Brand Audit

By: Nidia Quezada

Table of Contents
Company

page 3

Positioning and Competition

page 6

Products Categories

page 8

Brand Analysis

page 10

Consumer Profile

page 11

Advertising & Marketing Strategy

page 13

Promotions

page 16

Internet & Social Media

page 17

Brand Value

page 20

Marketing Research

page 20

Recommendations

page 21

COMPANY
Name: Kate Spade & Company
Location: Headquarters are located in New York City, NY, and retail locations present in over 20
countries.
Organization and Major Activities: Kate Spade is quickly expanding to become one of the
newest lifestyle brands. The once a handbag company, has expanded its offering into clothing,
jewelry, watches, shoes, stationery, eyewear, fragrance, tabletop, and gifts. It operates under the
flagship brand Kate Spade New York and two other core brands. A more price-conscious
subsidiary Kate Spade Saturday, and also the Jack Spade brand targeted at males.
Subsidiaries: Kate Spade & Company also owns Adelington Design Group and holds licenses for
Liz Claiborne, Monet, Trifari, Kensie, Lizwear and Liz Claiborne New York.
Brand History: Kate Spade & Company, previously known as Fifth & Pacific Companies, Inc.,
debuted on February 26, 2014. However, the initial sparks for this playfully sophisticated brand
date to when Kate Spade founded her successful company in 1993. Spades first goal was to
design the perfect handbag. Debuting with just six silhouettes, she combined sleek, utilitarian
shapes and colorful palettes in an entirely new way, and so the spirit of her company was born.
Kate Spade has gone from a niche to mainstream brand in the past two decades. Although
the company faced some initial challenges after Neiman Marcus Group LLC bought majority
control in 1999, it managed to grow and was then acquired by Liz Claiborne Inc. in 2006 for
$124 million. At that time, Liz Claiborne owned 30 apparel labels, including Juicy Couture and
Lucky Brands. As Liz Claibornes popularity decreased over the years, most were jettisoned or
closed.
Three years ago, the company sold Liz Claiborne rights to J.C. Penney Co. and
subsequently renamed itself Fifth & Pacific Co. Last year, as it sought to focus on Kate Spade,
Fifth & Pacific sold Juicys intellectual property to Authentic Brands Group LLC and agreed to
sell Lucky to Leonard Green & Partners LP. As a result this past February the holding company
became Kate Spade & Co, and is currently growing the Spade core brands.
Financial Data: On February 26, 2014, the company began trading under its new stock symbol
(NYSE:KATE). In 2013, Kate Spade saw total revenue increase +61% to $743M. Customer
acquisition was extraordinary and databases grew by 57%. Comps for e-commerce business were
up +49%. In the fourth quarter, they also marked 14th consecutive quarters of annualized comp
store productivity growth.
Consolidated Financial Statement from 10K:
(Amounts in thousands, except per common share data)

2013

2012
$ 1,043,403
599,169
(52,528)
(70,221)

2011
$ 1,100,508
598,331
(102,772)
138,206

(74,505)

(171,687)

0.61

(0.64)

1.46

0.60

(0.68)

(1.81)

0.60

(0.64)

1.22

0.59

(0.68)

(1.35)

121,057

109,292

94,664

124,832

109,292

120,692

NET SALES
$ 1,264,935
GROSS PROFIT
725,581
OPERATING LOSS
(45,513)
INCOME (LOSS) FROM
73,924
CONTINUING
OPERATIONS *
NET INCOME (LOSS)
72,995
PER COMMON SHARE DATA:
BASIC
INCOME (LOSS)
FROM CONTINUING
OPERATIONS
NET INCOME
(LOSS)
DILUTED
INCOME (LOSS)
FROM CONTINUING
OPERATIONS
NET INCOME
(LOSS)
WEIGHTED AVERAGE
SHARES OUTSTANDING,
BASIC
WEIGHTED AVERAGE
SHARES OUTSTANDING,
DILUTED **
WORKING CAPITAL
TOTAL DEBT

206,473
36,407
124,772
394,201
406,294
446,315
Overall, Kate Spade seems to be growing rapidly, yet strategically, even under current
competitive conditions in the retail sector. KATE stock has shown significant growth, jumping
from $19.86 to $40.75 in a years span and currently holding steady in the $35 range.
Annual Report: As can be seen from the financial statements and derived from the annual report,
in 2013, Kate Spade experienced industry-leading growth across categories through a successful
combination of initiatives including:
Balancing accessible and aspirational price points to increase customer reach.
The introduction of new product categories, including stationery, desk accessories and
fragrances, to build brand equity.
Increase of their global footprint with new stores in North America, Japan, China,
Brazil, Mexico, Turkey and the Middle East, along with international concessions in
Japan and France.
Shaping and refining the companys portfolio to position Kate Spade brands for
significant expansion.

