1. True Religion Brand jeans in China Aaron Si Abraham Sung Andrew Andrew Bobby Deng Julia Hillemeir

2. Today’s Agenda

3. Brand Map Premium Priced Luxury Mass Market Premium designer jeans market is saturated Low Cost

4. Competitors Analysis – Brand positioning True Religion is perceived as a brand that sits between 7 For All Mankind’s simple /sexy design and Diesel’s innovative and modern designs.

5. Competitors Analysis Strong Average Weak In China, in terms of product range, product presentation, and retail channels – Diesel has the stronger presence.

6. Today’s Agenda

7. Survey results Annual Income Age Those who are more likely to purchase/interested in TRJ are between the age of 22-30 and have a household income of 200K – 400K RMB / year 26.7% recognizes the brand “I like True Religion” 57% “I own True Religion” 14.3% From 26 samples, >90% are frequent luxury brand consumers(>3 items/year)

8. Brand Attitude and substitutes TRJ is perceived as too expensive, as a result customers are purchasing: Calvin Klein, DKNY, and Diesel as substitutes (priced $1000 RMB less than TRJ).

9. How Trends Filter Into China? Taiwan Japan Shanghai USA & Europe Hong Kong Source: "How Do Trends Filter into China" November 24, 2009 (http://enovatechina.com/blog/?p=1526)

10. How Trends Filter Into China? Taiwan Japan Beijing USA & Europe Hong Kong Source: "How Do Trends Filter into China" November 24, 2009 (http://enovatechina.com/blog/?p=1526)

11. Today’s Agenda

12. Recommendations PRICE: Pricing Strategy Better control - MSRP PROMOTION: TRJ Brand Equity is low in China Chinese Stars PR Events Advertising/Marketing PLACE: No Retail presence in China Pop up shops – low risk/low capital

13. Pricing strategy TRJ must better control its retail price in China. Otherwise, customers will continue to reach out to substitutes.

14. Chinese or Western Models? “You will find that many Chinese young people study how to dress like Kate Moss, study how to smoke like AgynessDeynand also discuss the freaky tattoos of Cole Mohr. But Du Juan, Liu Wen, and Pei Bei represent the spiritual nature of China rather than an attitude of life for all of its people.” –Leon Ni, enoVate, Shanghai Insight & Design Firm TRJ must usea western model, to sell the TRJ lifestyle and brand; and a Chinese model to identify with the Chinese market. Marketing Communications(1) Han Han Huang Xiaoming AgynessDeynand Cole Mohr

16. Bazaar Charity Night

18. POP UP SHOPS The pop-up concept involves taking an empty retail unit, or any venue that could act as a temporary retail space, and operating it on a short-term basis during busy trading periods. "Advances in technology mean setting up and operating a pop-up is now much simpler and does not require a high level of capital” - Accenture Study 2009 Source: ‘Pop Up Shops Cash in for Christmas’ Guardian UK, November 13, 2009

21. Why Not? Location, Location, Location: Unoccupied stores in hot retail locations aren't easy to come by. Shanghai is not New York City Why So Special?: Must draw customers with that extra ‘something’ The pop-up concept can totally back-fire. It’s Chinese to me: China’s sales and real estate channel’s are difficult to navigate. Source: ‘Pop Up Stores: All the Rage’ Businessweek, February 09, 2007

22. Navigating Pop Up Shops in Shanghai It’s already happening here!

23. Navigating Pop Up Shops in Shanghai It’s happening now! Vitamin Water in Shanghai

24. Where and how much? CITIC Square (West Nanjing) HuaHai Times Square (Pudong) Customer traffic and brand mix of these places are a good fit for the TRJ brand Source: “Shanghai Prime Retail” HSBC Q3 2008 Report

25. How Does True Religion Fit In? Temporary to Permanent Retail Model CLOT opened permanent store after success of pop-up on December 5, 2008. Shanghai is model for future first-tier city openings. Enter with Big-Bang Vitamin Water launch LA SH Party launch with LA & Chinese celebrities.

26. Thank you Questions?

27. BACKUP

29. Changing Fashion Trends

30. Growing Competitive Market

32. Increasing Operating ExpenseGlobal Markets Direct Company Profiles, 3 November 2009

33. Market Environment Fastest growing: has become saturated and cluttered. More than 40 start ups in 2000. Sales are still high for designer jeans. Up 5% in 2009: $8.2 Billion USD Average prices lower by 1%. “The key price is around $200…” Eric Jennings, Saks Fifth Avenue Men’s Fashion Director; Recession has asked designer jeans to rethink pricing strategies. Future of denim depends on ‘re-inventions’ No longer about ‘wash’ or ‘fit’ – “…designers will need to evolve denim” in order to sustain demand, [RenzoRosso, Diesel Founder] Source: “Preshrunk Prices” New York Times, October 28, 2009

35. Marketing Communications(1) Asian Face Endorsement Huang Xiaoming Lin Chi-ling Why? Halo effect Asian face is closer, more familiar, more friendly to Chinese customers. High end image from major stars. Successful Case Biotherm + Takeshi Kaneshiro

36. What Others Are Doing… Levi’s X Damien Hirst (Fred Segal, Los Angeles) Louis Vuitton Underground (Seibu, Tokyo) GAP 40th Anniversary (Canterbury St. London) Diesel X Heartschallenger (Causewaybay, Hong Kong)

37. True Religion Brand JeansHistory and Operation Founded in 2002 - Vernon, CA Wide product range Denim, pants, jackets, sportswear, shirts, t-shirts and sweatpants 2008 revenue is $270 million 76.75% CAGR in 2004-2008 66 branded retail stores Sold in 50 countries worldwide Timeless, Hippie, Bohemian, Chic. Jeffrey Lubell Founder, CEO and Artistic Director "To me it meant there's many religions in the world, but there's only one real religion -- and that's people.” – Jeff

38. Global business model Majority of revenue from jeans Premium pricing – up to $300 Made-in-USA Fully outsourced

39. Typical Chinese customers

40. Brand Substitutes

41. Brand – price positioning Source: Global Report on Jeans, Just-Style, 2009