Communication channels

We are going to use several advertising means for promoting American Apparel in Russia. And we decided to slightly differentiate marketing campaigns for two our segments as long as both segments see not exactly the same values in AA’s product (it was mentioned earlier).

First of all, we will use internet recourses as long as our both target audiences are young, fashion and active people, who spend a lot of time browsing the internet:

·  Creating on our official web-site (americanapparel.com) a section for Russian market. Here our customers can find all information about our stores, news, clothes and accessories, as well as shop in the internet store.

·  Creating and promoting “American Apparel in Russia” group in the biggest Russian social network vkontakte, as well as in Facebook.

·  Creating our blog at the popular web-site lookatme.ru.

·  Contextual advertising in search engines and social networks.

Second, very important and effective communication tool is placing advertising in fashion journals (e.g. Vogue, Elle, GQ, etc.). As most of the readers of such journals are young metropolitan people, which want to distinguish themselves through closing, we want to use this mean of advertising for our second group at the age of 19-23.

Third, we are going to use TV to reach our target audience: co-branding with showmen of Mtv, Muz-Tv (media-persons famous among our 14-18 age segment). Young people seek for social integration and thus willing to copy someone or wear popular fashion, so famous people will be perfect role models. Also, we will use product placement in reality shows which are popular among youngsters. As we decided, “Vocations in Mexico” is very good example of such shows.

Finally, billboards are a good communication tool to make teasing campaigns as well as to reveal our brand. As soon as we heat interest of our customers, we can use revealing billboards to tell everybody about our brand, country of origin and exceptional quality, which is distinguishing us from our competitors.

 

Group	Communication Channels
Youngsters of 14-18 years old	internet recourses, TV (co-branding with showmen, reality shows), billboards
Young metropolitan adults at the age of 19-23	internet recourses, fashion journals, billboards

Legal issues

Today in Russia we have the one basic law which controlls the advertisement activity throughout the country - the Federal law  "About the advertisement"  form 13.03.2006 № FZ-38. We have analyzed this law and also took a consultation with the student of School of Law of SPbU. The only one article which is related to the question about the possible limits of using the provocative campaign is Article №5 "The general requirements for advertising" which contains the next paragraph:

"It is not allowed to use in advertisement swear words, obscene of offensive images, comparisons and expressions, including those based on a sex, race, nationality , profession and social category..." (Paragraph 6, Article 5). Predicting the questions about our company's provocative campaign we can state that one of existing posters or advertisement could be seen as a  contradiction to Russian Federal legislation. We mean using immigrant images. We are not going to use this advertisement because it is forbidden by the Federal legislation and Russians simply dislike the immigrats from the Southern countries. Also there is only one law precedent here in Russia which forbidens the gay minority promotion, it is related to the territory of St-Petersburg. We can predict that such law will be passed on the federal level but it doesn't matter for us because we are not going to use gay images because In Russia the gay minorities are treated with the high degree of prejudice. Other statements of our advertisement campaign don't contradict to the existing legislation. 

In any case the Article 38 is it stated that "Persons whose rights and and rights are violated by an inproper distribution of the advertising are able to appeal in the prescrided manner to the court, including claims for damages, lost profits, compensation for harm to hte health of individuals and (or) property, compensation for moral damages..." So if someone thinks that this provocative campaign hurts its moral feeling he or she are able to defend their views in the court (no company is guaranteed  from such situation). But we are pretty self-confident to state that advertisement we are going to use will not give rise to such situations but even if it does as we were told by the lawyers it is practically impossible to prove the non-pecuniary damage in Russia and moreover to get the moral compensation. We don't know the precedents like that in the country.

We also want to present you some provocative advertisement  of other companies which were very successful and no one faced any problems which provocative contants and were met by the public quite friendly. 

Concept club

"Rich" juice

J'adore Dior

"Daria" damplings

So we can state that American Apperel is going to use its basic promotion campaign exept for the the ones that contradict to the Federal or local legislation. 

