,860,151 38,128,823 0.12100%

1,540 49% 30% Y1 $ $

66,140,391,038 Forecast R-CO Share Share R-CO

39,043,914 0.12200% Potential 0.1230% 0.1220% 0.1210% 1,694 Y2 $ $ $ $ $ $

74,500,536,465 R-CO Sales Sales R-CO Forecast

39,980,968 0.12300%

145,500 121,121

97,841 1,863

Y3 125

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Appendix 8- Competitive Factors Mapping

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Appendix 9- SWOT Analysis

SWOT Analysis:

Positives Negatives

Internal Strengths Weaknesses • Business aligned with mission and • Lack of industry exposure and traditional core competencies advertising

• Wide variety of styles and • Small competitive advantage products in general category • Number of employees • Established pricing model

• Innovative product technology, i.e. curved waist band External Opportunity Threats • Gain market share in niche • Intangibility of products markets • Ever-changing fads in the industry

• Large number of competitors • Disrupt the traditional way males shop or think of clothing • Government Regulation of E-commerce o Internet Privacy • Use of mobile technology for on o Internet Regulation the go purchasing • Increase of Oil prices o Increases shipping costs • Increase brand awareness indirectly

• Internet and Mobile o Carriers shutdown network o Go out of business

Strengths: Bonobos.com has come a long way for a start-up organization in one of the most competitive industries. With no brick and mortar locations fixed costs are minimized, although could be at the expense of exposure. Another internal strength is the Business culture at Bonobos; it fits the mission of the company while staying aligned with its core competencies. This strengthens the internal environment and atmosphere in the work place. With transparency in a business it enables the team to concentrate on more vital issues. The last strength is the degree of social networking that Bonobos is involved with. They use Facebook, Twitter, and a company blog to be responsive with their customers. Along with communication, Bonobos uses these channels for exposure, feedback, and promotions. Weaknesses: Many of the weaknesses exposed by Bonobos relate to the size of their business in the market. Considering the fashion/clothing industry is a fairly saturated market due to the large amount of players it leaves a small share of market for Bonobos to capture. This in turn relates to the amount of exposure or lack thereof, to the general public. Traditional advertising isn’t necessarily incorporated through Bonobos’ promotional strategies. Majority of promotional efforts are either social media (Facebook Twitter) or online sources. Opportunities: With Bonobos being a smaller company in the industry it has the opportunity to focus on niche markets some of the larger companies may bypass. These niche markets are discussed further in the Market 134

Analysis section on page ___. With direct targeting of these markets such as “Educators” or “College Students” it will put more emphasis about the importance of Bonobos products and services tailored to that particular group. This market penetration strategy will expose how “Cool & Hip” the brand is and result in word of mouth. Another opportunity Bonobos has is with positioning in the male clothing industry. The opportunity is to disrupt the image men portray of themselves concerning their attire. “A better look….for a better you” isn’t just a tagline. This needs to be placed in the minds of Bonobos consumers to reevaluate what that person wears in what situation. Last is the advancement of technology in the purchasing stage regarding mobile devices. The Bonobos mobile app allows for viewing of the full line of products. With the introduction of quick purchasing through the mobile app will automatically update the online dashboard for your virtual closet. With the incorporation of being able to scan a QR (Quick Response) code from an advertisement and then purchase it directly from the mobile device will shorten the purchasing time benefiting the customer with convenience. Threats: Many of the external challenges that Bonobos currently faces involves large competitors in the market. With Bonobos such a small share of business it could easily be bought out by larger companies. Many of these situations happen when a small competitor of a large company captures share of their customers. A large company may see a competitor as a threat so acquiring it seems profitable. Another threat to business at Bonobos is change in trends and fashion in the industry. The fashion apparel industry rapidly changes through the image from the public. The sector in professional casual could shift leaving Bonobos with unsellable products. This threat is intangible so best preparation is to stay as current as possible with market shifts through trends and fads. Current Situation: The situation that Bonobos is currently facing is the challenge of what to do next in the business. As stated earlier trends in the market are always changing and the product life cycle of clothing styles is shortened. The social media efforts by the Bonobos staff have resulted in a whole promotional strategy via Twitter including discounts and clearance sales. This increase of market presence needs to be transferred into brand loyalty, or repeat purchases. The next step in their business involves exposure and technology to ease the shopping experience to the tailored markets. Future Prospects: Prospects to be considered have been identified in segment forecasting section IV D. The potential markets outlined include international, college students, and homosexuals. Risks and benefits have been contrasted by each segment as costs and profits are associated. Another future prospect that Bonobos may want to consider would be collaboration. An internal business move to join with an alliance brand. This would increase exposure as well as increase capital. Although the big decision from the business perspective it creates more opportunities to capture market share.

Conclusion: The SWOT analysis provides an inside view of where Bonobos stands today. The single channel retailer has small market share in comparison to the lengthy list of competitors. With the implementation of the technology through mobile devices and the internet, Bonobos will become more of a threat to direct competitors. The main aspects of the SWOT that are most critical would be the lack of exposure of brand as well as the focus of niche markets. Exposure and positioning in the minds of the general public is significant to their success. People need to be informed about the benefits Bonobos products give, such as fit, style, and convenience. This message can be effectively communicated through current channels such as blog and social media. The incorporation of traditional advertising such as print and gorilla marketing will increase the word of mouth. Lastly the focus of niche markets such as “Educators” give an advantage to Bonobos. The needs of these small markets can be fulfilled though the custom tailored services Bonobos will have in place. For example the personal shopper can critique an outfit for any occasion, occupation, and situation. The incorporation of these products while focusing on the opportunities given Bonobos will gain market presence while increasing their bottom line.

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Appendix 10- Critical Factors: Risk and Success

CRITICAL RISK FACTORS AND RATIONALE Risk factors are critical uncertainties that will be faced by your company during the 3- year marketing plan period. These factors can derive from either internal or external sources. They are generally identified in the SWOT as internal weaknesses or external threats. You should develop an analysis that: 1. Identifies and defines the risk factor and its potential magnitude and impact. 2. Specify and document the key metrics for measuring the risk factor. 3. Develop a course of action to mitigate each critical risk. You may wish to self insure or develop other methodologies to deal with the risk. Provide your rationale. 4. Summarize your results in a table similar to the one below. a. Column 1: Identify and define the risk factor. b. Column 2: Specify how the risk is measured. c. Column 3: Briefly describe the mitigation approach. Critical Risk Factor Metric Mitigation Approach Ever-Changing fashion trends Loss of market share, decrease in sales, Training of designers set the market customer reviews, and social media trends, as well as using human channels (Facebook, Twitter, and Blog). resources to forecast industry. Increase of direct competitors Shrinking market share, loss of market Insurance by purchasing and coverage, and decrease of media integrating a patent therefore copy presence. writing the platforms used on a 7 year lease. Government Regulation of E- Internet privacy Using the current strategy commerce Internet regulation concerning privacy issues has not brought any more risk. Increase of Oil prices Increases shipping costs indirectly Analyzing logistics in the shipping Bonobos’ shipping and returns are free realm may forecast costs to build therefore increases their operating costs into product price. with oil fluctuation

Internet and Mobile Carriers shutdown network and Auto save feature, users can go back carriers go out of business to refresh current page.

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CRITICAL SUCCESS FACTORS AND RATIONALE Success factors are critical uncertainties that need to be identified and leveraged in order for the marketing plan to be successful. They can originate internally or externally and are usually identified in the Strengths and Opportunities sections of the SWOT. You should develop an analysis that: 5. Identifies and defines the success factor and its potential magnitude and impact. 6. Specify and document the key metrics for measuring the success factor’s impact. 7. Develop courses of action to leverage the success factors. Be specific about how to proceed, the importance to the plan, and expected outcomes. Provide your rationale. 8. Summarize your results in a table similar to the one below: a. Column 1: Identify and define the success factor. b. Column 2: Specify how the success factor is measured and at what point it is achieved. c. Column 3: Briefly describe the approach for leveraging the CSF. Critical Success Factor Metric Leverage Point and Approach Have 50,000 or more enganged Continue brand awareness, use followers of Twitter. Reach over 1 leverage to partner with more sales Increased Brand Awareness million “Likes” on Facebook . and distribution channels. Possibly retail in the future.

Be proportionately one of the top Using sales to standardize a Adds value to brand loyalty and three online male clothing retailers percentage of market share in brand recognition. Possible will in the U.S. comparison to indirect and direct result in national publicity/awards. competitors

Bring in more venture capitalist to Again sales can standardize the continue expansion process. Capital Having a proportionately substantial percentage of market share in increases likely hood of moving to market share internationally relevance to top competitors. emerging markets.

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Appendix 11- MOA Conclusions

In reviewing Bonobos as a company it has become clear that it possess many strong factors, though like any company Bonobos also has a few weak factors. The key strengths Bonobos posses include; catering to a niche market, unique and current business model, wide variety of styles and products, bettering fitting clothing, and exceptional customer service. Though Bonobos holds much key strength that set it apart from its competitors, it is important for Bonobos to be more recognizable to the target segment. The best way for Bonobos to get the public and potential customers excited and interested in the company would be to implement The Gentlemen’s University which includes; an online closet, a customizable mobile application integrated with QR code scanning, and Gentlemen Professors. Each of these technologies will work together and enhance Bonobos as a company. The online closet will enhance the competitive advantage of Bonobos and allow the company to gain a larger market share, by adding a differentiating and value added service. The customizable mobile application and QR codes will also improve Bonobos’ competitive advantage, as well as directly enhance the major weakness of lack of exposure and recognition. This will create a buzz and increase of exposure for the company, allowing more customers to find and purchase from Bonobos. QR codes within advertising will work directly to enhance the major weakness of lack of exposure and effective advertising. Installing QR codes within advertisements will allow for more effective advertising and will bring more attention, buzz and customers to the company. The Gentlemen Professors will work in conjunction with the online closet to increase the competitive advantage of the Bonobos and increase its market share. Clearly installing these new technologies into Bonobos’ current model will work to resolve the current weaknesses of the company and thus strengthen and create recognition of the Bonobos brand.

