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Part One:Country Marketing Environment Report

“Live every hour like it’s happy hour!” –Lilly Pulitzer

+ Defining Historical Events 660 B.C. According to legend, Emperor Jimmu

became the first emperor of Japan He was the descendent of of sun goddess Amaterasu,

and was said to live 126 years

1635 The Japanese break ties with all foreign countries for 200 years under a policy that was meant to protect the culture from European influence and war

1914-1918 Japan declared war on Germany

+Historical Events Continued…

1940 Japan entered WWII where they occupied North French Indochina

1945 Bombings of Hiroshima (15,000 deaths) and Nagasaki 75,000 deaths by the U.S.

**Those numbers are considered conservative**

1995 Japan becomes apart of the World Trade Oranization (WTO)

+International Trade History Edo Period 1603-1868 developed transportation

routes by road and water

Meji Period 1868-1912 Japan emerged as most developed country in Asia

After WWII overall economic growth from the ‘60s to the ‘80s due to worker productivity, government, and technology

After WWII international trade relations were driven by lack of domestic raw materials, and desire to catch up to the West.

+International Trade History The Lost Decade collapse of

the property bubble in 1989 causing economic stagnation, deflation, and high unemployment

They have struggled with recession on and off since 1989 until 2011

As of 2012, Japan is the 3rd largest national economy in the world (after U.S.A. and China) in terms of nominal GDP

+HumorThere is no word in Japanese for “sense of humor.”

Historically, jokes were centered around making fun of China

Their jokes are very pun based

For laughs, they enjoy scaring people. There have even been TV shows centered around it

+Literature Early literature was influenced by Chinese and Indian

literature

“Classical” Literature/The Heian Period (794-1185) Referred to as the golden era of art and literature Genji Monotgatari Kokin Wakashu Sei Shonagon

Konjaku Monogatarishu (circa 12th Century)

The Tale of the Heike (13th Century)

The Complete Haiku (17th Century)

+Works of Art The Great Wave—Katsushika Hokusai

Sansui Chokan—Long Scroll of Landscapes—Sesshu Toyo

Painting of a Cypress—Kano Eitoku

Abe-No-Nakamaro—Tomioka Tessai

+Cultural Plays Kabuki is the most type of

theatre Shunkan Kanadabon Chusingura Migawari Zanzen

Noh has been performed since before the 14th century Kyogen is a type of Noh that

is shorter humorous pieces

+Cultural Songs 2nd largest music market in the world

Traditional Japanese music has three main types: Instrumental Court Theatrical

Kabuki Gidayubushi (Joruri—narrative music) Shimoza Ongaku Noh

+National Heroes

Mineko Iwasaki—Infamous Geisha

Hirohito—Longest reigning Emperor

Masako—Crown Princess of Japan

+Heroes Continued…

Oda Nobunaga—Samuria Daimyo

Miyamoto Musashi—Warrior

Yoko Ono—Peace Activist

+National Sports Sumo Wrestling

+Traditional Dress:

Kimono

+Ethnic Groups, Sub-Groups, Language

98.5% Japanese, .5% Koreans, Chinese .4%, other .6% Ministry of Justice in Japan has no official breakdown of

ethnic groups in Japan

Japanese-Filipinos

The Ainu aboriginal tribe

+Three Most Important Holidays

Shogastsu New Year

Setsubin—The bean Throwing Festival

Hanami Cherry Blossom Festival

+Cultural TraditionsGeishas

Karaoke

Japanese Bath House

Tea Ceremony

+Ethics and Morality

Keiei= business in JapanStands for “making effort to develop

societies harmoniously and raise the well-being of the people”

It is always first discipline, then economic practices

Inseki Jinin (take responsibility and resign)

+Demographics and Geo-Demographics

Population: 127.6 million

+Family, Values, Issues Extended Family: several

generations living and working together on the land

Nuclear Family: father works, mother at home, and approximately 2 children for middle/upper class Lower class accepts that women

work

Multiple Family Patterns: no one model to follow in society to gain acceptance EX: divorced, re-married, married

w/o kids, gay/lesbian, etc.