Survey

Recently our Team conducted the survey dedicated to the reasonobility of entering American Apparel into the Russian market. Moreover the results of the survey might help us to draw some prelimenary conclusions about the pricing strategy, marketing strategy of AA on the first stages of its penetrating the Russian market. In the survey participated 229 people.

So, here we present the results:

We can admit that the survey is representative:
- 229 people participated
- the proportion of men and women is close to natural in Russia: 45% / 55%
- 74 % of respondents represent the segment of outmost importance for our company: 19-23 years old

Thus we can base our conclusions on these results.

Based on questions 4 and 5 we assume that it is posible to highlight 2 significant groups of young cloth-buyers in Russia:

- those who want to be individuals and look different (34%) are tend to buy clothes once in 1-3 months
American Apparel in Russia is basically oriented on this group. Individualistic style and American origin fully satisfies their needs. Unusual marketing campaign supports these benefits and attracts potential customers more efficiently.

- those who buy clothes only as necessary and want to satisfy this basic need (43%) usually go shopping once in 3-6 months.
 American Apparel does not mainly orient on this group of customers but with high level of posibility will attract them by:
---liberate pricing strategy (only 14 % of respondents are ready to pay less for outerwear and 11% - for jeans and trousers)
---broad range of basic models of high quality and color variability - great for clothes "as necessity"

Pricing strategy

We have supported our assumptions with questions 6 and 7 results and developed our pricing strategy.
In our survey we offered our potential customers the question of how much they are ready to spend for the overcoats and jeans, paying attention that these categories of clothes are the most usual and essential   in wardrobe of the average customer. So looking at the results we can state that the relative majority of the respondents (47%) are ready to spend 6-8 thousands rubles for the jacket or coat. Official price for the outerwear is in average 80-145 dollars depending on the model.  So it means that not only those who under the survey are ready to spend the determined sum of money but also  the first group of residents who determined the comfortable price gap of 3-5 thousands (see the survey in the previous post). It means that we will make an increase in price about 25-30% so that Russian customers are willing and able to buy the American Apparel brand clothes. Looking at the willingness for paying for the jeans we can notice that only 11 percent of the respondents don’t want to spend for the jeans or pants more than 1.5 thousands rubles. And again 89 percent of the residents are able to pay in average 2 thousands rubles and more.

 So we as a Department of Marketing can state that the margin will be about 25-30% of the original price and the final price for the item will in any case be very comfortable for Russian customer. The price-quality correlation remains to be the most optimal, besides that we sure that the quality of the brand in such pricing category is unusual for the country’s residents. You can also see our previous post where we analyze the brands which already exist in the Russian market, they stay at the same price level but at the same time the vast majority of the brands produce their products in China, and usually customers notice poor quality of the clothes no matter that they pay considerable for them sum of money. So the quality of the American Apparel brand which has been formulated into the slogan “100% American” is our fundamental competitive advantage.

Future success.

Based on questions 8, 9 and 10 we can assume that American Apparel has all the chances to win the hearts of Russia customers.


Current data:

- only 2% (!) of the target customers are addicted to certain brand.

76% enjoy multi-brand clothes and 22% have a desire to try something new.
In the consequences of low switching costs in garment industry  for American Apparel it means a lot of
potential buyers even on the first step

 - only 4% (!) of the target customers are not willing to buy original American clothes.

So Russian customers can be really touched by American origin of the clothes. It proves that our solgan "100% American" will work!
67% of respondents showed an active interest in our proposal and 29% acnoledge the posibility.

These are great results!

- brand awareness 34%

34% of respondents have heard about American Apparel. It is a high level of brand awareness especially for a company not presented in the market right now.
It is an uncommon situation when target customers are ready to buy the product but it does not exist in the market. We can say that there is unsatisfied nessecity in the market and still there are no ways to satisfy it.

It is high time to cease this untapped opportunity.

