CASE

STUDY QUESTIONS

Amalie Farcinsen
RedID: 824673792
MKGT 772 ALI
Martha Stewart Case Study Questions

Assume you are Aretha Jackson, president of the private equity firm who is deciding whether to recommend

Martha Stewart Living Omnimedia to a client. Consider these questions:

1. What is Martha Stewart's business model? How has she gotten to be so successful? How has she

built the brand?

Martha Stewart is a successful entrepreneur who built a media empire from scratch out of the old adage “there is

no place like home”. But it all began much earlier first with her having a small home-based catering business and

then through a catering event getting a deal to publish a cook book based on her recipes from these events. Her

first book was published in 1982. From then her career took off and she released more cookbooks, contributed

with columns on housekeeping to newspapers and magazines, appearing on well-watched television programs.

Already in the early 90s Martha Steward was well known and wanted more, she signed a magazine deal which

was successful from the beginning. She has continued to grow the business across multiple media platforms and

is still a household name to this day. The most recent development for the MSLO brand was it going public in

Oct 1999 where it traded at 35 9/16 up from the IPO price of $18 reaching a market value of $1.73 billion and a

stake for Martha Stewart worth $1.21 billion.

Overall, she started her business based on a value proposition to serve a desire, not only her own but every

homemaker’s desire, to elevate that job of homemaking. This desire eventually turned into Martha Steward

Living Omnimedia (MSLO) which is described as a branded and highly integrated content company dedicated to

helping people improve the quality of living in and around the home. A goal for the company is to turn dreamers

into doers by offering them the information and products they needed for do-it-yourself ingenuity "the Martha

Steward way". The business model for MSLO is composed of four business segments, organized into three

platforms. (Omnimedia Platform with publishing and television and OmniMerchandising Platform and

Internet/Direct Commerce Platform) where the publishing segment by far is the largest part with 63% of revenue

in 1999.

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Basically, what the company offers is the following; original how-to information and related products in seven

core content areas which are the center of the MSLO business model and organizational structure. 


(Home, Cooking and Entertaining, Gardening, Crafts, Holidays, Keeping and Weddings).

The MSLO strategy is leveraging content investments across media, retail channels and distribution platforms as

the "multiplier effect", which was credited with creating favorable economies of scale through cost-sharing,

cross-promotion and cross-selling. The primary company goal is to broaden the MSLO's reach by defining a

homemaker audience as "males, females, children and adults.. The rich and no-rich". The potential market is "as

big as everyone who has a house" which equals a really huge market for the brand. 


Martha Stewart is self-reliant and has built the business and brand around herself, this makes the distance

between the brand and the customer smaller, as it is easier to relate to a real person. This also relates to how she

has gotten so successful. People like Martha Stewart because she is true to herself, and levels with the customers

as a person. She doesn't consider herself either above or below her readers. Also, the material she shares speaks

to the customers in a positive and non-offensive way, which makes her likable. In her magazine, she would

never include articles in finding a mate, losing weight or styling your hair. On her platforms, she focuses on core

aspects of homemaking which centers around the good life, and post as desirable journey by many people.

2. What are the consumer trends in the "lifestyle" sector? Who are Martha's main competitors in

each segment? Who should you be most concerned about in each segment? Do any of the

competitors cover all the segments MSLO does?

The consumers trends in the “lifestyle” sector is that factors as technology and convenience are gaining more

and more momentum. The availability and digitalization in regard to goods and services people use in the daily

lives for consumer, creates a need for change. As the internet and other media platforms allows consumers to

stay in touch all the time, do and see what they want, when they want, makes consumers expect more and more

from the companies they engage with. There is a trend towards more personalized media.

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The human nature of consumers is the same, they are curious and opinionated. In regard to Martha Stewart,

people love to pry on other people’s lives. They want to tag along, both in your doings and in your everyday life,

and as information gets more easily available, it is easier to find someone else that you can relate to and get

inspired by, no matter where in the world they are.

As mentioned above, the MSLO business consist of four business segments, organized into three platforms.

(Omnimedia Platform with publishing and television and OmniMerchandising Platform and Internet/Direct

Commerce Platform). All of which have increased revenue the past financial years. To understand the market in

which MSLO operates competition is important to consider in regard to opportunities and threats.