Completing two complex sales one for the Lucky Brand Jeans business and one for
the Juicy Couture intellectual property.
Changing the company name to Kate Spade & Company and carefully merging
resources (leadership and capital) to ensure a seamless transition and continue to build
the company with a solid and experienced team.

Key Personnel:
CRAIG A. LEAVITT, Chief Executive Officer
GEORGE M. CARRARA, President & Chief Operating Officer
DEBORAH LLOYD, Chief Creative Officer
MARY BEECH, Senior Vice President & Chief Marketing Officer
CHRISTOPHER DI NARDO, Senior Vice President, General Counsel & Corporate Secretary
BILL HIGLEY, Senior Vice President, Human Resources
MICHAEL RINALDO, Vice President, Corporate Controller & Chief Accounting Officer
ROBERT VILL, Senior Vice President, Finance & Treasurer
LINDA YANUSSI, Senior Vice President, Global Operations & Information Technology
Recent News:

April 29, 2014: Kate Spade Launches Perch Technology in Stores:

Perch, an interactive display system, integrates rich media content into the in-store
shopping experience. It projects animated images onto the surface (table or wall) and an
optical sensor inside the Perch unit detects when a product is picked up or a customer
touches the table. The display responds in real time. By using its hashtag,
#travelcolorfully, as a starting point, Kate Spade introduced a live feed of Instagram
photos of customers in vacation locations. Other areas on the table are devoted to style
tips and ad campaign videos. There's also a "create the outfit" panel with looks spinning
and the sounds of a slot machine. Perch will be available next month in select Kate Spade
stores in Boston; Chicago; Dallas; Orlando.
April 16, 2014: Gap to Partner with Kate Spade on Kids Collection:
According to the announcement, the kids collection, which is expected to hit retail in
November, will be available through Gap's website as well as Gap Kids stores in the U.S.,
Canada, the U.K., France, Hong Kong and Japan.
April 4, 2014: Kate Spade Builds on Success in Japan:
Kate Spade New York is opening the doors of a new international flagship hoping to
capitalize on its fast-growing business in Japan and propel future expansion elsewhere in
Asia. Craig Leavitt, chief executive officer of Kate Spade & Co., described the store as
the "crowning achievement" for the brand's 18-year-old business in Japan. Citing a 26
percent surge in fourth-quarter comps for the company in Japan, Leavitt said the country
continues to perform very strongly.

POSITIONING AND COMPETITION

Category Definition: Kate Spade falls under the consumer goods sector and is considered part of
the textile/apparel industry. With its plans to expand to become true lifestyle brands, it might
soon enter the home goods sector as well.
Size of Category: Considering that the textiles and apparel industry as a whole accounts for $400
billion in global exports, and that the fashion industry is one of the most competitive consumer
goods sectors Kate Spade competes in a large and diverse environment against many other
brands.
History of Category: The fashion/apparel industry is known for its quickly evolving seasonal
trends, non-stop creative flare, as well as constant attempts to reach target price points to attract
consumers. Kate Spade, as a mid to upper scale brand has positioned itself to be considered a
brand that offers high quality for a reasonable price. The brand has sought to keep a classic
essence but uses a cheerful and colorful palette to position itself differently than its competitors.
Methods of Distribution: Kate Spade merchandise is available for purchase at its company
owned stores, through several premiere department stores, outlets, and of course online. As an
effect of becoming a global brand, Kate Spade is currently taking steps towards re-vamping and
promoting their website to increase online sales. Below is a chart describing the average number
of Kate Spade New York stores as of December 2013. For 2014 it is expected that 25-30 Juicy
Couture stores will be converted to Kate Spade formats and that the company will exit the
remaining stores.
Kate Spade New York Approximate
Number of Average Store
US Specialty Retail Stores .............................76
Foreign Specialty Retail Stores ......................22
US Outlet Stores .............................................42
Foreign Outlet Stores .......................................9
Concessions ....................................................42