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Appendix 12- Plan Objectives- Dashboard & Scorecards

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Appendix 13- Ansoff Growth Matrix

Growth Matrix-Ansoff Chart

Considering the current market penetration managed by Bonobos Menswear, they are still down in the food chain and need to increase existing product market share in existing market before moving to a new market or coming up with new products lines. The growth matrix chart below explains its positioning in market strategy and its’ aim to accomplish its strategically aligned goals.

Bonobos currently lies within the Product/Service Development section. Considering that they are a new start up, it would be quite unlikely for them to be placed in different section. However following up with their growth rates and ambition marketing plans, we predict that the company will move to the other sections quickly to make its strategies more towards long-term.

Explaining the short-term growth, in just over three years we have grown from a team of two to a team of almost 40 and sold over 125,000 pairs of pants direct to our customers on www.bonobos.com. In 2010 alone, we launched our own line of dress shirts, casual shirts, suits, sweaters, golf wear, and much more. (Bonobos) While doing that they reduced the operating costs to a minimum while still being able to offer variety of styles and products in general category. Within the same segment of the market, they still hold some valuable growth opportunities, which the company is exploring currently. The Bonobos is a brand associated with new hip and cool look in the business environment. This is a first step to introduce young and ambitious men to a workplace. This itself gives Bonobos an edge in online customer profile, considering the amount of young professionals in the U.S as well as globally. Furthermore it is aimed to introduce mobile technology use to enhance the shopping experience for its’ customers. In order for the company to make more realistic long term marketing plans, they also need to know where they are at currently. Within the products being sold at Bonobos, the purchase weights are given below: (Chafkin) • Trousers – 46.3% • Shirts – 33.1% 141

• Underwear – 9.6% • Coats – 6.3% • Suits – 4.8% The company needs to look into expanding their market share in given segments before looking into more realistic long-term plans. The stage two of the segment “Market penetration” requires increasing existing product market share in existing markets at the risk of price deterioration and commoditization (Ansoff) A report from the London Business School identified six common factors associated with successful growth companies.(Churchill) If we were to apply these concepts to Bonobos the following is the alternative growth strategies Bonobos management should consider: 1. Innovation and flexibility in marketing, which the Bonobos has not invested much yet. 2. A focus on profit not sales, with good management systems controlling costs; with the recent financing received by the company, it will be a great time to regulate the costing structure. 3. Operating in a growing market, considering the menswear is a small portion of apparel industry and it is quite stable. Each time you move into a new quadrant (horizontally or vertically) you increase risk. Therefore the least risky transition is the market penetration strategy. You will stay in your current market and increase market share to control the market. Bonobos is on track of reaching the market penetration but in order to achieve that, marketing and advertising should be considered and improved. Having a market development plan indicates taking your offering to a new market. Bonobos has had an idea of becoming worldwide but it failed due to the current domestic investments to maintain market penetration. But in order to achieve market development strategy they need to expand their markets to overseas, most preferably Europe and/or Australia. Diversification is the most risky strategy but if it is worth it, the most profitable. In order for Bonobos to use this strategy, they need to look outside of menswear and may introduce a new line of apparel for workingwomen.

Resources: ● Ansoff, Igor (1957), “Strategies for Diversification,” Harvard Business Review, 113-124. http://foswiki.org/pub/Sandbox/SimiWiki/Strategies_for_diversification.pdf ● Churchill, N. C. and V. L. Lewis (1983), ‘Five Stages of Small Business Growth’, Harvard Business Review (May/June). ● Bonobos Menswear (2011), “Bonobos |About Us” (accessed October 26, 2011), [available at http://www.bonobos.com] ● Chafkin Max (2008), “Improving Your Sense of Site” (accessed November 3,2011) [available at http://http://www.inc.com/magazine/20081101/improving-your-sense-of-site.html]

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Appendix 14- Value Disciplines- Radar Chart

Value Discipline Consensus Score*

Knowledge 0.92 Time 0.84 Operational Excellence 0.3 Customer Intimacy 0.84 Innovation 0.89

*Non-compensatory score (score weights do not add to 1.0) *You may use compensatory method if you wish (factor weights add to 1.0) Instructions: 1. Consider the type of value that your company needs to create and deliver with your product or service. 2. Review the customer value driver requirements you developed in the MOA. 3. Categorize the CVDs by the five value disciplines to determine which disciplines match up best with which CVDs. Create summary table. 4. Subjective score each value discipline based on its importance to the customer and your ability to deliver. Weights may be compensatory (add up to 1.0) or non-compensatory (from 0 to 1.0) since both can be converted back and forth. 5. Create the Radar Chart 6. Explain your rationale for the above.

References: Treacy, M. and F. Weirsema (1993), "Customer Intimacy and Other Value Disciplines," Harvard Business Review, January-February, 84-93. http://www.priconsult.nl/mediapool/77/770108/data/TreacyWiersema.pdf Treacy, M. and F. Weirsema (1995), Discipline of Market Leaders , Addison-Wesley, 208 pages.

Robert R. Harmon © 2010

Value Discipline: Knowledge Weights Time Weights Operational ExcellenceWeights Customer Intimacy Weights Innovation Weights Problem solver 1.07 24/7 access 9 Customer Service 0.3 Dashboard 0.78 Mobile App 0.89 Reassurance that 0.77 On the go tools 7.8 Improve self- 0.9 product will match their esteem and size and personal style confidence Quick access to recent 8.4 purchases Average 0.92 8.40 0.3 0.84 0.89

Rational We catagorized each of the value drivers from our CVD into the 5 value discipline catagories, transferred our numbers from the Segment Attractiveness analysis for continuity, then took the weighted average from our 3 target segments.

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Appendix 15- Positioning Strategy

Positioning Strategy ● What elements of positioning are you promoting? ○ Benefit positioning ○ User positioning

● State how you are differentiating your offering.

Benefit – We are differentiating by adding value to our “Personal Shopper.” More of our competitors are offering personal shoppers, but our differentiator is that our Gentlemen Professors answer more than your fashion questions, but your “Man” questions. Also, with the personalized dashboard, auto-closet updating, and mobile app. we can stand-out our service even more.

User – Through our customized dashboard we can offer our target segments the most streamlined and user-friendly online shopping experience. Bonobos will answer questions and offer advice on fashion and man-questions to improve the experience for online shopping for men, but also assist in creating the lifestyle they are striving for.

● State your value proposition for the target market.

Bonobos will help educate our target market into becoming gentlemen of the 21st Century by; having 24/7 access to personal stylists who can answer your questions on fashion and non-fashion, streamlining your online clothing shopping experience through social media tools and personalization on the Bonobos website.

● Discuss how you are positioned relative to customer requirements and differentiated from competitors.

Our customers are young professional males, who according to our research want an interactive, relatively quick, and educational. Bonobos, with the new plan we are suggesting, will position us parallel with our customer requirements. Our custom dashboard and closet will allow for a more interactive and quicker shopping online experience, while having our Gentlemen Professors give tips, suggestions, and advice to handle the thirst for knowledge our customers require. With our more custom online experience it will differentiate us from our competitors who are doing a more general personal online shopper.

● Develop a narrative rationale for your positioning strategy.

Bonobos customers demand a great fitting and hand-made pant. but its more than that. Through research, we have found that male shoppers necessarily don't like to 144

shop, but that they don't like the traditional shopping experience. They are goal and focus driven, but struggle with knowing what to buy and wear. Some of our current competitors (JCrew an Trunk Club) offer simple versions of a personal shopper. JCrew personal shoppers can assist you in-store or online, but its very general along with their generic cut clothing. Trunk Club takes what types of clothing you like and creates a “trunk” of outfits to ship to you, and then you must try them on and decide on your own if you want to keep certain/all items, then ship the rest back to then be charged for what you kept. With Bonobos, we will be offering the personal shopper experience, but also educate our customers so they can make decisions on their own too. The saying give a man a fish, fed him for a day, teach a man to fish, feed him for life. We are teaching our customers to “fish.” With our custom dashboard featuring your online closet you can mix and match current and future clothing options. Also, our Gentlemen Professors can suggest options for you too. Bonobos will go beyond clothing though, we find that our male customers don't just strive to look great but want to live a certain lifestyle, so our Professors will also give life advice. From learning how to make the perfect martini to how much to tip a valet. With these additional services, it will be value added to the customer, which we know that customers are willing to pa for products if the perceived value is present. These value added services will help differentiate Bonobos from our competitors.

Resources: ● Chapter 7 in the Roger Best text book. ● Lecture 3 and 5. ● Reis, A. and J. Trout (2000), Positioning: The Battle for Your Mind, McGraw-Hill, 213 pages. http://www.amazon.com/Positioning-Battle-Your-Al- Ries/dp/0071373586/ref=sr_1_fkmr0_1?ie=UTF8&qid=1285166683&sr=8-1-fkmr0

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Appendix 16- Brand Strategy & Brand Story

BRANDING STRATEGY Brand Strategy Development

1. Develop Your Branding/Brand Management Strategy:

• What criteria will you follow to ensure effective branding? a. To ensure effective branding, we must analyze the current branding strategy and how it aligns with in the mission and vision of the company. Furthermore with introducing the products such as the personal shopper, virtual closet, mobile app, and quick response codes; we must adapt the strategy according to fit the mission.