Talking about competition, the MSLO also recognizes a fifth competitive domain besides the four business

segments, which is the personality-driven multimedia empires such as the one orchestrated by Oprah Windfrey.

Competition within the publishing segment. Here the brand is faced with intense and multifaceted competition

based on price, editorial content and aesthetic quality. There are a lot of competitors both within women’s

service magazines and within categories such as decorating, cooking and lifestyle. Here Martha Stewart does not

recognize any important competition, as she categorizes B. Smith as a copier, Real Simple being relatively new

so not a real competitor and found that Oprah Windfrey’s magazine O: The Oprah Magazines focused more on

the inside, where Martha focuses more on the outside. At the same time, people who read Martha Stewart’s

magazine do not read the other competitive magazines and the sell through rate at a newsstand is 70% compared

to the average of 40%, meaning that Martha’s readers are very loyal.

Even though the publishing segment holds the largest part of the revenue for the MSLO brand, the trend for the

consumers is changing for the more digital approach. This will affect this segment the most, and will require

changes to adapt in the future.

Competition within the television segment. Here MSLO competes directly for viewers and advertising dollars

with other how-to television programs, as well as with general programming on other channels. There are other

large competitors on the market and the largest one within the food category is Julia Child, with the same

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external approach but though with another focus in her content. I the how-to category, Oprah is a competitor

with a huge number of viewer, though still with an internal focus instead of Martha’s external focus. Therefore,

there are no real competitors in this segment as well.

As mentioned earlier, there is a trend towards more personalized media, which will also affect the television

segment, as more and more people will watch on demand.

Competition within the merchandising segment. Here due to the partnership MSLO has with Kmart, the market

is different, as it has brought the firm into direct competition with other big-box retailers. Besides being in

competition with other lifestyle brands. Here the largest competitor for Martha Stewart is Ralph Lauren. But

unlike Martha Steward, they offer a much larger selection of choices made available to the consumer. Martha

only made a few choices available and thereby “guiding” the consumer through this lack of decision making.

People still shop even with changing trends, it all just depends on where they shop. A continuing trend is

towards from-home/online shopping, and the ability to match prices and traits of the goods you would like to

buy. Therefore, there is a need for a strong online presence with the assorted product line.

Competition within the internet/direct commerce segment. MSLO has with its catalog and websites large retail

competitors. And for MSLO being an engaging site, they are also in competition with pure-play interest sites.

Here the brand needs to follow the trends, and making sure that they are ahead of competition as this segment

will continue to grow rapidly in the future.

Competition within the new multimedia personality models. This is one of the most emerging categories to be

aware of, and one which post a large competition. The one competitor Martha should be the most concerned

about is Oprah Windfrey as she has dived in to the same aspects of media as Martha Steward, but with a

different internal focus, though has built her brand and business on her own person.

All in all, there are no competitors for the brand that cover all of the segments that MSLO does. There are

different companies who post as small competitors in each segment, but none across all and with the same

format and value proposition to post a real threat.

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 3. How strong is the MSLO brand? Evaluate the risks. Are they valid? Which concern you most?

The MSLO brand is strong. The total awareness by the adult American population is 87% which is quite high. At

the same time 52% of that population has watched her TV show and 28% has read her magazine, which states

the fact that Martha Steward is a huge figure in America. The fans she has are loyal and watch her and follow

her life as a religion, and even if people dislike her, they still know her and what she represents. At the same

time the brand is something that cater to a lot of people, it is related to almost every part of a person’s everyday

life and lets them dream and desire about improving it by empowering themselves. As mentioned the brand has

an ever-growing lifetime cycle to bring in new customers from new generations which secures future growth.

Though, there are some risks related to the brand. As mentioned, the value of the brand is highly linked to the

reputation of Martha Stewart which can impact the brand in a negative way if she is not careful of how she

handles herself. As well as how the public resonance with Martha, if the trends or customers tastes match what

she provides is crucial. Other risks related to the high level of dependency on a single person, is that this person

might be interested in maximizing his/her profits rather than maximizing her stakeholder’s profits or a person

who knew internal company info that would affect the price of the stocks of the publicly traded company whose

shares she owned. In relation to the external relationships, there is a risk related to the termination or impairment

of the small number of key licensing and strategic partners, which could affect the revenue.

