This document provides an overview and analysis of American Apparel, a vertically integrated apparel manufacturer, distributor, and retailer. It discusses the company's history, operations, products, distribution channels, target market, competitors, and macro environment. It also analyzes the US apparel industry and market trends. The document then provides recommendations for an integrated marketing strategy, including repositioning the brand, increasing digital marketing and e-commerce, improving inventory management, and implementing a "Back to Basics" advertising campaign. Financial projections anticipate increased sales and profits resulting from the recommendations.

1. Integrated Marketing Strategy
Jieli He
Sona Martirosian
Christina L Oresajo
Oguzhan Iskenderoglu
Channon Chiu
NYU MS Integrated Marketing

2. American Apparel is a vertically
integrated manufacturer,
distributor, and retailer of branded
fashion and basic apparel.
1998
Founded as
Wholesale
Distributor in
Los Angeles
2003
Opened First
Retail Store in
Los Angeles
2004
Launched E-
Commerce
website
2004
Opened first
stores in
Canada and
Europe
2005
Opened stores
in Asia, Latin
America,
Australia
2008
Sales started
declining
2010
Reported
highest Net
Loss in
company
history
2011
Listed as one
of “10 Brands
that Won’t Be
Around in
2012”
Company Overview

3. • Vertically Integrated – All operations done in
Downtown Los Angeles factory
• “Made in the USA”
• Use high quality fabrics
• Sawing facility ranked #1 in size and value in
western hemisphere
• 53,000,000 garments produced in a year
•Fare wages and benefits for employees
• “Sweatshop Free”
• Average factory worker earns $12 an hour
•Environmentally friendly production
• Use all residues of fabrics
• Solar panels used in factory
Production

4. • Wide range of products
• For men, women, children, babies, pets
• Clothing, hosiery, shoes, bags, accessories
• Wide range of colors
• Produce 499 styles in 614 colors
• Style - simple basics mixed with retro inspired pieces
• California Selects
•Vintage clothing
• Multibrand – products by other brands that fit the culture
and look of the company
• Watches by Swatch or Casio, nail polish by Nail
Lacquer, water bottles by Bobble…
• Varies based on culture of store location
Product

5. • Retail
• 285 stores worldwide
• Locations in 20 countries
• In metropolitan city centers
•E-Commerce
• AmericanApparel.net
• Operating since 2004
• 10 localized store fronts
• Wholesale
• Operates from Los Angeles Headquarters
• Sold to 10,000+ screen printers & specialty
shops.
Distribution

6. • “Young Achievers “ lifestage group on the Neilson Prizm
•Young, metropolitan adults
• Aged 20 to 32
• Culturally sophisticated
• Creative
• Independent-minded
•Well educated -a bachelor’s degree or higher
• Income between $50-90K per year
•Tech savvy
• Interested in world events
•Fashion conscious
•Shop online
• Looking for well-designed, high-quality fashion essentials
• Prefer companies with good corporate cultures
Target Market

7. Political/Legal
•The National Minimum Wage Act
•The Working Time Regulations
•The Employment Rights Act
“The average sewer with experience at American
Apparel is making about $25,000/yr, or $12 an hour,
almost twice the federal minimum”
Economical
•Recession in 2008
•Another factor of declining
share prices (from $15.80/a
share to $1.55/a share in the
same year.
• Influencing shopping
behavior towards apparel
industry downwards by 36%.
PESTEL Analysis
Macro Environment

8. Social
• Increased importance for consumers of the role
of corporate social responsibility
•Ability to easily access and spread information
about a company through social media
Macro Environment

9. Technological
•E-commerce has been gradually replacing
retail shopping. the apparel and accessories
industry will eventually lead e-commerce
sales with the predicted sales gain of 20.2%.
•By 2016, it will reach $73 billion of US
online retail e-commerce sales.
Environmental
As if 2011, American Apparel’s cost per pound of cotton went up to $2.34, from $.40-
$.50 per pound in 2010. This was due primarily to the weather conditions that affected
cotton producing companies and restrictions by governmental policies.
Macro Environment

10. US Apparel Industry
• 100, 000 stores in total
• Combined annual revenue of
$150 billion
• Rapid shifts in fashion trends
• Consumer demand volatility
• High competitive pressure
• Imports account for over 80%
of domestic demand

11. • Competition is based on brand
image, marketing, fashion design,
quality, price, customer service
and store location
• Apparel products differ in
function, and each product
segment contributes to a certain
portion of the industry revenue
US Apparel Market

12. Market Growth
• Industry revenue of women’s clothing stores
• Annual growth of 3.4% over five years
• Will reach $47.9 billion in 2017
• Industry revenue of men’s clothing stores
• Increase at an annualized rate of 1%
• Will reach $8.3 billion in 2017
• Store growth
• 2% over the next five years
• 56,879 locations.