• What is the brand identity?

a. Bonobos’ values a particular lifestyle choice which is represented by the stakeholders of the business. Not only the customers that purchase the clothing but the employees that work and sell the products. The lifestyle is considered fast- pace incorporating the balance of work and play.

Representing yourself through clothing and fashion enables a comfortable setting which may be in stressful environments.

b. The core value of Bonobos?

Bonobos core values consist through the professional realm of business. With working full time Bonobos hopes that their consumers feel confident wearing the clothing that was proposed. Other core values are more social, the portrayed Bonobos customer is intelligent, witty, and inclined to converse.

c. What does Bonobos stand for?

Bonobos stands for the “gentleman”, considering the way men are portrayed in media channels such as “Two and half men” Bonobos intends to reposition how men are looked at. In these days in age the typical gentlemen is hard to find if exists.

d. How does Bonobos want to be perceived?

Bonobos wants to be perceived in a combination of professional and fun. The balance of work and play is the perfect lifestyle that is portrayed. Furthermore customers should want to wear bonobos to be profiled for this lifestyle.

• What is the brand’s “personality?” a. Definition: traits that is involved and associated with the brand. For example Axe body spray is “Masculine, Seductive, individuality”.

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“Exclusive, Prestige, Confidence”

• What is your brand story? See next page.

5 brands stories attached.

• State how the brand’s position helps to achieve your desired market position.

With the given brands position, it will be easier to get to the desired market position. Bonobos being a business casual clothing company enables them to be in a particular place in market. Many of the competitors clothing seems to be purchased as a requirement of attire, instead of a judgment call by users.

• How will you build brand equity? Consider brand assets and liabilities.

Brand equity will be built through example and word of mouth. With the clothing being exploited through the media channels in place as well as traditional advertising will increase traffic. Through the blog and added value products consumers are more inclined to be loyal to the brand, repeat purchases.

• How will you leverage the brand?

The brand is leveraged due to the exclusivity. Some products that are offered will be limited edition, or limited supply. This strategy will drive demand in an aggressive fashion. Consumers want to buy and use the products before they are all gone.

• How will you implement the branding strategy?

The branding strategy will be implemented through the launch of advertising. Mainly the positioning of the products including the gentlemen’s professor (Personal Stylists). This implementation stage of the branding strategy is vital to the success of the marketing plan.

• How will you manage the brand over the period of the marketing plan?

Metrics are in place to measure how effective the branding strategy is. The metric that can be used is the blog, customer reviews as well as random surveys. If there is a negative in the responses Bonobos must critique there strategy to how the customer wants.

2. Develop a narrative rationale for your branding strategy.

Resources: 1. Chapter 7 in the Roger Best text book. 2. Lectures 3 and 5. 3. Aaker, David A. (1996), Building Strong Brands, New York: The Free Press, 380 pages. 4. Adamson, A. (2006), Brand Simple: How the Best Brands Keep it Simple and Succeed, Palgrave- MacMillan, 230 pages. 147

CREATE YOUR BRAND STORY

The Power of Story Successful brands help customers create stories full of value and promise. A soft drink manufacturer’s ads might inspire consumers to create brand stories about refreshment—thirst quenching, coolness, and good tasting. BMW might inspire stories about the “Ultimate Driving Machine” powerfully winding up the coast highway on a long weekend. Driving a BMW might enable the driver to feel “cool and sexy.” What is your brand story? Elements of a Brand Story (Coca Cola Example) Brands grow more powerful when consumers characterize them through qualities that evoke a higher order of thought. Such a notion is embodied in Coke’s “worldly” or “universal” characterization. On the other hand, the character of the brand is closely related to the benefits we directly derive from it such as quenching our thirst or refreshing us. The brand’s character, in effect, senses our needs. It can have duality such as “relax alone” or “energize with friends.” The power of the brand is the promise of satisfaction. Events are another element of the brand story. They constitute the moments the customer associates with the use of the brand (and the value created at that time) e.g. “Coke is a great ‘wake-me-up’ for breakfast.” Finally, all brand stories have a controlling idea or central theme. It communicates the value of the brand and the reasons for that value. The controlling idea behind Coke is that it “transforms.” It replenishes energy when the consumer needs it, re-hydrates the consumer when thirsty, calms them when they feel tense, makes them more comfortable with others, and can give them a sense of escape when they want it. These transformations emanate from the consumer’s changing desires and the ability of the product’s attributes to meet them. Directions 1. Individual exercise a. The first stage of creating the team’s brand story requires each team member to independently develop a one-page brand story about your company and product from the perspective of a new customer. Cover the complete experience they have with your company from initial evaluation, product purchase, product-use, and customer service. Be sure to include tangible issues and intangibles (emotions, feelings, and perceptions) in your story. Be sure to consider the relevant customer value drivers in the story. Look at your value proposition through the eyes of the customer. What would your customer say to his/her best friend about you?

Done

b. After all team members have completed the individual exercise the team leader will collect the output from each person. Please ensure that each document identifies its author. These documents will eventually be filed in the individual team members folder on the final Knowledge CD.

Done

c. The team leader should notify Dr. Harmon that the team is ready for the group exercise. Done 2. Group exercise a. Each team will be provided with instructions for the group exercise once the individual exercise is complete.

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Done

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Chris Sears Bonobos Brand Story: The re-education of the 21st Century Gentleman Bonobos, a men’s clothing company known for it’s handmade, high quality, well-fitting pants, but they are more than that. Yes you can look great in those pants, your rear-end not being curtailed by some saggy bottomed standard pant, but you can also become the 21st Century Gentleman. The 21st Century Gentleman is bringing back the golden days of when men, real men knew how to do things, treat a lady, and especially dress exceptionally well. So well that women will want you and men will want to be you. Children will aspire to dress like you and want to follow in your footsteps, footsteps made by fashionable shoes that were recommended to you by our Gentlemen Professor services. Being a 21st Century Man doesn’t just happen; one must educate themselves in the finer things in life. With your newly acquired professor via registering on Bonobos.com, you will be exposed to knowledge that every fine gentleman should be privy too. Think James Bond, but without having to dodge henchmen and carry a pistol, unless of course that’s your thing. Your Gentleman Professor will educate you on the finer things in life, but also in other manly skills. Need to know how to tie a bowline knot? Perhaps your lady friend likes a man who can make the perfect martini. Or maybe you just want to know what blazer goes with what shirt so you can look your best when you hit the town with your fellas. Whatever your query, your Gentleman Professor can help you answer it. Your professor isn’t just some Q&A man, but he is your confidant. As you ask questions and shop online you’ll be building your own persona on Bonobos and thus creating a relationship with your professor. He will suggest clothes that you might like, or outfits from current clothing you own. All of this will take place in your personal online Bonobos dashboard. You’ll have a place to virtually hang your clothes, save outfits that you really enjoy, and clothing that you’ll want to purchase either right away or at a later date. Need some advice on an outfit you currently are wearing, start a video chat with an available professor, or if he is out of the office you can leave him a video voice mail or a text, and he will answer your questions as soon as possible. Perhaps you’re on the go, well there is an app for that. With Bonobos’ mobile app you can access your dashboard at your fingertips from your Smartphone. In your condensed version of your dashboard, you can view your closet for saved outfits, shop for new clothing, or even start a text chat with your professor. You can send him pictures of a shirt you’re thinking of buying at a local store. He will let you know what goes with it and what doesn’t, even if it’s not Bonobos. We are here to make you into the gentleman you deserve to be. The re-education of the 21st Century Gentleman: guiding you to creating that distinguished and respected lifestyle you so deserve.

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My name is Andrew Howard, and I am a new customer to Bonobos. I found out about the company through a FaceBook ad that appeared while I was finding lost loves from college on FaceBook. Upon clicking the ad, it was great I got a 20% off coupon code for my first purchase to Bonobos! The website it aesthetically pleasing and there isn’t too much below the fold, which I enjoy. The slider effect for the main section of the site makes it nice and clean to see what’s offered. The first slide was offering me to register to become re-educated. Being a young professional I am looking to make my mark in my industry of Advertising, so along with excelling in my profession I plan to look good doing it. I picture myself hanging with my professional buddies after work have a few cocktails and enjoying life and my bank account. I register to begin my re-education of the 21st Century Gentleman. I fill out a short survey on some of my physical attributes, favorite color, current brands I enjoy, and some activities I like to do, overall pretty easy and harmless. This is great! The site led me to a quick tutorial on what a Gentleman Professor is and has to offer. Pretty simple, sounds like I don’t have to do too much work on figuring out what to wear or purchase. Hey, look at that! A little chat boxed popped up and George Marlin has introduced himself to me as my new Gentleman Professor. That’s exciting! He is helping me guide through the site after a few questions of what I would like to do here, I told him I just needed a casual going out outfit that I can also wear to my professional business office. Just like that he brought me to an outfit, a nice casual grey blazer, some good looking chinos and a comfortable looking button-up long sleeve shirt. I definitely wouldn’t have been able to put all those together on my own. George said the grey blazer is hip right now, so it’s definitely a must have for an up and comer like myself. With one click, I am able to purchase it after I enter in my financials. Super easy! George then leads me to my virtual closet. Hey, look at that, the close I just purchased are in there. What’s great it I can upload some clothes I already own by just taking a picture with my phone or webcam. From there I can click and drag to create outfits on my own, or George said he can see what’s in my closet and suggest things. There is even a star rating for my outfits and individual items, so George knows what I prefer and don’t. Just think that like 5 minutes ago I was just logging into the page. Well I should receive my clothes here in a few days, free shipping of course. Well my clothes arrived, and I must say I look dapper. I have a hot date tonight and am thinking of wearing my newly acquired outfit to it. She is coming over for cocktails prior. She told me she enjoys lemon drops. What’s a lemon drop? I remember through the tutorial on Bonobos, that I can ask them ANY man-question. Earlier that day I downloaded their app, these days who doesn’t have an app, right? I whip out my phone and ask the question on the app. Hey look, George is back! Quickly he gives me the recipe for a great lemon drop. I am on it like white on rice. I might make a couple practice ones for myself before she gets here, if you know what I mean. The date went well and without a hitch, she actually just left my loft. Time to get ready for work, not sure what to wear though. I know, I’ll ask George. Bonobos.com and there is George! We have a video chat going this time. He asked me about my date, and I told him I got great reviews on the outfit and that I closed the deal. I told him I need an outfit for work today and then some drinks with the fellas afterwards. Luckily yesterday I had uploaded my current wardrobe onto my online closet. George takes a couple minutes and just like that, a swanky outfit. It’s cold today so he implemented a nice sweater for today. Thanks George. Quick shower, shave, and off to work I go.