Stores Size (Square Feet)

2,000
1,300
2,200
1,600
N/A

The following table sets forth information concerning the companys branded websites through
which consumers can obtain information about the company, purchase products, or both:
Website

www.jackspade.com

Information Only

Information and
Consumer Sales

www.katespade.com
www.katespadeandcompany.com
www.katespade.jp
www.saturday.com
www.saturday.jp

Major Industry Rivals: Some of Kate Spades major competitors include: Ralph Lauren, Tommy
Hilfiger, Tory Burch, Marc Jacobs, Michael Kors, J Crew, Guess, Burberry, Fossil, and Coach
Seasonal Factors: Kate Spade must be aware of the latest trends and styles because it is trying to
portray an innovative and trendy profile. Behind-the-scenes preparation for spring, summer, fall,
and winter lines (both apparel and accessories) begins far before consumers see them in-store. As
is true for many retail companies, the holiday season is often the most active and demand for
products increases. Careful projections must be made to produce enough inventory to fulfill
demand during this busy period, but not have too much merchandise left over for the next year as
products lose their luster fairly quickly in the fashion world and must then be sold at discount.
Regional Factors: Considering that Kate Spade is evolving to a global brand it must strategically
position locations world-wide and analyze consumer behavior in order to know what regions
have similar patterns to group together. Keeping in mind that seasons change at different times
across the globe it is important to consider this when making plans for inventory and
advertisements. Language, culture, and economic situations must be understood before taking
big jumps into different regions.
Legal Considerations: With its growing popularity, the company should make sure their brands
and slogans are trademarked in order to protect them from competition and even lawsuits. One of
the greatest legal concerns that could soon be a problem for Kate Spade is counterfeit
merchandise. As the company expands into different areas it must be cautious to not lose its
control on quality. Kate Spade products are expected to be long-lasting and of superior quality.
While brand logos can easily be replicated, the materials and care that go into making Kate
Spade products are not so easily matched. It is important to be on the lookout for major schemes
and shut them down before they affect customer opinions.

PRODUCT CATEGORIES
Share of Category by Product: Currently, Kate Spade holds about 0.4% of the global handbag
market compared to Michael Kors 1.7%, but with its plans to expand, Kate Spade has lots of
room to grow. It is no secret that Coachs North American womens handbag and accessories
business has been hurt by growing competition from other brands like Kors and Kate Spade, who
are battling for Coach customers. Coach is planning to change gears this fall towards a more
lifestyle offering to include apparel and other things beyond just handbags and accessories but
Kate Spade has already taken steps towards beating them out of this sector. Only 26% of
analysts covering Coach stock rank it a buy, Kors, in comparison, gets a 71% buy rating while
Kate Spade earned a 67%. It is clear that Kate Spade is an emerging competitor, with a lot of
potential.
Product-Form Description: Kate Spade products, especially purses, usually embody very classic
cuts and silhouettes but feature eye-catching patterns and colors. Through its products, the
company strives to reach a compromise between classic products and innovative (very colorful)
details. Clothing is often multi-functional and appropriate for several occasions. Accessories and
dcor are meant to be fun ways to highlight any outfit or space.
New Product Introductions: Kate Spade has big plans for 2014-2015 and is currently working on
introducing the following items to several markets:

fine china & glassware and thermal coffee mugs

tablet accessories
stationery
home dcor
bridal accessories
fragrances
Louise purse & Skylar purse models

Benefits and Appeals of New Product:

Introducing products for the home is a great step for Kate Spade, and will address the
needs of those who desire to express their style not only through what they wear, but in
their living space.
By seeking to reach out to the bridal market, Kate Spade will address yet another need of
women and create presence in a new market that has very special significance.

By currently using Rio de Janeiro as a theme in spring/summer lines, Kate Spade is

creating a relevance with the World Cup, one of the biggest global affairs occurring this
summer. By focusing on the location, Kate Spade is benefiting from the buzz without
having to resort to soccer balls and team jerseys.

New Packages:

Generally sticks to traditional purse silhouettes, but changes colors. This season focuses
on yellow, sky blue, orange, and fuchsia which give a very tropical vibe.
A few small accessories such as coin purses, also feature tropical elements such as
coconut shapes, which add a fun and casual summer feel to any wardrobe.
For the more traditional products navy blue and bow tie patterns seem to be very trendy.