+Educational System 6 years of public elementary school

3 years of junior high school

3 years of high school

2-4 years of university

Education is highly valued by the Japanese, with an average of 15 years of education per capita and a literacy rate of 99%

+Religious Systems Japanese enjoy full religious freedom

Shinto and Japanese Buddhism are not separate religions, but rather a complex religious system

One will fine Christianity, Islam, Hinduism, and Sikhism in Japan

They are not so much religious, but spiritual

+Political Structure

Prime Minister Naoto Kan

Emperor Akihito and Empress Michiko

multi-party parliamentary representative democratic Constitutional Monarchy where the Emperor acts effectively as the symbolic Head of state, and the Prime Minister acts as theHead of government and the head of Cabinet which directs the executive branch.

Japanese Political System, the House of Councillors is the upper house of the Japanese Diet, and is composed of 242 members. The term of office for the elected members of the upper house is six years. The House of Representatives is the lower house, with 480 members.

+Legal/Financial Environment

1 Japanese Yen = 0.0086 US Dollar

+Financial/Banking System

traditional banking system was segmented into clearly defined components in the late 1980s: commercial banks (13 major and 64 smaller regional), long-term credit banks (7), trust banks (7), mutual loan and savings banks (69), and various specialized financial institutions

+Economy Strengths

• High quality and good designs of modern industrial products

• Japan has a leading advance in technology• The strength of Japanese companies consists in the

strong ties of trust within their organizations Weaknesses

• Japan is lagging behind China, South Korea, Taiwan, and advanced western countries in regards to expansion overseas

• They have become less competitive in the world in economic development

• Their population is aging which is impacting their effectiveness, productivity, and performance

+Economy Major Industries: manufacturing,

construction, distribution, real estate, services, and communication

Agricultural: only 2% of GNP, rice, sugar beets, vegetables; pork, poultry, dairy products, eggs, fish

Standard of living, income levels and distribution: Population below poverty line:

16% Distribution of family income:

37.6% Household income: lowest is

1.9%, highest is 27.5%

+Economy Unemployment Rate: 4.1%

GDP Purchasing Power Parity: $4.729 trillion

GDP Official Exchange rate: $5.007 trillion

GDP Per Capita: $37,100

1 Yen is equal to 0.0085 U.S. Dollars

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Part Two:Country Marketing Plan

“I didn’t set out to be unusual or different. I just wanted to do things my way”- Lilly Pulitzer

+History In 1959, Lilly opened her first

boutique in the Vias off of Worth Avenue in Palm Beach, Florida inspired by Palm Beach and resort wear.

She meant for the stores to be silly, bright, and reflect her carefree lifestyle.

Previously, she had sold oranges and juice but later went into sundresses and spill-proof shift dresses.

The idea was to create dresses that represented fun and partying- hence the crazy prints (from elephants to monkeys drinking mimosas) but also represent high prep fashion and class.

+History Continued… Lilly Pulitzer’s strategy for generating sustained profitable

growth is that it is a lifestyle brand and a company that evokes a strong emotional response from consumers.

The 2013 market was slow-moving due to the fact that consumers were becoming more cautious in their retail purchases.

However, Lilly Pulitzer and the other companies underneath the umbrella of Oxford (Tommy Bahama, Lanier Clothes, Ben Sherman, and Oxford Golf) were able to achieve a net sales growth of 7% and adjusted operating income growth of 8%.

Lilly Pulitzer itself grew with a 13% net sales growth. It had almost doubled in size from 72 million of sales in 2010 to 138 million of sales in 2013.

Lilly has moved from Palm Beach to completely dominating the East Coast and middle of the USA with some stores in the West.

+Lilly Pulitzer’s domination of the East

+History Continued….again!

Lilly Pulitzer’s core business competencies are its unique store designs (3D crabs and oranges on the wall, hand-painted prints, etc.) and emotional appeal through Lilly’s life story and her values.

Lilly Pulitzer primarily markets itself towards young women and girls with some products geared towards men.

It is competitively distinct in just that- the fact that it has multigenerational appeal. This is something we would like to carry over to Japan as well, hoping that the brand peaks interest in both younger and older woman alike.