[Now look some scrinshots that prove the readiness of the market for American Apparel product.
No doubt you will be amused what potential the market has and already how long customers have known and even have admired (!) American Apparel.] 

American Apparel Worldwide

In this post we would like to show you, how American Apparel acts outside its home market. Generally it can be concluded that in different countries AA uses more or less the similar approach as in US, though struggling to strenghen the global brand. It uses sexual and provocative ads, amateur model without make up and photoshop, AA is promoting itself via product placement in popular local and global magazines and it tries to be asclose as possible to its consumers trhough communicating with them on the social websites.  But not everywhere it really works out to be successful. In some countries such marketing approach is quite successful and reaches target audience, but in other countries as in China AA failes in sending its unique message to customers. In other countries it is really appealing and enjoys high volumes of sales and popularity among youngsters, but fails with negotiating with authorities.
So, just look on some facts and you'll see how typical is AA in every country it operates in:

In Japan

• 1st store - 2005 (now 5 stores)+ e-commerce;
• Active promoting via fashion magazines, social media;
• Creative ads and photos received a lot of attention, and is frequently discussed on Japanese social networking sites and blogs;
• 2011 - 49% sales growth;
• Previous 80s pop style was replaced with a 50s-60s classic line up;
• Focus on women's products

 In China

• 1st store - 2008 (now 2 stores) + e-commerce;
• Active promoting via fashion magazines;
• Main message: "Made in the USA", sweatshop free, commitment to chinese community (pay above market rates for labor);
• Marketing strategy in China similar to the U.S. (ads in a range of publications: from glossy fashion magazines to metro weeklies);
• Generally failed ad campaign (AA failed to explain to Chinese consumers why they should pay much);
• Collaborating with Groupon.com to offer significant discounts to chinese consumers

In Brazil

• 1 shop in Sao Paulo (since 2008)+ e-commerce; 
• Active promoting via fashion magazines social websites (http://www.facebook.com/pages/American-Apparel-Brasil / http://twitter.com/#!/americapparelbr / https://ru.foursquare.com/v/american-apparel/4b6c48a8f964a520b82d2ce3);

AA's store in Sao Paulo

 In UK

AA's product placement in UK

• 18 stores since the 1st store in 2004 in London+ e-commerce;
• Rather strong standpoint and successfull expansion;
• Deep understanding of the brand by UK consumers;
• Successfull and popular marketing combination  (60% sexiness, 40% ethical awareness);
• 2008 - Label of the Year;
• 2010 - A series of website adverts by AA was banned: AA was told  not to use similar images as in US, which were exploitative of women or that inappropriately sexualised young women  =>loss of $86m (£54m) for AA
  

  

  AA's store in Manchester

In Germany

• September 2003- Düsseldorf office and offering T-shirts to the wholesale market. This office is now the center of our entire European wholesale business;
• 2004 - 1st retail store (now 9 stores) + e-commerce;
• AA has received much coverage in the German media and has been honored with design awards for its German ad campaigns;
• Active communicating with german customers though social websites (http://www.facebook.com/pages/American-Apparel-Deutschland/118135204909394);

In France

• 2005 - 1st store (now 12 stores)+ e - commerce;
• Targets young, stylish and savvy consumers;
• France has always been one of AA's strongest markets. The French people have repeatedly demonstrated their affinity for and understanding of American Apparel's fashionable basics philosophy;
• http://www.facebook.com/AmericanApparelFrance;
• participating in fashion events + fashion magazines

In Mexico

AA's product placement in Mexico City Monthly

• 2004 - 1st store + e - commerce;
• Fashion publications;
• Commitment to mexican community;
• Vintage clothing collection. 

In Israel

• 1st store in 2005 in Tel Aviv with focus on classic style
• + e-commerce
• AA has created increasing brand significance among Israeli shoppers through local media, and collaborations with television shows and films.