Innovations:

Some newer clutches and purses feature new Spade hardware. Instead of using a regular
plaque with Kate Spade engraved in it, they have created a circular metal piece with a
spade shape in it.
A really unique product they are offering are small Bluetooth speakers in the shape of
dice with big spade logos, which could easily bring life to any pool or cook-out gathering
this summer.

Recent News about Product Category: Overall, Kate Spade seems to be a flourishing brand. It is
working to strengthen their hold in the handbag market, but also venturing out into new sectors
by taking their essence and creating products that serve both everyday purposes and special
occasions.

BRAND ANALYSIS
Top Brands by Dollar or Unit Sales: Kate Spade New York is definitely the biggest asset of the
Spade brands in both dollar and unit sales terms, followed by Jack Spade and Kate Spade
Saturday.
Growth Trends of Top Brands: With increasing profit returns and investor confidence Kate Spade
plans to increase the number of Kate Spade locations by 15% in North America, and hopes to
expand the Kate Spade Saturday brands in Asian markets. E-commerce initiatives will be made
to attract online shoppers to all 3 of the separate Kate Spade, Jack Spade, and Kate Spade
Saturday websites.
Category Share by Country and Region: Kate Spade presence is strongest in the United States. It
is increasingly gaining popularity in the Mid-West and Southern regions and already strong in
the North East. If properly managed, minimal adjustments could be made to fit the tastes of all
the U.S regions. Asia is the next strongest market for Kate Spade, and especially with current
campaigns and color schemes Latin America could soon see Kate Spade presence as well.
Pricing Trends: Kate Spade is positioned in the premium spot thats cheaper than designer goods,
costlier than mass merchandise, and more resistant to the markdowns that many chains must
face. Below is a general price range for some of the most popular items:

Purses $98 - $700

Desk accessories $8-$50
Clothing $50-$800
Casual dinnerware $20 per piece

Kate Spade truly attempts to make products available to all types of price ranges. Depending
upon a persons socioeconomic position, or reason for shopping, they can be as economic or
extravagant as they want and know that they are still getting a quality product. There doesnt
seem to be any indication that prices will vary from this range, especially considering that Kate
Spade Saturday was launched to target customers on the lower end of the spending scale.

10

CONSUMER PROFILE
Demographic of Users: While Kate Spade Saturday and Jack Spade target other sectors, the
flagship brand Kate Spade New York consumer demographics are as follows:
Almost entirely female
Between the ages of 20 and 35
(Targeting primarily those in the millennial
category)
College-educated
Primarily live in urban areas
Appreciate great design, aware of trends and
definitely know what color is in for the
season
Seek combination of fashion with
functionality
An interesting detail is that when trying to identify the ideal Kate Spade customer research
was conducted by photographing New York and Los Angeles women carrying bags. These
images personified the target woman, one who May be fun-loving, but she also wants to
appear neat and polished. She also wants to be the most interesting person in the room

Frequency of Purchase/Usage: Depending on spending abilities Kate Spade customers usually

purchase 1-4 Spade products per year, more if they purchase apparel every season.
Place of Purchase: While catalog purchases used to be the major selling point when Kate Spade
began two decades ago, online sales have definitely taken over since then. Most women fitting
the demographic profile are comfortable making online purchases, and often find it most
convenient. In-store sales also popular, as well as purchases from the select retailers that carry
the brand.
Heavy-user Profile: Unmarried women with higher incomes generally make more frequent
purchases than those with mid-range salaries and those who are already married.
Awareness and Attitude: Kate Spade is gaining consumer awareness and becoming a well-known
brand. The words in the image below are in the Kate spade design area and aim to capture the
customers psychographics, which are attributes that relate to her personality, lifestyle, attitudes
11

and interests. Youll notice a particular sense of confidence and whimsy, which is exactly what
the brand is selling. Generally speaking, consumer view this brand as one to attract optimistic,
sophisticated yet easy-going, multi-faceted women.

Decision Makers vs. Purchaser: Women that will be using the product tend to be the ones

purchasing it. On occasion, close friends or significant others may be making gift purchases, but
generally know exactly what will please the person receiving the gift.
Normal Purchase Cycle: Following up with customers after purchase is just as important as
driving them to purchase. In the US, Kate Spade illustrates this perfectly, after a customer has
purchased a handbag, the company sends a handwritten note, along with a key ring and a moneyoff voucher for their next visit which usually leads to a repeat purchase. Kate Spade offers high
quality products, therefore following purchases tend to be for items in a different category than
the initial one.
Brand Loyalty/Switching: Kate Spade customers are women who know what they want, they're
also known to be very loyal customers. Women who flaunt Kate Spade bags tend to have two to
four hanging in their closet at home.