Although Lilly has no global market positioning to date, we are hoping to begin in Japan as there are many patterns that would flatter and excite the Japanese market as well as tap into family values/tradition and the quick-moving Japanese economy.

+Mission and Vision

Lilly Pulitzer does not appear to have a mission statement although it appears that their vision is to bring together multiple generations of “preppy” women through their use of aesthetics, fun, and values in their stores and dress.

+Goals Domestic Goal: Maintain an average of

opening 5-6 stores every year and slowly spread across the West while exceeding 200 million in Retail Sales Value come the end of year 2015.

International Goal: Successfully introduce Lilly Pulitzer to Asian woman by emphasizing mother/daughter clothing, going in with a high price to emphasize class, and strengthening family values.

Goal for Japan: Introduce Lilly Pulitzer to Tokyo, Yokohama, and Osaka and expect a 5 million Retail Sales Value for all three stores in year 2015.

+Goods to be marketed and why

The three Lilly Pulitzer stores will begin in the Spring of 2015, around late March/Early April around the exact time the cherry blossoms bloom.

The stores will be hand-crafted as they always are, with added tastes from local artists. All merchandise will be shown (Shift dresses, sun dresses, tops and bottoms, bathing suits, stationary, and bed spreads).

+Marketed goods continued… There will be emphasis on the “Cherry Blossom

Print” which will be the highlight of the opening and reflect itself in mostly the stationary, shift dresses, and bed spreads.

The five different prints will be shown: 1. Bright Navy Cherry Mine  2. Hotty Pink A Thing Called Love  3. Bright Navy Cherry Picker  4. Bright Navy Cherry Wine  5. Resort White Flowers and the Trees *All are variations on the cherry blossom print

These prints will be shown in the advertisements at the end.

+Market Analysis

+Transportation

Transportation in Japan is modern and highly developed

175 airports: there are three main international airports in Tokyo, Osaka and Nagoya.

27,182 km of railways: railways are a major means of passenger transportation

1,210,251 km of roadways; there are 45 million cars in Japan, for a ratio of 350 cars per 1000 people

22 major sea ports

+Communication Phones: excellent domestic

service (high level of modern technology) and excellent international service (numerous submarine cables)

TV & radio: 6 national terrestrial TV networks including 1 public broadcaster; the large number of radio and TV stations available provide a wide range of choices; satellite and cable services provide access to international channels.

+Domestic competition There isn’t any other company in Japan that focuses on

dresses like Lilly Pulitzer makes.

The trend in Japan in Kawaii clothes, and some Japanese online stores such as MinkyShop or Syndrome Store sell dresses that might resemble, but they don’t pose a threat because they aren’t big companies.

+International competitors Virtually no competition.

Lilly has a unique product offering because the brands are so special.

We are differentiated from the competition and uniquely positioned in the market.

We sell more than just a dress, we sell our brand, this is what differentiates us from competition.

+Market Potential

26.3 million people

Lilly Pulitzer’s operating results are impacted by seasonality and the sales depend on the time of year. The following table presents the repartition in % of net sales and operating income for Lilly Pulitzer by quarter

for 2012:

Current net sales (in thousands):In 2012: $122,592 In 2011: $ 94,495

+Sales ForecastWe expect sales to rise 30% the first year, then an additional 15% the third year and 15% the fifth year:

Net sales forecast (in thousands):

+Market Potential: Prospective Buyers Given the market size of 26 million

girls and women ages 5-49, prospective buyers would be teens and women buying for themselves and their young daughters

The market size for people in their 20s is the largest. This is because most of them still live with their parents and don’t need to pay living expenses. The largest market for most countries is in the 40–year old age group.

+Consumption Characteristics

The Japanese are very loyal to foreign prestigious fashion brands such as Louis Vuitton and Gucci. The sales of these companies have been growing steadily with support from young consumers.

Most influenced by fashion magazines and retail-oriented sources of collecting fashion information such as store displays and sales people

23% of consumers in Japan shop for most of their clothing at specialty stores, followed by off-price stores (22%), department stores (17%), and chain stores (15%)

+Market Trends 2012 market grew 2.3% for Japanese apparel retailing

There were many examples of success, particularly among the top 100, including overseas brands such as H&M

Sales are being boosted by consumers buying before the increase in consumption tax to 10 percent in April 2015.

