Sarah White, Isaac Buwenbo, Pablo Prieto, Mariana Quiroga, Brian Schmierer

April 14, 2013

MARKET INSIGHT RESEARCH

Topic Areas •  Executive Summary

•  Industry Landscape

•  Tellason Background

•  Objectives & Methods

•  Findings & Relevance

•  Opportunities

•  Recommendations

•  Appendix

Tellason Jeans is seeking to understand the current market needs surrounding the high end, denim jean category.

Our investigation into the denim jeans category uncovered four user types: •  Denim jeans as Just Jeans •  Denim jeans as a Uniform •  Denim jeans as a Style Statement •  Denim jeans as an Extension of Me

The most relevant user types to Tellason are: •  Denim jeans as an Extension of Me •  Denim jeans as a Uniform.

Two additional insights were found around the female shopping experience: •  Many women do the shopping for their men - opportunity to direct the

Tellason message specifically at them •  The industry lacks high quality, denim experiences for women

Executive Summary

We uncovered the following four experiences that people look for in Denim jeans:

•  UTILITY

•  FREEDOM

•  VALIDATION

•  TRUTH

Based on our research, we recommend that Tellason focuses on FREEDOM and TRUTH as the primary experiences for both men and women moving forward.

Executive Summary

Denim Jean Market Size

•  Global Market $75 billion •  US Market $13 billion •  Premium denim market $2 billion

Industry Trends

•  Premium denim category affected by “return to craft” trend •  Focus on sustainability in material and manufacturing

Direct competition

•  Increase in small batch, premium brands •  Mass market brands entering the premium denim category

Industry Landscape

Small Batch Crafting: Tellason was born in 2008 and based around creating the perfect jean.

To create a great fit, meant for 9 out 10 body types, Tellason spent their first 6 months producing one prototype.

Made from custom loom woven fabric from Cone Mills' White Oak plant in Greensboro, North Carolina and cut and sewn right here in San Francisco, California.

Tellason has an affinity for all things well crafted and authentic.

Owners Pete Searson and Tony Patella

•  Identify a clear brand story that will help them still be here in 10 years

•  Identify new markets Tellason might enter in the future

Objectives

•  Uncover current and potential experiences within the denim jean category

•  Identify opportunities for Tellason to distinguish themselves from competitors

24 Street Intercepts •  targeted locations •  5-15 minutes each

•  Even split (Men/Women)

•  Age Range - 18+

2 Expert Interviews •  30-60 minutes

•  Ashley Holoquiste: Senior buyer at Armani

•  Tim Smith: Marketing Director at Levis

4 Secret Shoppers (in San Francisco) •  A/B Fits

•  Self Edge

•  Mill Mercantile

•  Two Jacks Denim

Survey of trend reports and publications on denim industry and

Tellason + competitors

Methods

We identified four attitude segments surrounding denim jeans:

denim jeans as JUST JEANS denim jeans as A UNIFORM denim jeans as A STYLE STATEMENT denim jeans as AN EXTENSION OF ME

Findings

JEANS AS JUST JEANS

“ I don't care about form, but I am more interested in function which can be served by

any kind of pants. ”

JEANS AS UNIFORM “ It’s about comfort, enables me to do what I

want to do when I want to do it. ”

JEANS AS A STYLE STATEMENT

“ I feel good when I look good. I want to know what's popular and trending so I can know

what others think of my style. ”

JEANS AS EXTENSION OF ME

“Honesty and integrity are important to me, I need to know how this fits into my life and want it to align

with what I know of myself.”

We identified four key experiences surrounding denim jeans:

TRUTH FREEDOM VALIDATION UTILITY

Findings

TRUTH

feels like a trusted friend

honesty and integrity in every aspect of experience, transparency

of methods and inner workings, brand story/history, they speak to

your story/show the wear

FREEDOM

takes you everywhere

freedom to choose between a well tailored suit jacket or your old

basketball t-shirt from highschool; take you from work to play

VALIDATION

fit in & still make a statement

support, status, belonging, mostly social validation, not about loyalty to the brand but exterior perception as

motivation to stay "in the know”

UTILITY

value in enduring quality

usefulness, longevity, endurance recognizes the importance of being able to stand up to life's challenges

and still look/feel great without having to do much

ADDITIONAL FINDINGS

• Many women do the shopping for their men

• The industry lacks high quality, denim experiences for women

Strength of

EXPERIENCE POTENTIAL

Truth & Freedom experiences are what people are most looking for in the premium denim category.

This insight closely relates to Tellason’s brand ethos but to realize the full potential of this customer segment the Tellason brand must focus on and leverage opportunities to evoke Truth & Freedom.