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Rachael Kelly

Fall 2011

Bonobos Brand Story

From initial evaluation a new customer views Bonobos as a fashionable clothing solution for men. Bonobos originally made a name for itself among Wall Street Professionals, gaining leverage through their customized fitted pant technology. Since establishment, the brand has expanded into a full spectrum clothing company for men, providing fashionable outfits that range from fitted business suits, casual business wear, and trendy attire.

Bonobos is an online exclusive business and must provide customer support through the functionality of the website. From a new customer perspective, the website is navigational and user friendly. Bonobos products are presented and organized by item type to ease the shopping experience. The layout of the website: the clearly labeled tabs, photography, models, modern colors and design all contribute to the user experience. These aesthetics are visually pleasing and ease the shopping experience and assist customers to provide purchase success.

In the purchase situation, Bonobos customers seek support through online services. Bonobos extends their reach through the “Bonobos Ninjas”; the customer support team that provides answers to questions and product information. The Bonobos Ninjas serve as “in store assistants” because Bonobos customers do not have the option of going to a brick and mortar location and speak to actual assistants. Through these services Bonobos has focused to fulfill customer values and substitute face-to-face in store assistance that is not present within the online shopping experience.

A new customer will learn that Bonobos provides free shipping and returns and a “no questions asked return policy”. Upon arrival of Bonobos products, customers can try on items and feel the quality material. If they are not satisfied with their purchase, then they have the ability to send it back for an exchange or refund. By providing this customer service to the customer, Bonobos takes full liability for unsatisfied customers and takes a step foreword to find exactly what the customer is looking for.

Through the eyes of a customer: the value proposition lies in the Bonobos mission to provide excellence in both customs fitted pants and customer service. Bonobos customers receive quality products that are durable and provide customer confidence and satisfaction. Bonobos customer support is extremely important based on its online exclusive business model, which is why it offers the specified features and services above.

The Bonobos brand speaks to their confidence, style, fashion, attractive, fun, hip, and sleek attributes. Men who shop at Bonobos seek clothing that conveys their inner Bonobos male. The products provide confidence in outward appearance and tailor to an assortment of personalities and preferences. The brand provides products to men who know fashion are able to find the latest trends and those men who need style assistance and are looking to become more fashionable. Overall the brand speaks to men who appreciate quality, durability, and style. Men who shop at Bonobos receive value through products and will appreciate the convenience from the online shopping experience.

If a customer was to speak to a friend they would probably focus on the confidence that they feel from the Bonobos products and convenience gained from the online shopping experience. The customer would elaborate on their personal purchase experience, highlighting the quality of products, no hassle return policy and free shipping and return features. These features assume responsibility for any customer dissatisfaction and represents Bonobos’s customer loyalty. Overall the most valuable touch points for the customer to speak with their friend about would relate to products and customer service.

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Ian Enis Tiryaki MKTG 464 Harmon Bonobos Brand Story

“Unleash the Ape in You!”

Finishing college and looking for jobs are harder than it seems. Especially for young gentlemen who are trying to fit in the business world, fashion and first impression are one of the most important things for getting the job. For a young adult, Wall Street is a hard place to get used to, dresses and ties to look more professional… We have to add that how us –males- are like apes when it comes to shopping…We either let our significant other to do shopping or we choose the first thing that glimpses to our eyes. Isn’t it time to evolve in shopping as well?

In 2007, during their second year at the Stanford Graduate School of Business, roommates Brian Spaly and Andy Dunn used $60,000 in savings to manufacture their own line of men's pants. They had one idea in their mind – of course considering their own lifestyle– to help guys who absolutely do not like to shop to look great. When it was time to decide on the name, they look no further than their ancestors, actually closest ancestor of all human kind, Bonobos Apes.

They feature two things quite prominently: an iron-clad guarantee of satisfaction and a shot of the pants that makes the not-so-subtle promise “ Your butt will look good in dress pants.” Bonobos takes fashion for women, adjusts the way men like to do shopping and evolution of shopping and fashion creates one of a kind fashion solution for guys like us to do look good at work, at a social event, on the street, on a date, everywhere! It’s about time that women are jealous for your pants!

What makes Bonobos different any other online retailer is quite unique and hidden in their mission: “To provide excellence in both customs fitted pants and customer service.” Who wouldn’t want to have their whole wardrobe on the go? Isn’t about time that technology allows us to try dresses without actually putting them on? When your shopping experience starts at their interactive web page; you are not only buying great pant but you are receiving a great stylist helps, you are being “pimped out” by the fashion ninjas of Bonobos.

You would think that it’s hard to find Bonobos but you are mistaken. Bonobos is everywhere! Bonobos is on your cell phone, at your college party, Wall Street bathrooms, anywhere men needs help for fashion and their look. You do not need to go thousand miles to hear about Bonobos, either. The quality of their products are so high, the brand speaks for itself, but majority of the time customers do the talking by expressing their immense connection between their inner ape and Bonobos. Satisfaction comes from many directions at Bonobos; Ninjas, technology, quality, and sleekness gives everything a man is looking for in a shopping experience.

The Bonobos is not only a company where customers get the perfect fitting pants but it is also the place where they reach their inner potential of being a “fashionista”. The brand talks to your inner charismatic, tall and attractive “you”… Bonobos represents everyway you would ever wanted to look… The new era of shopping wants you to unleash the Bonobos Ape in you, are you down for it?

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Katie Hellman Fall 2011 Brand Story: Bonobos The Bonobos website would be the first point of contact for any new customer. They would be drawn in by the trendy, upbeat appearance of the site and assume the clothing matches that same theme. Customers would find the webpage easy to navigate and esthetically pleasing. Customers would quickly realize the subtle cues of humor throughout the site, which would lead them to understand the lighthearted, humors nature of Bonobos. The customizable online dashboard and online stylist would allow customers to learn how important they are to Bonobos, and would draw them to make a purchase. When making their first initial purchase, customers would find the site easy to purchase from and also would feel comfortable with the return polices and guarantees the company prides its self on. Making the decision to purchase from Bonobos would come easy, due to the quickly installed sense of trust and loyalty customers would find from Bonobos. They would realize how much importance Bonobos places on the customer’s success with its products. New customers would quickly learn the level pride and comfort Bonobos has in its products, that they would not even second the loyalty of the company to its customers. Once a new customer receives their first Bonobos purchase, they would be impressed with the superior quality and technology of the product. They would then understand why the brand has such a high level of confidence in its products, based on the superior quality. If anything happened to not work out with this purchase the customer would know they could return the product, hassle free through the Bonobos website. The customer would likely wear the Bonobos clothing often because of the high quality and superior fit of the clothing. A new customer of Bonobos would be shocked by all the many ways the company places its customer first. From the easy to navigate website, quick response time for any customer questions or concerns, 24/7 online dashboard, the mobile application and online stylist, customers would realize the great importance they hold within the Bonobos company. Customers would feel secure in the decision to purchase and repurchase from Bonobos because of the great quality and expertise of the Bonobos customer service. When thinking about the Bonobos brand words such as trendy, cool, customized, fashionable, stylish, quality, superior, upbeat, valuable, easy, timely, efficient, knowledgeable, loyal, trustworthy and exciting would come to mind. When thinking of Bonobos emotions such as; happiness, refreshment, excitement, tranquility, passion, infatuation, pleasure, comfort, acceptance, engagement, resolution and joy. If a customer was to talk to his or her friend, they would likely explain the exciting all online business model Bonobos has. They would explain how trendy and stylish the concept and products of the brand are. Customers would tell their friends how much they have learned about style and dressing through the online stylist Bonobos provides. They would inform their friends of the excellent no hassle return policy Bonobos has and about the easy purchase process of the brand. Customers would explain the wonderful fit of the product and the great quality of all the Bonobos products.