13. Market Trends
• Demographic shifts
• 10% increase in US population
• 8% increase in population of adults between the
age of 25 and 44
• Baby-boomer generation will retire and be
replaced by younger workforce
• Retail prices for clothing will continue to decrease
• More consumers will shop in specialty clothing
stores
• Clothing store sales increased nearly 10 percent
between 2005 and 2010
• Sales at conventional department stores
decreased 14 percent
• Competition with international brands will
increase in the upcoming years

14. Wholesale Net Profit 2011
Wholesale Sales 2011
•Large customer base in mass merchandisers such
as Target, Wal-Mart, and Kohl’s
•Hanes, Champion and L’eggs.
•Active wear and wholesale T-shirt : Russell and
Russell Athletic
• Production takes place in overseas in Latin
America.
•Marketer and globally low-cost vertically-
integrated manufacturer of quality branded basic
apparel
•Gold Toe and exclusive rights with Under Armor
Wholesale Competitors

15. • 2,500 stores in 44 Markets that offer “Fashion and Quality at the
Best Price
• Celebrity clothing lines from Marni, David Beckham, and Madonna
to name a few.
• Over 400 stores
• Considerably lower price, point makes Forever 21 a popular retail
location for teens and young adults.
• Urban Outfitters, Anthropologie, Free People, BHLDN and Terrain
• “On some days, 20% of the company’s sales came from social
media
Retail Competitors
2011 Annual Sales
2011 Net Profit Margin

16. Strengths Weaknesses
● Vertical Integration
● “Made in the USA”
● Sweatshop free
● Strong supplier relationships
● Product quality
● Company owned manufacturing facilities in California
● Speed to market
● High fixed costs
● Negative brand perception
● Provocative advertising
● Financial restrictions
● Rapid store expansion
● Breath of line
● Leadership
Opportunities Threats
● E-commerce
● Return to “basic” apparel (prune line offerings)
● International expansion
● Change brand perception through advertising
● Improve inventory management
● Improve financial margins
● Market Nicher
● High level of global competition
● Costs of raw materials increasing (cotton)
● Celebrity endorsements of competitive brands
● Economic market trends
● Government regulations
SWOT

17. Marketing Mix
Product
Shirts, dresses, basics, denim, sweaters, jackets,
shoes, bags, accessories, and cosmetic goods.
For men, women, children, infants, and even
pets.
General product design: Iconic retro and vintage
imagery.
Place
•Retail
•285 stores in 20 countries, positioned
accordingly to the target market. Exp:
metropolitan areas and university sites.
•Wholesale
•A dozen wholesalers and 10,000 screen
printers sold by call center in L.A
•Online
•Americanapparel.net since 2004
Price
A competitive pricing strategy
Promotion
•Increasing awareness as well as supporting
acquisition, retention and growth strategies.
•Utilizes digital (online), print and outdoor
advertisement to support retail and online
sales. (Wholesale benefits too)
•Approximately, 25% of advertisement spend
was cut last year.
Keeping reasonable prices despite cost of
supplies and exchange rates.

18. ATTRIBUTES
BENEFITS
VALUES
POSITIONING
STATEMENT
To the trend setting, young adult, American Apparel is the sweatshop free provider of high
quality fashion basics and accessories that puts pride and value back in “Made in
the USA” fashions.
• Fashion Basics produced in the USA
• Fast product turnover (vertical integration)
• Corporate social responsibility-sweatshop free
• Brand Recognition
• One Stop shop
• Multiple locations
• I like to layer my outfit with a bright colored T-
shirt
• I do not mind paying more for sweatshop free
clothing
• I am against Forever 21 they are as bad as NIKE
• I love my gadgets and must be the first to try the
latest technology
• Strong Brand Loyalty
• Fashion Basics (T-shirts, jeans, dresses)
• Multiple Brand Extension
• International Brand
• American Clothing company
• Company owned Warehouse and Factory
• Wholesaler
• Retailer
• Vertically Integrated
• I support American Business
• I shop in specialty stores like H&M, J Crew and
Urban Outfitters
• Having the latest fashionable apparel is
important
• I shop online and in store
• I value quality apparel over low prices
Brand Ladder and Positioning

19. Keys to Success and Key Issues
Keys to Success
•Quick to Market
•Relationships with Suppliers
•Company Owned Warehouse
•Sweatshop free clothes “Made in the USA”
•High Quality products
Key Issues
•Extensive product line
•Provocative advertising /Negative brand perception
•Difficulty repaying past debt
•Declining profits
•Lack of Cash flow

20. Marketing Objectives
•Increase positive brand awareness
and recognition by 25% over two
years.
•Expand E-commerce to increase
online sales by 5% percent
•Increase Market share by 1% within
2 years
•Position American Apparel as a
Market Nicher

21. Market Research
• Focus groups
• Current and perspective
customers
• Behavior towards
marketing trends
• Advertising concepts
• Heart share

22. • Surveys
• Facebook, receipts,
email blasts
• Brand association
• Campaign
effectiveness
• Mind Share
• Market share
Market Research

