Alexa Bergman Lucy Colgan Kyle Jensen Kelsey Kramer

Alexa Bergman Lucy Colgan Kyle Jensen Kelsey Kramer Julia Mc. Clellan Kok Kit Sue Christopher Thomas

Agenda History Current Big Picture Revised Big Picture Final Implications 2

History S. S. Kresge Corporation officially changes it name to the Kmart Corporation Sebastian S. Kresge: invests in 5 -and-Dime convenience stores, called the S. S. Kresge Stores 1897 Kmart merges with the Sears Corporation in hopes to obtain the Sears customer base 1977 March 1 st 1962 First official, “KMART” store is opened in Garden City, Michigan 2005 2002 Kmart Corporation files for bankruptcy 3

Current Big Picture Product Segment Price Business Objective Marketing Objective Source of Volume Target Place Positioning Promotion 4

Fundamental Entity • Kmart as distinct brand under Sears Holding Corporation • Discount Retail Space

Core Competence Maintaining/establishing exclusive brands with celebrities and designers Strategic Asset Exclusive brands only sold at Kmart Benefit Unique products that drive consumers to Kmart Goal: Provide quality, discount products through its exclusive brands.

Marketing Objective/Source of Volume MO • Acquisition SOV • Steal Share 7

Segmentation • Demographics – Females aged 28 -49 years – Emphasis on Hispanic shoppers • Attitudes & Behaviors – Value low prices – Engage in discount shopping 8

Targeting • Meet Maria, 28 – Mother of 2 kids – Lives in Raleigh, NC – Works at Department of Labor – Discount shopper – Interested in cooking, spending time with her family, and maintaining a well-kept home 9

5 -Box Positioning Statement Kmart stores are outdated and do not fulfill my basic shopping needs When I shop at discount retail stores, I go to Walmart or Target Kmart offers exclusive brands like Sofia Vergara to attract adults Kmart meets my shopping needs and standards Kmart is my first choice discount retail store 10

The 4 P’s Product Price Promotion Place 11

Product • Offering a wide range of goods in the discount retail sector • Introduction of Smart Sense line by offering quality products that cost 20% lower on average • Introduction of exclusive brand lines, e. g. Bongo, Joe Boxer, and Sofia by Sofia Vergara 12

Price • In discount retail market • Offer low prices but not guaranteed to be the lowest 13

Promotion • Television Advertising – http: //www. youtube. com/watch? v=s. QTwt. FUc. GUg – Event and seasonally driven advertisements • Shopyourway. com – Online reward/loyalty point system • In Store promotions through signs – Promotes discounts, layaway, distinct brands • Weekly circulars 14

Place • Retail Locations – currently 1, 300 stores – Warehouse of plethora of products – 3 sub-retail brands which each offer additional products • Kmart • Big Kmart • Super Kmart • Online Options – English/Spanish – Online Services, such as: Pick up in store, My. Gopher delivery service 15

Our Kmart Adventure 16

Big Picture Problems Product Segment Price Business Objective Marketing Objective Source of Volume Target Place Positioning Promotion 17

Revised Business Objective Core Competence Skill at creating a fun, family retail expeience Strategic Asset Widest breadth of family-oriented products Play spaces for Children Benefit A familyfriendly retail experience for all ages 18

Revised Target JOHN CLARK Age: 42 Paramedic DENICE CLARK Age: 37 Dental Hygienist Expecting a baby KATIE CLARK GREG CLARK Age: 13 Loves Katy Perry, to dance, trendy fashion Age: 7 Loves baseball, action figures, playing outside 19

Revised Positioning Kmart stores are outdated and do not fulfill my basic shopping needs When I shop at discount retail stores, I go to Walmart or Target At Kmart there is the widest breadth of family products and experiences Kmart is a onestop-shop with products for my whole family Kmart is my first choice discount retail store 20

Revised Place FOCUS: Retail stores that appeal to a FAMILY, FUN experience EXECUTION: 1. Shut down current Kmart stores that are in poor condition and decentralized areas 2. Renovate remaining stores to appeal to Family and Fun - Ball Pit, Jungle Gym area - Music Selection in fitting rooms - Tablet Kiosks in aisle 21

Sample Place 22

Revised Product FOCUS: Products that appeal to each member of the family EXECUTION: 1. Expand Grocery department 2. Expand on household appliances -utilize relationship with Sears 3. Further develop apparel lines for babies, toddlers and juniors 4. Expand toy and games department 23

Revised Promotion FOCUS: Promotions that market a FAMILY, FUN experience EXECUTION: 1. Advertisements that demonstrate the new dynamic variable 2. Move the weekly print circular to a digital medium 3. Seasonal promotions for kids 24

Sample Promotion Everything for the American 25

Summary • Kmart was lacking a dynamic variable • We recommend to: – Make dynamic variable a discount store that provides a family, fun experience for shoppers – Retarget to the family as a unit – Renovate locations to offer the family experience 26

Questions? Thank you!

Discount Departmental 28

Supercenters 29

Supercenters 30

25 -40: “Department stores often target advertisement and marketing toward this age group since they are more likely to have growing children and families for which they need to purchase merchandise. ” –www. ibisworld. com 31

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Product Differentiation • Private labels or exclusive brands account for about 20. 0% to 30. 0% of store merchandise. • 70. 0% to 80. 0% of merchandise is the same across most stores in this industry. 33

Competitor Distinct Brands • Walmart – Great Value • Super Target – Archer Farms – C 9 by Champion – Circo – Merona 34

Driving Factors in Retail As shown in the following Figure, young adults are considerably more likely to report shopping at department stores and to do so frequently. The 25 -34 segment is clearly an especially important target for many department stores, as many within this segment routinely shop within the channel. 35

In-Store Media “According to Mintel’s exclusive consumer research, 43% of mass merchandiser shoppers stated that it is extremely or very important to them that the retailers they patronize provide ways for them to learn about new products and other topics of interest. As such, the potential for this factor to influence sales should not be overlooked” –mintel. com “Of particular importance is the ability of electronic media to communicate the value of various products, thereby reducing the common fixation on price. By educating customers about the value of quality products, retailers can highlight store worth while reducing price sensitivity. ” mintel. com 36

Important Factors 37