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Bonobos.com Marcus Thompson Brand Story: “The late night business professor”

Scrolling through the massive amounts of e-mail day by day, one particular link stuck out…Bonobos.com. It began on a winter cold night in the city limits of New York City where Jack Gripper may a found his answers to the extensive list of issues. With a man so busy such as Jack, working late nights through grading papers, meeting with faculty, and tutoring on the side, he has zero time for personal activities. Although his students give him respect, it cannot be said for his fellow faculty. Jack has always been the outcast through his teaching career but why? While the gym teachers are going on dates with the beautiful women of New York, Jack can only wish to put himself in their shoes. When Jack clicked the Bonobos website he thought “maybe there is hope”, not only was he intrigued with the presence of the outfits but the culture of the business. Unfortunately Jack doesn’t know how to create aligned outfits and is quite embarrassed about his inadequate skill to dress. While Jack was just about to finish up his last paper, and power down his pc he noticed a tab on Bonobos’ website titled “Personal Shopper”. Hesitant at first, he continued to explore what the “Personal Shopper” detailed and provided. Once Jack realized that this technology was in place for convenience and was free to the end user he was hooked. That next day when he had an hour between classes Jack signed up for the Personal Shopper. The online stylists provided Jack with the tips and details on how to set up his account/profile. Jack thought “wow this seems to simple, what’s the catch” the stylists informed Jack that a large percentage of the US males feel self-cautious about their attires. Furthermore this was in place to ease the shopping experience. Once Jack listed age, size, occupation, lifestyle activities, favorite colors, ect. The personal shopper recommended the following: 2 blue button ups with light weighted fit, 2 pairs of dark blue chinos, and 4 ties that would go according with all combinations of outfits. Below there was a small caption on the what the general public would profile his as. Jack accepted the purchases and the clothing was instantly uploaded to his “virtual closet & mobile app”. He was very surprised with the prompt service and excellent guiding of the Personal Shopper. On top of initial experience Jack noticed a mistake in his ordering process. Jack immediately called customer service at Bonobos to inform them they didn’t charge his for the shipping of his products. The customer service rep began to chuckle as she told Jack that all shipping to and from Bonobos is “Free”. Jack was even more surprised as he thanked the service agent for all the hospitality. Later that night Jack sent out the link to five close friends in his chess club to exploit how helpful Bonobos was to him.

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Appendix 17- Value Discipline-4P Transition Matrix

Operational Customer Knowledge Innovation Excellence Intimacy Time Product 8 3 7 8 7 Price 5 4 8 7 6 Distribution 6 7 8 7 5 Promotion 7 6 9 6 8

Weights 0.27 0.07 0.26 0.14 0.26

Operational Customer Knowledge Innovation Excellence Intimacy Time Wtd Avg** Product 2.16 0.21 1.82 1.12 1.82 7.13 Price 1.35 0.28 2.08 0.98 1.56 6.25 Distribution 1.62 0.49 2.08 0.98 1.30 6.47 Promotion 1.89 0.42 2.34 0.84 2.08 7.57

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Appendix 18- Product Platform Strategy

1. Products: a. Online stylist i. Passive elements ii. Video Chat iii. Gentlemans University b. Mobile Application i. Basic closet ii. Gentlemans University c. Online dashboard i. Online visual inventory of purchases ii. Database of previous video chats/ database advancements iii. Access to your personal lifestyle questions d. QR codes i. Through advertisements ii. Clothing tags for inventory purposes

3. Additional platform would be the video conferencing interface which would roll out at the end of year two.

Product/ Feature Year 1 Year 2 Year 3 Online Stylist Recommendations Use of webcam Gentlemans from Bonobos staff technology to University in place within the current communicate and for further questions wardrobe inventory video chat with regarding the gentleman “Lifestyle” professionals Mobile Basic on the go tool No significant Additional tab for Application to review previous change to mobile questions regarding purchases and application lifestyle and will be wardrobe inventory recommended from Gentlemans University database Online Dashboard Virtual closet Log of previous Questions/results enables personal interactions with comprised from inventory of “Gentleman Gentlemans Bonobos’ products Professional” University will be and recent purchases (Fashion recorded and logged recommendations) QR Codes Quick Response No significant No significant codes incorporated additions to QR additions to QR into advertisements codes integration codes integration and Bonobos clothing tags 157

4. CVD/FAB Analysis 1. Customer value and FAB. How does each product or service version meet the CVD and FAB requirements for each segment in year 2 and year 3? Develop a table that is appropriate to display this.

Product/Version Year 2 Year 3 Online Stylist Enhance online shopping Create brand experience by providing relationship/reliance personal assistance and between customers and innovative solutions bonobos staff through Gentlemen’s University Online Dashboard Ease of access to past Ability to refer to previous conversations with Gentleman University Gentlemen professors and questions reassures previous shopping current problems solving recommendations issues

Mobile Application Current mobile Ability to connect to application version previous Gentleman enables the “on the go University questions tool” to fit convenience in reassures current problems any setting solving issues “on the go” QR Codes Continuing to provide Implement new quick access to products unpredicted QR and features through technologies to provide advertising easy access to product information

5. Product/service portfolio. What other products or services are to be sold concurrently? -Include full clothing line: such as better fitting pants, tops, suits, shoes, etc. they offer third party brands through their website. Expanding better-fit technology for other clothing items. Seasonal limited designs. -Bonobos provides “Bonobos Ninjas” for customer support-free shipping, no hassle returns, lifetime guarantee -Social media marketing efforts such as their Facebook, Twitter, blog. Provide codes and discounts. Short-term promotional sales distributed to customers that are connected to their social networks -Community engagement with third party social applications to connect and expand customer base

Appendix 19- Sales & Distribution Strategy 158

SALES AND DISTRIBUTION STRATEGY

SALES & DISTRIBUTION PLAN: Bonobos has four main objectives for sales and distribution. The following objectives are designed to decrease distribution time and increase sales for Bonobos within the next three years.

1. Decrease search time on the web for the customer by introducing “Gentlemen’s University”. 2. Create an app to carry your Bonobos closet with you, on the go. 3. Provide promotional incentives through different channels (rather than Goggle Ads) that will increase sales by 10 percent. 4. Increase market share by market development with introducing the new way of shopping clothing.

The first objective is focused to enable customer to reduce the time spend on finding the right products. Bonobos wants to focus on customers’ convenience by providing the service called “Gentlemen’s University. The gentlemen’s University is a concept of enabling online shopping experience at its best. The online closets will hold onto everything the client purchases, make recommendations considering the previous purchase or similar customer preferences, and giving fashion tips personally via video chat. The main concept of this marketing campaign is to “teach men how to dress like a gentlemen.” The second objective of Bonobos is the extension of the first objective. In order for second objective to get in action, the first objective must be successful. Second objective can be explained as an effort to assist customers to a comprehensive shopping experience. Bonobos will not only sell clothing to men but also creating a style of being gentlemen even on the go.

The third objective is focused on increasing sales through promotional offers. Currently Bonobos is using major search engines to optimize customer search for men’s clothing and direct the customers to Bonobos website. As a web company, Bonobos should increase World-Wide-Web appearance in order to attract more customers and increase sales. Forth objective is an additional step to third objective. When the online appearance increases, the brand equity will increase eventually. With an additional advertising campaigns emphasizing on the innovative way of shopping at Bonobos, the company can increase its market share by reshaping the shopping experience for all.

SALES STRATEGY

Due to the small nature of operation of Bonobos, our sales team is not very complicated and big. Bonobos is based upon the internet-based sales and therefore it is vital to have technologically experienced sales staff for Bonobos operations. The strategy for this small sales team is to focus on the supplier chains and the interaction with online marketing section. The strategies for these two teams are to grow suppliers, which will ultimately lead to an increase in sales because of a larger product variety. In order to manage a small team and get the best results out of it, very experienced CMO and Vice President of Sales and Marketing shall be hired. Following chart shows the layout of the sales employees.

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The structure of the sales operations is aligned with the objectives given above. Furthermore the technological team needs to be put together to create the backbone of our marketing strategy, the online cloud operations. The chart below shows the hierarchy of the software team that will directly influence on sales.

CHANNEL STRATEGY a. Type of distribution

The distribution on Bonobos current strategy is primarily e-commerce. With no brick and mortar locations, magazines, nor telephone orders they rely sole on online sales. The introduction of the new products will alter the way Bonobos does business. E-commerce is still the main distribution type although mobile phones and devices are now integrated to the core of Bonobos’ interaction with their customers. 160

b. Channel levels

The strategy includes using direct sales, online marketing, direct marketing, as well as a mixture of some representatives for marketing efforts. Considering that Bonobos is B2C disintermediation is already happened. This is also because they are primarily in the e-commerce business. c. Channel efficiency

Efficiency is measured not just through the sales fluctuation. The following is Bonobos’ channel performance metric: • Volume, in the case of how many customers are being reached. Tracking can be acquired through Facebook, Twitter, downloads of the mobile app, members of the Gentleman’s Professor as well as hits on the website.

• Operating Efficiency, looking into more the cost of maintaining and introducing the channel in relevance to the benefits (tangible & intangible) Bonobos is receiving.

• Quality of service, this can be measured by looking at how many un-installation of the mobile app, users cancelling their account on the Gentlemans Professor. Another key way of measuring what consumer’s think of the service is looking at the social media posts as well as blogs and customer reviews.

d. Market coverage

Coverage of the market consists through exposure. One of the initial problems Bonobos faces is the need to exploit the brand and name. This will increasingly be over social media avenues such as Facebook and Twitter. Although the reach must go farther than social networks because some potential customers don’t use social media. Hopefully Bonobos can rely on publicity to expose the brand as well. Any articles and talk in the industry directly gets the name out to customers Bonobos may not been able to reached otherwise. e. Direct vs. indirect

Bonobos will be using a direct channel to expose services and products. The direct channels will consists of direct sales, online marketing, direct marketing, mobile sales and marketing. It makes it difficult to implement all of these direct channel systems considering the amount of capital it takes to put in place. f. Transaction volume

Purchases from customer can be credit, debit, or PayPal. With introducing the mobile application it can be used as a mobile purchasing device as well. After the credit information has been saved transactions are at the tip of your finger. This should increase the volume of transactions that Bonobos will see. g. Margins

Margins are derived by what the marketing expense is in comparison to the actual end user price. Considering that this service will be “Free” to the customer it must be the percentage that is built into Bonobos’ products. h. Cost

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The costs involving distribution of Bonobos products have already been incurred through the current platform used for sales. The current website that enables users to do traditional online shopping will be used along with the services being introduced. One sales introduction will be the mobile application. Although once the application is developed and launched on the Android and Apple markets only the maintenance will be needed to adjust bugs as well as customer requests for improvement.