Relevance

+ -

We discovered these insights related to the premium denim category.

Relevance

EXTENSION OF ME aligns most closely with TRUTH.

A UNIFORM aligns most closely with FREEDOM

STYLE STATEMENT aligns most closely with VALIDATION

JUST JEANS aligns most closely with UTILITY.

We discovered these insights related to the premium denim category.

Customers who see premium denim Jeans as an Extension of Me & Jeans as a Uniform mapped most closely to the experiences of Truth & Freedom respectively.

This insight closely relates to Tellason’s brand ethos but to realize the full potential of this customer segment the Tellason brand must focus on and leverage opportunities related to these attitude segments as they relate to the experience of Truth & Freedom.

Opportunities

TRUTH - expand and educate

Provide more for knowledge hungry customers on Tellason’s inner workings, provide additional access to the brand through alternative avenues

VALIDATION – celebrate

Create social feedback and community gratification that celebrate the relationship between an owner and their jeans

FREEDOM - bridge

Provide a platform to better connect online and in-store shopping experience

UTILITY – demonstrate

Find unique ways to demonstrate quality and strength of denim

We recommend that:

•  Tellason focus on the segments who see denim jeans as:

AN EXTENSION OF ME & A UNIFORM

•  Tellason do so by evoking the experience of:

TRUTH & FREEDOM

Recommendations

We also believe that:

•  With the goal of inspiring loyalty amidst the recent shift in trends, there is potential to educate and market towards those that view denim jeans as:

A STYLE STATEMENT

•  Women shopping for their men may be reached through:

VALIDATION

Recommendations

Moving forward on the following strategies with a focus on the experience of TRUTH & FREEDOM will position Tellason as a leader in the premium denim jean category.

Recommendations

Improve customer brand loyalty:

Identify key leverage points for understanding and improving customer’s assessment of the perceived value of the brand

Develop channel and image differentiation strategies:

Identify online and brick & mortar retail growth opportunities

Cultivate long-term relationships:

Identify partnership marketing opportunities to build customer loyalty

Thank You

APPENDIX

★  How often do you wear jeans?

★  What does a high quality pair of jeans look like to you? (what’s the most you’d be

willing to pay for that?)

★  How long do you typically spend looking for jeans?

★  Can you tell me about your favorite pair of jeans? (question about detail,

attachment)

★  Do you know where your jeans are made?

★  How much of a difference would it make if you knew more about them?

★  What’s important to you when you’re purchasing jeans?

★  What do you love about finding a perfect pair of jeans? perfect fit?

★  What is a delight when you buy jeans?  

★  What is a great experience buying jeans?

★  What causes you buy new jeans?

Intercept Questions

Ashley Holoquiste & Tim Smith 1.  What are trends you see in denim today? 2.  Is the current market of denim a trend or will it last longer than a few

years? 3.  How does Armani/Tellason/Levis view denim within their product mix 4.  What are your thoughts around local production and the importance of

“story”? 5.  How important is location of manufacturing to your customers? 6.  Why do you feel denim been such successful thru the decades. 7.  How does Armani / Banana Republic help women find the right fit? 8.  What factors does Armani consider when selecting which styles to

include in their collections? 9.  What makes a pair of jeans bad?

Key Expert Questions

Research Sources ★ "$200 Jeans? The Economics Of High-End Denim." Real Men Real Style. N.p., 12 Sept. 2011. Web. 18 Feb. 2013. ★ "The Rundown on Selvedge Denim â€nd What’s It All About." RawrDenim.com. N.p., 25 Mar. 2011. Web. 18 Feb. 2013. ★ "The Story And Philosophy of Tellason." RawrDenim.com. N.p., 10 Feb. 2013. Web. 18 Feb. 2013. Goligoski, Emily, ★ "The Jean Genies." The Bold Italic. N.p., 9 June 2010. Web. 15 Mar. 2013. Lipke, David. ★ "Men's Denim By the Numbers." WWD. N.p., 18 Feb. 2013. Web. 15 Mar. 2013 Centeno, Antonio. ★ "$200+ Jeans? The Economics Of High-End Denim." Real Men Real Style. N.p., n.d. Web. 18 Feb. 2013.

Other stores references: http://shop.imogeneandwillie.com/pages/womens http://denimbar.com/ http://www.raleighworkshop.com/ http://www.millmercantile.com/ http://www.selfedge.com/ http://www.urbanoutfitters.com/urban/catalog/category.jsp?id=W_CUSTOM_DENIM http://www.jackknifeoutfitters.com/about/