Prices are rising due to low yen, higher raw material and labor costs.

Japan remains a huge fashion market that is profitable, stable, with high levels of trust, and plenty of unmet demand and new markets to provide growth for years to come.

+Product plan

We won’t be making any product changes, however we will have a lot of emphasis being placed on certain patterns- such as the cherry blossom patterns.

The Lilly Pulitzer brand has a distinct, unique & iconic style, which is why we won’t be making any modifications to our products or to its label.

+Market penetration strategy

Our future goal is to be a global company, as we want to be present in many countries. We market our products through the use of the same coordinated image and brand in all markets.

Right now our company is an international company, we have no investment outside of the US so our strategy will be exporting for now. We are also counting a lot on online sales.

+Promotion plan We will promote our brand in magazines so

that we can reach most of our potential market.

Metropolis Aera (Japan’s #1 English magazine) (major Japanese magazine)

+Promotion plan We will also have TV and radio commercials on all

major networks.

We will put ads on the internet and social networks to reach girls and young women.

An ROP (Run of Paper) Advertisement will looks as follows…

+“We love it!”

+Potential Commercial/ Spring Collection*Zero to brief dialogue is used is usually used in Japan

+Distribution Plan

Retailers......

The way goods are sold…

Location………

Role of wholesalers……

Transaction relation……

Nationwide chain stores

Specialized (or standardized)

Suburban shopping centers, roadside, railway station building

Minor

Simple market transaction

+Distribution Cont’d…

Central warehouse in Tokyo

Railways will be main mode of transportation to central warehouse

Trucks will distribute inventory to other major cities

+Pricing Plan

We will use the skimming method to price our products- Launch products at premium pricing for the market segment

Lilly Pulitzer’s closest competitor, Uniqlo, is set to raise prices 5% before Fall/Winter line debut this year. Biggest clothing provider, though casual wear

+Calendar/Timeline

Nov 20th, 2014- Apply for Licensing in Japan

December 30th, 2014- Receive approval from Japanese government

January 1st, 2015- Launch Advertisements to be run for one year.

February 3rd,2015- Start store construction in Tokyo, Yokohama, and Osaka

March 15th, 2015- All sales associates/managers hired and trained

March 30th, 2015- All stores built and ready for grand opening

March 31st, 2015- Lilly Pulitzer opens with Cherry Blossom line just in time for their cherry blossom trees to bloom!

+Sources: http://www.nber.org/chapters/c8664.pdf

http://www.businessoffashion.com/2013/12/japans-apparel-market-is-finally-growing-again.html

http://www.japantimes.co.jp/news/2014/06/10/business/corporate-business/uniqlo-set-raise-prices-summer/#.VG2mzfnF_O4

https://www.cia.gov/library/publications/the-world-factbook/geos/ja.html

http://afe.easia.columbia.edu/japan/japanworkbook/economics/factshe.htm

http://www.globalsherpa.org/japan

http://www.oecdbetterlifeindex.org/countries/japan/

http://www.japan-guide.com/e/e644.html

http://www.japantimes.co.jp/opinion/2013/05/17/commentary/japan-commentary/enhancing-japans-strengths-remedying-its-weaknesses/#.VGz2nvmG_9U

http://investor.oxfordinc.com/releasedetail.cfm?releaseid=753852

http://files.shareholder.com/downloads/AMDA-EGPX7/0x0x665078/DABDB367-1E10-4720-A7A5-45895D65B537/2012OxfordAnnualReport.pdf

+Sources Continued: http://www9.ocn.ne.jp/~aosima/english-yuisyo.html

http://intranet.ames.cam.ac.uk/jbib/

http://www.datesandevents.org/places-timelines/29-timeline-of-ancient-japan.htm

http://www.aasc.ucla.edu/cab/200708230009.html

http://www.lillypulitzer.com/content.jsp?pageName=lillyattitude

http://files.shareholder.com/downloads/AMDA-EGPX7/0x0x768823/0F5C66E8-6F2A-4451-800F-34BB5F9EC75D/2013OxfordAnnualReport.pdf