The premium service provided by Bonobos will be charged at 19.99. This will be purchased through the website just as a common clothing product would be purchased. The users account then will be prompt with the capability to use the service. The costs of delivering the service is the staffing of the professional assisting the user. This price will be fluctuated depending on the pay of the individual.

i. Service quality Bonobos and its services are available at all times of day any day of the week. Bonobos must create metrics or some kind of measurement system to make sure that their service is being portrayed at top quality among customers. To assess their service quality uses of current platforms such as Facebook, Twitter, customer reviews, and the Bonobos blog will be used to reveal what users think.

It’s difficult to get consumers to do surveys for companies at their own will. Bonobos will be offering a random survey to the current users via email. The email is derived from the profile account the user created when initially setting up the account (Gentleman’s Professor). To create interest in the users mind to complete the survey a discount incentive will be applied. If a account user completes the survey then they will have a 10% discount on one product off the Bonobos website.

Although there isn’t a software incorporated such as a CRM system, the Bonobos staff will be directly interacting with the target customer. This makes accountability of the quality of service directly in reference to who helped that customer at that time. In order for Bonobos to have confidence prior to launch of services, they must require each staff member has proper training in the field of communication as well as expertise in the industry. Much of this will be looked into when hiring staff members for the Gentleman’s Professor.

j. Vertical integration In traditional distribution their might be as many as 4-5 players. After disintermediation a company would hope to have its distribution strategy down to 2-3 stages. These stages would be manufacturer, wholesaler, retailer. This dribution integration doesn’t apply to Bonobos as its primarily in the e-commerce shopping industry. The vertical integration of the distribution of the Gentlemans Professor, mobile app, and Gentlemanss university is Direct B2C. This means that other than manufacturers selling to consumers it doesn’t get any more vertical.

k. Speed Considering the general business setting Bonobos’ customers are in time is money. The Gentlemans professor is distributed at a speed that depends on the customers network connection. For example Comcast internet is oiffered in a number speeds. With that said the faster package the consumer holds, the faster the services will be to them from Bonobos. The same goes for the mobile devices concerning the mobile application. If one user has the AT&T 3g plan their use of the service will be slower than a user with the Verizon or Sprint 4g packages.

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Appendix 20- Pricing Model & Projections

Pricing Strategy

PRICING PLAN With the current business model of Bonobos, it is vital to determine an efficient pricing strategy where the costs of manufacturing and operations are covered and the price is reasonable for the customers’ perceived value at the same time. The table below will guide us to determine the pricing strategy with the best interest of the company in mind.

(Source: Robert Harmon Lecture Slides, 2009)

Level of desire for the product and/or service Clothing and especially men’s apparel is one of the most demanded products, considering the work schedules and shopping attitude of male customers. Bonobos has a piece in the pie, where the customers have a high level of desire to purchase goods.

Distinctiveness from the competitive offerings Bonobos carries out a very unique distinctive offering, their design of pants. Their pants are tailored in a specific way to fit men’s waist perfectly without making the bulky look on the back of the pants. (Lipke, 2011) This style makes it very unique for Bonobos customers’ experience with their purchased products.

Importance of the price in value equation One of the biggest difficulty for web-based firms such as Bonobos is that their competitive analysis can be done while doing shopping online. Blogs, forums and customer reviews are usually very effective on purchase patterns. Moreover, the concept called “impulsive shopping” does not apply to online shopping, since you have a chance to double check price differences and also you have to wait for the item to arrive. For Bonobos, importance of price is less important that the value perceived by the customer.

Ease of duplicating the competitive advantage Fashion is continuously changing and one of the major threats for innovative brands like Bonobos is that the competitors can adopt/ duplicate the styles to attract your customers for low prices. Bonobos can overcome this 163 problem by purchasing patent for their style. With this way, Bonobos has a patent application pending currently. (Patent Genius, 2008) Moreover one of the other competitive advantages for Bonobos is the free shipping matter, which can easily by adopted by other competitors. But Bonobos currently is offering the best shipping option and should maintain this to create a distinctive competitor advantage.

Speed of return on investments Bonobos is able to perform monetary actions through its selling operations through their website. Since the company started operating, the company did not fail to announce profits for each period of operation. This was also a sign for the investors and because of their skills of capitalization they received $18.5 Million financing at the end of year 2010. (Lipke, 2011)

Importance of innovation Bonobos is an innovative business, trying to reshape the purchasing habits for customers. The showed the apparel industry that you do not need to have brick retail shops to manage sales. Moreover, the proposed technological changes will enable Bonobos to engage with further innovative operations such as “Gentlemen’s University” concept.

Importance of personal selling For the Bonobos business model, importance of personal selling is very high. They created a online platform, where the shopping experience evolves. With the additional services proposed in this paper, the company will improve its personal selling factors.

The key indicator analyzed above gives us the understanding of the market and evaluated direction for our pricing strategy. Considering the analysis above, the dynamic pricing model of Bonobos leans towards skim pricing.

PRICING STRATEGY

The pricing strategy of a company is crucial because it can either draw customers in, or turn customers off from your products. Before deciding about the price strategy following models have been reviewed and evaluated for the compatibility with Bonobos business model:

Penetration O Random discounting: Bonobos offers such social media offers that introduces the company to the new customer group(s). At the same time they give discounts to increase ROI as well as to decrease the level of ongoing inventory.

Skim O Price signaling: Bonobos keeps continuous connection with their customers, alerting them through social media. Via social media, they manage 1200% ROI. O Image pricing: Bonobos carries out a word-of-mouth advertising. Considering the quality of Bonobos products, customers are suggesting the company to their social circle, enabling customers to purchase Bonobos products just for the image of the brand for the customers. O Premium pricing: Bonobos produces individually designed clothing. They are mainly custom made and require additional effort; therefore the company can get away with premium pricing.

Hybrid O Cost-plus pricing: Like any business, the basic and the fundamental goal of the business is to cover the main costs of operating and manufacturing. Bonobos is aiming on covering these cots primarily. O Periodic discounting: The method skims inelastic demand of innovators. Bonobos has done this and continue doing it over the social media services. They reduce the prices and change the demand for their products for certain periods of time.

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We believe that Bonobos has a competitive advantages and majority of these advantages maintained by the perceived value of the products and services. As an innovative company with futuristic business ideas, we believe that, it is important to give value to the products and calculate that through perceived value than cost-plus valuing. We created a Pricing Strategy matrix, pointing out our current pricing strategy and the futuristic prediction of the strategy. Price skimming is defined as setting prices high during the introduction of a product and then dropping the price over time (Price Skimming Paradoxes). The attractiveness of the price skimming strategy for Bonobos is the idea that Bonobos is so new that pricing can start high, and lower as the customer base increases and more efficient processes and procedures can be established. With a throughout research on which method to choose for the pricing structure of Bonobos, we decided to go with Value-Based Pricing Model in order to meet our overall marketing strategy of maintaining more market share.

CUSTOMER REACTIONS In reviewing the reactions of Bonobos customers, it appears most customers of Bonobos react positively to the prices of Bonobos. In reading customer reviews on the Bonobos web-site, most reviews consisted of customers praising the quality and styling of the product rather than stating any price issues. The Bonobos Facebook page was also consistent with this same theme. In reviewing weeks of the comments listed on the page most customers discussed the quality of the clothing or any kind of ordering issue they may have come across. Only a few mentions of price concerns were shown only on the Facebook page of Bonobos. However it definitely seems that customers see the value of Bonobos products matching the perceived value of the products. This would likely be the reason little regard is shown to price on the Facebook page and customer reviews of Bonobos.

COMPETITOR REACTIONS The main competitors of Bonobos include J.Crew and Gilt, who both use similar pricing strategies to that of Bonobos. However, Gilt uses more of a limited time only “sale” type strategy of pricing. Designer prices are displayed on the site and crossed out to show customers how much they are saving by purchasing the product through Gilt. This strategy is definitely different from that of Bonobos, where price cuts are not listed and advertised in the same extreme manner. Looking at the pricing strategy of J.Crew, it seems the pricing is fairly similar to that of Bonobos. The majority of the clothing within both the J.Crew and Bonobos lines run in the same price points. Due to the fact that Bonobos is a newer company in a somewhat saturated market, competitors of Bonobos have not

165 reacted to the pricing strategy of Bonobos, because it is not disruptive in nature. Perhaps if Bonobos came into the market at an extremely low price point competitors would have more of a reaction to Bonobos.

ANALYSIS

RESOURCES: ● Harmon, Robert R., Haluk Demirkan, Bill Hefley, and Nora Auseklis (2009), “Pricing Strategies for Information Technology Services: A Value-Based Approach,” Hawaii International Conference on System Sciences (HICSS)-Volume 42, January 5-9. Note: The pricing model discussion in this paper can be applied to many non-technoloyg pricing situations.

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Appendix 21- Promotional Strategy

PROMOTIONAL STRATEGY-MEDIA MIX

PROMOTIONAL STRATEGY

Our promotional strategy will include advertising campaign, sales promotions, and direct marketing efforts. We will focus our strategy on building brand awareness, increasing product sales and conveying customer value through the introduction of the Gentlemen’s U new services.