12

ADVERTISING & MARKETING STRATEGY

Creative Strategies: Kate Spade seamlessly transfers their brand personality to their advertising
and marketing, specifically their social media sites. They have mastered the art of hashtags,
which allow customers from all different locations to share their love for Kate Spade products, as
well as encourage new customers to check out the store by increasing brand awareness.
An interesting aspect of Spade communication is that they dont only post about their products,
but also about people. It is common for customers, designers, and employees to be featured in
some of Kate Spades media. This strategy allows the brand to be seen as much more than a line
of purses and accessories, and instead become a living form of expression. A wholesome mix of
various media and frequent updates also helps the brand appear as a well-established company.
From blogs to Pinterest, to the traditional catalog, one of Kate Spades biggest points of strength
is their superb marketing strategy.

By featuring the individuals that

keep Kate Spade going, such as this
graphic designer, the company
achieves a much more genuine
personality.

Specific Promises:
In this years annual report the marketing section discusses plans expand the e-commerce
site to include customization and additional merchandise collections, which would appeal to
many current Kate Spade customers.
13

One of the companys biggest marketing goals is to reflect the distinct personalities of
their brand, offering a unique shopping experience and exclusive merchandise, in order to
serve women from all types of backgrounds
Kate Spade attempts to offer the highest customer service and prides on their work ethic,
they have extended this to online channels and now advertise that they offer free returns.

Appeals:

Transition to a heavier reliance on online marketing which appeals to Kate Spades main
consumer group because it makes it easy for them to be connected at their convenience.
Kate Spades focus on relating their fashion pieces to current events, seasons, and
consumer interest demonstrate the versatility of the products and often provide women
with inspiration for their own attire
The bright color schemes that characterize Kate Spade are very aesthetically appealing,
and therefore enhance much of the marketing material and make it very eye-catching.

Claims: From the 2013 annual report, Kate Spade stated that their major advertising and
marketing accomplishments included:

continuing domestic in-store sales, marketing and merchandising programs

encouraging multiple item regular price sales
building one-on-one relationships with consumers
maintaining merchandise presentation standards

Special Effects:

Use of vivid color really makes a good impact

Short videos to introduce new products are fun, explanatory, and can be conveniently
watched whenever.
Live feed from Instagram and access to boards on Pinterest within stores often brings
media communications full-circle

Examples of Past and Current Executions:

14

Category and
Current media
included the
Perch
to some of
Spade

Brand Spending:
expenses have
addition of
technology
the Kate

locations,
which serves as
the in-store
connection to live
social media
newsfeed
as well
as to make
outfit
suggestions,
similar to other in-store graphics Additional
expenses also include traditional paper format advertisements as well online media management.
Kate Spade does not currently have any celebrity endorsers, but could possibly consider this for
future investments.
Seasonality: Kate Spade stays relevant year round by emphasizing seasonal trends and
advertising the lines respective to that season. As is common in the industry, the last quarter of
the year is one of the most important times to reach out to consumers and remind them of their
trusted brands.
Regionality: Depending on location, Kate Spade has adopted a domestic in-store shop and fixture
program, which is designed to enhance the presentation of their products on department store
selling floors by allowing stores to create their own mix of fixtures, merchandise presentations,
and graphics to best represent their customers. As Kate Spade expands to other countries, it must
also consider language and cultural norms in those areas.
Media Employed: Major initiatives include direct mail messages, in-store events, and internet
marketing, including the use of social media sites such as Facebook, Instagram, Twitter,
Pinterest, and Tumblr.
Spending Patterns: Cost for individual brand marketing was not available, but marketing and
promotion expenses for all brands under the Kate Spade & Company umbrella were:

$59.3 million in 2013

$44.0 million in 2012
$36.7 million in 2011

An incremental trend in spending is visible, which hints that marketing efforts are now directed
at a larger audience and that Kate Spade is growing in popularity.

15

Spending Compared with Market Share: As a brand that is not as mature as its major
competitors, Kate Spade must spend more than its counterparts in order to increase its market
share and brand equity. However, as social media campaigns gain momentum and brand
resonance increases, Kate Spade will reap the reward of initial investments.