While all risks could be a reality, the one that concerns me the most form an investment point of view are how

unpredictable it can be to have a brand linked this much to a real person who might not always act in a favorable

way, especially as Martha is known to have a temper.

4. How would you position the MSLO brand in the mind of the consumer? What value would you

offer? Is there a unique selling proposition?

The core target is a confident 40-yesr-old woman with a part-time job, a nice house, and a family in the suburbs.

She is highly educated (college), has a medium household income ($100.000), she is eager to try new things a do

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it herself, she is a spender (quality over price and brand loyal). The target is also expanded to everyone basically.

All both men and women, rich and not rich that want to learn about homemaking and everything that follows.

The target is a dreamer with the hopes of attaining the perfection in several aspects of her life and more specific

homemaking. The aim is to turn dreamers into doers by offering them the information and products they needed

for do-it-yourself ingenuity "the Martha Steward way". What is special about Martha Stewart is that she makes

her consumers feel at home with her, and like they are a part of her life. It is a “homey” feeling she has created.

And that is exactly what Martha Stewart had envisioned for the brand to share, inspire and empower. In relation

to the competition, Martha focuses on non-personal things in relation to the consumer. There are no articles

about weightless or how to date or style your hair. The content is all about improving quality of life with

information. You grow with Martha as she gets older and as you do, you evolve together, and you can include

your family to tag along. There is an ever-growing lifetime cycle and it can bring new users. The subjects are

somewhat relevant for everyone, and across all generations. E.g. A mother uses a Martha Stewart cookbook

together with her daughter, so that it is something that she grows up with. Then when she grown older she might

need tips on how to handle her home to tips for her wedding.

All of this is set to make Martha Stewart your life companion and helper but also a distant family member.

Martha Stewart’s unique selling proposition is that she caters to every part of your day-to-day life and you can

connect with the brand on every possible media platform – she can assist you with whatever you like, whenever.

With the development into Omnimedia = multiplier effect. As a consumer, you can reach the content in any

shape or form you want from a magazine to a TV show and so on. community-oriented site. 


5. If you were Martha Stewart's ad and PR agency, how would you handle Martha Stewart, the

person?

Martha Steward as a person is the core of the company and all of her actions in her personal life reflects back on

the company. Therefore, she need to set an example and enforce the values of the brand as they are also hers.

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One of the advantages of having one person serve as both a company’s dominant brand and its controlling

shareholder is that the person is the face of the company so that the brand value or image of the person will be

helpful for the company, which is why you as Martha Stewart’s ad and PR agency, needs to enhance the

likability of Martha Stewart as a person, as people will see the brand equaling her. So, if people and potential

customers sees her as someone that they like and relate to and value her opinion, then that enforces the brand.

She needs to stay relevant, innovative and authentic to the customers and follow the trends in the market.

One of the disadvantages is the exact same thing, so if people dislike her as a person or any of her actions, that is

very harmful of the brand.

As Martha Stewart’s ad and PR agency, I would tell her to stay relatable and authentic. Even though she is a

business woman and makes money off of the ones following her, she needs them to listen to her as a dear friend

and help on their level. She needs to not act out, not show too radical opinions as she needs to please the masses,

but she needs to somewhat stay true to her characters and person.

6. Bottom line, is this Martha Stewart Living Omnimedia a good investment?

In my (Aretha Jackson’s) opening, based on the previous analysis of MSLO, I would value the investment as

being good and profitable. Both the financials and the brand is strong, even though there are some risks involved

as the value of the brand is highly linked to the person of Martha Steward and her reputation. I believe it is a risk

that can be mitigated by a strong PR team to assist her. The MSLO brand is at the same time positioned with the

consumers as being down to earth and for everyone, no matter who you are. And in some way, they all link with

Martha Steward on a personal and sometime intimate level as she shares so much of her private life with the

public and her followers. They see themselves in her which is a strong factor in relation to creating and

maintaining brand loyalty.

The business model is great and thorough, the brand is strong and the target audience is good and makes up a

huge potential market, and a last there are no direct competitors for the entire MSLO platform. All of this

constitutes a good investment with a lot of potential for further growth.

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