Through this analysis we want to focus on promotional activities that strategically and efficiently reach our target demographics. We will measure the success of our promotion plan by tracking metrics such as subscription rates, impression rates, TRP’s and click through rates of our various mediums. We have strategically chosen the various magazines, online sites, transit and ambient publications, sites, companies and locations that will provide the most return on investment for Bonobos.

Advertising The following advertising plan will be focused on building Bonobos brand awareness with the introduction of the new services. Below is a three-year breakdown of our advertising imitative.

Y1: Bonobos Gets Personal Campaign In Year One, we will introduce the Gentlemen’s Professor (Personal Stylist) and Virtual Closet (Customized Dashboard) using a “Bonobos Gets Personal” advertising campaign. The advertising campaign will speak to each of our target segments and their customer values: West Coaster, Fashionably Challenged and Educator. Ads will target West Coaster’s by advertising the custom fit in pants/suit, fashionable products, and confident in appearance. The Fashionably Challenge male will be targeted using a head to toe fashion makeover theme focusing on style guidance and increasing customer confidence in appearance. And, the Educator targeted using am innovative wardrobe solution theme; for example with a presentation of a full dress code appropriate wardrobe for everyday of the work week, and an alter ego closet for the weekend. With this campaign we want to attract and get to know the “West Coasters”, “Fashionably Challenged guys” and “Educators”. To show how these new services provide them an enhanced convenient shopping experience. This campaign will introduce the two services and also build awareness for the release of the Gentlemen’s University Mobile Application in year two.

Y2: On-The-Go Bonobos Campaign: With the introduction of the Gentlemen’s University Mobile Application, we will run a “Bonobos Gentlemen’s University On-The-Go” Campaign. Which will extend off of the “Bonobos Gets Personal” theme. We will stress the key features of the mobile application including: the purchasing capability, access to virtual closet, access to product information and QR code capabilities.

Year 3: Service Updates and QR Code Integration Year three will include advertising for the Gentlemen’s University Premium Account we will focus the campaign to introduce the new features to the Virtual Closet and Mobile Application. Year three will focus on a campaign that communicates any changes and updates relating to the services. The prior two years introduce our complementary features and year three will be about premium account promotion. The Premium Account includes a $19.99 fee so we want to make sure we are marketing these new features with high benefits for customers as an incentive to sign up.

Advertising Medium Breakdown Each medium was selected based on its reputation and popularity among our three target segments. The following provides an estimated financial breakdown of each medium and how it provides a return for Bonobos. The following mediums include: 167

• Print: GQ, Men’s Health, Sports Illustrated • Online: Facebook, Twitter, Business Week, Wall Street Journal • Outdoor: Billboard/Transit • Ambient: LA and NYC

PRINT: From analysis we recommend running print ads in GQ, Forbes, and Men’s Health. Below is a price estimate. The estimate is based on four, three-month flights throughout the year. We have chosen these three magazines based on their readership demographics, impressions, rate base and estimated cost. They are each reputable men’s magazines that speak to our three target segments and will provide a return on our advertising investments. The numbers below were provided by the media kits from the listed magazines. Rate Base Ad Size Cost per run CPM Ave. Age Ave. Income GQ 925,000 ½ Page $98,209 $ 106.17 34.3 $72,738 Men’s Health 1,800,000 ½ Page $115,605 $ 64.23 37.7 $81,736 Sports 900,000 ½ Page $68,260 $ 75.84 45 $100,000+ Illustrated

ONLINE: Online ads will be placed on social media sites: Facebook and Twitter. As well as reputable journal websites: Business Week and The Wall Street Journal. We have researched click through rates, user demographics, impressions, and cost. Below is an estimate of our projected cost. The numbers below were provided directly from the companies in their media kits or sample accounts. Rate Base Ad Size Annual Cost Notes Facebook 10,424,980 2” side of page $120,000 Avg. CPC - $0.61 Avg. CPM - $0.26 Twitter:Promoted 29,000,000 Promoted User $60,000 Pay-Per-Follow pay system Account Demo. Ad Size CPM Notes Playboy.com 72% Male 300x250 $13.00 Using targeted and homepage 45% Age: Or placements 25-49 728x90 Median HHI: $86,006 Forbes.com 63.5% Male 120x40 $11.00 Logo (creative must include 54.7% Age: “Sponsored by” text 25-54 HHI $100k+: 71.5%

OUTDOOR: Outdoor ads are costly but the return is high in populated cities such as LA and San Francisco. We feel want to consider billboards in large cities where people are walking and driving constantly. Below is a price estimate of what it would cost to place an billboard ad id downtown LA. The numbers below were provided by CBSOutdoor Media Kits Circulation Average Rate CPM Notes: All through CBS Outdoor Chicago: Transit 7,182,359 $45,000/ 51 $6.27 For 10 units “Brand Buses” weeks NYC: Transit 15,993,941 $96,000*/ 51 $6.00 On commuter buses “Brand weeks Buses” *Price is an estimate based upon similar regions NYC: Billboard 15,993,941 $7000* $2.80 Cube display at 42nd street *Price is an estimate based upon similar regions LA: Billboards 8,830,800 $5500 $3.99 Reach/Frequency: 75.6%/8.3x 168

AMBIENT: Ambient advertising is creative way to get the brand out there and show off the new Bonobos services. We want to introduce each campaign with ambient advertising initiative. For example, have a large crew Gentlemen’s Professionals in the center of downtown LA or San Francisco styling men off of the street. The numbers below were supplied by associated website and/or by setting a range budget based upon the Rate Base to keep CPM below $1.00.

Rate Base Ad Size Annual Cost Notes Flash Mob 2604 n/a Apprx. Eveoke.org; Goal is to post on $1000 YouTube and have it go viral Giant mannequin: 1,611,581+ 12ft. mannequin $8,000- Display for one year changing NYC $12,000 for pants for different seasons mannequin +park fees Giant mannequin: 4,000,000 12ft. mannequin $8,000- Display for one year changing LA $12,000 for pants for different seasons mannequin +city fees

Sales Promotion Though sales promotions we will welcome to try the new services by rewarding customers with product discounts and promotional incentives:

• Registration for an account • Downloading the mobile application • Purchasing from the mobile application • QR code usage • Referring a friend (customer referral reward) • Like/Follow Bonobos through social media The goal within this section of the promotional strategy is to provide customer appreciation by providing discounts and incentives to sign up and use these new services we. We want to retain our current customers and also build new customer service accounts.

Direct Marketing In a digital world, Bonobos has gained brand recognition and identity through word of mouth advertising, Facebook advertising, and blogging. We are recommending the following direct marketing efforts for Bonobos with the integration of these new services: Email, Social Media, and SEO SEM advertising.

E-mail alerts: • Exclusive Customer Trials: Six months before the launch of each service we will filter Bonobos’s long-term, high purchasing customers and invite them to try an exclusive trial of the service. We will ask them to sign a privacy policy that protects Bonobos from any breach of information about the service and ask them for their feedback at the end of the trial. • Invitations to Large Auction Sales: By being on the Bonobos email list through registration of a customer account-customers will be invited to save big on popular items throughout the year. • Customer Feedback Survey: To gain insight and customer feedback on the Bonobos online customer shopping experience we will survey customers through email, providing incentive discounts and free products, or enter to win contests.

Social Media: Currently Bonobos has a great Social Media plan. On Facebook Bonobos has 67,583 Likes, and they are actively engaging with their customers by utilizing the page for catchy promotions like “Happy Hour” deals, or “TGIF” discounts, and also their customer service Ninjas use it to address 169 customer questions. Bonobos has two Twitter accounts to engage with customers. One is their @Bonobos account where they do the same promotions as on Facebook, and the second is their @BonobosNinjas which handle any type of customer service questions. With the deployment of our Gentlemen Professors we will phase out the Ninjas and establish the Professors in their place. Since Bonobos is fairly well established in the social media world our plan will just incorporate the current social media plan and just direct it towards promoting the launch of the Gentlemen’s University.

1. Develop a spreadsheet schedule for your media buys by quarter over the three year plan. The categories in item 5 above can serve as the left hand column of the spreadsheet. 2. Note: in MarCom Budget exercise to follow, you will develop the budget for your scheduled media buys. 3. Complete the narrative articulation of your promotional strategy.

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Appendix 22- Marketing Plan P&L

MARKETING PLAN P&L

2012 Q-1 Q-2 Q-3 Q-4 SALES $10,000,000 $2,500,000 $2,500,000 $2,500,000 $2,500,000 Cost of Sales $2,770,000 $692,500 $692,500 $692,501 $692,502 GROSS PROFIT $7,230,000 $1,807,500 $1,807,500 $1,807,499 $1,807,498

Administration Expense $567,000 $208,125 $208,125 $208,125 $63,375 Other $50,000 $12,500 $12,500 $12,500 $12,500 TOTAL EXPENSE $617,000 $220,625 $220,625 $220,625 $75,875

Net Income Before Interest & Taxes $6,613,000 $1,586,875 $1,586,875 $1,586,874 $1,731,623 Taxes $2,314,550 $555,406.25 $555,406.25 $555,406.25 $606,068.25 Capital Funding NET INCOME AFTER TAX $4,298,450 $1,031,468.75 $1,031,468.75 $1,031,467.75 $1,125,554.75

2013 Q-1 Q-2 Q-3 Q-4 SALES $11,500,000 $2,875,000 $2,875,000 $2,875,000 $2,875,000 Cost of Sales $3,478,750.00 $869,687.50 $869,687.50 $869,687.50 $869,687.50 GROSS PROFIT $8,021,250.00 $2,005,312.50 $2,005,312.50 $2,005,312.50 $2,005,312.50