23. Objective
• Reposition American Apparel as the premier fashion basic retail brand
– generating a 25% increase in positive awareness increase net sales by 5-10%
Recommendation
• Year long “Back to Basics” Campaign
• Highlight the basic fashion pieces not the models
• Highest quality basics that make fashion trendy, unique and versatile.
• Focusing on heart share
– increase in mind share will ultimately increase the current market share of American
apparel in the next year.
Media
• Print
• Out of Home
• Store Fronts
• Digital
Revamp Brand Image

24. Current Advertising

25. In The Media

26. Sample Executions

27. Market Testing 6/1/2012 9/1/2012 Marketing Team
Creative Executions 9/1/2012 11/1/2012 Creative Team
Back to Basics Phase 1 11/1/2012 3/1/2013 Marketing Team
Back to Basics Phase 2 3/1/2013 8/1/2013 Marketing Team
Back to Basics Phase 3 9/1/2013 12/1/2013 Marketing Team
Creative Schedule

28. Objective: Increase Sales from E-Commerce
Recommendation:
•Increase overall presence on the Internet
•Increase digital advertising
• Facebook Advertising
•Grow social media presence
●Increase following on social networks
●Establish positive brand image in the blogosphere
●Implement online only sales
•Optimize website & Facebook page for positive user
experience
Increase E-Commerce

29. • Consumers are more likely to visit company’s
social profile than website for information
•American Apparel has smallest social following
and site traffic of all its competitors
Social Media

30. Social Media Posts

31. Facebook Page Improvements

32. Accessing American Apparel E-Commerce site:
Landing Page: Corporate Website Select Region Online Store
Recommendation:
Landing page: Online store featuring current offers.
Website Improvements

33. • Contact 100 Fashion bloggers with high readership
• Offer American Apparel merchandise to use in posts
• Include link-backs to AmericanApparel.net
Blogger Outreach

34. Prune Lines/ Inventory Controls
Objective: Increase cash flow in order to
minimize financial obligations and allocate
more marketing dollars to raise net sales by
10%.
Recommendation
•Prune lines which house underperforming
products
•Based on Net sales and production cost
•Multibrand Brand Extension
•Improve Inventory Control System
•Analyze current system
•Sync sales forecasts with inventory re-order
•Utilize technologies such as RFID
•Market Nicher Strategy
•Focus on basics

35. • Break Even within 2 year on
implementation
• Increase Net Sales by 17 % in two
years
• Increase and maintain Advertising
spend by 20% for 2 years
Financial Objectives

36. • The sales after campaigns would be
higher than previous campaigns.
• The sales of Q4 and Q3 will be higher
than Q2 and Q1, because of the holiday
season, which prompts sales.
• The sales would be higher when
compared to the same quarter in the
last year.
• The highest profits will show in 2012 Q4
and 2013 Q1, which follow the
marketing action plans, and the sales
will remain the same in the following
quarters because of the after effect of
action plans.
Sales Projections

37. Because our marketing actions mainly focus on social media and advertising, we estimate
that online sales will have the most rapid growth and followed by retail sales.
Sales Projections

38. Profit & Loss Statement

39. Task Start By
Complete
By
Department
Marketing Plan
Completion 2/7/2012 5/7/2012 Marketing Team
Recommendation 1
Line Pruning
Research 6/1/2012 1/1/2013
Marketing/Accounting
Department
Begin Line 1/1/2013 6/1/2013
Marketing
Department/Sales
Recommendation 2
Increase Digital
Advertising 6/1/2012 12/1/2013 Marketing Team
Facebook Advertising 6/1/2012 12/1/2013 Marketing Team
Increase Social Media
Presence 6/1/2012 ongoing
Marketing Team/ Web Design
Team
Blogger Outreach 6/1/2012 9/1/2012 Marketing Team
Improvements to
Website 6/1/2012 ongoing Marketing/Web Design Team
Recommendation 3
Market Testing 6/1/2012 9/1/2012 Marketing Team
Creative Executions 9/1/2012 11/1/2012 Creative Team
Back to Basics
Phase 1 11/1/2012 3/1/2013 Marketing Team
Back to Basics
Phase 2 3/1/2013 8/1/2013 Marketing Team
Back to Basics
Phase 3 9/1/2013 12/1/2013 Marketing Team
Budget Allocation (Dollars in thousands)
Line Pruning $1,630
Digital Advertising $4,500
Facebook Advertising $3,000
Other Social Media Advertising $1,500
Blogger Outreaching $1,000
Improvement to Website $250
Market Testing for Back to Basics $500
Execution of Back to Basics $5,500
Total $17,880
Implementation Schedule

40. Monitoring & Controls
• Net Sales
• Expenses
• Heart Share
• Mind Share
• Market Share
• Conversions
Contingency Planning
Difficulties and Risks
• Our recommendation to prune underperforming lines, runs the risk of not
recouping profit or added to cash
• A substantial increase in market share amongst the niche brands will be difficult as
the threat of competition is high
Monitoring and Control

41. Questions