Kate Spade, a core Liz Claiborne brand, had been losing money for quite some time. When it was established in 1993, the handbag maker had decided to target 40-year-old, suburban mothers who loved “vibrant bags with classic lines.” In 2007, in an effort to revive Kate Spade and generate revenue, the company decided to diversify its brand by designing a new product and targeting an entirely different market. In other words, Kate Spade’s Got a Brand New Bag.
To do this, Kate Spade brought in Deborah Lloyd. At first look, she said that it [Kate Spade] was “a sleeping beauty that needed a kiss;” the Kate Spade bag was impractical and only seen as aesthetically pleasing. Deborah Lloyd wanted to focus on “marrying fashion and function;” she would add more neutral tones as well as practical bags.
Now, the company needed to get a visual of the current consumer to better understand what their new market would look like. To do this, Kate Spade hired Redscout branding to take pictures of women carrying a Kate Spade bag in Los Angeles and New York City. From the data Redscout provided to Kate Spade, they decided to target 26 to 36-year-old, professional globetrotting women.
To reach the globetrotting women, Kate Spade added more lines to its collection and expanded to Japan and China. In these new lines, there were bags that catered to the various global markets. In the United States, handbags had cell phone holders. In Japan, the bags had file folders “customized to accommodate the different size folders used in that country.” The company was successful in reaching these markets and increasing sales. Kate Spade is now looking to branch into apparel and jewelry in 2012.
Kate Spade succeeded not only because of its new designs, but also because it used social media, such as Facebook, Twitter and YouTube to reach its new, younger target market. The brand even hired a celebrity spokesperson, Bryce Dallas of Spider-Man 3 and Twilight. One marketing decision that should also be highlighted is that Kate Spade never budged on price. While its competitors lowered prices due to the recession, Kate Spade held steady and kept its name as a high-end handbag.
While Kate Spade successfully positioned itself in a new market and used diversification to increase revenue, it leaves us to wonder: what happened to the 40-year-old, suburban mothers? Are they still buying the Kate Spade brand? Perhaps Kate Spade should use market development techniques to regain and/or capture the 40-year-old, suburban mothers who want to be fashionable like their younger counterparts. But would this only be applicable to North America and Europe where youth is a cultural priority?
What about the company’s global markets? If Kate Spade wants to expand into apparel and jewelry, will they be able to cater to each country’s customs and preferences as they did with their handbags? And even though Kate Spade has been thriving in its new market, and it has been making money that was lost, the company is still new to the Japan and China markets. To answer these questions, Kate Spade should do a thorough cultural analysis of its current markets. From there, the company can fully analyze its weaknesses and opportunities. Ultimately, should Kate Spade work on strengthening and even further expanding its global handbag market before it tries to “outfit the globetrotter from head to toe?”