Administration Expense $265,500 $66,375 $66,375 $66,375 $66,375 Other $50,000 $12,500 $12,500 $12,500 $12,500 TOTAL EXPENSE $315,500 $78,875 $78,875 $78,875 $78,875

Net Income Before Interest & Taxes $7,705,750.00 $1,926,437.50 $1,926,437.50 $1,926,437.50 $1,926,437.50 Taxes $2,697,012.50 $674,253.13 $674,253.13 $674,253.13 $674,253.13 NET INCOME AFTER TAX $5,008,737.50 $1,252,184.38 $1,252,184.38 $1,252,184.38 $1,252,184.38

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2014 Q-1 Q-2 Q-3 Q-4 SALES $17,192,240 $3,306,200 $4,463,370 $4,628,680 $4,793,990 Cost of Sales $4,637,954.06 $1,104,270.80 $1,490,775.60 $1,545,985.80 $1,601,192.66 GROSS PROFIT $12,554,285.94 $2,201,929.20 $2,972,594.40 $3,082,694.20 $3,192,797.34

Administration Expense $117,500 $38,750 $38,750 $38,750 $1,250 Other $50,000 $12,500 $12,500 $12,500 $12,500 TOTAL EXPENSE $167,500 $51,250 $51,250 $51,250 $13,750

Net Income Before Interest & Taxes $12,386,785.94 $2,150,679.20 $2,921,344.40 $3,031,444.20 $3,179,047.34 Taxes $4,335,375.08 $752,737.70 $1,022,470.54 $1,061,005.47 $1,112,666.57 NET INCOME AFTER TAX $8,051,410.86 $1,397,941.50 $1,898,873.86 $1,970,438.73 $2,066,380.77

3-YEAR BUDGET YEAR-1 YEAR-2 YEAR-3 SALES $38,692,240 $10,000,000 $11,500,000 $17,192,240 Cost of Sales $10,886,704.06 $2,770,000 $3,478,750.00 $4,637,954.06 GROSS PROFIT $27,805,535.94 $7,230,000 $8,021,250.00 $12,554,285.94

Administration Expense $950,000 $567,000 $265,500 $117,500 Other $150,000 $50,000 $50,000 $50,000 TOTAL EXPENSE $1,100,000 $617,000 $315,500 $167,500

Net Income Before Interest & Taxes $26,705,535.94 $6,613,000 $7,705,750.00 $12,386,785.94 Taxes $9,346,937.58 $2,314,550 $2,697,012.50 $4,335,375.08 NET INCOME AFTER TAX $17,358,598.36 $4,298,450 $5,008,737.50 $8,051,410.86

The tables above are the projected breakdown of the income of Bonobos for the next 3 years. The standard profit and loss model has been applied to calculate the potential of Bonobos with projected sales amounts. Since Bonobos is a product oriented sales company, we projected our sales numbers for the next 12 quarters as it is shown below:

SALES VOLUME UNITS (Apprx) Quarter - 1 25,000 Quarter - 2 25,000 Quarter - 3 25,000 Quarter - 4 25,000 Quarter - 5 28,750 172

Quarter - 6 28,750 We estimated the sales volume for the next 3 years Quarter - 7 28,750 depending on the current sales numbers. At the second Quarter - 8 28,750 stage, where we needed to calculate the COGS we Quarter - 9 33,062 include the costs of direct material per unit, shipping Quarter - 10 44,634 per unit, supplies per unit, commission per unit and to Quarter - 11 46,287 overestimate we added other expenses per unit. In Quarter - 12 47,940 order to reflect on the tax cuts from the profits of Bonobos, the approximate rate of 35.00% has been applied.

One of the reason why the administrative costs are declining is that, Research and Development of the project and proposed solution requires additional hiring for a certain period of time, which creates the hike in wages. Towards the end of 3-year period, these expenses slowly diminish due to keeping only the core team for research and development.

Financial Ration Analysis

According to the Break Even analysis done and showed above, the breakeven point in volume is 140,710 units. We expect to reach that point within our Quarter-6. According to this information, our cash flow will be positive approximately in May 2013. Considering that the total budget needed for this project to be in motion is $13,993,077 and the revenue numbers provided above the Internal Rate of Return (IRR) would be 39.174%. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment, which gives us approximately 176.5% of Return on Investment.

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Appendix 23- Marketing Budget

Financials The financials will show the estimated costs for the Gentlemen’s University. Pre-launch costs will be much higher than the average annual cost due to having to employ a software development team to help get the Gentlemen’s University built, as well as a larger advertising campaign to help establish the service. The plan will help direct the costs for Bonobos over the next three-years and help them differentiate themselves in the growing Men’s Fashion market. Marketing Budget The budget includes a Marketing Communications budget, Marketing Team, Customer Support, and the Software Development Team. We also included a 10% contingency for any unforeseen expenses along the way. The budgets do not include any of the already established services and pricing at Bonobos, it is strictly for the implementation and running of The Gentlemen’s University over the next 3 years. What is also not included is the elimination of the Ninja customer service positions, with the elimination of these positions it will help open up more capital for The Gentlemen’s University. As seen on the Marketing Budget the Pre-launch costs will be relatively low given what is included, just below $2.7 million. The remainder of the 3 years, the budget will run at a lower cost due to not needing a full development team, just a system management team, and also due to staggering our advertising so that not everything runs at the same time. Bonobo’s marketing budget is planned conservatively. Since the newly acquired funds of over $18 million from financing last year, using less than 15% of that to finance a high growth and differentiating service seemed very reasonable. The following table shows the totals of the three-year budget including the pre-launch budget. Marketing Prelaunch 2013 2014 2015 Budget Marketing $575,897.00 $2,333,756.00 $2,225,506.00 $2,209,756.00 Comm. Marketing Team $15,614.00 $187,360.00 $187,360.00 $187,360.00 Customer $95,010.00 $1,140,120.00 $1,140,120.00 $1,140,120.00 Support Software $597,000.00 $265,500.00 $265,500.00 $155,000.00 Development Contingency $118,851,10 $278,661.60 $267,836.60 $255,211,60 (10%) Totals $2,685,893.10 $4,205,397.60 $4,086,322.60 $3,947,447.60

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Appendix 24- Marketing Communications Budget

Marketing Communications Budget With the Marketing Communications Budget, again we didn’t base our budget based upon a sales percentage, but rather use what is reasonable considering the newly acquired finances. Since Bonobos is still fairly new to the market, getting them involved in some traditional advertising should be done. GQ Magazine, Men’s Health, and Sports Illustrated all fit our target segments. Since traditional print advertising is very costly, we will be utilizing our established online presence in social media. Since Bonobos is already well established in Social Media, this is not included in this budget. To reach our higher HHI audience, Bonobos will establish advertising on Forbes.com. Included in the online marketing will be the already used Behavioral Target Marketing. Also, outdoor and ambient advertising will be utilized. Alternating advertising between billboards and transit in high traffic, high fashion cities such as New York and Los Angeles will be established. For the pre-launch to get the buzz going for the Gentlemen’s University, Bonobos will advertise on all media’s listed plus the already established ones. The planned 3-year budget will help maximize our dollar per connection. Below is the budget for the next 3 years including the pre-launch. Marketing Communications Pre-Launch 2013 2014 2015 Budget Traditional Advertising $488,814.00 $2,33,756.00 $2,225,506.00 $2,209,756.00 Internet/Web $11,333.00 $136,00.00 $136,000.00 $136,000.00 Outdoor $72,750.00 $229,500.00 $134,250.00 $106,500.00 Ambient $3,000.00 $13,000.00 $0.00 $12,000.00 Totals $575,897.00 $2,333,756.00 $2,225,506.00 $2,209,756.00

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Appendix 25- Capital Budget

CAPITAL BUDGET

Directions 1. Develop a three-year by quarter pro forma spread sheet model for the capital budget requirements for your plan. The left hand column should feature the major capital expenditure categories.

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2. How much investment will be needed to develop and implement the plan? Bonobos will require additional capital in order to implement the Gentlemen’s University over its initial three year period. A total of $13,993,076.90 will be required to develop the Gentlemen’s University. Of the total capital requirement approximately $7.4 million will be used towards marketing communications objectives, approximately $4.8 million towards development and running the Gentlemen’s University and the remaining amount used as contingency funds.

3. What are the major spending priorities? Initial spending priorities will be towards the initial development of the Gentlemen’s University including the hiring of the software development team and purchasing a contract for a hybrid cloud server. After initial development and launch of the Gentlemen’s University spending priority will be shifted towards marketing communications efforts with additional focus on maintaining our Gentlemen Professors.

4. What is the schedule of capital requirements? The full amount of $13,993,076.90 will not be required before implementation of the Gentlemen’s University begins. Bonobos will require approximately $2.7 million during the 2012 pre-launch year for initial development. The first year of introduction of the Gentlemen’s University will require approximately $4.2 million. Sequential years will require slightly less capital to maintain the Gentlemen’s University with year two requiring approximately $4.1 million and year three requiring approximately $4 million.

5. What are the ROI and IRR for the investment? In order to calculate the Internal Rate of Return and the Return on Investments we need to know the projected cost of this project, which is stated before as $13,993,077 and the revenue numbers, which can be found in the financial section of this paper. In order to calculate the Internal Rate of Return, the initial investment cost and the revenues for the next three years have been computed. The calculated IRR is 39.174%. This means that the company creates enough revenues to generate a bit over 39% profitability from the investment. On the other hand, to calculate ROI, the benefit (return) of an investment is divided by the cost of the investment, which gives us approximately 176.5% of Return on Investment. This means that the company creates 1.765 times more than initial investment.

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Appendix 26- Presentation Draft

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