PROMOTIONS
Promotions used in Category:

Plans to roll out a gold service program to certain retail stores this year in order to
reward the most loyal customers.
Discounts and Sales events
Free shipping for online orders
Promo codes for online sales

Major Promotion Types and Examples:

16

Success Rates of Promotions: Considering that Kate Spade offers goods for a large range of
budgets, promotions allow many women to upgrade to a different product, as well as justify the
need for treating themselves to something new.

INTERNET AND SOCIAL MEDIA

Website: The Kate Spade website http://www.katespade.com/ is the main portal to the flagship
brand. Other sites exist for Kate Spade Saturday and Jack Spade, as well as company website.
This site however, is the most visited and allows customers to shop for all categories of Kate
Spade products.
Purpose of Site: Apart from being a way for shoppers to purchase a wide assortment of products,
the Kate Spade website also features certain shops. Currently, the luxurious styles of Madison
Avenue and the On Purpose collection (a line that helps Rwandan women sustain their families)
are featured to give a good contrast of all the variety Kate Spade offers. The site also has a
section dedicated to the behind the curtain: A blog from Kate Spade NY blog which discusses
various topics, provides fashion advice, and often has trendy wallpapers that viewers can
download to freshen up their devices look. The site also offers information pertinent to the Rio
advertising campaign and other locations through the our month in section, and even features a
few tips from locals in those areas. Lastly, the site offers a contact point to reach the company as
well as a links for investors, job applicants, and those seeking to learn more about the company.
Ecommerce Activities: Online sales account for around 25% of Kate Spade sales, making it a
top-performer in the industry. Ecommerce provides a quick, cost-effective way to reach out to
many consumers, especially as Kate Spade expands into a global brand. With competition also
focusing on improving ecommerce ratios Kate Spade must stay up-to-date in order to continue
being successful.
Social Media Activities: One of the biggest advantages Kate Spade has had in the social media
realm against its more mature competitors, is that it has easily transitioned its brand personality
onto social media sites and grown with the newest trends. Below are brief descriptions of how
Kate Spade uses each site:

Facebook: To increase brand awareness, promote other social media sites, and answer
customer inquiries.

17

Twitter:
A major
tool for
fan

engagement. Major campaigns have included #livecolorfully, #thingswelove,

#travelcolorfully and the success has spilled over to other sites.

YouTube: One of Kate Spades most innovative ideas had been to create various short
YouTube videos to launch new products and help create buzz about them. This allows
shoppers to learn about new features and the stories/inspiration behind the designs.

Instagram: Has helped provide followers with an inside look at the happenings at Kate
Spade headquarters.

18

Pinterest: With its bright color schemes and

strongest appeal to women, its as if Kate Spade
and Pinterest were created for one another. By
having yearly boards with themes such as: the year
of color, the year of pattern, and the current places
to go, people to see Kate Spade has established a
timeline of its products and popularity spike.
However, the fun does not stop there. Several other
boards for home dcor, fashion, travel, quotes, and
many other things cheerful and sparkly are also
linked to Kate Spade.

Tumblr: Has served to engage and inspire users on a visual level. Through its photo stream
followers can get ideas on how they wear the brands products.
Kate Spade has been very successful in ecommerce and digital marketing. With strong follower
bases and interactive marketing activities the company has strengthened store-to-web and webto-store cross development. Image based social media sites are especially great platforms for
Kate Spade to get its voice out there, not just as tweets and text, but through vivid images and
color, which are in the DNA of the brand. As Kate Spade develops into a lifestyle brand it helps
to have exposure through real women, the women behind those Twitter/Facebook/Pinterest
accounts that literally let others into their wardrobes and help Kate Spade become more than a
storefront.