In Korea

• 2005 - 1st store in Asia;
• + e-commerce;
• Fisrt made -in -America  experiment proved to be a great success;
• Now 7 stores (5 in Seoul alone) 

In Australia - 3 stores in Melbourne,Adelaide and Sydney since 2008+ e-commerce;

In Netherlands - store in Amsterdam since 2006+ e-commerce;
In Sweden - 2 stores in Stockholm since 2007+ e-commerce;
In Italy - 1st store in Milan since 2007, 2nd and 3rd store later in Florence and Rome+ e-commerce;
In Austria - store in Vienna+ e-commerce;
In Belgium - store in Antwerpen + e-commerce

International Marketing

Do you remember what American Apparel is worldwide?
Look again.

So what American Apparel is for the Russian market?

. . . 

International Marketing Strategy should be tuned to Russian customers.

Formula:
[American Apparel unique marketing campaign + adaption to Russian mentality and differences in perception]


Plan of adaption.

I. No "Legalize Gay" campaign.

"American Apparel believes in freedom, expression and equality

American Apparel believes that sexuality should be celebrated, not condemned.

With many of our employees and customers identifying as gay, lesbian, bisexual or transgendered, we are a company that is vocal about our support for the protection of gay rights."

(c) from AA official site.

For Russia it is not an easy social problem to discuss. Russians are known for not being tolerant. Such a campaign can ruin brand image.

II. Immigrants issue.

Evidently, immigrants play an enormous role.

Nearly half of the top 50 venture-backed firms in the country were founded at least in part by an immigrant, according to a new study by The National Foundation for American Policy. Expanded to include key management personnel, the portion of the top young companies headed by foreign individuals hikes up to 74 percent.

(c) from AA official site.

This issue is not actual for Russia. Perception of immigrants in Russia differs a lot.

American cultural peculiarities and history of the country itself show great importance of immigrants.

"The contribution of immigrants can be seen in every aspect of our national life.

We see it in religion, in politics, in business, in the arts, in education, even in athletics

and in entertainment. There is no part of our nation that has not been touched

by our immigrant background."

John F. Kennedy

President of the United States

While in the USA a significant portion of immigrants place high positions and make business, immigrants in Russia mainly represent sweatshop - hard work for little money without any favorable conditions.

We are afraid that American Apparel campaign for immigrants can ruin the brand perception and will not gain any significant results in terms of profit - immigrants are not our target group.

III. Shop in the street VS. Shopping center.

American Apparel officially states that "shop in the street" is the only right concept for this brand. it facilitates creating special atmosphere and ease following corporate style.

Russian market is quiet a new experience for American Apparel. Russian customers in big cities are tend to go shopping in huge shopping molls.

Thus we suggest to rent significant premises in the shopping center in order to provide more space inside and be able to design showcases in a corporate style.

Entering Russian market...

We, an ambitious team of 6, have analised properly the Russian clothes market and concluded that it is quiet an attractive country to enter.
In our previous posts you can see the basic information about American Apparel. We are pretty sure that this brand is awesome and differs a lot from competitors. It is clear that company will gain a strong position in the Russian market and that's why we are going to increase awareness of the brand and attract much attention to it.

Our plan of actions:

Shop: self - owned;
Location: Moscow/Saint-Petersburg;
Negotiation with authorities since Autumn 2012
Teasing Campaign: Summer 2013;
Time of shop opening: Autumn 2013;

Pre-opening actions

Natalie Nevedrova, Muz-tv VJ

Teasing Campaign*

First step: Heat the interest
- co-branding with showmen of Mtv, Muz-Tv (media-persons famous amoung our target audience)

Стас Давыдов, This is хорошо

- billboards


- "no Protoshop and no make-up" concept


- using slogan and teasing message, not brand name

Second step: Reveal the brand

- revealing billboards

- product placement in  reality shows popular among youngsters

Каникулы в Мексике

- Creating and promoting personal group in Vkontakte

http://vk.com/american_apparel

- Create Russian blog (lookatme.ru)



*advertisement designed to tease the public by offering only bits of information without revealing either the sponsor of the ad or the product being advertised