Bienvenido a México, el Secreto de Victoria The Expansion of Victoria’s Secret into Mexico Aparna Donthi Man Tsun Lee Bouphavanh Mathouravong Marisol Rivera Nicole Winkle

Research Overview Primary Research –In-depth survey Industry Analysis –Demographics –Perfume Industry United States Mexico Company Analysis –Situation Analysis –STP –Marketing Mix Implementation

Executive Summary Due to the declining market in the U.S. and growth in Mexico, Victoria’s Secret has the potential for a sizeable fragrance market in Mexico. Mexican consumers’ product values are congruent with that of the Victoria’s Secret brand image. Significant similarities and differences in marketing Victoria’s Secret brand in Mexico.

Primary Research Bilingual In-Depth Interview –Parallel Translation –Administered in Cuernavaca, Mexico Goals of the Interview –Awareness of Victoria’s Secret in Mexico –Product Perceptions/Knowledge –4 P’s –Competitor Awareness

Situation Analysis –Mexican Consumers Highly rank service and price Have short term view of products – initial price means everything Receptive to high quality products that are sold in smaller packages –Implications Victoria Secret offers great service/personal attention to customers Offers smaller, affordable product selection

Situation Analysis (Cont.) Company –High International Awareness –Sales Growth 8.1% (2003) Competitors –Estee Lauder, Avon, JC Penney, Lancôme Collaborators –CBS, Musicians –Supermodels – Heidi Klum, Tyra Banks, Environmental Factors

Perfume Industry Analysis Perfume Industry in The United States –Perfume industry to grow at declining rate over next five years –Dominated by female fragrances (2/3 of sales) –Male fragrances accounts for 23.5% of market) Implications –Declining U.S. market –Seek International Growth Mexican Perfume Market

Mexican Demographics Male customers account for 70% of perfume sales despite the fact that men’s fragrances represent 1/3 of the market Women between years can afford to pay $40-$150 for a bottle of perfume Mexico City represents 52% of sales Guadalajara and Monterrey have large potential for sales

Perfume Industry in Mexico –“Female Fragrances Experience Dramatic Growth” $253 million 2006 – Predicted $348 million (37.5% increase) –Many competitors (“Satisfactory sales…suggests…there is still space for new launches…”) –Black market Relevant to price and distribution Mexican Market

Mexican Economy –Increased Purchases of Luxury Commodities Economic recovery in 1996 Increase in private consumption –International Companies are increasing their presence

Victoria’s Secret (STP) Positioning –“For the woman who wants to feel sexy, sophisticated, and ultra feminine” Segmentation –Does not segment based on age –Segment based on products “various Victoria’s Secret brand fragrances appeal to different aspects of the Victoria’s Secret woman” Targeting –“Target how a woman feels, rather than her age, ethnicity, or other specific demographic”

VS Marketing Implementation They cross promote between their online and offline operations. “360-degree brand” – connects all 3 selling channels (catalogs, the stores, and website) Sex appeal is portrayed through advertisements and promotions.

Expansion into Mexico Segmentation and Targeting –Highly populated/developed cities Mexico City, Monterrey, Guadalajara –Product selections to appeal to different tastes and preferences –Low price-sensitivity Positioning –Provide high quality product that delivers a flawless experience –Creates an image of sensuality and femininity

Who and How Old? AGEMALEFEMALE >18 years(0) 0%(1) 6% years(3) 60%(6) 52% years(1) 20%(2) 18% years(1) 20%(2) 18% 46+ years(0) 0%(1) 6% Total(5) 100%(12) 100% More women between the ages of responded to the survey.

Interest Women are more apt to put their name on a mailing list to receive Victoria’s Secret catalogs than are men, thus it is important to target women with catalog advertising mediums. Women are interested in shopping at Victoria’s Secret more so than men. Tactics emphasizing femininity and sensuality would be appropriate. YesNo Male 40%60% Female 100%0% YesNo Male 20%80% Female 100%0% Are you interested in receiving a catalog? Are you interested in shopping at a Victoria’s Secret store?

Where and How? Brick and Mortar –Provide service –Provide quality Discount store –Black market Focus on print ads De-emphasize online ads

Characteristics of Target Market Mexican consumers are willing to pay Victoria’s Secret price-range. Customers are not price-sensitive.

Marketing Mix Product –Victoria’s Secret perfume lines Price –Equivalent to USD: range between $15-$60 Place –Open retail stores in major cities –Primary distribution channels: specialty/beauty stores and discount stores Promotion –Fashion magazines, catalogs People, Cosmopolitan, Elle Mailing of 364 million catalogs worldwide –Less emphasis of online sales

Goals –Short-term (one year) Establish test markets in urbanized cities Monitor sales and product awareness Evaluate effectiveness of distribution options –Long-term Evaluate potential production possibilities in Mexico Gain competitive market share Evaluate opportunity to expand to lingerie and clothing line

Summary Emphasis on fashion magazines, catalogs, and television ads, not internet Specialty stores and discount stores Acknowledge differences in sex roles when promoting –Women are seductive, not assertive and aggressive

QUESTIONS?