19

BRAND VALUE
There is no doubt that Kate Spades brand value has increased significantly since back
when it was launched as a line of 6 purses. Kate Spade has not only surpassed one parent
company (Liz Claiborne), but this year its most recent parent company, Fifth & Pacific,
completed its plan to spin-off lower performing brands and rename itself Kate Spade. Now with
full power, the brand can work towards positioning itself amongst other lifestyle brands.
Through strategic expansion, successful ecommerce, and interactive marketing initiatives
Kate Spade is becoming more popular amongst consumers, as well as a serious rival to other
well-established brands. Kate spade has been one of the few fashion brands to experience such
large growth percentages as the U.S and other nations recover from major recessions. The
companys stock prices have almost doubled in a one year period, and it continues to meet expert
predictions.
A good indicator of the brands strength is the amount of Goodwill and Intangibles found
in the balance sheet, which are mostly values attributed to brand worth, and trademark and patent
values. Below are the amounts for 2013:
Goodwill....................................$49,111,000
Intangibles.................................$90,678,000

MARKETING RESEARCH
20

After conducting both qualitative and quantitative research, in the form of a survey, bubble
drawings, and a personification exercise the following results were most interesting:

100% of respondents were able to identify Kate Spade from K_TE SP_ _E
From the big 5 personalities, Sophisticated and Exciting received the most votes
90% of respondents would choose a Kate Spade purse over a Coach purse
About 78% of respondents would purchase Kate Spade makeup
Zooey Deschanel would embody the characteristics of Kate Spade as a human
Comments included: Cool, calm, and collected Im a diva and I know it The
building is on fire Kate Spade on Sale!

*Survey data as well as bubble exercise and personification worksheet are attached at end of
report.

RECOMMENDATIONS

As Kate Spade launches out to expand its brand into new consumer goods sectors, it
should be cautious and conduct research to make sure that consumers accept Kate Spade
within those sector and that current brand value will transition to make it easier to enter
those sectors.
One suggestion of an extension I believe Kate Spade would do well in, is a cosmetics
line. Kate Spade is known for its bright color scheme selection, and I believe customers
would easily associate this brand with makeup.
Kate Spade could continue to develop its to serve womens needs for any occasion goal
through this cosmetics line, and expand on the idea that makeup is also a form of
expressing style.
Small home accents, desk accessories, and dinnerware are already being produced by
Kate Spade but one major area of home goods that I believe the brand could enter
successfully is furniture. They could begin by offering smaller items such as side tables,
coffee tables, and small chairs and then transition into larger items such as couches,
dressers and bed frames. By partnering with a major furniture store, such a Rooms-ToGo, who is known for other partnerships with brands and celebrities, Kate Spade could

21

focus on the design aspect and the furniture producer could use their knowledge to
produce high quality goods.
One thing that Kate Spade must watch for is the integration of its two other brands, Kate
Spade Saturday and Jack Spade. Jack Spade is not very well-known and definitely needs
some more investment. Kate Spade Saturday has grown since its launch a couple of years
ago, and although it offers products and prices targeted at a slightly difference audience,
it could possibly cannibalize some of the flagship, Kate Spades, sales. In order to prevent
this from happening Kate Spade must differentiate the two. The company could do this
by continuing to market Kate Spade Saturday as a more casual alternative that would not
replace the flagship Kate Spade.
Kate Spade is already committed to making sure their products are made in contracted
factories with fair and decent working conditions. It has been a participating company in
the Fair Labor Association (FLA) since its inception, and participates in several social
responsibility programs such as the Matching Gift Program which supports community
programs, the Love is Not Abuse campaign against domestic violence, and the On
Purpose campaign to empower Rwandan women. This passion to make the world better
could really be marketed to create more awareness, as well as let consumers know that
the company is actively involved in many corporate social responsibility programs that
truly make Kate Spade a wholesome lifestyle brand.
Consider making an agreement with Zooey Deschanel to endorse the brand. Through her
success in New Girl and other projects, as well as her bubbly personality, she would be an
ideal candidate to represent Kate Spade

Update:
On January 29th, the company announced that it would be making some changes to its brand
portfolio. By mid-2015 it will close all free-standing Jack Spade and Kate Spade Saturday
locations in an attempt to refocus efforts on the core company goals. Having to market three
individual brands heavily was beginning to take a toll on profit margin and beginning to reflect
on stock price. With retail being such a competitive sector, Kate Spade has decided the best move
is to step back from an aggressive market expansion strategy and instead focus on market
penetration and product differentiation. In order to accomplish this Kate Spade Saturday will be
sold alongside Kate Spade New York products in Kate Spade Ney York locations. New branding
will make the brand more complimentary to the Kate Spade image and serve as supplementary
products, instead of being heavily promoted as weekend products. As far as the Jack Spade
brand goes, it will still be available for purchase online and through Kate Spades various retail
partners. There are plans for expanding the Jack Spade line to become a mens lifestyle brand, so
although the physical locations are closing the brand is experiencing expansion.

22